The Trump administration’s move to ban rental evictions through the end of the year, as a public-health precaution, is of dubious legality but reveals a lot about how the public views housing markets. That the rule comes from someone with a real-estate background makes it not only ill-considered but also cynical.
The rule, announced incongruously by the Centers for Disease Control and Prevention, assumes, as does New York governor Andrew Cuomo, that, absent such interventions, evictions would be rampant. The order relies on a set of false assumptions, the first being that landlords have such deep pockets that cutting off their cash flow—as would happen if tenants could avoid paying rent yet remain in their homes—will not set off a chain reaction of mortgage defaults and unpaid utility and repair bills. Another assumption: as a group, residential property owners don’t merit sympathy or concern. Indeed, Alexandria Ocasio-Cortez and other socialists are going one step further than Trump and demanding an explicit “cancellation” of rent.
A large proportion of residential property owners are not big players. Small property owners make up about half of the national residential real-estate market. The Department of Housing and Urban Development reports that of 45 million occupied rental units in the U.S., individual investors own 22.7 million of them. The estimated 10 million such individual investors—“mom and pop” landlords, as HUD calls them—often own one-, two-, and three-to-four-family homes. Especially in New York, many owners are immigrants, and they may also have ground-floor retail space. New York’s Rent Stabilization Association, which lobbies on behalf of the owners of the city’s 1.1 million rent-regulated units, estimates that 70 percent of its members own just one or two buildings.
“Ting had hoped to replace the roof of his prewar brick Brownsville apartment building this year,” writes Curbed, a real-estate news website, in a rare sympathetic profile of a small property owner, a Brooklyn landlord. “Instead, he’s using the money saved for that renovation to stay afloat after three of his four tenants didn’t pay rent.” The Curbed story observes that “smaller landlords, who own one or a handful of properties, often operate on slim margins and—unlike their larger counterparts—lack the cash reserves or access to credit to weather a prolonged economic pause as a result of the novel coronavirus pandemic.” But cash reserves and credit are precisely what the combination of an eviction ban and stalled rent payments will require.
That immigrant strivers would not garner the sympathy of progressives—and that the president thinks an eviction ban would be a political winner—should remind us of the stubbornness of certain public attitudes. The very term “landlord” evokes the relationship between a medieval lord and a serf, one of self-evident exploitation. No other business operator is called a “lord.” Health-care providers have become frontline heroes, but landlords—more aptly regarded as housing or shelter providers—remain villains.
In the real world, small property owners, far from rubbing their hands in anticipation of evicting longstanding tenants, fear vacancies. As people who owned a duplex home for more than 30 years—the second unit made the difference in our being able to buy a home—my wife and I were well aware that the loss of several months’ rent was a real hazard. Far better not to raise rent, even as our costs rose, in order to make sure that reliable tenants would stay. Property owners have every incentive to negotiate. A lower rent is better than none—especially in today’s New York City, in which the number of rental vacancies has spiked. Indeed, the New York Times has reported that “in June and July combined, more than 120,000 apartments were for lease, a nearly 26 percent increase over the same months in 2019.” The Times reports further that rent levels have dropped by 10 percent. In the relationship between landlord and tenant, as with all market relationships, power is distributed on both sides.
Legally speaking, Trump’s eviction ban amounts to federal intrusion into millions of private contractual relationships and the interruption of a supply chain. That chain includes capital that enables ownership, the owner’s sweat-equity labor (fixing leaks, shoveling snow) in maintaining a building, and the contractors, plumbers, and electricians who provide such maintenance as well. It’s as if a federal regulation dictated that the food supply chain—from farm to truck to store shelves—must absorb the costs of unpunished shoplifting.
Why are the owners of residential property different from the providers of other consumer goods? In reality, they’re not. One wishes that the White House, at least—to say nothing of those to its left—understood that.
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