Rental Crisis from the Landlords Perspective

I previous wrote about how the COVID-19 pandemic was creating a rental crisis. In California, no one can be evicted from their apartment until June 2021 (some exceptions apply such as if someone has a high income and is just trying to avoid making rental payments). At that time, I looked at this crisis from the tenants perspective. How about taking a look from the landlords perspective?

The LA Times (Apr 5) did just that:

A new survey published Monday by researchers from the University of Pennsylvania offers more specific insight into the pandemic’s effect on landlords in Los Angeles: More than half of 1,300 property owners surveyed in December last year said their business would face financial distress within six months if their situations didn’t improve.

. . . Moody’s Analytics and the Urban Institute think tank estimate 9.4 million U.S. renter households owed an average of $5,586 in back rent, utilities and related late fees as of January, for a total debt pile of $52.6 billion.

. . . An improving economy and the flow of significant rent relief money could improve fortunes for both landlords and tenants in coming months. The two federal stimulus bills passed since December allocate about $50 billion to help tenants nationwide pay rent, with that money set to automatically go to landlords.

Okay, honestly, I suspect that many landlords are not in the dire situation that the University of Pennsylvania survey uncovered. It is a dated survey and soon after that point in time (as indicated by the above quotes), there were two federal stimulus bills that were passed. Moody's estimates that there are $52.6 billion in unpaid back rent. Some of that would be utilities and late fees. The stimulus bill was at $50 billion. It really looks like from that perspective that only a small amount of back rent actually needs to be collected from tenants. I am sure that knowing that money is going to start flowing (if it hasn't already) that banks wouldn't foreclose on landlords who were good customers prior to the pandemic.

The article does indicate that some landlords were forced to sell. Considering how property values have increased, I wonder if they took much of a financial hit even if there were some tenants that weren't currently paying.

The article does state that some landlords are selling due to fear of changes in the laws that will be more favorable to the tenants. That, to me, is a a reason to sell which is different from a fear of falling behind on loan payments. I actually suspect that restricting the rights of landlords could backfire on tenants over the long run. Current tenants might gain some benefits by being allowed to stay in their apartments / houses for a longer period of time during periods of financial stress, but future potential tenants might have a harder time finding someone to rent to them.