In just nine days, some may experience an eviction or foreclosure as the national moratorium is about to come to an end. I suspect you won’t see nearly as many foreclosures as evictions. Many of those who own property and experienced financial hardships have either found their financing footing and/or worked with their lender to work out a plan where they don’t forfeit their property to the bank. I dare say a great many evictions for renters is about to occur. It was a calculated decision by some renters to not pay the rent as the moratorium shielded them from eviction. Without any equity to lose, the worst that can happen is that they must find a new place to rent. Certainly, for a period of time, some could not pay, but some chose not to pay rent even though they could have. In fact, many lower wage earners actually made more take home pay through a combination of juiced up unemployment and stimulus making the affordability of the rent even easier.
In a perfect world everyone does the morally right thing, but in the real world, some made questionable business decisions to hide behind the moratorium and stiff their landlords. Yes, there were some programs set up to provide financial assistance to renters and landlords alike, but many people who are not professional or commercial landlords and who rent a house or two were left in the cold, unware of the assistance and/or unable to unwind the red tape involved.
The bottom line is a system was put in place where people could and did take advantage of others financially. The good intentions of financial assistance and protections put in place by lawmakers did benefit some, but also created unintended consequences, hurting others at the same time. I’m not saying that there should not have been financial assistance either. Some desperately needed it, but the mess created by the moratorium was a case and point example of how fast and heavy handed moves by government almost always result in messy outcomes.
As always, we hope you find the Weekly Market Review both interesting and informative. Have a nice week!
Trevor N. Coe, CFP®