Eviction Crisis Coming?

by d_kab1

Many people stopped making money because of the pandemic, and are depending on unemployment benefits plus the federal eviction moratorium to prevent them from losing their homes. The CARES act that was passed in March banned evictions until July 24. Landlords need to give their tenants a 30 days notice before they can officially file for eviction. That means that the earliest eviction notices can come next Monday, August 24.

Trump signed an executive order which covered an extension of the federal eviction moratorium and extended unemployment benefits of $300 per week. However, the wording of the executive order shows that it may not prevent evictions, since it implies that evictions can only be halted if those evictions will cause further spread of COVID-19:

” The Secretary of Health and Human Services and the Director of CDC shall consider whether any measures temporarily halting residential evictions of any tenants for failure to pay rent are reasonably necessary to prevent the further spread of COVID-19 from one State or possession into any other State or possession. ”

Some states have made their own eviction moratoriums, but there are still many which haven’t. Only a few states have been approved for the extended unemployment benefits, and some have declined it all together. Here’s a list of the states that do not have eviction moratoriums, along with the percentage of renters at risk of eviction in that state, and the status of the unemployment benefit extension:

-Alabama: 42%

-Alaska: 37%

-Arkansas: 37%

-Indiana: 44%

-Iowa: 48% (Approved benefits extension)

-Louisiana: 50%(Approved benefits extension)

-Michigan: 40%

-Mississipi: 55% (Approved benefits extension)

-Nebraska: 35%

-New Hampshire: 34%

-North Carolina: 43%

-North Dakota: 34%

-Oklahoma: 42% (Approved benefits extension)

-Rhode Island: 35%

-South Carolina: 43%

-South Dakota: 42% (Declined benefits extension)

-Tennessee: 58%

-Texas: 48%

-Utah: 29% (Approved benefits extension)

-West Virginia: 59%

Evictions on this scale could have a big impact, on the optimism of the economic recovery, on social unrest, on the election outcome, etc. etc.

Position: UVXY shares

TLDR: Evictions can start next Monday as the federal moratorium on evictions expires, along with EI benefits. Executive order does not explicitly stop evictions from happening. Can have big economic, social, political impacts.

Sources:

www.cnbc.com/2020/07/27/how-the-eviction-crisis-will-impact-each-state.html

www.cnet.com/personal-finance/the-final-eviction-protection-for-renters-ends-monday-aug-24/

 

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.