Next pandemic threat to economy: A wave of evictions

Why We Wrote This

Government aid for individuals during the pandemic was speedy but also limited in its duration. The expiration of eviction bans is a test of whether the U.S. will let a health crisis also become a housing crisis.

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Protesters participate in a national "Cancel the Rents" event on May 30, 2020, in Boston. The movement calls for government aid to cover rent and mortgage payments in the midst of the pandemic.

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Even in good times, 2 million or more households can face eviction in America in any given year. Low-income renters, especially, often scrape by on margins too narrow to absorb even modest difficulties. Now, the coronavirus pandemic, disrupting the income of legions, could create a tsunami of evictions. 

Some states have seen temporary bans on eviction expire, and this week a federal eviction moratorium affecting about one-quarter of America’s rental properties is set to end. An estimated 11 million or more U.S. households may face eviction in coming months.

In Milwaukee, on the ninth floor of a downtown apartment building, Edward Smith was alarmed recently to get a notice that he owed more than $3,000 in rent. Mr. Smith, a disabled Army veteran and former paratrooper, says he fell so far behind because he had to pay funeral expenses for his father, who tested positive for the coronavirus.

“They said they’re going to be sending out eviction notices at the first of the month,” he says. “I told them I’ll try – if I can set up a payment program.” For renters in Wisconsin and beyond, a lot now rides on discussions in Congress about a new round of coronavirus relief for the economy.

The first of the month had come and gone, and now in early July the man with the clipboard arrived at the apartments on North Hopkins Street, a plain two-story brick building where grass and weeds grow scraggly along the street and broken furniture lies abandoned around the dumpster out back. 

To tenants he was a figure of doom. On the second floor, he stuck a folded eviction notice in the door of Apartment 14, two units down from where Sorea Appling lived. It wasn’t long before Apartment 14’s tenant, and the woman in Apartment 5 downstairs, had found new places to live.

“They say once you get your door knocked on by the man with the clipboard, you might as well leave,” says Ms. Appling, a public school janitor who has been out of work since March and worries that she might be next.

Her worries are increasingly shared by renters across the nation. For several months during the coronavirus pandemic a combination of tenant grit, landlord forbearance, and federal aid has helped people stay in their homes. State or local bans on evictions have in many cases offered a reprieve. 

Now those eviction bans are phasing out along with key government support for unemployed workers. With the economy far from recovered, some of the steepest declines in income have been faced by low-income renters like Ms. Appling. By some estimates, the United States could see more than 11 million households evicted in the next four months.

“People are going to go over a cliff,” says Mary Cunningham, a housing expert at the nonprofit Urban Institute, and co-author of a new analysis on the problem. “We’ve seen this coming. We’ve been racing toward it with the clock running out and, so far, Congress hasn’t responded.”

Analogies like “cliff” or “tsunami” are apt. As the Senate convenes this week to consider new coronavirus relief, a key question is whether the resulting bill will include provisions to help at-risk renters. The expiring supports – from the CARES Act passed by Congress in April – include an eviction moratorium for the roughly one-quarter of rental properties that get federal backing, plus supplemental unemployment benefits that have so far buoyed up millions of households. 

Although some states have moved to extend eviction bans, the potential for mass evictions on an unprecedented scale looms.

Economists say such an eviction wave could deepen poverty, widen racial inequality, and create severe new damage to the economy that will take years to repair.

“The issue of inability to pay, poverty, and unemployment – that existed pre-COVID-19,” says Raphael Ramos, a lawyer with Legal Action Wisconsin and head of its Eviction Defense Project. “The difference between now and then is that the pandemic has shifted the line of poverty. There are more people at risk than before.”

“Not in 40-hour jobs”

Indeed, the coronavirus is amplifying a problem that has long festered in Milwaukee and other cities. Housing advocates say evictions are a symptom of a combination of chronic problems like low-paying jobs, too little affordable housing, and public transportation systems that are inadequate to take people to where the work is. Renters often scrape by on margins too narrow to absorb even modest difficulties.  

“A good part of our clients are not in 40-hour jobs, but in a patchwork of jobs – babysitter, bus driver, hair cutters,” says Peter Koneazny, litigation director at the Legal Aid Society of Milwaukee, where calls from renters appealing for help have skyrocketed. “You have a lot of that. It’s a kind of constant struggle for many people. Their head is barely above water, most of them.”

Evictions are sometimes the result of cascading circumstances. Iyonna Hall-Davis was working as a certified nursing assistant in a Milwaukee suburb, often for 16 hours at a time, when she started having trouble with her car, an old 2007 Cadillac. Taking public transportation to work was “not an option,” she says. “No bus came near it.” 

Her transportation troubles led her employer to cut her hours, and she fell behind on her rent, Ms. Hall-Davis says. At the end of February a payroll check that would have covered what she owed arrived late, forcing her eviction. She’s been struggling ever since, moving with her 3-year-old son among family and friends and waiting for her unemployment application to be acted on. She’s been waiting 10 weeks. She hopes to use the money to rent a new apartment and buy another car that can take her to work.

“Whenever that comes, I’ll get my life back together,” she says.

Options for Congress

To stave off the potential crisis, affordable housing advocates are pushing for one or more of the following from Congress: a comprehensive federal ban on evictions to replace the diminishing patchwork of protections currently in place, rental assistance for tenants affected by the pandemic, targeted help for landlords, continuation of the supplemental unemployment benefits at some level, and help for local governments, which are expected to be swamped by eviction notices once the moratoriums end.

Many of those provisions are in the HEROES Act, a $3 trillion package passed by House Democrats in May. Republicans in the Senate, however, say the Democrats’ measure is far too costly. 

Some housing groups are optimistic Congress will act. “It’s brink negotiations,” says Bob Pinnegar, president and CEO of the National Apartment Association, which represents the rental housing industry. He expects an acceptable package will emerge. 

Affordable housing advocates are more optimistic about local initiatives.

The “cancel rent” movement, for example, notched a victory recently when Ithaca, New York, passed a resolution calling on the state to cancel rent for residents and small businesses for three months. 

Massachusetts is the latest state to renew a pandemic-related ban on evictions. Its moratorium, which had been set to expire in August, will now stretch through the fall, due to an order Tuesday by Republican Gov. Charlie Baker.

In Wisconsin, by contrast, a two-month ban set by Democratic Gov. Tony Evers expired May 26. That month, the Republican-majority state Supreme Court threw out Governor Evers’ coronavirus order as unconstitutional and mandated that new policies go through a legislative rule-making process.

Mr. Ramos and others saw evictions in Wisconsin jump 40% over the previous year in the first week after the state eviction moratorium ended. They are now running 14% higher than last year. 

“There are a lot of people in this building who are under the threat of eviction,” says Ms. Appling, a slender woman with close-cropped blond hair and a silver crucifix around her neck. “Ever since March, these people haven’t been able to go to work.” 

For families, wide ripple effects 

Eviction has big ramifications for families. It makes it much harder to rent from other landlords, pushes families into substandard and more crowded housing, and has been shown to have negative effects on everything from physical and mental health to education for children who have to move from school to school, says Emily Benfer, a law professor at Wake Forest University and co-creator of the COVID-19 housing policy scorecard set up by the Eviction Lab, a research project at Princeton University in New Jersey.

Pushing people into more crowded, substandard housing is problematic anytime. Doing it in the midst of rising coronavirus cases makes the potential health fallout much worse, says Ms. Cunningham of the Urban Institute. “It’s really reckless during a pandemic to have people lose their housing when we’re all trying to socially distance.”

Evictions already hit people of color disproportionately. In Boston, a report last month from City Life and the Massachusetts Institute of Technology found that in nonsubsidized housing, more than a third of evictions happened in predominantly Black neighborhoods, even though only 18% of the rental housing was in those neighborhoods. That’s partly a result of poverty and low income, the researchers said, but the most telling predictor was the neighborhood’s racial composition.

In the pandemic, people of color are more vulnerable because they’re more likely to work the low-wage jobs most at risk during the pandemic, such as hospitality and retail positions, where people can’t work from home. And it’s not clear how many of those service jobs will come back as the economic recovery shows signs of slowing.

Among Americans in general, the problem of eviction is huge, affecting about 2.3 million households in a year, according to the Eviction Lab. In the next four months, the figure could hit more than 11 million, according to a new data analysis tool by global advisory firm Stout Risius Ross LLC. 

Richard Mertens
Edward Smith sits in his one-bedroom apartment in downtown Milwaukee on June 17, 2020. Mr. Smith, an Army veteran, furnished his apartment with the help of the Veterans Administration. But he's fallen behind on his rent and worries he might be evicted.

In Milwaukee, on the ninth floor of a downtown apartment building, Edward Smith was alarmed recently to get a notice that he owed more than $3,000 in rent. Mr. Smith, a disabled Army veteran and former paratrooper, says he fell so far behind because he had to pay funeral expenses for his father, who died in May at a nursing home in the Chicago suburbs. Mr. Smith says his father, who was 90, had tested positive for the coronavirus. “I had to help bury him,” he says.

Mr. Smith, a tall, friendly man who wears an American flag face mask, says he talked to the building’s management after receiving the letter. “They said they’re going to be sending out eviction notices at the first of the month,” he says. “I told them I’ll try – if I can set up a payment program.” But he’s worried. He’s applied for rental assistance. 

Lifelines in a storm

Wisconsin is spending $25 million of federal COVID-19 relief money to help tenants avoid evictions. The problem is that many renters don’t know about the assistance. And housing advocates wonder what happens when the money runs out. 

In the meantime, many small landlords, too, are on the financial brink, unable to withstand a long-term dive in rental income. Yet some have shown leniency because of COVID-19.  

“The mom and pop landlords are doing what they can to keep good tenants,” says Lisa Owens, executive director of City Life/Vida Urbana, a tenant advocacy group in Boston. 

Ms. Appling, the school janitor, was astonished to hear from a friend that another landlord had forgiven tenants a month’s rent. Moreover, many landlords know that tenants can apply for rental assistance. They are willing to wait. But not all landlords are so lenient, and as Ms. Appling has observed, evictions can happen suddenly and ruthlessly.

She’s been spared, but only for now. Furloughed from her job on May 4, she’s been able to borrow enough from relatives to pay her $525-a-month rent. And yet there’s a limit to what she can borrow. She’s applied for unemployment benefits but has received nothing, even after months of waiting. She doesn’t know when she’ll be called back to work.

“I’m good for this month,” she says hopefully. 

Laurent Belsie reported from Waltham, Massachusetts.

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