October 2020

The New CDC Landlord

As I have mentioned in the past, government will most likely continue to grow bigger in our lives. Like it or not, I believe that concepts like UBI and printing money to “kick the can down the road” are here to stay. Last March, Congress passed the $2.2 trillion CARES Act, which included sending $1,200 checks to anyone making less than $75k per year. It was the largest economic stimulus package in U.S. history. Another estimated $2 trillion package is currently in the works. No matter who gets elected in November, you can almost be certain the “not on my watch” mentality will prevail, and the money printing presses will stay on to prevent any potential economic collapse.   

As the reach of government gets larger, last month something unprecedented happened. The Centers for Disease Control and Prevention (CDC) announced that they would be immediately implementing a nationwide eviction moratorium for all rental housing. The edict took effect on September 4th and is scheduled to go through the end of the year. According to Treasury Secretary, Stephen Mnuchin this will protect approximately 40 million tenants across the country. The order was announced without congressional input and purely by administrative decree under the notion that people getting evicted may end up in overcrowded living facilities or in homeless shelters furthering the potential risk of spreading COVID-19. Unfortunately, the landlord will not have the same ability to suspend mortgage payment obligations, taxes, insurance, or payroll, and smaller landlords could have trouble staying afloat.

At least two lawsuits have been filed in Federal Court that argue the moratorium eviction is unconstitutional. The National Apartment Association, a leading trade group in the rental housing industry, has joined a lawsuit filed in a Georgia federal district court seeking to roll back the moratorium. The lawsuit claims the moratorium violates the U.S constitution “because the CDC has not identified any act of Congress that confers upon it the power to halt evictions of preempt state landlord-tenant law”.

Even during some of the most turbulent times in America, including the Great Depression and World War II, no one expected the federal government to suspend rent. The CDC move brings into question the trust in contract enforcement. Hopefully, the effects of this moratorium will not continue to seep into American life and convey the message that financial obligations can be unilaterally eliminated by state edict.
Edward M. Aloe
Founder and CEO
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Latest Headlines...

September single-family housing starts reached highest level since 2007

Multifamily starts fell 16.4%

Privately owned housing starts in September rose to an annual rate of 1.415 million, 1.9% above the revised August estimate of 1.388 million and 11.1% above the September 2019 rate of 1.274 million, the Bureau said. Single-family housing starts in September were at an annual rate of 1.108 million, which is 8.5% above the revised August figure of 1.021 million, and a level not seen since 2007, Doug Duncan, chief economist at Fannie Mae, said.

Despite Overall Economic Struggles, Multifamily Foundation Looks Strong

Industry experts say health issues need to be resolved before the economy can fully recover.

“As we go through this economic cycle and we look over the next year or two, I’m very optimistic about how multifamily is going to play out because I think the demand is going to remain extremely high,” John Sebree, senior vice president, national director at Marcus & Millichap, told attendees during the virtual Multifamily Executive Conference's Economic Outlook session at the end of September. “We can have a quarter or two that is soft with some uncertainty, but the underlying fundamentals are very strong.”

NMHC Rent Payment Tracker: 86.8% of Households Made a Rent Payment by Oct. 13

This marks a 2.4 percentage point decrease from the share who paid rent through Oct. 13, 2019, and compares with the 86.2% who paid by the same date last month.

“Over the past few months apartment residents have largely been able to meet their housing obligations,” David Schwartz, NMHC chair and CEO said in a statement. “In no small part, this is due to the enhanced unemployment benefits enacted under the CARES Act and significant steps by apartment owners and operators to help their residents.”
“These unemployment benefits that have proven so important to so many households have now lapsed, meaning greater financial distress for millions and the potential worsening of America’s housing affordability crisis,” Schwartz said.

On the lighter side....
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