The next housing crisis is here, and this time, it’s about rentals

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If Landlords Get Wiped Out, Wall Street Wins, Not Renters

The next housing crisis is here, and this time, it’s about rentals. Across the U.S., landlords and tenants are wrangling over next month’s rent while an approaching avalanche of evictions threatens to bury them both.

To avert a damaging wave of foreclosures like the one that swept the country more than a decade ago, Congress included a provision in the $2.2 trillion rescue package it approved in March that allows homeowners with government-backed mortgages to defer payments for up to a year. But Washington stopped short of offering renters comparable relief on the assumption that those in distress would likely qualify for the $1,200 checks the Treasury began mailing out in April, as well as beefed-up unemployment benefits.

In an Urban Institute survey of renters carried out from March 25 to April 10, almost half said they had experienced material hardship in the previous month.

Many U.S. states have imposed moratoriums on evictions. But without a national rental-market bailout, the economic pain is likely to spread as efficiently as the virus that caused it, flowing upward to landlords, their lenders, and cities losing property tax revenue.

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About half of the 43 million rental units in the country are owned by small businesses such as Shields’s one-woman enterprise. Unless help comes soon, “both renters and property owners will slide down the socioeconomic scale together,” says Emily Benfer, a visiting law professor at Columbia University. “It will have a ripple effect. Rent doesn’t just go to property owners, it pays for property taxes, mortgages, and salaries for the people who maintain buildings.”

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