As Evictions Loom, Rent Is Down but Not Nearly Enough

Comments

1

Mass evictions won't be taking place. That's non-sense talk to suggest they will be taking place.

If one can't afford the rent at location A, going to location B and still not being able to pay the rent makes no sense to anyone thinking.

What the media should be reporting on, and no one is, is the Hit the County will take when Property taxes are not being paid.

2

No need for the decimal when using "percent"

We don't see .100 percent do we?

3

If one is lucky enough to had a job, now is probably a great time to renegotiate your rent - either delay increases or even get a reduction. Tenant acquisition is expensive.

Of course that's more likely to happen with a local company or landlord. The big management companies don't care.

4

@2:

You really don't have anything better to do these days, do you? How crushingly dismal it must be to be you right now.

5

"One reason for Seattle’s drop could be that rent was always way overpriced here, so we’re seeing a slow collapse of a bubble that was too ridiculous to sustain. Other overpriced cities are seeing similar declines: Rent is down by about 4% in San Francisco, and 3% in New York and Boston."

Or, alternatively, it just might be possible rents have declined in major markets because we are in the midst of a global pandemic. As explained in the report Matt was unable to properly link:

"Since the start of the COVID-19 pandemic, we have seen shelter-in-place ordinances put a halt to normal moving activity, combined with staggering job losses as huge segments of the economy were put on pause. These unprecedented forces have dampened the demand for rental housing across the country. 33 percent of Americans say that they are now less likely to move since this year, while the 21 percent who are more likely to move are being driven primarily by a need to find more affordable housing. These financial losses and general uncertainty are creating softness in the market. While rents levelled off this month at the national level, prices are still declining fairly rapidly in some of the most heavily impacted markets." https://www.apartmentlist.com/research/national-rent-data

6

I predict Seattle rents will fall farther.

7

@1 An owner of an investment who can't afford the carrying cost should sell the investment to someone who can.

I can't figure out why so many people in these arguments are assuming that landlords are somehow incapable of selling properties.

8

robotslave dear, two of the wealthiest people I know own rental properties that they bought from desperate landowners in the Boeing Bust. They own big chunks of the West Seattle Junction and 152nd street in Burien.

9

@8 Yes, that's exactly what I mean! Rental property as an investment is for people with deep pockets, or at least long lines of credit. But Bighonk and the rest of the "economic realists" in these debates seem to think that landlords are living check-to-check, just one vacancy away from defaulting on their taxes, and also bound by witches' curses that prevent them from selling property.

10

@9 - A lot of landlords may not want to sell for any number of reasons. Some might be doing so at a loss, particularly if the dire predictions we're hearing start to come true. I am puzzled why people seem to think that it's just fine for landlords to be in the position of potentially losing their buildings but it is the end of the world if some tenants are forced to move.

And as to @1's point, if Landlord A can't pay their property taxes because their tenants can't pay the rent, selling to Landlord B is going to change nothing unless the new owner has a secret stash of paying tenants. Either way, the taxes are not getting paid. How does that forced sale help the county budget that gets hit with the unpaid tax?

Any scheme that you come up with that puts the onus for supporting tenants onto landlords will have the same problem re taxes. This is a society-wide issue, and it is appropriately handled through the general government budget, not on the backs of the few who own property.

11

FYI, the county won't even start foreclosure proceedings for delinquent property taxes for 3 years. And that's under normal conditions - no idea what they might do differently because of the COVID. This doesn't solve the county's revenue problem, of course. But nobody going to be compelled to sell because of property taxes.

If, however, somebody went and got themselves over-leveraged the banks won't be so forgiving. But that's the way the cookie crumbles when it comes to capitalism, right? If there's no risk, then the market won't function correctly. People should applaud such a stellar example of things Working as Designed.

12

@10 Selling a property for less than what you paid for it will, at some point, pencil out as more financially responsible than holding onto property that is losing money continuously. You can only bleed so long before you're dry; a landlord is better off selling while the writing is on the wall, rather than at liquidation in a bankruptcy or foreclosure proceeding.

I can't fathom why you assume the buyer of a property will be just as bad at managing their investment as the seller, or just as capital-constrained. The buyer of a rental property could tolerate lower returns from lower rents, thereby attracting tenants who could not afford the higher rent prior to the sale. The buyer could redevelop the property to attract higher-income tenants. A well-capitalized buyer could even run the property at a loss for some time, betting that future gains would cover the carrying cost. There are all sorts of different approaches with different risks that will be attractive to different buyers, if the price is right. And the price will be right, because markets efficiently find prices.

A tenant forced out of their residence because they haven't got enough money for rent has nowhere to live, while a landlord who sells a property as a stop-loss measure now has a sum of cash instead of a real estate investment. You would have to be an utter psychopath not to see how these two situations are different.

13

"A tenant forced out of their residence because they haven't got enough money for rent has nowhere to live, "

except to a cheaper place to rent or living situation.

"while a landlord who sells a property as a stop-loss measure now has a sum of cash instead of a real estate investment."

has no more rental income and a tax liability.

We're not utter psychopaths, robotslave. There are many differences, yet each party must address new challenges.

14

Widener owns almost every apartment building in Anchorage, their office Building is on lake Washington. Yeah buddy, landlords have it rough.

15

@13 The very poorest Americans would be evicted from the cheapest rentals available, because they could no longer afford the lowest market rent. They, the very neediest, would have nowhere to live.

Do you think splitting a tax-liability hair makes you look smart when anyone arguing in good faith would have assumed "sum of cash" referred to the net after transaction costs?

If the former landlords simply can't do without an income stream after they sell, why, they can take the money from the sale and put it into another investment at whatever risk level they're comfortable with. Or, at the risk of making an impolite suggestion, they could just go out and perform labor in exchange for wages, couldn't they?

If you're not psychopaths, you're certainly acting the part convincingly.

16

@15: Of course the former landlords could find other investment options and that's certainly a nicer problem to have than looking for a new place. Whether they should sell or hold really isn't a matter for public consumption, is it?

I think your frustration is you're not realizing that sooner or later the landlord will find the right buyer if unable to keep the rental units going to their satisfaction (not your satisfaction).

17

@16 My frustration? Frustration with what, exactly? It can't be the mystical alternative economics you just invented for that comment, it would have come before that, whatever it was.

18

@2 Incidentally, the difference between 2000 and 1992 is 8. And 8 is 0.4% of 2000.

We in fact would see 0.1% if the ratio in question was 1/1000

I can pedant with the best of 'em!

19

@17: It's not about economics, it's about personal choices that you want to control without knowing all the factors involved (like loving the property and wanting to keep it in the family, for example).

20

@18: Good point, and that's why we should use the decimal only when it's less that one percent. Like the infamous .08%!

Cheers!

21

@19 I'm not asking anyone to make any personal choices, raindrop. I'm saying we shouldn't do anything special to prop up landlords who don't have the ability or resources to manage a rental property profitably. I'm not calling for any personal coercion, I'm suggesting we just let the market do what it's supposed to. What's wrong with that?

22

@9
Additionally, if the landlord takes a loss on sale of rental, they get a tax break on the loss, which can carry forward.
The renter doesn't get a similar tax break.

23

@21: Oh, okay then. I missed the "shouldn't do anything special to prop up landlords" context.