The Federal Government's Eviction Moratorium Expires This Week. Will an Eviction 'Tsunami' Be the Result?

Democrats in Congress are floating plans for billions more in rental assistance, and a blanket nationwide moratorium on evictions to forestall a potential housing crisis during the pandemic.

The looming expiration of the federal government's eviction moratorium this Friday, coupled with the end of expanded unemployment insurance later this month is fanning fears that the much-warned-about wave of evictions could soon sweep the nation.

In response, Democrats in Congress are floating a number of proposals to keep people in their homes and paying their bills, including a yearlong national eviction ban and billions in additional aid to distressed renters.

And yet, there's reason to be skeptical of the near-universal consensus that we will see people forced out of their homes in droves for nonpayment because of the coronavirus. Some of the more far-reaching proposals to handle this potential wave carry their own risks of exacerbating America's housing problems.

This week, Sen. Kamala Harris (D–Calif.) plans to introduce the Rent Emergencies Leave Impacts on Evicted Families (RELIEF) Act. (This is not to be confused with Harris's Rent Relief Act, a separate proposal to provide cost-burdened renters with refundable tax credits.)

"We are now on the brink of a housing and homelessness crisis, but this administration has failed to address the financial hardship Americans are facing," said Harris in a press release. "Housing is a human right, and that's why we need this comprehensive plan to help keep Americans safe and in their homes throughout the COVID-19 pandemic."

The bill would freeze evictions and foreclosures for up to a year, ban rent increases, and give tenants 18 months to pay back overdue rent, according to a summary put out by Harris' office. Her legislation would also ban late fees for missed rent.

Harris' bill would both extend and expand the existing federal moratorium on evictions passed as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. That eviction freeze applies only to tenants who either received federal housing aid or lived in a building financed with a federally backed mortgage.

The Congressional Research Service estimated that that moratorium covered about 28 percent of rental properties, although reporting from outlets like CityLab and The Washington Post has found this eviction ban has been unevenly enforced by local housing courts.

The Democrat-controlled House has twice passed an extension of this moratorium coupled with $100 billion in emergency rental assistance, once in May as part of the $3 trillion HEROES Act, and once as a standalone bill at the end of June. The GOP-controlled Senate has taken up neither bill.

Sen. Elizabeth Warren (D–Mass.) has also introduced her own legislation expanding the CARES Act eviction moratorium to all rental properties until March 2021 and banning fees applied to late rental payments.

In the first two weeks of July, some 87.6 percent of renters made at least partial rent payments, according to the rent payment tracker put out National Multifamily Housing Council (NMHC), a trade association. That's down slightly from both the 89 percent payment rate reported at this point in June, and the 90 percent payment rate from July 2019, according to the NMHC tracker.

Given the circumstances of a global pandemic and related economic recession, a near-90 percent payment rate is nothing to sneeze at. It's also something landlords worry won't last.

"The government support, including unemployment benefits, that has proven so important to so many apartment residents expires at the end of the month," said Doug Bibby, NMHC's president. "If action isn't taken now we risk making the nation's housing affordability challenges far worse."

Tenants' concerns about paying growing too. Some 21 percent of renters surveyed by ApartmentList in July said they were either very concerned or extremely concerned about being evicted in the next six months, up from 19 percent last month.

The U.S. Census Bureau's Household Pulse survey from early July found that 12 percent of renters had no confidence they'd be able to make their next housing payment on time, up slightly from the 11.5 percent of respondents in early June.

Researchers are worried too.

"You could use whatever natural disaster metaphor you want, there's the avalanche, the tsunami, and I think we are going to see that level of displacement," Sam Gilman, economist and co-founder of the Colorado-based COVID-19 Eviction Defense Project (CEDP), tells Reason.

CEDP, using data on tenants' rent burdens, incomes, savings, and availability of unemployment insurance and other benefits, estimates that between 19–23 million people will run out of money to pay rent and will be at risk of eviction by the end of September.

Other economists are more skeptical such an eviction wave is imminent, noting that the last recession saw eviction rates stay pretty flat.

"Based on what little data we have, [there was] absolutely no effect on evictions from the 2008 recession. If you look at their data lines, just looking at those, you would not able to guess the economy got worse those years," says Salim Furth, a researcher at George Mason University's Mercatus Center.

"If you think of this only from the tenant angle, it doesn't make a lot of sense," says Furth. "From the landlord angle, it actually makes sense. An otherwise good tenant who loses their job is still probably better than a vacancy and a search." Many of the tenants who could fill a unit quickly are also on the market because they're being chronically evicted, he adds, saying "there's a lemon market aspect to it."

"The [eviction] filing rate has been relatively stable for the last 20 years, as far as we can tell," says Alieza Durana of Princeton University's Eviction Lab, which collects historic data on legal evictions.

During the COVID-19 pandemic, the Eviction Lab has also published a weekly tracker of evictions in select cities. That tracker shows that evictions are way down in most cities, which Durana credits to the eviction moratoriums almost every state imposed in response to COVID-19.

"The eviction moratoria in many places were effective in shutting down the courts and slowing eviction filings to a trickle," says Durana.

These policies are starting to unravel, however. The Eviction Lab's scorecard of state eviction policies shows that only ten states, plus the District of Columbia, still have an active moratorium on evictions for nonpayment. Where eviction moratoriums have been allowed to expire, Durana says, there's been a surge in filings.

"Now as some of the moratoria lift, we're starting to see increases in filings, and in a couple of places—Milwaukee, Richmond, Houston—filings surpass their historic average," she tells Reason. Milwaukee, in particular—which saw eviction filings spike by some 44 percent above last year's numbers in first two weeks of June after the city's eviction moratorium was lifted—is the "canary in the coal mine," she says.

Some of this surge can be chalked up to the effects of moratoriums themselves, which have created a backlog of eviction cases that would have otherwise been processed over a period of several months.

Despite the spike at the beginning of the month, June evictions in Milwaukee were only 17 percent above the historic average number of evictions filings from 2012–2016, according to the Eviction Lab data. That's comparable to the number of evictions filed in the pre-pandemic months of January and February. Eviction filings for the first two weeks of July are only 4 percent above historic averages.

There've been 4,644 total eviction filings in Milwaukee this year, down from a historic average of 6,569 eviction filings.

States that never imposed an eviction moratorium, and for which we have current data, haven't experienced these massive surges in eviction filings either.

That would include Oklahoma, which never imposed an eviction moratorium of its own. Data from the Oklahoma Policy Center's Open Justice Project, which tracks eviction filings, shows that 5,141 evictions have been filed since Oklahoma's state of emergency was declared on March 15 and that 1,677 evictions were filed in the month of June.

According to Eviction Lab's data from 2012–2016, Oklahoma has averaged roughly 37,000 eviction filings each year, or an average of 3,122 each month. That means eviction filings are at about half of where they've been historically.

Some of this reduced rate can be explained by the Oklahoma Supreme Court's requirement that landlords verify their property isn't subject to the CARES Act's moratorium when filing an eviction. That the CARES Act moratorium covers only about 28 percent of rental properties nationally suggests it alone is not solely responsible for the 50 percent drop in Oklahoma's filings.

This all has implications for what should be done about the pending expiration of the federal eviction moratorium.

It's possible that letting it sunset will not produce the wave of evictions many housing advocates and researchers fear. Keeping it in place for another year, and expanding it to all rental properties—as Harris and other Democrats are proposing—would however almost certainly set the stage for a huge surge in evictions whenever it is lifted.

In an op-ed for Barron's, National Low-Income Housing Coalition (NLIHC) President Diane Yentel proposed pairing an eviction moratorium with rental assistance, which would prevent tenants from accumulating unpayable back rent, and thus hopefully prevent a major spike in evictions down the road. The NMHC and other landlord associations have endorsed the idea of rent assistance as well.

Gilman agrees, saying that "the eviction crisis is a cash crisis. Tenants can't pay their rent. Landlords don't have rental income, which makes it harder for them to pay their mortgage. Cash is the solution." He notes that evicting people during a pandemic also raises public health concerns, given that many of the people who lose their homes might end up rooming with family, friends, or staying in crowded homeless shelters.

Some free market scholars have accepted this logic, suggesting that the unique circumstances of the COVID-19 pandemic necessitate either cash transfers or rental assistance targeted at the very low-income tenants.

The trouble with these proposals from a more radical libertarian perspective is that they, like any government transfer program, depend on coercive taxation. They also shift the burden of paying the rent from tenants onto taxpayers and could also reduce landlords' incentive to lower rents, offer forbearance, or even forgive some of the rent debt tenants have accumulated.

In a June policy brief, Furth recommends a number of more modest policy proposals. He suggests state and local housing authorities, as well as landlord associations, encourage renegotiation of lease terms by publishing model agreements with clauses for rent forgiveness and repayment plans.

Preventing a surge in evictions could be done through prioritizing evictions for tenants who are violent, creating nuisances, or causing property damage, he recommends. Should a surge in evictions occur, he says, the number of evictions allowed per landlord could be capped temporarily.

Landlords could also be compensated for rent forbearance they offer with tradable development rights that could then be sold to developers looking to build bigger buildings than what current zoning codes allow.

Even in the best of economic times, a huge amount of people are evicted in America each year. "The last year for which we had publicly available data, which is 2016, we witnessed 3.7 million eviction filings, so about seven per minute," notes Durana.

Whether this problem will be worsened by COVID-19 remains to be seen. Proposals for endless eviction moratoriums carry their own risks.