Just as states are taking initiatives to stop the spread of the virus, they also have to take dramatic steps to stop the economic fallout that is a consequence. This Curbed article discusses what those economic impacts will be and potential ways to minimize them.
When trying to convey the extent of the economic shockwave coming from the novel coronavirus crisis, “unprecedented” comes off as an understatement. As paychecks and jobs disappear, the looming question for Americans is, how am I going to pay for the place I live?
Rent or mortgage payments are typically the largest monthly expense for any person or household. With April 1 just a week away, and a lack of certainty from the government over the length of mandatory shelter-in-place orders, those payments have become an issue of national importance as both the federal and local governments try to figure out how to help people through the crisis.
Many cities and states have responded quickly with eviction moratoriums. That’s a great first step to prevent people from immediately losing shelter in the midst of a global pandemic. But if anything, it compounds the question of how we’ll pay the rent over the next few months.
“April 1 won’t be so bad for tenants, because so many places have passed moratoriums on evictions,” says Randy Shaw, a housing activist in San Francisco. “The calamity will be June 1 or July 1. Renters can be evicted in June or July for back rent from April and May.”
It’s all part of the domino effect that starts with tenants not having the work, or money, to pay rent. In a typical down real estate market, the daisy-chain, domino-effect reaction goes as follows, per real estate lawyer Jeff Friedman: “Apartment renters lose their jobs or take significant pay cuts and can no longer afford to pay their rent; owners collect less rent and cannot make their debt-service payments to their lenders; and lenders are not collecting enough on the debt service, with their loans now on distressed real estate assets. Evictions and foreclosures follow, with distressed assets available to vulture buyers.”
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