In North Carolina, Governor Roy Cooper has extended the moratorium on eviction proceedings. It was put in place during the COVID-19 shutdown to protect rental tenants who lost jobs or were furloughed. Although the impending end of the moratorium seems worrisome for those citizens, there is also the perspective of property owners and the real estate market as a whole.
When businesses shut down at the end of March, many employers laid off employees or reduced their hours. Many were able to work remotely and stay employed, but with the large number of hospitality jobs in Asheville, that wasn’t an option. So halting evictions gave many tenants a sigh of relief. With all the uncertainty swirling, they knew they couldn’t lose their homes.
How Does The Eviction Moratorium Affect Landlords?
For a landlord or property owner, this was bad news. Although it protects tenants, it adversely affected their cash flow. In turn, property owners’ ability to keep up the property and pay the mortgage was at stake. If your tenant isn’t paying rent, your income is gone. In the short term, landlords were in danger of bankruptcy or foreclosure.
The pause in evictions and loss of funds also has long term effects. Landlords may choose not to be landlords anymore due to the issues they faced throughout the shutdown. This would result in less rental properties with higher prices, making it even harder for tenants to find a place to live. It would especially hurt those with less-than-stellar rental track records, lower incomes, or lower credit scores. Landlords and property managers will be more selective and less apt to accept those tenants and take a chance on them.
In the mortgage industry, this is already happening. Homes are selling for higher prices, lenders are being more choosy with giving out loans, opting for applicants with higher incomes and credit scores. Inevitably, this will flow down to tenants. Property taxes will probably go up, too, due to loss of income at municipal and state levels, so rents will follow.
So, it benefits tenants who can’t pay rent to keep the eviction moratorium. But what will the long term effects on the Asheville real estate market be? We’ll have to brace ourselves, and wait and see.
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