
One-third of American renters expected to miss their August payment - hhs
https://www.bloomberg.com/news/articles/2020-08-07/survey-exposes-america-s-looming-rent-crisis
======
DoreenMichele
We need to be making it possible for people to earn a living safely. We need
to be focused on creating new work opportunities that work in the current
climate.

This "waiting for things to return to normal" looks pretty dumb to me. I think
the stimulus checks and other relief funds are smarter than just throwing a
third of Americans out into the street, but it's not really a long term
solution. A long term solution is the economy needs to adapt and we need to
create work opportunities and reshape work with more of an eye towards germ
control.

I've been trying to write down some of my thoughts about how we move forward
in a sensible way. For example:

Earlier this year I wrote about a work opportunity I know of and about my
opinion that this model should be borrowed for other kinds of work. That piece
is here:

[http://writepay.blogspot.com/2020/03/the-textbroker-
solution...](http://writepay.blogspot.com/2020/03/the-textbroker-
solution.html)

I also wrote about my thought that more eateries need a contactless takeout
option similar to Little Caesar's pizza portal:

[https://projectsro.blogspot.com/2020/07/pizza-
portal.html](https://projectsro.blogspot.com/2020/07/pizza-portal.html)

I'm very frustrated at the kinds of things I see other people saying. We need
to stop framing this as an either/or thing: _Either_ we protect ourselves from
the virus _or_ we go back to work.

We need to do both. We need to figure that out. We aren't even trying. This
assumption that we need to choose one or the other is part of the problem.
It's not true.

~~~
bb88
I get what you're saying here, and I respect the fact that you were able to
pull yourself up by your bootstraps, literally.

Depending upon where you get your numbers there are 18-31 million unemployed
right now. Some of that will be solved by brains -- people who can find niches
and what not. But with a 1/3 of the renters who won't be able to make the
August check, that's just a bunch of people who can't afford to spend money at
all.

So demand is purely in the trash right now.

So the question is, if you could get 18-31 million people in gig positions,
what would happen?

Well for one thing the pay would be low, because the supply for labor
(unemployed people) would be more then plentiful to meet current demand.

E.g. How many uber drivers do we really need right now? And if you doubled or
tripled the amount of uber drivers what happens to the income for one uber
driver? That would drop by basically by 1/3, as more uber drivers compete for
the same amount of rides. And more and more uber drivers are willing to take
less money for the same effort.

The result is you have an uber driver making less income and less willing to
spend money. And that starts a vicious cycle. More and more people not willing
to spend, more and more companies laying off individuals.

That continues until we hit a bottom, which we may or may not have seen yet,
given the massive amounts of evictions coming as of today.

~~~
Jackypot
I don't doubt that it will happen regardless, but what is the point of
evicting people if no-one is waiting to rent the property? If the bottom falls
out of the economy and regular people can't rent then landlords are screwed
aren't they? Rent-seeking is the section of the economy which has to change, I
think.

~~~
bb88
Well, I would expect that the supply of rental units to flood the market. So
those that can afford to pay rent will pit landlord against landlord seeking
the best price. This will drop prices of rental units as landlords will have
to accept a drop in rent to fill their units. That's good in the long run, but
not good in the short term.

So for the people who can't afford to pay rent, well, a lot of them will end
up on the street. No job, no home, no health insurance.

Keep in mind that in this economy the supply of money is not flowing anymore
to the middle class, many of who were already living paycheck to paycheck.
It's all being hoarded by those who have it seeking wealth preservation above
all else first.

------
fortran77
As a commercial landlord, I've seen all sorts of assistance offered, but no
local government I know of is offering property tax deferrals. I have a
$60,000 property tax bill due, and tenants who can't pay their rent (I've
discounted them 75% to help them out.)

~~~
ed25519FUUU
State governments are totally MIA here. There’s not even a hint they’ll defer
state or local taxes, let alone forgive. In fact in some states they’re
proposing the highest income tax hikes in their history.

~~~
MisterBastahrd
Many state governments aren't constitutionally allowed to borrow money or run
a deficit. The people who supported these features are largely the ones who
will be impacted by the results.

~~~
fortran77
They can cut programs.

~~~
MisterBastahrd
The first thing that should be cut are special tax agreements with large
businesses, not supportive programs.

------
Shivetya
Well Congress needs to get reasonable with the boost per week for unemployment
rather than the $600 a week boost; a number likely chosen for that 600/40
magic number. The $600 isn't sustainable let alone on top of the $1200 per
house hold plus $500 per dependent.

Worse is the stuffing of the bills with defense appropriations and more items
not related to COVID19. Worse is the attempt to feed the state governments
between five hundred to a trillion dollars to shore up budgets of states that
are not even trying to clip their expenditures, most of this is routed towards
shoring up their pension systems and again, not COVID19 related.

The real pandemic is the debt bomb that Congress is foisting on the American
public, remember, no serious crisis can be allowed to go to waste. It is time
for the money to flow to friends and family.

~~~
dragonwriter
> Worse is the attempt to feed the state governments between five hundred to a
> trillion dollars to shore up budgets of states that are not even trying to
> clip their expenditures,

States shouldn't be trying to clip overall service expenditures during a
massive economic and public health emergency that creates novel challenges for
education delivery (health, economic safety net, and education cover much of
the big ticket state spending items, and this situation creates additional
demands on all of them.)

And, unlike the feds, states can't as a practical (and usually constitutional)
matter meet temporary emergency need with deficit spending for operations,
because most have Constitutional balanced operating budget requirements but,
more importantly (because it's a constraint that applies whatever the state
chooses), they have a much higher cost of borrowing because they aren’t
currency issuers whose debt is in their own currency.

For that reason, it's normal for the federal government to backstop the states
on major emergencies specifically so they aren't forced to make temporary
economic emergencies worse by taking more money out through spending cuts or
saddle taxpayers with greater debts than if the feds were paying by borrowing
at the state level.

~~~
TearsInTheRain
Some states like Illinois are struggling because of their spending during the
last economic expansion. Bad behavior needs to lead to negative results or
you'll just get more of it.

~~~
dragonwriter
Punishing a group of people indiscriminately because a partially overlapping
group of people engaged in bad behavior in the past is, itself, widely
recognized as bad behavior.

------
jlnthws
Could someone knowledgeable in this topic maybe tell us which international
financial institutions will be mostly impacted by this kind of defaults (short
or long term). Any CDS-like turmoil possible?

~~~
Lavery
Turmoil, yes, but internalized to the corporations impacted. One of the major
impacts of the financial crisis a decade ago was the massive increase in
private equity ownership of real estate. Groups like Blackstone (BX), the
largest residential landlord in the US, may take a hit. Not covered in the
article (but referenced elsewhere on HN lately), you're seeing even worse
trends in retail-focused commercial mortage backed security portfolios. REITS
like Simon (SPG, a mall operator) have been cut in half since pre-COVID.

Your question, though, is presumably around whether we'd expect problems with
systemically important banks. Highly unlikely, for two reasons:

First, regulatory changes to their capital structures largely prevent them
from holding things like CMBS on their balance sheet unless they reserve
significant amounts of capital against it. This is what facilitate the rise of
private equity landlordship: banks exited the business.

Second (and this has, largely, already happened) the Fed and other central
banks learned their lessons well, and were swift and comprehensive about
backstopping the financial markets.

~~~
ls612
Third, Dodd-Frank domestically and Basel III rules internationally make banks
hold far more safe capital on their books precisely to cushion against a shock
like this. Turns out those rules work.

~~~
barryrandall
Here’s the question I’m trying to answer: Do current stress tests contemplate
a scenario of the same magnitude as 1/3 of US renters simultaneously missing
payments?

~~~
credit_guy
The stress tests are designed by the Fed and specify what happens to 28
variables such as unemployment and GDP. The description of the scenarios can
be found in [1] page 14. Rent delinquency rate is not one of them, but there
are 2 real estate indices, House Price Index and Commercial Real Estate Index.
The House Price Index under the Fed's severely adverse scenario is supposed to
take an instantaneous hit from 280 to 200 and then to keep sliding down from
there for 2 more years and reach a minimum of about 150 (I'm rounding all the
numbers a little). What happened is the HPI was flat during the Covid19 crisis
[2] page 7. Something similar happened for the Commercial Real Estate Index
too: the Fed prescribed shock was very large and the actual index barely
moved.

[1]
[https://www.federalreserve.gov/newsevents/pressreleases/file...](https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20200206a1.pdf)

[2] [https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/HPI-
mon...](https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/HPI-
monthly_7222020.pdf)

------
kache_
Housing market correction? Nah, that's never going to happen

~~~
axaxs
It happens, but rarely. We should really ease pressure by putting in laws to
keep prices lower. In three cities I've lived, every 'good deal' is snatched
in cash by landlords or flippers. Why not regulate the amount or at least the
velocity of how many homes a person can own? My current landlord has 16
houses, that's ridiculous.

~~~
VWWHFSfQ
> Why not regulate the amount or at least the velocity of how many homes a
> person can own?

Why not just eliminate private property all together? Everyone should just
rent stuff from the government.

~~~
mschuster91
That's what Vienna (Austria) is doing. 62% of people live in government
housing - and on average only spend 27% of their income on rent:
[https://www.huffpost.com/entry/vienna-affordable-housing-
par...](https://www.huffpost.com/entry/vienna-affordable-housing-
paradise_n_5b4e0b12e4b0b15aba88c7b0)

------
AbrahamParangi
Unemployment was and still is a mistake because it creates perverse
incentives. It should be UBI instead.

The government has spent $10,000 per US resident propping up banks, hedge
funds, dog-shit junk-grade corporate debt, etc.

Do you think that money was well spent propping up braindead investment funds,
or would you have used it better?

~~~
eloff
Why is it that whenever the government does something, it takes me about ten
minutes to come up with a better plan? I've considered that I could be wrong
that my plan is actually better, or that I'm missing something (I surely am)
but I don't find that compelling.

I'm starting to think that the outcome of our political systems in the West
produces suboptimal compromises engineered by politicians who are quite
frankly ignorant, incompetent, corrupt, and really just not good specimens of
the species. It's like the system is designed to be mediocre.

What's the alternative though?

~~~
doorstar
Have you ever worked at a company where they bring in a brand-new CTO or Lead
Architect and they decide after a week or so that the entire dev org has been
Doing it Wrong and it's only them, with their clear outsider's view, that can
see the true way forward.

I certainly have. It usually leads to 3-4 wasted years of dev time on the
brand new architecture that will never match all the features of the old
stack, and during that time the old stack has fewer and fewer resources and
the tech debt piles up.

It is absurdly easy to come up with a better plan in 10 minutes if you have
absolutely no idea how it really works or how complicated it really is.

~~~
eloff
Yes, I agree that the fair default assumption is I just don't understand the
true complexity of the problem. And this is certainly true.

However, I don't accept this answer. I think most of the time the government's
plan is so bad, so glaringly flawed, that even from my position of ignorance,
I'm confident I can beat it without hardly trying.

~~~
ModernMech
The plans Congress comes up with look like shit from your perspective because
to you, a good plan is one that solves problems for regular Americans.
Congress does not work for regular Americans. The plans they come up with are
great plans for the people they work for. They are highly effective and
channeling money to the rich and their corporations. Just look at the trend
lines of the past 40 years - consistently increasing inequality between rich
and poor. That kind of consistent performance is by design. As always, the
purpose of a system is is what it does.

------
dingaling
A notable example of how omitting a word from a headline introduces ambiguity.

One-third had expected to miss, but managed to scrape together the payment?

Or

One-third are expected to miss?

Brevity is valuable but not at the cost of clarity.

~~~
hammock
Is your confusion around the verb tense in the headline? I.e. "renters did
expect to miss" (past) vs. "renters are expected to miss" (present)?

In either case it doesn't make much difference. It was a survey done in July
for August rent. One-third of renters DID EXPECT to miss August rent; and now,
August rent being past due, we EXPECT that one-third of August rent was missed
(lacking actual data around August rent payments made).

You tried to add in a bit of non sequitur / additional unsubstantiated info in
your interpretation which was about the "scraping together" \- there's nothing
about that in the data

~~~
nitrogen
_You tried to add in a bit of non sequitur / additional unsubstantiated info
in your interpretation which was about the "scraping together" \- there's
nothing about that in the data_

That kind of thing's usually added by people as just a bit of color for
storytelling purposes.

------
snissn
what percentage was it the year before?

------
abstractbarista
This isn't real surprising. On a good day, a ridiculous percentage of people
don't pay their rent when it's due. This doesn't mean they don't pay their
rent. They just pay it late. Chronically.

------
troughway
Are we going to have another thread where the top comment is “this is
completely normal and everything is fine”?

~~~
swiley
This is expected, most people who were paying attention have been wondering
when it will happen and the corona virus gave us the answer.

------
matz1
Government need to reasonable, still have the lockdown while we know the virus
is not that dangerous ? paying people extra unemployment money to not working
?

~~~
SketchySeaBeast
> still have the lockdown while we know the virus is not that dangerous ?

Does the graph presented of those most likely to have issues with rent match
with those states that locked down the hardest?

> paying people extra unemployment money to not working ?

I'm confused - are you implying that by giving some people money (for some
more than they would earn while employed), that prevented them paying rent? If
any, it would seem like a failure in the dispersal of said money.

