Sunday, August 9, 2020

Evictions On Hold – For the Moment

President Trump has signed an executive order putting a hold on evictions. He is doing this to help ease the burden on working folks who have seen their income evaporate as businesses were shut down in a vain attempt to stop the spread of the Chinese virus. His heart is in the right place but this is a band-aid on only half the problem.

The Deeper Problem

While it is helpful for people not to be thrown out of their homes when their income stops, this does little to help the property owners who still have ongoing expenses like taxes and insurance as well as mortgage payments in many cases. This pushes the burden on other innocent parties hurt by the economic shutdown. The anti-capitalists in our midst may think this is the way it should be, that the wealthy landowning class take care of the so-called working class – as if the landowner sit around all-day drinking scotch and eating bonbons..

But this thinking comes from a lack of understanding of what is involved in providing housing in the community. Unless the property has been held for many years, there is probably a mortgage payment due every month, If rent checks stop coming in, it is difficult to keep payments going out.

This is not an argument for the government to write checks to the landlords. By the way, landlord is not a dirty word, no matter what some people try to make it sound. It is just a recognition of the economic truth: Their ain't no such thing as a free lunch. Somebody has to pay the check. In this case, the people providing the housing are asked to foot the bill. To Bernie Sanders followers this is entirely appropriate, but most property owners do not have an infinite supply of funds to support those that can't, or won't, pay the rent.

Eviction is not the Best Answer

In normal times, when people stop paying the rent (or mortgage payments) sooner or later the sheriff comes knocking on their door and out they go. When this happens the property owner is looking at several months (at least) of lost rent, along with legal expenses, and a rental unit in need of some work. This is even if the people being tossed out don't trash the place. Even if it is just paint and, possibly some carpet, it still costs money and another month of lost rent.

The Ticking Time Bomb

Unless the rent payments (and mortgage payments) are forgiven – that is written off, never to be paid – debt is piling up month after month. For the tenant who had been paying $700 to $1000 a month, if they haven't paid rent in six months, how will they pay back the $4,200 to $6,000 back rent when this madness ends? They may still be out on the street and the property owner will still be out the back rent, etc., etc.

A Sliver of Light

Fortunately, not everyone was put out of work or business. Many people kept on working and paying their rent and/or mortgage. As with every economic problem, some people thrived while others headed toward the bottom. Many online retailers saw their profits soar while small brick and mortar shop shut their doors – sometimes forever. While those deemed non-essential by the powers that be sat at home watching their bank accounts drain, those deemed to be “essential” kept chugging along, sometimes even enjoying a financial windfall.

Property owners with a variety of rental units many have a had a couple of tenants with issues even while most of the revenue continued. Smaller owners with few units saw their income remain or fall based on the fortunes of their renters. Even for those with sufficient cash flow to cover the missed revenue, we still have the moral issue that begs the question: should someone be forced to support another person who is not part of their family who cannot pay their bills?

Helping another person in trouble should be voluntary, not imposed from above by those with nothing at risk. This is a question many seek to avoid, and I will not go into all the ramifications of the various answers, but it is one that deserves consideration when we look at people deprived of the ability to earn their way in life.

Working Together

If the property owners and the renters work together in good faith, there may be some sort of reduced rent and partial payment deal to be had that benefits all concerned. Sometimes banksters work with property owners, but whichever side of the table one finds him or her self, talking about what is possible can help ease the burden on both. In fact, it is the only way to come out of this without either side being too badly damaged.

Neither side is the enemy. The property owner is simply supplying a place to live and the renter is paying for the value he is receiving. However, until we get back to the point where we recognize that all jobs are essential, except possibly that of some bureaucrats, and people can bet back to work without hearing the “OMG, we're all gonna get killed” mantra from the media, we will have to figure things out to get by.

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