As the end of another year in the pandemic nears, renters and landlords alike across the Santa Clarita Valley and beyond are working to recover from the economic crisis that ensued.
Despite the progress from reopenings and many returning to work, the crisis is not over, as many of these renters are on the precipice of eviction, which could lead to a ripple effect across the broader housing market.
As of July, more than 15 million people live in households that were behind on their rental payments, or 7.4 million adults and 6.5 million households, according to an Aspen Institute study.
And, back pay on rent is estimated to be between $13 billion and $57 billion as of early 2021, according to another study conducted by the National Low Income Housing Coalition.
While the U.S. Supreme Court blocked the Center for Disease Control and Prevention from further extending its eviction moratorium that had been in place since the onset of the pandemic, here in the Santa Clarita Valley and across Los Angeles County, some protections remain in place.
In October, the L.A. County Board of Supervisors voted to extend the eviction moratorium through Jan. 31, 2022, continuing to provide a defense against eviction for commercial tenants, as well as “limited renter protections” for residential tenants.
Therefore, the true impact of evictions on the housing market remains unclear, as there are so many moving parts, explained Holly Schroeder, president and CEO of the SCV Economic Development Corp, who noted that it will take time to see the true effects of the moratorium.
“The eviction moratorium hasn’t yet had a large impact on the economy because once an eviction process begins, it can take weeks and or months to actually remove a tenant from the premises, (and) there are also a number of government programs that are designed to help tenants and landlords pay back rents and bring their accounts current,” added Ivan Volschenk, president and CEO of the SCV Chamber of Commerce. “From an economic perspective, we hope that this will have a very minor impact to the economy, businesses and residents. The SCV Chamber has been assisting local businesses with finding needed resources to support them through this process.”
Since December, nearly $50 billion in aid has been provided to renters and landlords across the U.S., but in California, that aid has been slow to reach those in need, with estimates indicating only around of the more than $1 billion the state has received had been administered.
The moratorium and the uncertainties that accompany it have made being a landlord nerve-wracking, especially for individual investors who only have a handful of properties, Schroeder said.
Schroeder believes there will be a shift in terms of the proportion of rental properties that are owned by larger mid or larger companies, as smaller investors don’t want to take the risk, causing the moratorium to impact these small businesses, or in this case investors, disproportionately.
“(It) created a bigger chasm because larger organizations with more capital are able to make the pivots and the changes, (while) the small investor is not able to, making it that much harder to be a small business,” Schroeder added.
Additionally, Schroeder believes the moratorium has taken some of the natural turnover out the market, as many have remained in the same locations rather than moving.
“We fundamentally still always have a supply problem … which is just really acute, and so all these moving parts I think are contributing to some of that lack of product becoming available,” Schroeder added.
SRAR member and SCV Realtor Marc Leos said it’s the lack of supply, combined with the demand for housing and skyrocketing prices, indicates that the housing market will be OK.
“When the moratorium does end, I think buyer demand will still be high enough that an investor should be able to unload the property rather than let it default,” Leos said.
However, the true effects of the eviction moratorium remain to be seen.