“Stop the evictions!” reads a sign at one eviction protest. These types of signs have become commonplace since the pandemic first hit.

But while evictions have been halted, renters and landlords alike are faced with another problem.

During this pandemic, renters have accumulated astronomical amounts of debts. This has put a strain on landlords, many of whom face property loss. The entire housing market is in trouble.

Experts worry businesses will be forced to close if Covid-19 cases continue to rise this winter. In New York, it was recently announced that bars, restaurants, and gyms will have to close at 10 pm. Many worry this is the beginning of another complete lockdown, which would only further Covid-19 debt.

With the hopes of a stimulus package dwindling and the potential of another lockdown leading to more job loss, experts worry about the future of housing.

A Growing Problem

It’s a sad but true fact: the rental debt crisis in this country is only going to worsen before it gets better.

The Philadelphia Federal Reserve estimates that rental debts could reach $7.2 billion by the end of the year. Renters who owe debt would owe an average of $5,400 if this holds true.

Renters with children are falling especially victim to this crisis. About a quarter of American households with children have rental debt. Black and Latino renters are also falling victim, being twice as likely to carry rental debt that white renters.

Many renters celebrate the eviction moratorium that was passed until the end of the year, but few understand the long term consequences. Massive amounts of rental debt continue to accumulate for these renters. Rental debt that will eventually need to be paid off.

The solution for many of these renters is to pay their rental debts using credit. Credit card payments to businesses related to real estate increased by 70% in the spring to about 50% through the fall. This simply transfers the problem elsewhere instead of actually solving it.

Landlords and renters alike have pleaded for a stimulus package to alleviate the problem. However, the lawmakers in D.C. struggle to find a way to get it done.

Since the summer, the stimulus package has become a main point of division between Democrats and Republicans. Senators claim that another stimulus package is coming, but the public worries that this is just another false promise.

Some Republican Senators claim that a stimulus package will give unemployed workers less motivation to find work. However, a study by the Chicago Federal Reserve found that laid off workers receiving the unemployment boost were more likely to look for jobs.

The Housing Market

While people are focused on how the rent crisis is hurting them, the housing market as a whole is crumbling.

Housing providers have been forced to cut corners to make ends meet. Costs associated with quality of life are often neglected in order to make mortgage payments or pay property taxes. This also puts the 17.5 million people who are employed by this industry, such as maintenance workers, at risk.

“Tenants complain that things need to be fixed,” explained one New York City property manager. “But, without rent being paid on time, I just don’t have the ability to make these fixes.”

Experts worry this will be the end of the small landlord (one-to-four units). Small landlords do not have the same kind of funds that corporations do to survive. Millions of these units are already at risk of foreclosure.

The death of the small landlord would be detrimental to the entire housing market. Small landlords typically own more affordable housing units than larger landlords. Worries have arisen that once these properties are foreclosed upon, large corporate property owners will purchase these, renovate them, and hike up the prices. This would only worsen the potential homeless problem.

Surviving the Crisis

Property owners have had a tough go through this rent crisis. They have learned the hard way that the government is not looking out for their interests. Instead of waiting on a stimulus package that will likely never come, property owners have had to find another way.

“I learned early on that landlords can’t rely on the government for aid,” says a New York City landlord. “We’ve had to go out and seek outside help to collect. Often it’s successful since many tenants have the money to pay but aren’t since there is no longer the threat of eviction.”

Many have sought outside recourse to collect debts and continue to thrive. A proven collection agency will assist in recovering a landlord’s rental arrears without damaging the important relationship between Landlords and tenants.

Oxygen XL uses cutting edge industry technology to create custom strategies to get their clients’ paid so they can thrive through this rent crisis. Contact us to strategize how you can thrive through the rent crisis too.

1. https://www.philadelphiafed.org/-/media/frbp/assets/community-development/reports/household-rental-d…
2. https://www.wsj.com/articles/struggling-rental-market-could-usher-in-next-american-housing-crisis-11…
3. https://newsroom.ucla.edu/releases/blacks-latinos-more-likely-to-face-housing-displacement
4. https://www.thekproperties.com/vamd-news/struggling-rental-market-could-usher-in-next-american-housi…
5. https://www.chicagofed.org/publications/chicago-fed-letter/2020/441