Denver photographer Lucy Beaugard has struggled with tears and sleepless nights this week.
The 32-year-old works as a freelancer, booking mostly editorial and commercial work related to the restaurant industry (she’s shot photos for Curbed sister site Eater). On Wednesday, March 11, she lost half her business as clients called to cancel work. That figure rose to 75 percent the next day. By Friday, all her work for the next two months was gone. March was originally going to be her busiest month in her 12-year career as a photographer; now, she’s desperately trying to fill her days with running, puzzles, and Netflix.
“It’ll take a while to rebuild my business,” Beaugard says. “I’ll be seen as a luxury for a long time.”
Like many workers coping with new economic realities brought on by the coronavirus, Beaugard worries about how she’ll pay the bills—especially her share of rent for an apartment she splits with two other roommates, which comes to $612 a month.
“I probably have enough money to get through March or April, maybe just enough to pay rent, but few funds to take care of all the other bills and expenses I need to get by,” she says. “It’s pretty unnerving. Will I lose everything, or will it blow over and I can bounce back quickly?”
When trying to convey the extent of the economic shockwave coming from the novel coronavirus crisis, “unprecedented” comes off as an understatement. As paychecks and jobs disappear, the looming question for Americans is, how am I going to pay for the place I live?
Rent or mortgage payments are typically the largest monthly expense for any person or household. With April 1 approaching, and a lack of certainty from the government over the length of mandatory shelter-in-place orders, those payments have become an issue of national importance as both the federal and local governments try to figure out how to help people through the crisis.
Many cities and states have responded quickly with eviction moratoriums. That’s a great first step to prevent people from immediately losing shelter in the midst of a global pandemic. But if anything, it compounds the question of how we’ll pay the rent over the next few months.
“April 1 won’t be so bad for tenants, because so many places have passed moratoriums on evictions,” says Randy Shaw, a housing activist in San Francisco. “The calamity will be June 1 or July 1. Renters can be evicted in June or July for back rent from April and May.”
It’s all part of the domino effect that starts with tenants not having the work, or money, to pay rent. In a typical down real estate market, the daisy-chain, domino-effect reaction goes as follows, per real estate lawyer Jeff Friedman: “Apartment renters lose their jobs or take significant pay cuts and can no longer afford to pay their rent; owners collect less rent and cannot make their debt-service payments to their lenders; and lenders are not collecting enough on the debt service, with their loans now on distressed real estate assets. Evictions and foreclosures follow, with distressed assets available to vulture buyers.”
“This isn’t a time to be timid,” says Carol Galante, a professor at the Terner Center for Housing Innovation at UC Berkeley as well as a former HUD and FHA official during the Great Recession. “Millions of Americans will have trouble paying rent this month. The more money you spend now, including on helping people stay in their homes, the less you’ll spend in the long run in terms of damage to the economy.”
On Friday, March 27, President Trump signed a $2 trillion stimulus bill, the largest emergency aid package in U.S. history. Many Americans will receive a one-time, $1,200 check to help cover housing and other costs (the median U.S. rent in December 2019 was $1,343 for a two-bedroom apartment). The one-time payment gradually phases out based on a recipient’s annual income, and disappears for those making above a certain level ($99,000 for a single person, $198,000 for a married couple without kids). The package also bolsters unemployment benefits by $600 a week and expands the program to cover contract workers, and includes additional funding for food aid.
For homeowners, the federal government is instituting a program of mortgage deferment likely to be adopted across the industry, which means borrowers who have lost income or employment due to novel coronavirus fallout will be able defer payments on mortgages backed by Freddie and Fannie Mae by up to a year.
But backstopping the mortgage market is already part of the traditional financial policy playbook. This is a long-term crisis, and will require a solution that looks ahead to the world after the current economic slowdown, says Galante, perhaps something akin to a Universal Basic Income. Moratoriums are a great, immediate action, but nowhere near enough.
“I’m a little perplexed that so many people are focused on rent and eviction moratoriums as the strategy,” she says. “It’s not a bad strategy, if paired with emergency rental assistance. I’m calling for a disaster-like response. In a hurricane, if you lose your house, you get housing assistance on a temporary basis. We need the same thing on a national level right now.”
The policy decisions made now will have an incredible impact on the economy. Rent payments ripple upward and across multiple levels, and as Shaw says, “if the renter doesn’t get or can’t earn money, the landlord doesn’t get money, then the city doesn’t get money.”
Galante argues that it’s sensible for the federal response thus far to have prioritized mortgage relief, but that that’s just one part of what’s required.
“What drove the entire financial crisis in 2008 was people not being able to pay their mortgages,” she says. “It hurt the lending institutions, it hurt the individuals, and the single-family housing market is a huge part of the economy.”
In New York City, where roughly two-thirds of the population rents, there are much stronger calls to go beyond an eviction moratorium, with some calling to temporarily cancel rent. According to Susanna Blankley of the Right to Counsel NYC Coalition, a citywide tenant organizing group, nobody should be paying rent during this crisis. The government should give renters a few months off, and have landlords absorb the cost, with emergency funding available to help smaller landlords and nonprofits. Since the state offered a 90-day mortgage suspension, she argues, landlords aren’t in a situation where they have to pay, either.
“Thirty-nine percent of New Yorkers can’t pay rent if they lose a month’s worth of work,” says Blankley. “It’s important people don’t have to worry about being evicted during this time. But we have to think about what happens when we emerge from this. We’ll have a surge in evictions and cases flooding the court.”
The speed at which the crisis is developing, combined with the anxiety of uncertainty, is leaving renters in a lurch as they weigh if they should pay rent now, or put money toward more immediate expenses.
“So many Americans are living paycheck to paycheck, and we’ll see the consequences of that when April 1 rent payment is due and so many don’t pay it,” says Justin Hollander, a professor at Tufts University. He’s proposed a rapid employment program led by the federal government, reminiscent of the Works Progress Administration programs during the Great Depression, to get money into renters’ hands as quickly as possible. “The Great Depression took years to come to fruition. The economy slowed down drastically, instead of grinding to a halt. What’s so sudden and dramatic today is the large percentage of the workforce that has been put out of work so quickly.”
Beaugard, the freelance photographer, has mixed feelings about the eviction moratorium, which is currently in place in her home state of Colorado. Her immediate reaction is that it’s great she won’t have to face homelessness on top of everything. But without relief, her only option is to put off paying rent, which amounts to just another stressor.
“Being self-employed, I don’t like to add extra bills or burdens, and with a moratorium, there’s no guarantee that later I won’t be further into debt,” she says.
Thubten Comerford, 54, lives in Vancouver, Washington—a state that also has an eviction moratorium in place—with his partner in a small apartment. He normally makes a living organizing and producing networking events for companies in the Portland tech scene, but has no idea when such events will be permissible again. He’s not sure if he’s going to pay rent April 1 because he’s not sure how long he’ll be out of work.
“Is the fabric of society going to fall apart? I have no idea what’s going to happen,” he says. “Making a choice on incomplete info is a challenge.”
It’s not just renters who are seeking relief from the government. Landlords also need federal assistance, says Jeff Cronrod, who represents the American Apartment Owners Association (AAOA), the nation’s largest landlord trade group.
Landlords have been trying a number of solutions to cut expenses and make their own mortgage payments on April 1, Cronrod says, including using tenant’s security deposits in lieu of their rent payment this month. But ultimately, existing moratoriums just delay rent payments that landlords need to pay their own mortgages and bills.
Earlier this week, the Federal Housing Finance Agency said it would grant apartment owners mortgage forbearance if they agree not to evict tenants, a move that allows apartment owners to restructure their agreements with mortgage lenders to pay later, but doesn’t get them off the hook.
“You’re talking about billions of dollars if we forgive a few months of rent payments,” he says. “Someone has to suck that up, and I assume that’s the federal government. They’re the ultimate backstop for all of this. There’s no alternative.”
Issues of rent and the long-term impact on the real estate market will be paramount. Berkeley’s Galante says it’s imperative that any rental aid reflects different costs of living across the country: a flat amount set too low could make it hard for renters in high-cost coastal markets to cover all their bills, for instance.
“It’s also important that we don’t take our eye off the housing affordability crisis,” she says. “If we don’t factor that in, we’ll be in another crisis right after this one. We saw rents really spike after the last crisis.”
Policy that helps guarantee rent and mortgage payments are still made on time will be instrumental in solving this complex economic crisis. The exact solution isn’t clear yet, but nearly everyone agrees that the kind of large-scale government interventions that would have seemed unimaginable just a few months ago are now necessary.
“We’ve been calling for a city that’s free of evictions for over a year and people say it’s impossible, and now we’re living in a city that’s eviction free,” says New York City’s Blankley. “The demands we’ve been making are now possible.”