The big banks are reporting in the coming weeks -- including JPMorgan Chase (JPM) , Wells Fargo (WFC) , Bank of America (BAC) , and Citigroup (C) . But they will put out their quarterly numbers and forecasts amid the backdrop of high jobless numbers, expected loan losses and failed rent payments, both from businesses and apartment dwellers.
To get an on-the-ground look at the human cost of the latter -- rental woes of millions of Americans living paycheck to paycheck, TheStreet spoke with Lavar Edmonds, a research specialist with the Eviction Lab at Princeton University.
Even before the coronavirus crisis hit the nation and world, the Eviction Lab had been tracking evictions across the nation with its database of how many people have lost their rental homes. Now that shutdowns and lockdowns have put millions of Americans out of work, many are finding they can't make rent and other bills.
"Make no mistake about it: The Covid-19 outbreak has increased the risk of eviction for millions of renter households and will continue to threaten the livelihoods of everyone, especially the most disadvantaged in our society," Edmonds told TheStreet in an email exchange over the weekend.
Saving many of these renters at least for now, however, are local, state, and federal efforts to halt evictions amid the pandemic -- although at least nine states have no eviction protections at all and federal policies don't catch everyone, said Edmonds.
"These (policies) vary considerably in terms of restrictions and time length from jurisdiction to jurisdiction, but, generally speaking, they seem to have been effective in reducing evictions," said Edmonds, noting he's seen "considerable drops" in filings vs. previous years in cities with robust policies in place to keep people in their homes. But, he said, that's starting to change in places like Milwaukee, Wisconsin and Richmond, Virginia, where statewide eviction moratoriums have expired.
Following is a lightly edited interview with Edmonds.
TheStreet: As many states are shutting down again because of a surge in outbreaks, do you see this as getting worse in the months to come?
Edmonds: This is certainly possible. I think it’ll largely come down to how our elected officials decide to proceed in the coming months. Marked rises in unemployment in recent months speak to the precarious economic state millions of people are in currently, with financial resources increasingly constrained. Given most evictions are for non-payment of rent, it is unsurprising that widespread job loss can severely impact millions of renter households. We’ve seen how effective eviction moratoria can be. Rolling them back or letting them expire as we move deeper and deeper into a historic economic downturn can only hurt renters worse than they already have been.
TheStreet: It seems that we've heard for years about the possibility of the next pandemic -- since around the anniversary of the 1918 flu -- and we've heard for a while about the increasing burden of high rents and relatively stagnant pay for a large portion of Americans -- many of whom have little in savings. Does this seem in a way like the "perfect storm" that was actually forecast a while ago? Or would that be an unfair statement?
Edmonds: I would absolutely call it a “perfect storm” of events. This was not a surprising outcome, in a sense. Our data, which go back to 2000, show around or over three million eviction filings every year in the United States. Under “normal” conditions in this country, over half of renters are rent-burdened, spending upwards of 30% of their monthly income just on housing. That’s more than 20 million households devoting a disproportionate amount of their earnings to rent. Preliminary estimates from research we’re conducting in the Eviction Lab suggest that most evictions are for one to two months’ worth of rent. This suggests that, while there are people deeply impoverished who are chronically behind on rent and need substantial policy intervention, many households come to eviction court after falling behind a month or two. When you’re living this close to the edge -- paycheck to paycheck to cover monthly expenses -- all it takes is an unexpected event, such as an unplanned copay or an untimely death in the family, to push these households into a state of financial disarray. We’ve been sitting on a powder keg for years, waiting for a shock big enough for these households to spiral. Massive job losses? Millions infected with a currently incurable, often fatal virus? That’d do it.
TheStreet: Who is getting hit the hardest?
Edmonds: With the data we have currently, it is difficult to assign a superlative of who’s getting hit the hardest. However, from what we know about evictions in previous years and the structure of recent policies to combat eviction, we can make some inferences about who’s at risk. We know Covid-19 is disproportionately affecting Black lives, both in terms of cases and deaths, and the Black unemployment rate is higher than the rate for the entire country (as it typically is). We also know from our research that Black households (and especially Black women) are more likely to be filed upon for an eviction. Pair these with the reality that Black residents tend to live in Southern and Mid-Atlantic states, which our Policy Scorecard shows are more likely to have no or weaker statewide Covid-19 policies protecting tenants, and I don’t think it’s a stretch to say Black renter households are especially at risk of eviction now.
TheStreet: But the Lab's "Covid-19 Housing Policy Scorecard" ranks states like Massachusetts and Connecticut highly. What are they doing to prevent evictions?
Edmonds: We grade Massachusetts and Connecticut highly because they’ve taken a more holistic approach to their eviction moratoria. This includes pauses on eviction filings and notices to quit — the notice given from landlords to tenants to notify them of an impending eviction filing — and prohibiting landlords from charging late fees for back rent accumulated during this period.
TheStreet: Still, these numbers and anecdotes about evictions around the nation in a way seem like the tip of the iceberg, like we're only seeing the extreme of what's actually happening. How do you view what's going on in terms of evictions in America right now?
Edmonds: We can point to a few ways in which we’ve only grasped the surface of what’s going on.
All the discussion up to this point has only addressed “formal” evictions: Evictions carried out through some court proceeding. This is to say nothing of the millions of “informal” evictions that take place every year, to varying degrees of legality....
Even in legislation that is at least somewhat effective, we can see clear areas for improvement and expansion. For instance, there are many families out there that aren’t covered by the federal eviction moratorium in the Coronavirus Aid, Relief, and Economic Security, or CARES, Act. Recent work by the Federal Reserve Bank of Atlanta estimates that between 28.1% and 45.6% of renter households are covered by the CARES Act’s stoppage of evictions. For the remaining households, unless they’re covered by some state or local legislation, they have no protections against eviction during the pandemic. On top of this, very few states require landlords to notify tenants that they’re not in a CARES Act-protected residence before filing an eviction. Fortunately, the Federal Housing Finance Agency, or FHFA, has generated an online database for searching whether your home is covered, if you’re in a multifamily unit. However incredibly valuable this resource is and through no fault of the FHFA admittedly, it does not include single-family units, which account for just over half of all rental properties. For many renters, this means they have to take the landlord’s word, assuming landlords themselves even know. It’s these types of power imbalances that continue to govern the infrastructure of evictions and leave millions of renter households at a severe disadvantage.
Lastly, this also says nothing of those who do manage to keep their housing, but have to make sacrifices elsewhere to maintain rent payments. From Washington D.C. to San Francisco, we’re seeing reports of dramatic increases in food bank need. So, you may still have your housing, but, to sustain that, you may now be starving. Truly, the severity of this crisis is far-reaching.
JPMorgan Chase and Goldman Sachs Group are holdings in Jim Cramer's Action Alerts PLUS portfolio.