Record-low mortgage rates, among other factors such as the desire for more space during stay-at-home orders during the pandemic, have spurred 2020 home sales in the U.S. This industry boom is an exception to the record declines endured by many other industries as a result of the COVID-19 outbreak. Home sales for 2020 are expected to exceed 2019’s numbers, when the country’s economy was in much better condition. Regardless of the rise in housing sales, millions of Americans are currently experiencing difficulties making their mortgage or rent payments, and many are leaning on temporary eviction moratoriums to keep their roofs over their heads, widening the gap between the wealthy and the poor in our country.*
In California, Governor Gavin Newsom extended the stay on eviction orders until January 31, 2021. “While this bill will give tenants some room to breathe, it is not permanent. As of now, the protection for evictions lasts only until February 1, 2021,” says Governor Gavin Newsom. “That’s why we’ve been continuing to advocate for action from the federal government to help protect renters. We have made remarkable progress in helping more Californians keep a roof over their heads during this emergency, but even a state as large and influential as ours cannot tackle a national crisis on our own.”
Home ownership wasn’t a luxury everyone could afford before the pandemic, and post-pandemic home ownership is reserved for those whose incomes and savings accounts haven’t been affected by the economic impacts so many others are experiencing. Also, with the increase in demand for housing, home prices are rising, making it that much harder for lower income individuals to afford a new home. Renters are also feeling the impact, with a larger percentage of renters losing their jobs and their incomes as a result of the pandemic. With depleted savings accounts, no money is left to use as a down payment on a house, and the inability to pay monthly bills is a blow to credit scores, making it unlikely for current renters to come up with down payments or secure loans if they were considering purchasing a home in the near future. According to the U.S. Census Bureau, approximately one in six households that rent are behind on payments.
In early 2020, Governor Newsom issued an executive order banning the enforcement of eviction orders for renters affected by COVID-19. The order prohibits landlords from evicting tenants for nonpayment of rent and prohibits enforcement of evictions by law enforcement or courts. It also requires tenants to declare in writing, no more than seven days after the rent comes due, that the tenant cannot pay all or part of their rent due to COVID-19. This order was later extended through September 30, 2020, and the most current extension expires January 31, 2021. The order, or the COVID-19 Tenant Relief Act of 2020, is a statewide law that imposes a temporary moratorium on certain evictions between March 1, 2020 and January 31, 2021. The act applies to qualifying residential tenants for failure to pay rent because of financial distress related to COVID-19.**
As per the California Eviction Moratorium, “Tenants who pay at least 25% of their rent from September 1 through January 31 will be protected from eviction—and won’t be liable for rent that was due from March through August until March 2021.” To qualify, renters are required to submit a form each month, the Declaration of COVID-19-related financial distress, declaring they face a COVID-19 related hardship and are unable to pay rent. It bans any evictions for back rent owed so far and forces landlords to civil court to collect debts, but requires renters to pay at least 25% of rent moving forward.***
“In the Capitol, we are working hard to help you keep a roof over your head, and there are new resources and protections available to you right now,” Governor Gavin Newsom said. “Tackling the housing crisis in California has been a priority for me since my first days in office. Access to safe and affordable housing is a cornerstone of the California Dream, one that must stay in reach of all Californians.”
The economy is expected to slowly recover, as economic indicators such as employment rates and consumer spending begin to normalize, but the polarized trends in the housing market may be long lasting. With millions of people in financial dire straits as a result of the pandemic, it is more important than ever to have the security of a home, and to maintain that security without the uncertainty of whether they can make the monthly payments. Without extended eviction protections, over 6 million households may face eviction in early 2021.
The COVID-19 Eviction Moratorium does apply to residents in the San Joaquin County area. For more information, the state of California created a website called Housing Is Key that provides important information for tenants, landlords, and homeowners that is available in several languages and provides links to resources.
Safe and secure housing is a basic necessity, and something we all should have the right to enjoy. At Soldavi Realty, we are committed to making real estate dreams a reality for all Californians in the greater Merced area. Reach out to Soldavi today to learn more about how we can help you realize the dream of home ownership.