Goldman Sachs forecasts a potential surge in evictions this year if Congress fails to act on rent arrears and eviction moratoriums
According to Goldman Sachs, around 2.5 to 3.5 million households are seriously behind on their rent, owing landlords a staggering 12 to 17 billion USD. It seemed unlikely that these tenants would be evicted before October, until last week's Supreme Court decision lifting Biden's eviction ban, signaling that Congress must act further. With most state eviction restrictions set to expire soon, analysts from Goldman Sachs noted that the situation appears grave in their latest report published on Sunday.
"So long as Emergency Rental Assistance (ERA) funds are not distributed more swiftly or Congress addresses this issue, the ending of the eviction moratorium in the coming months could lead to a substantially increased eviction rate," the report states.
Goldman Sachs estimates that without swift intervention or new legislation this fall and winter, around 750,000 households could face eviction. Wall Street banks have observed that around half of all eviction attempts in the United States ended in evictions between 2006 and 2016.
The underlying problem appears to lie in the hurdles faced in processing state aid for rent arrears.
Goldman Sachs analysts lamented the slow payment collection process through emergency programs meant for rent aid, suggesting that while the U.S. Treasury has allocated 25 billion USD to state and local governments and another 20 billion USD is available, only 4.5 billion USD has been disbursed so far.
The Census Bureau estimated that approximately 1.3 million people may be displaced within the next two months. The same report estimates that more than 2.2 million people have applied for rental assistance from state or local governments, but either received no response or were rejected.
"The strong housing and rental market trends suggest that landlords will likely attempt to evict tenants in arrears, unless they receive government aid," the report concludes.
Goldman Sachs predicts that evictions will be particularly pronounced in cities severely affected by the pandemic, as housing markets in these areas are stronger.
A housing crisis could impact not only affected families but also exacerbate public health concerns and economic recovery while fueling inflation.
The report predicts that 750,000 evictions are likely in 2022, and the cooling of inflation in the rental market will exert a "moderate strain" on spending and employment growth. The report also warns that the potential impact on new COVID-19 cases and public health could be more severe.
Key Takeaways
- Goldman Sachs warns that the end of the eviction moratorium in the US could lead to a significant rise in evictions without quicker assistance or new regulations.
- The report advises Congress to pass a final spending bill with increased funding for various HUD programs, oppose cuts to affordable housing, and advocate for funding through email or call campaigns.
- Organizations can join a national letter campaign to support increased funding for affordable housing, homelessness, and community development resources in the 2025 budget.
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