What Policies Can Help Prevent Evictions in the Wake of Covid-19?

This blog is part of a series to share research and analysis prepared for the Rapid Response Network (RRN). The RRN is an initiative of the California Mental Health Services Oversight and Accountability Commission (MHSOAC) and Social Finance, providing actionable research to agencies responding to the Covid-19 crisis.

Government officials across the country are thinking about how to maintain housing for residents in the face of widespread unemployment caused by the pandemic. While many jurisdictions have enacted a moratorium on evictions and utility shutoffs, rents and mortgages largely remain due.

In the wake of the moratorium—in the absence of significant policy action—evictions will spike. Counties reached out to the RRN to understand (1) the potential scale of evictions after any moratoriums end, and (2) how to prevent a surge in evictions post-moratorium.

Social Finance and MHSOAC analyzed publicly available data and spoke with experts in eviction policy to better understand the potential problem and suggest policies that can help prevent evictions.

How many people will be at risk for eviction?

Surprisingly, “social scientists know very little about who gets evicted.” We know still less about the future: There is no precedent for what is to come. We know that household income will decrease, as evidenced by the quickly rising unemployment rate, which now stands at 14.7%. We saw this happen during the Great Recession, when household income for California residents fell by ~6%. With the severe impact of the pandemic, it is plausible to assume that there will be at least a similar, if not more severe, drop. But rent will change more slowly. During the Great Recession, rent in the state decreased by ~3.5%. However, rents may be slow to adjust to economic changes, particularly as tenants typically lock in rents through one-year leases.

We expect the crisis will exacerbate an existing problem of rent burden. Using California as an example, ~56% of households were rent-burdened in 2018, and this jumped to 90% when limiting to those with a household income of less than $40,000, approximately 39% of whom have lost their jobs or were furloughed since the beginning of the crisis. Depending on the severity of the economic recession, we would anticipate an additional ~222,000-450,000 households becoming rent-burdened. This would disproportionately impact those households with less than $40,000 in income, who would account for ~85-90% of these newly rent-burdened households.

What can jurisdictions do to prevent a surge in evictions?

Eviction is both a near and long-term concern: policies will need to solve for both the sudden impact of the pandemic and the resulting long-term economic stagnation.

Near-term policy options will supplement eviction and foreclosure moratoriums and utility protections. Some options include:

• Enact grace periods to pay back rent following the crisis, which should be supported by restricting both late fees and reporting late payments to credit bureaus.
• Incentivize landlords to keep residents stably housed by suspending mortgage interest accrual on owner-occupied and rental housing, delaying payment of property taxes (to “help landlords help tenants”), and establishing landlord support funds, or bridge loans, to compensate for losses.
• Suspend or forgive rent to prevent obligations from accumulating during the crisis.

In each of these scenarios, it is important to consider sub-populations: forgiveness may leave out undocumented people; and it may be tricky to demonstrate being “directly impacted by Covid-19.” Simplicity is key to overcoming these issues. More straightforward and universal laws will more effectively reach those at risk of eviction and prevent landlords from finding workarounds to any protections.

Long-term, there is an opportunity to re-think tenant protections by both extending responses to the pandemic and enacting comprehensive eviction-prevention strategies. Responses during the pandemic can be extended to include: limiting annual rent increases to the level of consumer price index or 3% (whichever is lower), creating plans to provide legal services to tenants (particularly low-income households), and passing just-cause eviction laws. More comprehensive approaches include expanding the HUD rental voucher program, enacting long-term protective measures for eviction prevention, e.g., right-to-counsel laws, and employing land-banking strategies to increase stock of affordable housing in preparation for anticipated increased demand.

While no one strategy will solve the eviction crisis to come, together these measures can improve tenant protections to help prevent a wave of dislocation.

We are grateful for the support of the Robert Wood Johnson Foundation, the invaluable in-kind support from GLG, which supports the RRN through access to their expert network, and the partnership of Jim Mayer and Anna Naify from MHSOAC.