20% Of Renters Are Behind In Their Rental Payments

It is sad but true; one in every five renters is behind in their rental payments. This delinquency is primarily because of the pandemic and corresponding job losses, but the eviction moratoriums have worsened the problem.

Now that Landlords can not evict non-paying tenants, we have over ten million homeowners behind on their mortgage payments. It is only logical that if the tenant is not paying, neither can the Landlord. The latest report I have seen says that Landlords are carrying roughly fifty-seven billion in debt from over ten million renters.

This delinquency has sent the request for mortgage forbearance and mortgage assistance to a skyrocketing four million since the start of the pandemic, March of 2020. The current eviction and foreclosure moratorium expiration date is set for March 31, just six days away. This moratorium has not been extended; however, mortgage forbearance extensions have been.

The forbearance gives homeowners up to 6 months’ extension on making their first housing retention payment. The missed payments are added to the back of your loan, and your loan term is extended for six months. Another forbearance option is a 12 -18 month no payment with a balloon payment at the end of the forbearance term. Add the stimulus with the forbearance extension, and you get a scary housing situation. With jobless claims rising, additional strains of Covid-19 forcing Europe into more lockdowns, and energy prices creeping up, the housing market is insane.

We have a market with all-time low inventory, incredibly high demand, low-interest rates, and prohibitive new construction costs. The housing market is undoubtedly in bubble territory. Here in Middle Tennessee, I have seen estimates of anywhere between a 4-10% increase over the next 6-12 months.

High-demand markets like Nashville are attracting out-of-state cash buyers fleeing high taxation policies. They are coming in with cash and making offers with no appraisal contingencies. These California buyers are selling their little San Francisco dump for a million dollars and coming to Nashville, spending $500,000 and buying what seems like a mansion to them. Again, all-cash so, no appraisals required.

What all this is doing is preventing our market from having gradual and sustainable corrections. Instead, it is inflating our market to astronomical heights. I can personally assure you, if our market were not being artificially inflated by the issues I raised in my previous paragraphs, we would not see the prices we are. This market is not normal. It is a bubble.

This bubble collapses when these eviction moratoriums end, and these forbearances are no longer extended. We see this happening in the commercial market now, and the rental market is next. This could all start collapsing as early as next Wednesday March 31st when the eviction moratorium ends.