More than six months after the Centers for Disease Control and Prevention (CDC) enacted a moratorium on evictions nationwide that order could be coming to an end. Last week a federal judge in Washington D.C. ruled that the CDC’s order was illegal and must be terminated, though the ban will remain in effect until final ruling. While the CDC has appealed the decision, with vaccinations ramping up across the country and all states moving forward with their reopening plans, it’s likely that the decision will be upheld.
In New York, the state legislature signed an extension of the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020, which placed a hold on evictions until the end of August. Even if the nationwide eviction moratorium is terminated, so long as the New York ban remains in effect, landlords and tenants will still need to abide by the state’s ban.
As we wait on a final decision about the national eviction moratorium, there’s one question on the minds of many Long Island real estate industry professionals: what comes next?
According to CNBC, 1 in 5 renters in America are “are struggling to keep up with their payments amid the coronavirus pandemic.” If the eviction moratorium comes to an end and a renter has fallen behind with their monthly payments, their landlord can move to evict them. This could potentially displace millions of people across the country.
Best case scenario, as the economy continues to recover and many businesses hire back workers, the problem could take care of itself. With people going back to work, some renters might have the opportunity to either make up missed payments or work out a plan with their landlord to get back on track and avoid eviction.
Worst case scenario, there will be a lot of movement in the rental market and a possible increase in foreclosures across the country if some landlords are unable to keep up with their own mortgage payments. While foreclosure is never a good thing, in the long run it would actually add inventory to an incredibly tight sales market. Some landlords may also opt to put their rental properties up for sale to avoid a foreclosure.
Either way, when the eviction moratorium comes to an end, it doesn’t mean we’re heading toward a housing market crash. There is still a ton of demand from qualified buyers who are pre-approved and have the funds to buy, but haven’t yet secured a home. More inventory, even distressed, would be a welcome relief to prospective home buyers.
A market correction is much more likely than a crash. If more inventory enters the market, it will help offset some of the current demand for homes. This could slow upward price growth and reduce the number of offers received on an individual property. This is not to say the market would shift from a seller’s market to a buyer’s market on Long Island overnight. It would just mean that instead of receiving over ten offers on their home, a seller might receive two or three. More inventory would mean a more balanced market for everyone.
If you currently own a residential investment on Long Island that you’re thinking of listing, we would love to talk with you about how we can help you get that property sold quickly. Check out some of our recently sold properties to get an idea of how we market homes. We also have plenty of qualified buyers that are looking to buy a home on Long Island – we might be able to make a match for you from within our own client database. Reach out to us today and let’s set up a meeting to get your property on the market this year.