fbpx

The data from the Princeton Eviction Lab is both thorough and informative, and it contains some interesting insights about U.S. eviction rates when considered in the appropriate context. The reality is, the states and markets with the highest evictions are not always those with unhealthy and problematic housing markets. There must be something going on in those markets to drive these high numbers, right?

What Do the Eviction Numbers Say?

When looking at evictions during the pandemic, it may seem, at first, that cities with high evictions are the least favorable or successful housing markets, but in many cases the inverse is true. Those markets that had less restrictions on evictions were more resilient throughout the pandemic, and those evictions that did take place were greatly reduced in numbers compared to the period before the pandemic.

Los Angeles, CA

States like California and New York, which have some of the the highest populations in the country, have the least amount of evictions. This is because of the policies put in place to limit or completely prevent evictions, an essential piece of a functional rental market. These interventions have a clear effect on the multifamily market.

On the other end of the spectrum, looking at the list of markets with the highest evictions, you see places like Tulsa and Indianapolis, and you might think that the economies of these cities must be collapsing. What’s interesting, however, is that these markets are actually healthy and improving. Why is this?

Indianapolis, IN

What we’re really examining are markets that are functioning smoothly and markets in which government intervention has been an obstacle to providing housing.

Low Evictions and Rough Markets

Minnesota, for example, ranks at the top of tenant-friendly states, with the most restrictions and limitations to landlords’ ability to evict tenants. This does benefit those tenants who are currently unable to pay, but if you step outside the Eviction Lab and examine the state’s multifamily markets as a whole, a different picture emerges. Occupancy in Minneapolis is suffering, rent growth is negative, net deliveries have far outpaced absorption, and the vacancy rate is trending upwards. That last figure effectively reflects the impact of limits to evictions—it is more difficult for landlords evict tenants, but now more apartments are empty, without anyone living in them.

Minneapolis, MN

Los Angeles is a similar story. Negative absorption and increasing vacancy. The political environment in these markets have an impact on the multifamily market and the greater economy. Markets with fewer regulations—those with more evictions because of less restrictive governmental policies—are healthier and performing better.

Markets Operating Smoothly

It is worth noting that, in states with more evictions like Indiana, evictions have been below average throughout the pandemic. We haven’t seen one single month during the pandemic with evictions above average in Indiana. If you look at the evictions for Indiana in 2020, evictions were actually above average for January and February, but they dropped precipitously during the eviction moratorium. More importantly, evictions did not rise precipitously once the federal moratorium was lifted. They stayed well below average.

No one likes an eviction. Operators and landlords do not want to evict their tenants, and obviously tenants do not prefer that situation. In our economic system, individuals are responsible for the cost of housing the same as food, clothes, and other basic needs. This system starts to break down when a resident enters into a contract to lease an apartment and they are unable to honor that contract.

Indianapolis, IN

States like Indiana have chosen to enforce these contracts so that the markets are better able to function. The real economic damage of the past year has come from the enormous impacts of the pandemic and the measures taken to prevent its spread. Governments have done hard work in drafting policies to ensure the safety and security of citizens during the pandemic, but forceful moves like the eviction moratorium are overly disruptive to the markets and create obstacles to growth.

Gray Capital is committed to staying on top of the latest and most important news, ideas, and information about the multifamily industry, and we share this news every week in the Gray Report newsletter. Click the button below to sign up for the newsletter, and individuals interested in investing with Gray Capital can click the button to apply to join the Gray Capital investment club.