Is the US is an accurate tell-tale of what is about to happen in global property markets? Perhaps with home ownership rates much higher in European states like Italy, Greece and Spain the US rental market may face a harsher reality. Here is what we know so far:
The mandatory closure of nonessential businesses around the country and subsequent layoffs could bring on another housing crisis. With cashflow drying up and employees furloughed without pay or laid off entirely, owners and workers are struggling to find the means to pay rent. A conglomerate of retail outlets is threatening to withhold April rent payments, citing a common clause in commercial real estate contracts. But business’ inability to pay rent could completely upend the mortgage market. States and municipalities are stepping in to provide relief and abate foreclosures and evictions, particularly while shelter-in-place orders are in effect. The federal government has instituted a nationwide stay on foreclosures for the next two months for about 30 million homeowners that have mortgages backed by Fannie Mae and Freddie Mac.
Here are other steps being taken to protect renters and keep people and businesses in their homes:
- Los Angeles has extended its ban forbidding landlords from evicting tenants in rent-stabilized apartments and turning them into condominiums.
- Miami-Dade police are not carrying out evictions.
- New York Gov. Andrew Cuomo put a moratorium on all commercial and residential evictions for 90 days.
- San Francisco has issued a moratorium on evictions and put additional protections in place for small businesses. California Gov. Gavin Newsom, meanwhile, issued a directive allowing local governments to put a stay on residential and commercial evictions.
- Maryland Gov. Larry Hogan has banned evictions while the state is under a state of emergency.
- Kentucky has put a hold on any eviction proceedings until April 10, however, any evictions already in progress are still being executed.
- In Detroit, real estate conglomerate Bedrock will not collect rent or fees from small business until July.
It could be that “stimulus” and cash injections will prop up small businesses much more than those with interests in the real-estate market – and that home owners may well be the ones to help share the burden by facing a loss of rental income. In countries like the US, Australia and UK this will increase the risk of toxic loans as mortgage lenders risk a new crisis.