An East Bay Realtor recently read a controversial article about the eviction moratorium. As we read this article, it got us talking about trends in real estate and how evictions will affect the real estate market in 2022:
The end of pandemic-area tenant protections.
Depending on who you ask, hundreds of thousands of people are on the verge of losing their homes — even as the Delta variant surges nationwide — or a similar number of landlords big and small will finally recover control of their properties and income.
But with the Supreme Court’s ruling that the CDC’s latest eviction moratorium was unlawful, a long-delayed reckoning within the housing sector is finally upon us.
The consequences will be enormous, if not quite immediate.
A virtually endless backlog of eviction cases could take months or even longer to resolve, during which time both tenants and landlords will apply for federal rent relief.
Only $5.1B of the allotted $45.6B has been dispersed.
Since this article was published there have been several changes in the eviction moratorium. Many states have implemented their own eviction bans. For example, California’s statewide eviction moratorium ended on September 30, 2021, but some cities have their own eviction moratoriums in place:
- Los Angeles. The coronavirus eviction moratorium was extended by the Board of Supervisors through October 2022.
- San Francisco. On November 11, 2021 the San Francisco Rent Board released the following statement: “In order to evict a tenant before March 31, 2022 due to non-payment of rent, the landlord must prove that they applied for government rental assistance but none was approved or received for the amount owed, and that no applications are pending for such rental assistance (whether filed by the landlord or tenant).” For more information read the full update HERE.
Will Evictions Increase?
An important question on everyone’s minds is if evictions will increase in 2022. Here are three predictions for 2022:
- Reduction of Mortgage Loans in Forbearance
Mortgage forbearance is an agreement between a lender and borrower to delay a foreclosure. A report from the Mortgage Bankers Association found the share of mortgage loans in forbearance decreased to 2.06% as of October 31, 2001. As of January 31, 2022, that trend continued, down another 11 basis points from 1.41% in December 2020 to 1.30% as of January 30, 2022.
- Rental Vacancies to Remain Low
According to the U.S. Census Bureau, vacancy rates in the U.S. ranged from 5.7% and 6.8% in 2020 and 2021. Vacancy rates are expected to remain low in 2022, partly due to rising home costs. This will make it harder to save for a down payment, prompting many to stay in rentals longer. This will make the demand for rentals to increase in 2022.
- Evictions Levels To Remain Low
Eviction rates across the country have remained below pre-pandemic levels in the majority of states. In spite of inflation hitting new highs, a Fannie Mae report predicts multifamily construction to remain “robust” as vacancy rates and rent growth metrics remain strong in 2022.
The Bottom Line
While some areas such as Las Vegas are seeing an increase in evictions, many believe evictions will remain low in 2022. Extended rent moratoriums in some areas, low rental vacancies, and low inventories are key reasons for forecasts of low evictions. Each of these is a key factor that can have a direct impact on the housing market and must be monitored for any new developments.
Are you looking to buy or sell a home? Range Homes has helped customers buy and sell homes in Lafayette, California for years. We have some great market data to help you pick the perfect area and are ready to help you find your dream home during these unprecedented times. Contact us HERE for your real estate needs.
Editor’s note: This post was originally published in 2020 with commentary from 2022.