I don’t want to get too deep into the economics of this move. I won’t discuss whether it is completely and totally insane, or how much it will permanently drive up rental costs since renting means the government might decide to seize your property outright and pay you nothing in return, while you maintain it under penalty of law at your own expense in the hopes that the government will one day give it back.
I am not here to dispute whether the *CDC* is the one to do this, but its worth engaging with the best arguments in favor of an eviction moratorium:
In ordinary circumstances, the purpose of evicting a non-paying tenant is so that you can vacate the property in favor of a tenant who will pay. But in a pandemic that is causing catastrophic levels of unemployment, large sectors of the economy shut down, and legal and prudential restrictions on travel, where are the paying tenants? One or two landlords may be able to find someone, but in the aggregate, allowing evictions now will just increase itinerancy and homelessness without really helping landlords much.
This is especially true given some of the criteria that have to be met to be eligible for the moratorium:
They have used their “best efforts” to first obtain all available government assistance
They are unable to pay the full amount of rent due to experiencing a “substantial” loss of income, or because they were laid off or had to pay “extraordinary” medical expenses
They are using their “best efforts” to continue making at least partial rent payments as close to the full amount as possible, taking into account other nondiscretionary expenses.
Eviction would “likely” make them either homeless or force them to move into a shared living situation.
Although Trump’s people call it a moratorium, it’s really a very particularized defense to eviction that applies precisely to those people who it would be economically bad to evict—tenants who were (pre-pandemic) reliable payers of rent, who can’t pay now because of the pandemic but who, because they were reliable before, can expect to be reliable again when circumstances return to something like normal. There simply is no good reason to evict these people, and the consequences of such eviction would be ruinous for them, and yes, would at least marginally increase the risk of contracting and spreading COVID.
All those air quotes sound mostly like the kind of thing that people who want to can just claim without too much effort, or threaten to claim they did when threatened with eviction, or when taken to court to be evicted. Meanwhile they’re threatening criminal penalties for breaking the rule. So effectively, anyone who doesn’t want to leave and is willing to break the social contract to stay, is going to be untouchable—the fight is ugly enough to begin with, this gives a credible threat to make it much worse.
If we think it is good public policy to keep such people in their homes, and we decided to pay their rent for them because this was a taking of private property, and ideally take over that debt in some form for later collection if the person recovers their income, that seems like a plausible thing to consider. Seizing the property outright, not so much.
Also, I don’t buy that property in general is in such low demand. The argument presumes that people have little demand for slash ability to pay for apartments/houses (house), and thus there’s a huge overhang of supply, and evictions make things worse. But what I’m seeing in the charts is that house prizes are up in many/most places, not down, with places that are exceptions places that actually are worse places to live for now (e.g. NY/SF).
I think that’s about as far as I’ll go with this. I agree that there’s a reasonable argument to be made to provide some eviction protections, or more than already exist. But we both agree, I think, that the CDC doing it is in no way appropriate. I would say blatantly unconstitutional, sets a really horrible precedent, violates the basic concept of rule of law, etc etc. You want to do this, you pass an act of congress.
Housing prices are only partially controlled by supply and demand for HOUSING. They have been financialized into speculative assets to a ridiculous extreme that is highly destructive to their primary function. The price is driven up by investors which have access to huge amounts of freshly created money loaned into existence, such that as long as there is the expectation that the price can go up, speculative demand is almost literally infinite and prices are driven above the ability of those who need housing and lack access to that sort of financing to pay. The situation is highly untenable in the long term.
I agree the housing market is deeply broken in many places, but would explain this purely in supply and demand terms. There is large demand, and laws severely restrict supply. Thus, prices go up. We expect additional restrictions on supply, so prices are expected to go up more, so they go up now, expectations set in, and so on. Then in part to protect those expectations, restrictions are increased.
If we ban/tax renting that won’t solve the problem, that will force renters to buy instead, and destroy the ability of the poor (who don’t hit a lottery where they’re given a house for free) to find places to live even more than we already do. This is already happening of course. Rent control is known to be the best way to destroy a city’s housing stock short of aerial bombing—and eviction bans are the most extreme form of rent control.
The solution is obvious. Get rid of the restrictions on building more housing and on how one rents out housing, and supply will increase, as will expected future supply, driving prices down to not much more than cost of construction. To help more, also work to make us able to build things cheaper.
(OK, tagging out on further discussions here to avoid getting into politics and things that have nothing to do with Covid-19)
The distinction between federal action and actions by state or local government on this issue is important.
My understanding is that evictions are ordinarily almost entirely a matter of state and local law. As just one example, here’s a description of the eviction process in California—https://www.courts.ca.gov/27701.htm .
Beyond the principle of remaining consistent with historical division of responsibility between federal and state governments, there is also the reality that economic conditions vary considerably from state to state. As of July, reported state unemployment rates ranged from a low of 4.5% in Utah to a high of 16.1% in Massachusetts ( https://www.bls.gov/web/laus/laumstrk.htm ). Emergency government action regarding evictions that makes sense, on balance, in Massachusetts may be poor policy in Utah. It’s therefore reasonable to leave this decision with state and local governments, which have the power to take actions (or not) in response to their differing situations.
Currently living in the South, I can tell you that most states here are not actually responding to their situations and are ideologically incapable of doing so.
I do want to get into it a little on this:
I am not here to dispute whether the *CDC* is the one to do this, but its worth engaging with the best arguments in favor of an eviction moratorium:
In ordinary circumstances, the purpose of evicting a non-paying tenant is so that you can vacate the property in favor of a tenant who will pay. But in a pandemic that is causing catastrophic levels of unemployment, large sectors of the economy shut down, and legal and prudential restrictions on travel, where are the paying tenants? One or two landlords may be able to find someone, but in the aggregate, allowing evictions now will just increase itinerancy and homelessness without really helping landlords much.
Law and Economics professor Neil Buchanan makes the economic argument at more length here: http://www.dorfonlaw.org/2020/08/why-would-any-landlord-evict-any.html
This is especially true given some of the criteria that have to be met to be eligible for the moratorium:
They have used their “best efforts” to first obtain all available government assistance
They are unable to pay the full amount of rent due to experiencing a “substantial” loss of income, or because they were laid off or had to pay “extraordinary” medical expenses
They are using their “best efforts” to continue making at least partial rent payments as close to the full amount as possible, taking into account other nondiscretionary expenses.
Eviction would “likely” make them either homeless or force them to move into a shared living situation.
Although Trump’s people call it a moratorium, it’s really a very particularized defense to eviction that applies precisely to those people who it would be economically bad to evict—tenants who were (pre-pandemic) reliable payers of rent, who can’t pay now because of the pandemic but who, because they were reliable before, can expect to be reliable again when circumstances return to something like normal. There simply is no good reason to evict these people, and the consequences of such eviction would be ruinous for them, and yes, would at least marginally increase the risk of contracting and spreading COVID.
All those air quotes sound mostly like the kind of thing that people who want to can just claim without too much effort, or threaten to claim they did when threatened with eviction, or when taken to court to be evicted. Meanwhile they’re threatening criminal penalties for breaking the rule. So effectively, anyone who doesn’t want to leave and is willing to break the social contract to stay, is going to be untouchable—the fight is ugly enough to begin with, this gives a credible threat to make it much worse.
If we think it is good public policy to keep such people in their homes, and we decided to pay their rent for them because this was a taking of private property, and ideally take over that debt in some form for later collection if the person recovers their income, that seems like a plausible thing to consider. Seizing the property outright, not so much.
Also, I don’t buy that property in general is in such low demand. The argument presumes that people have little demand for slash ability to pay for apartments/houses (house), and thus there’s a huge overhang of supply, and evictions make things worse. But what I’m seeing in the charts is that house prizes are up in many/most places, not down, with places that are exceptions places that actually are worse places to live for now (e.g. NY/SF).
I think that’s about as far as I’ll go with this. I agree that there’s a reasonable argument to be made to provide some eviction protections, or more than already exist. But we both agree, I think, that the CDC doing it is in no way appropriate. I would say blatantly unconstitutional, sets a really horrible precedent, violates the basic concept of rule of law, etc etc. You want to do this, you pass an act of congress.
Housing prices are only partially controlled by supply and demand for HOUSING. They have been financialized into speculative assets to a ridiculous extreme that is highly destructive to their primary function. The price is driven up by investors which have access to huge amounts of freshly created money loaned into existence, such that as long as there is the expectation that the price can go up, speculative demand is almost literally infinite and prices are driven above the ability of those who need housing and lack access to that sort of financing to pay. The situation is highly untenable in the long term.
I agree the housing market is deeply broken in many places, but would explain this purely in supply and demand terms. There is large demand, and laws severely restrict supply. Thus, prices go up. We expect additional restrictions on supply, so prices are expected to go up more, so they go up now, expectations set in, and so on. Then in part to protect those expectations, restrictions are increased.
If we ban/tax renting that won’t solve the problem, that will force renters to buy instead, and destroy the ability of the poor (who don’t hit a lottery where they’re given a house for free) to find places to live even more than we already do. This is already happening of course. Rent control is known to be the best way to destroy a city’s housing stock short of aerial bombing—and eviction bans are the most extreme form of rent control.
The solution is obvious. Get rid of the restrictions on building more housing and on how one rents out housing, and supply will increase, as will expected future supply, driving prices down to not much more than cost of construction. To help more, also work to make us able to build things cheaper.
(OK, tagging out on further discussions here to avoid getting into politics and things that have nothing to do with Covid-19)
The distinction between federal action and actions by state or local government on this issue is important.
My understanding is that evictions are ordinarily almost entirely a matter of state and local law. As just one example, here’s a description of the eviction process in California—https://www.courts.ca.gov/27701.htm .
State and local governments can put a moratorium on evictions or otherwise delay evictions, and many did so earlier this year—https://www.nolo.com/legal-encyclopedia/emergency-bans-on-evictions-and-other-tenant-protections-related-to-coronavirus.html .
Beyond the principle of remaining consistent with historical division of responsibility between federal and state governments, there is also the reality that economic conditions vary considerably from state to state. As of July, reported state unemployment rates ranged from a low of 4.5% in Utah to a high of 16.1% in Massachusetts ( https://www.bls.gov/web/laus/laumstrk.htm ). Emergency government action regarding evictions that makes sense, on balance, in Massachusetts may be poor policy in Utah. It’s therefore reasonable to leave this decision with state and local governments, which have the power to take actions (or not) in response to their differing situations.
Currently living in the South, I can tell you that most states here are not actually responding to their situations and are ideologically incapable of doing so.