Like all Californians who have waited in excess of 15 months to mingle again, we have celebrated the grand reopening of the state, but this jubilee should be tempered with the fact that rental housing providers are in it for the long haul.
Our community remains in a suspended state of ambiguity on when eviction moratoriums will end. The state’s ban on evictions for nonpayment of rent is set to expire June 30 but if the pandemic has taught us anything, it is that moratoriums can be extended over and over again. We will keep you posted and plugged in as developments happen.
There is a cogent argument being made that as long as rental relief remains dysfunctional and is slow to get money into the hands of landlords and tenants, renters should not be displaced and that the eviction moratorium for nonpayment should extend out to some point in the future.
Reforms to rent relief programs are underway but there is no reason to believe that a lack of technical proficiency on the part of some applicants, issues obtaining documents, language barriers, overwhelming demand, and other kinks in the rental assistance program will be easily resolved.
Many in our community have been unable to qualify for assistance because their tenants exceeded the income thresholds as documented in 2020. We can expect that a large portion of those tenants, temporarily falling on tough times but having upward mobility, will be motivated to pay rent debt, preserve their credit and avoid the stain of a court judgment lodged against them.
We cannot say the same for other tenants who are living rent-free with little regard to their credit standing and are perhaps uncommunicative with the landlord. It is likely that legal action will have to be taken to transition them out.
Of course, there are honest, hard-working renters who are trying to bounce back and not looking to game the system. We urge some latitude in working out payment arrangements if an otherwise model tenant behind on rent returns to the workforce.
As for tenants who have abandoned the rental unit to seek greener pastures during the pandemic, unfortunately, there is no prospect for property owners to tap into rent relief funds because the tenant must be in possession of the unit and instead, the debt must be pursued in civil court. While the loss of good tenants is lamentable, many landlords would find it to be a blessing that an undesirable tenant has flown the coop, which leads us to our next point.
A word about rent prices
We feel that rent prices have bottomed out - they will not precipitously decline as we saw over the past year.
That's about the only positive outlook we can make at this juncture. Seasonality may play a factor, but we do not project any substantial rise in rents this year. There will likely be an improvement in 2022, but in our view, it will take at least a few years for rent prices to return to pre-pandemic levels.
With that in mind, our advice is to be realistic about setting rent amounts if there is a vacancy. "Asking rents" are on the rise, but they are just that - asking. We can ask for a winning lottery ticket but it doesn't mean we will get it.
We want landlords to get cash flowing again and avoid units languishing for months on end because apartment shoppers are not willing to pay an exorbitant amount.
We have always maintained that a bird in the hand is worth two in the bush and if you do the math, it is much more preferable to rent a unit quickly than to let it sit idly on the market with the hope that rents will spike.
Consider the revenue lost if it takes 3-6 months to rent a unit at a higher price than to accept a lower rate that can get a lease inked today.
The reopening date of June 15th was a monumental event, but our community’s challenges are far from over. As always, Bornstein Law is dedicated to helping you power through them.
