Eviction Moratorium Overturned
The tale of the federal government eviction moratorium has more plot twists than a Hollywood film. The federal government created the eviction moratorium to provide a safety net for renters who were not able to pay rent because of the pandemic. It was never meant to be a permanent feature of the real estate landscape. It was merely a stop gap measure to prevent people from being put out on the streets during the pandemic. Unfortunately, the pandemic has lasted far longer than many have expected, which has lengthened the need for the moratorium to remain in place. As such, every time we have reached the end of the moratorium it has been extended. That was until last week when the Supreme Court ruled that the CDC did not have the authority to extend it. What does the abrupt end of the moratorium mean for homeowners, home buyers, and renters?
Supreme Court Overturns Eviction Moratorium
On Thursday, the Supreme Court overturned the CDC’s eviction moratorium. This decision allows renters to be evicted, which will impact approximately 3.5 million Americans throughout the nation. The eviction moratorium expired at the end of July, but it was quickly extended by the Centers for Disease Control until October 3rd. The six justices who ruled in favor of overturning the moratorium argued that the CDC lacked the authority to extend it without approval of Congress. While it might seem as if this decision by the Supreme Court creates some finality, the truth is some things are up in the air. There are multiple ways in which the eviction moratorium can be continued in some form.
Possibility of Future Eviction Moratoriums
The Supreme Court decision did not say that all moratoriums were unconstitutional. Instead, they said that only Congress has the authority to make them. This leaves the door open for Congress to pass an eviction moratorium of their own. How likely is it that Congress will act?
Unfortunately for renters, it seems unlikely that Congress will pass an eviction moratorium of their own. There seems to be some strong political will towards a large segment of Congress to pass an eviction, but not enough to actually pass the legislation. At this point in time, renters should not expect relief from Congress.
Congress is not the only group who has the power to step in and help renters. State and local governments can pass moratoriums of their own and a handful already have. It is entirely possible that other states and local governments take independent action to save renters from eviction. However, it is probably unlikely that we will see many more states and local jurisdictions act. The states and local governments most open to establishing moratoriums already have when the federal moratorium was set to expire in July.
Renters and Homeowners Have Not Received Aid
Moratoriums on evictions and foreclosures were not the only steps taken by the federal government to prevent a housing crisis due to covid. In the last stimulus package Congress included billions of dollars to help with owed rent payments and help homeowners catch up on mortgage payments. Congress had allocated $46.5 billion to state and local governments to distribute to renters and homeowners. However, as of the beginning of August, only $5.1 billion had been actually distributed to those who need it the most. Some of this has to do with renters and homeowners not knowing about available assistance for rent and mortgage payments. In other instances, it is almost entirely the fault of state and local governments who have done a poor job of attempting to distribute the funds. Either way, millions of Americans are now at risk of eviction.
Impact of Ending Eviction Moratorium on Renters, Homeowners, and Home Buyers
Those who will be hurt the most by the end of the moratorium will be renters who are behind on payments and do not live in states with their own moratoriums. Along with renters, investment property owners also risk some pain. Even if they are able to evict tenants behind on payments, there is nothing to guarantee they will get the back rent they are due. This will put them at risk of falling behind on their own mortgage payments and potentially face foreclosure. There is a possibility that the end of the moratorium will have ripple effects in the real estate market as evictions result in foreclosures. Will this cause rent and home prices to fall?
It is unclear how the Supreme Court’s ruling will impact the real estate market as a whole, but it is unlikely to cause rent or home prices to crash. Home buyers should not expect to see relief from rising home prices or see their dream home on the market for a discount. For starters, there is huge demand from home buyers that far exceeds available supply. As long as mortgage rates hover near historic lows there will be more than enough buyers to keep prices from crashing. First-time home buyers recognize that these low rates allow them to buy their dream home with favorable mortgage terms.
Second, individual home buyers are not the only one putting pressure on home prices. Wallstreet investment firms are buying up houses because they see rent as guaranteed income. They are buying up thousands of properties all across the United States and are willing to outbid retail home buyers. This is one more reason why home buyers are seeing so many bidding wars and why homes are selling for more than the asking price. Investment firms are helping drive up house prices even if retail buying pressure drops. All of this is to say that home buyers and renters should not hold their breath for prices to drop anytime soon. It might happen, but it is far from a certainty.
Final Thoughts
It is truly sad that millions of Americans are at risk of being evicted. It is also sad that millions of Americans are renters instead of homeowners. All over America, rents are increasing dramatically. Every year, renters are spending more and more of their income on rent without receiving any of the benefits of homeowenrship. At Peoples Choice Mortgage we believe that everyone deserves to be a homeowner. If you are tired of paying and not having a place that you truly own, contact us. Our professional mortgage brokers will do what it takes to help put you on a path to buying a home of your own.
