Likely Eviction Moratorium Scenarios for 2021

December 4, 2020

Likely Eviction Moratorium Scenarios for 2021

December 4, 2020

The CDC eviction moratorium currently has provided a measure of stability to renters during the uncertain era of COVID-19, but limitations on evictions are scheduled to expire on January 1.

It is very likely that the moratorium established in September will be extended into next year. Questions linger, however, about how this extension will be implemented and whether it will be paired with additional supplemental aid to support landlords. We’ve summarized some of the most probable outcomes based on the most recent signals from Washington, D.C., and state governments, as our nation’s leaders grapple with answering these questions as well.

Biden Renews Eviction Moratorium

Most Washington insiders expect the Biden Administration to sign off on an extension of the eviction moratorium. A recent article in The New York Times identified this issue, along with student loan debt forgiveness, at the top of president-elect Biden’s priority list for potential executive orders when he enters the White House on January 20.

One unknown that members of the multifamily industry should keep an eye on is the 20-day gap between January 1 and the beginning of the Biden Administration. Some fear a sizeable wave of evictions could arise during this gap of renter protections, but the following scenarios suggest that we will not see millions of Americans on the street come the start of the new year.

Long-term solutions to the conditions that made the eviction moratorium necessary will have to come from Capitol Hill.

Congress Debates Rental Assistance

Although the final makeup of the United States Congress is unknown due to pending two runoff elections, it is typical that political dynamics begin to morph significantly with the end of election season and the start of a new Administration. Deadlocked partisan leadership could be persuaded back to the negotiating table as early as January with far less pressure to pass all-or-nothing legislation.

One proposal supported by renter and landlord advocates alike is to supplement an extended eviction moratorium with direct financial assistance for renters. This approach may act as a compromise option for budget-hawkish congress members who are skittish about committing to numerous rounds of stimulus checks. A similar proposal has reportedly been included in the most recent round of bipartisan aid package discussions that began on December 1.

State Governments Continue to Fill Gaps

The 20-day transition period mentioned above is not the only potential hole in the economic safety net that has been keeping most Americans in their homes during the pandemic. Thankfully, state governments and the nation’s top lenders have already mobilized to help fill in the gaps where possible.

Washington Governor Jay Inslee recently announced an eviction resolution program that will see state specialists work as official intermediaries between landlords and tenants struggling to make payments because of COVID-19. The goal of the program is to get ahead of a potential eviction surge by getting payment plans and other agreements in place as quickly as possible.

This is a savvy strategy, as lack of communication between landlord and tenants is the most common reason that payment disputes spiral down into eviction proceedings. Similarly, Massachusetts Governor Charlie Baker announced that the state government is making over $100 million in emergency funds available to aid renters affected by the pandemic in making their monthly payments.

Vaccine Distribution Will Be Key

Ultimately, the impact of the eviction moratorium will depend on the ability of federal and state leadership to successfully address the COVID-19 pandemic in 2021. Most news about vaccine efforts has been optimistic, and we can assume that leadership at all levels will be highly motivated to get the country healthy again as quickly as possible.

Another positive note: the nation’s largest lenders were far better prepared for this crisis than the previous economic slowdown and have provided as much stability to the rest of the economy as possible, with assistance from the Federal Reserve. With any luck, a steady recovery over the next twelve months will negate the need to address any of the long-term potential outcomes of the moratorium.