In this issue:
- December and 2020 overall HAR data
- Stimulus, Stimulus, Stimulus
- Evictions in 2021
December HAR Release – https://www.har.com/content/newsroom?pid=1761
If you’ve been looking at these the past 6 months or reading my letters from time to time, there wasn’t really anything shocking in here. More of the same, but of course HAR gave an attention grabbing headline – “The Houston Housing Market Defies a Pandemic to Set New Records in 2020” – and talked up the large increases in sales year over year.
Don’t get me wrong, an over 10% increase in the number of houses sold versus 2019 is pretty impressive when you take a step back. April and May were the only months to take a pause, and the summer went crazy with pent up demand after that. The higher end of the market definitely carried the weight though; with December, yet again, showing homes priced above $500,000 increasing more than 50% in sales year over year.
What will slow this down? Inventory is now at an all time low of 1.9 months. That is crazy, especially considering 6 months of inventory is considered a “balanced” market. HAR does not report inventory by price segment, but we already know based on sales data that there is becoming more and more a lack of affordable housing. We’ll see if people that held back selling in 2020 feel bold enough to put their house on the market this year. But, unless that happens at a record breaking speed or demand drops off significantly, this lack of inventory could cause a dramatic decrease in sales in 2021.
Stimulus, Stimulus, Stimulus
Well, the $900 billion stimulus bill finally passed at the end of the year. By now, most eligible people have already received their $600 direct payment, and small businesses across the country are getting documents together to start applying for the next round of PPP loans. Something very important for property investors was also included in this bill: $25 billion in rental assistance. This of course was paired with an extension of the CDC eviction moratorium through end of January, but we’ll focus on the rental assistance for now.
To be eligible, tenants need to show either eligibility/history of unemployment or attest in writing that they’ve lost significant income. They also need to show past due rent or utility notices. But the application part is still a bit of a mystery. States are supposed to receive their portion of the $25 billion (I’m assuming based on population, demographics, and lobbying efforts) by January 20. Then the states will portion out that to local agencies across the state. For a more thorough explanation, see this article – https://www.cnbc.com/2021/01/07/congress-approves-25-billion-in-rental-assistance-heres-how-to-apply-.html. We’ll monitor this closely and send info to tenants at properties we manage that are struggling.
What’s next? This week Joe Biden released some teasers about a $1.9 trillion stimulus plan he hopes to get approved very soon after his inauguration.
Evictions in 2021
How Biden’s newest stimulus proposal will affect landlords, tenants, and property managers is still to be determined. However, a couple important initiatives have been disclosed. One, an additional $1400 in direct payments to individuals, which will certainly help those struggling pay for rent, food, and other essentials. Also further unemployment benefit increases, which should help landlords continue to receive rent. However, all of this again paired with an eviction moratorium. This one will last until the end of September 2021. That will be over 14 months of national eviction moratoriums in some form since the first one went into place with the CARES Act in July 2020.
I do believe direct payments, increased unemployment benefits, and rental assistance programs are all good things for landlords. But it’s a double edged sword because it means evictions will be very tough. Unfortunately, at our property management company, we have seen some folks take advantage of the moratorium. However, the majority are doing what they can and paying rent as they’re able to. Overall if Biden’s plan passes, plan on working with tenants and push them to get the assistance that should be out there. Evictions for non-payment will continue to be very difficult for most of 2021.
That’s it for this session. Welcome to a new and hopefully much better year, and I’ll be with you again next month as we see how the next round of stimulus goes.
Advantage Asset Management