Earlier this month the CDC issued a new eviction moratorium for communities with a high risk of COVID-19 transmission. Louisiana still fits the bill under the moratorium, especially after seeing a record-breaking number of cases last week. Under the CDC’s latest order, qualified renters do not have to pay rent until October fourth. The eviction moratorium has been extended several times and could be extended again. Economists, real estate experts, and property owners say this could lead the housing market down a dark path. Newell spoke with Wade Ragas, real estate consultant and economist, about how the moratorium impacts renters and landlords.
“The eviction moratorium has been extended,” Newell said. “How has that impacted the renters and rental owners here in the city?”
“The affordability problem is real, in that the incomes we have in the New Orleans market are relatively modest compared to the more high growth urban markets of the U.S.,” Ragas said. “We need job growth and good wages to be able to cure the problem on the ground at the job level. The other confounder here are high rents compared to the incomes that are earned and can be adjusted every year by the property owner. That problem brings on the question of whether there's a way to cap rent and cap evictions and intervene in the private marketplace to try to make housing more affordable…. Also we’ve got a relatively high cost for insurance and property tax that accrues to rentals and owners.”
“The mayor’s Office of Housing Policy and Community Development anticipate that they will
have received about $23 million in federal emergency rental assistance,” Newell said. “That office is now offering that assistance money, not to the landlords, but giving it to the tenants with no notice to the landlords… It seems to me that this approach is just ripe for fraud and abuse.”
“I think it does put a complicated layer or two or three between the money and the individual whether it’s the developer, or the owner of the property, who was bearing almost all the operating expenses of the property,” Ragas said. “This program, from a federal view, was designed to help cover not just financing related items, but also all the operating costs, because we are dealing with individuals who don't have the money to make the payment.”
“The government is empowering the tenant to try and negotiate a lower price on the rent,” Newell said. “I don't know if that was the legislative intent of this bill.”
“So many small owners have just a few units,” Ragas said. These units often have high operating expenses in many instances. The rental unit itself is relatively old and expensive to operate, so what you're doing is saying we're not going to have enough money to go around to pay for operating expenses properly.”
“To resolve the debt that's been incurred by virtue of the lease, this is not a path to success - not for anyone, not for the tenant, not for the landlord or, or otherwise.” Newell said.
“Simpler is usually better, and this is not simple,” Ragas said. Usually, we're better the more visibility there is on how decisions are going to be made, what the criteria is, and how we can implement payments under the program that are fair and equitable. This needs its own set of rules.
