After a national eviction moratorium lapsed last weekend, the Centers for Disease Control and Prevention said a new 60-day moratorium would apply to communities with “substantial” coronavirus issues.
There was though one big problem (among many). The first batch of rental assistance dollars were minimally distributed. Procedurally struggling, the municipalities that were giving out the money lacked the administrative structure they needed to accomplish the task:
The data indicate that more than six million Americans are behind with their rent payments. At the same time a spokeswoman from the National Association of Realtors warned a new rent moratorium could nudge small landlords into bankruptcy.
Renters and Landlords
A new Pew Research report looks at the residential renters and landlords that the eviction moratorium affects.
The report sees renters through two lenses. One view reveals that more than half (58 percent) of all Black-led U.S. households rent their homes while for non-Hispanic White-led households, it’s 27.9 percent. But then, focusing on rentals, approximately half are occupied by White-led households and close to 20 percent by households that are Black-led:
Typically more affluent than renters, homeowners are overwhelmingly White, married, and older than 35:
The majority–close to 7 in 10– of U.S landlords are small businesses and individuals. Owning one or two units, they worry about mortgage payments, repairs, property taxes:
Our Bottom Line: The Circular Flow Connection
As economists, we can use a circular flow model to locate our landlords and renters. In the lower loop (below), landlords send their rental income from the Businesses rectangle to Households. Then, in the upper loop, the renter’s consumption expenditure–the rent check– travels from the Households rectangle to Businesses:
In the circular flow, rent is one form of Household income that we use as consumption expenditures for buying our goods and services. Thinking of the tradeoff, we have to decide whether to give more to renters through a rent moratorium or landlords with a rent mandate. Or, sidestepping a tough decision, some of us may wonder if the federal government can minimize the tradeoff by subsidizing both groups.
But then, with the national debt soaring, we have other tradeoffs. There is never a free lunch.
My sources and more: The Washington Post, here and here, has most of what we need to know. Then, completing the picture, the new Pew Research Report has the statistics as does this survey of every state. Please note that today’s post primarily is about residential tenants. However, the circular flow model (from my textbook, published by Addison Wesley) applies to residential and commercial tenants.