America has a new position on the concept of landlords: take their property without compensation and, better yet, public shame them. That plan of attack is about to backfire in a big way. In this Mobile Home Park Mastery podcast we’re going to review how the “war on landlords” is really going to end and it’s the alternative ending that won’t please the masses.
Episode 211: Here’s How The War On Landlords Ends Transcript
The unconstitutional COVID-19 inspired CDC evictions moratorium has finally ended. But much like the way we ended the war in Afghanistan, the legacy and ramifications will upend the American housing market for decades to come. This is Frank Rolfe with the Mobile Home Park Mastery Podcast. We're going to talk about how the CDC evictions moratorium was quite possibly one of the dumbest things anyone ever did, as far as disrupting and permanently altering what was already a very fragile housing market.
You see, here's the problem. 50% of every rental housing unit in the United States is owned by a mom and pop, the small individual. Many people for some reason going into the evictions moratorium thought it was different. They thought it was all big companies, they were only putting pain and suffering on people like Blackstone, well, they can afford the money, right? However, instead, they inflicted this horrible, horrible financial damage on regular small investors, people who just own one rental home or a duplex or a fourplex, and 58% of those had no backup means to pay the bills while the rent was not coming in the door. So more than half of the half of the rental housing market was cast aside, because people were either too dumb to know that they represented that much of the housing market, or people never thought through what happens next.
So what does happen next? Now that the order has ended what's going to happen? Well, many of those landlords have already either decided to sell, will soon decide to sell, or already were just waiting for it to end so the money could come in the door so they could then go ahead and put their properties on the market. And here's what's going to happen. When they go to sell those rental housing units, one of two things are going to happen. Number one, big companies, perhaps Blackstone, are going to buy those rental units. And can you guess what will happen as far as those rent levels? Yes, that's right, they're going to increase them up to market. Because those mom and pops were the ones who had rents were too low to begin with, but they were too good natured to bring them up to market. The large companies will not be so lenient.
The other option is that those folks with those rental units, particularly the rental houses, they are going to sell those to home shoppers. Because as we all know, right now, there's an excess of people trying to buy homes in America. So there's more than enough customers who will be more than happy to buy that rental house and make it into their permanent dwelling. Plus they're willing to pay a bigger prices, right? There's no tie in really in the housing market in most markets as far as what things rent for and what people will pay, they pay a huge premium for ownership. So probably the highest bidder on most of the housing stock, if it's not a big company, will be just Americans trying to find that final roof over their heads, that final dwelling to call their own.
And so what happens now, when you look at the math? Well, if I take 50%, which are the folks who couldn't afford to cover their bills, and surely are soured on the idea of being a rental landlord now, if I take 50% of that 50% of the US rental market, and I take it out, what do you suppose happens? You just lost 25% of the entire American rental market. It is gone, never to come back. Now, we already had an affordable housing shortage in the United States before we ever even had this whole COVID-19 thing. Before the CDC evictions order had ever reared its ugly head we all knew we had a problem in America. And it was called inability to pay the mortgages and the rentals to have suitable housing. It's been a giant crisis that's been discussed now for the longest time.
And if you look up the word moronic on Wikipedia, it is defined as something very stupid or foolish. Is there any way you can look at what transpired with the CDC evictions moratorium and the after effect that could be described any other way? What in the world were people thinking? And what did we even really accomplish? What was ever even done with the CDC order of any value? Well, let's see. We basically helped people who could pay the rent the whole time to not pay their rent. I've never understood the CDC order. I didn't when it first came out and I sure don't still understand it today.
So let's get this straight now. If you had a job, and you lost it because of COVID, as I recall, you then got unemployment insurance with this extra $300 a week bump. For most of Americans, it was noted that was more than they were earning when they had their job. And then, if you didn't lose your job because of COVID, you still really had the ability not to pay your rent, all you had to do was sign something that you got from your landlord, this thing called the CDC Declaration, and who cares about the perjury part, most people didn't. Many landlords had people turning those orders in on their way to work. So most everyone could have paid their rent the entire time. Look how many unfilled jobs we have today in America. Tell me that there are people out there who can't get a job enough to pay the rent. No, they may not want to get the job. We're finding right now businesses across the nation that are closing, they can't get employees. Why? People are at this point kind of considering COVID is just the ultimate adult snow day and they just don't want to go back to school. It was just altogether too much fun.
So instead of using the tough love that all mobile home park owners know is required in life, particularly with people who don't have a lot of money, what's happened is the American government has allowed people to dig themselves into a hole that is now as much as a year and a half deep. People who could have paid the rent the whole time, now suddenly realize, "Uh-oh, I better pay the rent or I will be evicted." And now instead of being in the hundreds of dollars, it's in the thousands of dollars. So now they will all be displaced.
So the other part of the CDC moratorium, which I think we would all have to additionally label as moronic, was the fact that all the government did was become an enabler. It didn't benefit in the end, anyone. People who could have paid the rent weren't forced to pay the rent, to just let it fester. Those who needed to pay the rent and could have gotten a job didn't do it. Because again, the government said "No. Rent? No, you don't have to pay that thing. Go ahead and buy something else you enjoy more. Don't worry, we have your back," when they knew full well, they did not. The rent was never forgiven and the government knew this. So they were just delaying the inevitable and allowing people to get in just more and more trouble to dig themselves at a deeper hole they could never, ever climb out of. "How could they have been this dumb?" you might say. I don't really know. I think we've all watched events unfold, we can see it on the TV every day these days, that make us all scratch our heads and say, how is it possible that people can make such poor decisions, and be in the position to make those decisions? So I think we don't really know how the evictions moratorium was ever even viewed as being a positive force. In the end, it accomplished absolutely nothing.
Millions of people will now be displaced. They estimate as many as 11 million households didn't pay the rent, and now can't of course pay afford to pay it all back, not in 18 months in one whack. So we didn't solve the housing problem. All we did was kick the can down the road. Anyone with any level of intelligence would have seen that what they should have done from the beginning, when they wanted to do in evictions moratorium, was to have the landlords send the bills for the rent to the state agencies to get paid directly. But no, they set it up so that the person renting the unit, the person who's the least equipped to fill out any kinds of forms in a bureaucracy would make application, and that's why none of this stuff has been processed. The estimate only 5% of rental assistance has been tapped into. That's because you have people who are not in any way skilled at working on filling out such forms in charge of doing it. Why could it not been a direct contract between the landlord and those funding programs? If that had been the case, the rent would be paid on all of those people and no one would be displaced. And no small mom and pop landlords would have lost their property to foreclosure or be massively behind on their bills. We've all seen the stories about homeless landlords, people who lost everything by being a wealthy landlord and of living out of their car. None of that had to occur.
It was a very, very flawed strategy. People thought they were helping somehow, but they weren't using good thinking. And I think we've all learned that when you don't apply good strategic thought to your actions, the ramifications are horrendous. This is Frank Rolfe, the Mobile Home Park Mastery Podcast. Hope you enjoyed this. Talk to you again soon.