If Congress doesn’t implement a new eviction ban, three-quarters of a million American households could be evicted later this year, according to new research.
Goldman Sachs estimates that between 2.5 million and 3.5 million households are significantly behind on rent, owing a combined $12 billion to $17 billion to landlords.
Those renters appeared to be safe from eviction until at least October until the Supreme Court last week struck down the Biden administration’s ban on evictions, indicating that further action must come from Congress. At the same time, most state-level restrictions on evictions are scheduled to expire over the next month, which the Goldman Sachs analysts noted in the Sunday night report.
“The end of the eviction moratorium is likely to result in a sharp and rapid increase in eviction rates in coming months unless Emergency Rental Assistance (ERA) funding is distributed at a much faster pace or Congress addresses the issue,” the report said.
Without faster aid or new legislation, Goldman Sachs estimates 750,000 households will face eviction this fall and winter. The Wall Street bank noted that roughly half of all US eviction filings resulted in eviction between 2006 and 2016.
Part of the problem appears to be trouble getting government aid out the door.
The process of recovering back rent through the emergency rental assistance program has been “disappointingly slow,” Goldman Sachs analysts wrote. Even though the US Treasury Department has dispersed $25 billion to state and local governments — and has another $20 billion available — just $4.5 billion has been distributed, according to the report.
The Census Bureau estimated last week that about 1.3 million people are very likely to get evicted in the next two months. That same report estimated that more than 2.2 million people applied for rental assistance through state or local governments and either did not hear back or were denied.
“The strength of the housing and rental market suggests landlords will try to evict tenants who are delinquent on rent unless they obtain federal assistance,” Goldman Sachs analysts wrote.
The firm predicted evictions could be “particularly pronounced in the cities hardest hit by the coronavirus” because those areas have stronger apartment rental markets.
An eviction crisis, should it emerge, would not only cause hardship for individual families, it could also impact the pandemic and the economic recovery — as well as inflation.
Goldman Sachs (GS) estimates a “small drag” on spending and job growth from the projected 750,000 evictions and an easing of shelter inflation in 2022. “The implications for Covid infections and public health are probably more severe,” the report said.