Back Rent in California to Reach Almost $1.7 Billion by Year-End, Study Shows
A Federal Reserve study showed California's back rent is estimated to reach almost $1.7 billion by year-end, or almost one-fourth of the total rental debt across the nation.
Reports on the study said, under the eviction moratorium of the state, landlords can "pursue that liability through small claim courts next spring," should their tenants fail to settle it by then.
The Federal Reserve Bank of Philadelphia research found that a whole, almost 240,000 renter households in California have reportedly fallen behind on rent, with debt amounting to $6,953 each household on the average.
Across the nation, as indicated in the research, renter debt is expected to hit 7.2 billion by the end of this year. The Philadelphia Fed specified that around 1.34 million American families would owe about $5,400 on average, apiece, in unsettled rent pay.
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The Risk of Eviction
The said analysis, which was presented during a USC rental housing conference on November 12, proposed that thousands of tenants are facing the risk of eviction after a nationwide Centers for Disease Control and Prevention suspension ends on December 31.
During the online conference, Director of New York University's Furman Center for Real Estate and Urban Policy, Ingrid Gould Ellen said, if there is no additional federal backing, and the economy does not recover, that "debt is going to grow" by more than $1 billion per month.
Meanwhile, housing assistance director for the Los Angeles County Development Authority, Tracie Mann said, the said amount of debt "is quite a tall task."
Mann added, it is certainly challenging to "wrap your head around the fact" that a lot of people have that huge amount for outstanding rent.
Impact of the Pandemic on Tenants and Landlords
The event which USC's Lusk Center for Real Estate initiated focused on how this global health crisis is impacting both the tenants and landlords in Southern California.
Topics discussed during the event included the ability of the tenants to pay rent, how landlords are addressing conflicting state and local eviction freezes, and how the pandemic has affected sales of apartment buildings.
However, Richard Green, Lusk director said, its 2020 conference did not include the annual "Casden Multifamily Forecast" due to uncertainty over what will happen with the pandemic.
Joint research by UCLA and USC showed that 80 percent of LA County tenants paid their rent promptly since the onset of the pandemic, although some were obliged to depend on savings, credit cards, or personal loans from friends and relatives to stay current.
Green also said that while homeowners who get forbearance for government-supported loans don't need to repay their missed payments for a mortgage until the end of their loans, renters still have the liability to repay their payments rent by March next year.
Although eviction moratoriums have helped renters to keep their homes, added Green, it doesn't do anything to shield their credit scores, probably, making it much more difficult for them to rent their next home in the future.
California Governor Gavin Newsom announced in late August that he already signed into law a bill stating the extension of the statewide eviction moratorium until January for tenants who were suffering losses of job and income as a result of the COVID-19 crisis.