One Man’s Opinion: So…What’s the Plan

Not much more than one month into this pandemic, millions of American were losing their jobs or going from full to part-time, under-employed, to unemployed, and increasingly…self-employed.  As housing costs are the highest fixed expense for most American households, mortgage, and rent payments started to become more difficult, or went unpaid.

The U.S. Centers for Disease Control, as part of their State of Emergency Declaration, issued an order prohibiting evictions or foreclosures based on the non-payment of rent or mortgages.  Millions of Americans have struggled since some of course more than others.  Many paid no rent or mortgage because they were unable, some delayed or made partial payments because that is what they could afford, and regrettably, yes some certainly did not pay because eviction/foreclosure was at now at least temporarily off the table.

But sooner than later, perhaps as early as July, this President will be in the position to end this State of Emergency, and with that the prohibition on evictions and foreclosures.  And talk with any mortgage banker or lender, or anyone who owns manages or leases rental real estate property, and there is a tsunami of evictions and foreclosures building just offshore.

Good leaders react, try to build consensus, and on occasion use the bully pulpit to unite the country and American will.  Great leaders identify problems before they reach critical mass and assemble a team and a plan.  So what is the plan?

The Biden Administration has already proposed $6-trillion in spending in response to this pandemic, and other initiatives as well as other massive expansions to the federal government which it supports.  None of that money, in a significant sense, was budgeted to address this problem.

Private landlords and apartment complex owners are certainly due their rent, it is impossible to indefinitely manage, maintain, or service debt on real estate without income.  And with the banks and mortgage lenders, we mortgage loan holders signed a contract.  Deferred payments are one thing, but no one is expecting the financial services industries to simply write down potentially hundreds of billions of lost mortgage loan principal and interest income.

Potentially, if the debt load coming Is not managed, it could dwarf the sub-prime lending collapse in 2006 which triggered a 2008 market collapse.

Yes, there are dozens of billions available for emergency housing assistance and the homeless, but that doesn’t mean that the zoning or building permits are in place, or that neighborhoods and communities will not push back when some of the newly homeless are relocated into their area, or older apartments are rehabilitated complexes, etc… Where is the plan for what is coming?

This will require a mix of solutions, local, state and federal.  Likely loosening local building and zoning codes to allow for tiny houses, non-traditional construction such as remodeled rail cars or 3-D printed structures. States potentially utilizing former military bases or empty college dormitories (during summer semester) to provide temporary shelter…and the federal government looking at ways to incent the private sector and a broader range of non-profits to invest in affordable and lower-cost housing development offerings.

With lumber costs off the chart, the way we typically build homes will also need to be reconsidered, greater use of cinder blocks, lighter cement and structural steel will come into the mix, as well as more factory built prefabricated housing.  And I already am aware of several families and friends who are not so certain what the rest of this year will bring them on this front, even with the new security that their good health may again be safe.

Part of the American Dream is homeownership, and rightfully so…but that also comes with multiple never-ending leashes, costs, utilities, and ongoing and unexpected expenses.  For renters, things may be even scarier.  The AVERAGE rent in metro Atlanta during this real estate price spike is $1200.00 a month and that’s for two bedrooms and one bath.

Yes, more sustainable energy sources and multiple other aspects of the Biden agenda are worthy of debate and support, but NOT over the likely immediate housing needs of millions of Americans…and we simply can’t afford the federal government to cut that check and pay off everyone’s mortgage debt or back rent.  You will be hearing more about this soon…some of our friends may be needing help as well, even temporary housing.  If the macro plan isn’t ready, start with your own family and circle and be ready.  That’s the start of a plan.

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