Beacon Hill should beware the growing possibility Massachusetts will face a housing crisis this summer or fall.
If it comes, early indications suggest it won’t be a foreclosure crisis, as in the last recession, but an eviction crisis, as thousands of renters are turfed out because the pandemic and its lingering effects destroy their jobs in the service sector.
First, as this paper reported last week, demand for homes is still very high and the number of sellers is even lower than before the pandemic. Total for-sale listings in Greater Boston, for example, were down nearly 38 percent on a year-over-year basis as of May 30, according to Zillow. With purchase mortgage apps continuing to rise and anecdotal reports from real estate agents around the state suggesting even more prospective homebuyers are entering the market in what seems to be a delayed spring market, there appears to be no immediate threat of prices collapsing.
Second, a new report from CoreLogic finds that rising home prices in Massachusetts pre-pandemic left local homeowners with $16,000 more in equity than the year before as of the end of the first quarter of 2020. The same report finds only 3 percent of residential mortgage-holders in Greater Boston are upside-down on their homes.
But a new survey from the MassINC Polling Group shows nearly 3 in 10 Massachusetts renters are having trouble paying some or all of their rent, while the same is true of only 13 percent of the state’s homeowners. The culprit, the survey says, is likely the massive number of layoffs in the state’s retail, hospitality and health care and social assistance industries. And the MassINC poll found 1 in 4 households that make less than $50,000 a year, and just over 1 in 5 people who make between $50,000 and $75,000 a year, say they have missed some or all of a housing payment this spring.
It seems fanciful to hope that the state economy will snap back to “normal” as Massachusetts continues to reopen, eliminating much of this rent deficit. While some of the jobs eliminated by social distancing restrictions are returning, projections swirl that a substantial number of retail businesses and restaurants across America will never reopen. In addition, local hotel industry figures expect tourist and business travel to urban areas will not recover this year, and Republicans in Washington, D.C. say they will oppose any extension to the extra $600 being given to unemployment recipients through July 31.
In short, conditions exist to create an eviction crisis after the state’s moratorium expires Aug. 18, when many small landlords will naturally seek to replace tenants unable to pay with ones who can in order to keep their own heads above water. Legislators and Gov. Charlie Baker must find a way prevent this calamity without bankrupting apartment owners.
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