This is a clip from an older video filmed a few months ago with Sebastian Ghiorghiu about making money and the happiness that follows…or doesn’t follow.
ATLANTA — On a brisk morning in mid-December, Valencia Hicks was running late to the Fulton County courthouse in hopes of avoiding eviction.
The 43-year-old mother had been forced out of her home the year before, a process that had uprooted her family from their apartment in East Point, Georgia. At her new brick split-level, Hicks decided not to pay her $995 monthly rent because her landlord hadn’t adequately fixed broken appliances, preventing the family from enjoying affordable home-cooked meals. The landlord, in turn, filed for eviction.
Like most tenants facing eviction in Fulton County, Hicks is African-American and lacked a lawyer. She planned to tell the judge about her family’s hardships. Not only did she have a disability, reliant on government checks for rent, but she also was raising two boys who each had autism.
Without a favorable ruling, a landlord could move forward with padlocking the door and placing their items on the curb. If she was lucky, she might get her wish of celebrating Christmas there.
A long understudied facet of the American housing market, evictions have hit no area of the country harder than the South, a region home to most of the top-evicting large and mid-sized U.S. cities, according to a list released by Princeton’s Eviction Lab.
Last year Eviction Lab debuted what’s thought to be the nation’s largest eviction database, revealing that U.S. property owners had submitted at least 2.3 million eviction filings in 2016. For housing experts from Louisiana to Virginia, it provided the evidence to confirm what they long suspected: Black renters disproportionately bore the brunt of the eviction crisis.
Eviction Lab found that nine of the 10 highest-evicting large cities were not only located in the South but also had populations that were at least 30 percent black.
Moreover, the top 25 entries in its ranking of mid-sized cities — including East Point, population 35,000 — experienced an eviction rate at least four times higher than the national average of 2.3 percent.
“If you’ve read about the housing crisis, it seems located in New York and San Francisco, but the eviction crisis is happening in cities with a fairly low cost of living like North Charleston, South Carolina, and Tulsa, Oklahoma,” said Matthew Desmond, a professor of sociology at Princeton and the author of the Pulitzer Prize-winning book Evicted.
“There’s a lot of questions left unanswered, but the data allows us to see the problem in a way we’d never seen it before,” Desmond said. “That’s allowed the narrative to change in some communities.”
The current shutdown of many federal agencies could make the matter worse. If the shutdown lasts much longer, housing experts fear evictions could spike nationwide because landlords who rent to low-income tenants might not be able to get rental assistance from the Department of Housing and Urban Development.
Strengthening tenant rights
As some southern legislatures kick off their 2019 sessions this month, many state lawmakers are considering a new slate of bills to curb the larger affordable housing crisis. Following the launch of Eviction Lab’s database, local advocates intend to further raise awareness of the consequences of eviction, a process that can start with a single missed rent payment.
Not only do evicted people face barriers to new housing, studies suggest evictions also are linked to worse health and educational outcomes, according to research respectively from Desmond and the Urban Institute. With evictions often clustered in lower-income black neighborhoods, entire communities can face the fallout of a churn of new neighbors that severs close-knit social networks.
This status quo is often protected and nurtured by politicians and property owners. Landlords in Mississippi routinely file for eviction as a legal way to collect rent, according to an investigation last year by Mississippi Today.
Meanwhile, some lawmakers in the Republican-controlled Georgia statehouse have stymied proposals to strengthen tenant rights.
From 2012 to 2016, Republican state Rep. Wendell Willard, then the chairman of the influential House Judiciary Committee, received at least $30,000 from various companies with ties to the housing industry, based on a Stateline review of campaign contributions. No bill to bolster tenant rights advanced out of his committee.
The former chairman of the Georgia Senate Judiciary Committee, Republican Josh McKoon, didn’t grant a hearing to a bill that would have forced landlords to fix “unsafe or unhealthy conditions” in rental units such as mold growth, pest infestation and tainted water.
McKoon says the committee under his leadership granted hearings to any lawmaker who requested one, but that lawmakers sometimes file legislation “to have a broader conversation” about an issue.
“We try to give judges a fair amount of discretion,” said Willard, who said campaign contributions had no influence on his decision-making on the issue. “I think we have a pretty good body of law in Georgia that’s been developed over many decades on dispossessory. But if something needs to be changed, we try to change it.”
Armed with data and heightened public awareness, in part thanks to Desmond’s book Evicted released two years ago, some housing advocates are pursuing changes in law with a renewed energy to decrease evictions, increase affordable housing and reduce disparities that exist for black renters in the South.
While eviction rates have spiked in states like South Carolina, according to Eviction Lab data, Georgia and Virginia have seen their rates trend downward since the Great Recession.
“Evictions are both a consequence of cumulative forces of poverty — and black poverty — and a cause of it,” said Dan Immergluck, an urban studies professor at Georgia State University. “Evictions hurt folks in all kinds of ways. Because evictions are concentrated in black neighborhoods, it impacts whole communities.”
Higher rents, more evictions
Evictions are the latest in a long line of housing policies that have disproportionately harmed black Americans. Over the past century, well-documented discriminatory practices like redlining, restrictive covenants and predatory lending have denied black people the opportunity to buy homes.
Discouraged from homeownership — and the accompanying wealth-building benefits — many black people rented instead. In 2015, the African-American homeownership rate was about 42 percent, more than 20 points lower than the rate for all groups, according to the U.S. Census Bureau. But a 2018 study found that black people are more likely to pay higher rents than white people in the same areas.
And a Cleveland State University researcher surveying rental agreement laws found that no southern state had a suite of laws protecting tenants over landlords.
Every week, attorney Jesse McCoy sees this play out inside eviction court in Durham, North Carolina. The tenants, he said, are mostly black. Many make honest pleas to a judge about their life’s circumstances — which almost always lack legal standing.
McCoy thinks many of those same tenants would have legitimate grievances, from roach infestations to black mold, that might yield a favorable outcome. But without consulting counsel, he said, they rarely raise legal arguments.
“If you don’t understand rights, you can’t advocate for yourself,” said Sue Berkowitz, director of the SC Appleseed Legal Justice Center, an organization that helps clients in South Carolina, a state with an eviction rate of 8.9 percent, nearly four times the national average.
Housing attorneys throughout the South think that tenants facing an eviction case could have better outcomes in court if they were guaranteed the right to counsel — a right now ensured in select cities such as New York.
“An eviction — even a filing — follows you around,” said Elora Raymond, an assistant professor of city planning and real estate development at Clemson University. “If you get evictions filed against you in Georgia, and move to California, you still have that history.
“If that’s happening more in South Carolina or Georgia,” she said, referring to two states with high percentages of black residents, “and less in Montana or Colorado — there’s a racial implication.”
Virginia Poverty Law Center attorney Christine Marra said tenants who have had rental applications denied are less likely to find safe or affordable housing.
In some cases, those renters often can find housing only farther from where they lived before, potentially impacting other family issues, such as a child’s academic performance. And health care researchers have found that evictions are linked to higher rates of depression, stress and suicide.
Garland Nellom, a 51-year-old mother of three who faced eviction in New Jersey, said she moved to Georgia four years ago after her youngest son, who had asthma and an allergy to the mold she later discovered in their apartment, died. He was 11 years old. Nellom found an apartment in College Park, Georgia, for $745 a month.
Soon, she noticed problems including rodents and mold. She withheld her rent in protest — a practice that in some northeastern and western states can be done legally to force serious repairs from a neglectful landlord, but in Georgia can be grounds for eviction. Her landlord took legal action.
They ultimately settled the dispute, thanks to a lawyer Nellom had secured through the Atlanta Volunteer Lawyers Foundation, and she stayed. This past summer she left for good upon finding exposed wire in her laundry room, which had flooded once again. Given her spotty housing record, landlords wanted her to pay a higher security deposit, which she was unable to do living on disability.
“I was fearful I was going to die,” she said. “I had nowhere to go — nowhere. I put my name on homeless shelter lists. They were full. I had neighbors gracious enough to let me stay.”
Focused on change
Faced with the scope of the eviction crisis, advocates are lobbying for changes to address housing disparities throughout the South.
In North Carolina, McCoy has helped oversee Durham’s eviction diversion program, which pairs Duke law students with unrepresented tenants facing eviction.
South Carolina state Rep. Marvin Pendarvis, a Democrat from North Charleston, is pushing a bill to approve “repair and deduct,” a practice allowed in many states, in which tenants front the costs of repairs if a landlord doesn’t fix the issue, and deduct that amount from a future rent payment.
And in Virginia, which is home to some of the nation’s highest eviction rates, a coalition of lawyers, researchers and activists last year launched the Campaign to Reduce Evictions.
The group has drafted more than 30 proposed changes that would make it easier for tenants to understand the court process for evictions, increase tenant legal rights trainings, pump $20 million into the state’s housing trust fund and expand the state’s low-income housing tax credit.
In response to news reports about Virginia’s high evictions rate, National Apartment Association President Robert Pinnegar recently claimed that “misunderstandings” about evictions have unfairly cast landlords in a negative light.
“Apartment owners do not target evictions for any group or reason,” he wrote in a letter to the Washington Post. “Evictions are a last resort in the rental housing business.”
Housing advocates further recognize that changes can only be effective if they also address the shortage of affordable housing affecting many southern cities.
Some officials have recognized the need: Atlanta Democratic Mayor Keisha Lance Bottoms has vowed to put $1 billion toward more affordable housing. But low-income housing developers say additional funds or tax credits are needed to build new units.
Policies like inclusionary zoning — requiring developers to make a fixed percentage of rental units affordable in new developments — have received a mixed reception across the South.
“Don’t just build new affordable housing,” Immergluck said. “States and localities need to think about creating their own voucher program that might focus on particular populations like families with kids. I don’t see southern states funding a permanent voucher program. Maybe it’s short term.”
Short of a universal housing voucher program, something that Desmond has called for, the Princeton professor thinks states could reduce evictions by making smaller policy changes, such as providing additional legal support, wraparound services, short-term financial assistance or better record keeping.
“We might have a referendum on housing in 2020 — and we haven’t had that in a long time,” Desmond said. “I do think we’re in a moment where we could ask for something ambitious.”
Until tenant rights and affordable housing supplies improve, many experts say black southerners like Hicks will remain vulnerable to eviction. Hicks showed up over 30 minutes late to her Dec. 18 court date. Weary and worried, she said she experienced more traffic than usual.
In a letter to the judge, Hicks explained that she hadn’t slept well because one of her autistic sons had tried to open the upstairs windows of their house late that night. But the judge, offering no explanation, denied Hicks’ request to stay longer in her brick split-level.
According to court records, Hicks’ landlord could have filed for a writ of possession immediately to regain possession of the house. So Hicks called apartment complexes and family members hours away in case she needed to relocate fast.
She desperately wanted a place nearby to keep her boys in the same special-needs program at Banneker High School. But no one she called had immediate availability. She felt disheartened.
“Evictions shouldn’t hurt you after the eviction,” she said. “The laws are more for the landlords and rental companies than the tenants. It’s hurting people. It’s hurting us.”
The day after New Year’s, Hicks was finishing up packing her house, thankful the county marshals hadn’t yet been called to place her possessions on the curb. Her landlord had let her stay through the holidays, but wanted her out in just a few days’ time. She didn’t know where her family would go next. But one thing was certain: She couldn’t stay there.
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At the national level, housing affordability conditions improved in December 2019 compared to a year ago and fell modestly compared to November, according to NAR’s Housing Affordability Index. Median home prices rose 8.0 % in December from one year ago. The effective 30-year fixed mortgage rate1 also rose to 3.78% this December from 3.75% in November although this mortgage rate is still lower compared to the year-ago level of 4.99%.
As of December 2019, the national and regional indices were all above 100, meaning that a family with the median income had more than the income required to afford a median-priced home. The income required to afford a mortgage, or the qualifying income, is the income needed so that mortgage payments make up no more than 25% of family income. The most affordable region was the Midwest, with an index value of 211.5 (median family income of $78,785 is almost twice the qualifying income of $37,248). The least affordable region remained the West, where the index was 116.1 (median family income of $85,720 and the qualifying income of $73,824). For comparison, the index was 165.6 in the South (median family income of $72,900 and the qualifying income of $44,106) and 165.9 in the Northeast (median family income of $90,618 with a qualifying income of $54,624).
However, with home prices rising faster than income, affordability is down from last month in two of the four regions.
Nationally, mortgage rates were down 121 basis points from one year ago (one percentage point equals 100 basis points). The median sales price for a single-family home sold in December in the US was $277,000, up 8.0% from a year ago, while median family incomes rose 3.3 % in 2019 from one year ago.
With lower mortgage rates compared to one year ago, the payment as a percentage of income fell to 15.5% this November from 17.1% a year ago. Regionally, the West has the highest mortgage payment to income share at 21.5% of income. The Northeast and the South had the second highest share at 15.1%. The Midwest had the lowest mortgage payment as a percentage of income at 11.8%.
This week the MBA reported mortgage applications increased 1.1% compared to last week for the third straight week. There is still a housing shortage and more inventory is needed for potential home buyers. Mortgage rates are still historically low.
What does housing affordability look like in your market? View the full data release.
The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principal and interest payment to income). See further details on the methodology and assumptions behind the calculation.
1 Starting in May 2019, FHFA discontinued the release of several mortgage rates and only published an adjustable-rate mortgage called PMMS+ based on Freddie Mac Primary Mortgage Market Survey. With these changes, NAR discontinued the release of the HAI Composite Index (based on 30-year fixed-rate and ARM) and starting in May 2019 only releases the HAI based on a 30-year mortgage. NAR calculates the 30-year effective fixed rate based on Freddie Mac’s 30-year fixed mortgage contract rate, 30-year fixed mortgage points and fees, and a median loan value based on the NAR median price and a 20% down payment.
2 A Home Affordability Index (HAI) value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).
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Jared Kushner’s family real estate business is seeking federal financing for a $1.15 billion real estate deal, Bloomberg reports.
Kushner Cos. has been in talks with federal lenders Fannie Mae and Freddie Mac about backing for its purchase of more than 6,000 rental apartments in 16 properties in Maryland and Virginia from private equity firm Lone Star Funds, two sources told Bloomberg. It’s not clear how much money the company is seeking.
It’s the firm’s biggest deal in more than a decade, The Wall Street Journal reported.
Kushner Cos. president Laurent Morali told the Journal that the firm plans to borrow about 70 percent of the cost of the Lone Star package. He said Kushner Cos. was “running a competitive process” to choose a lender, the Journal reported. Morali apparently didn’t mention the federal lenders to the Journal.
President Donald Trump’s son-in-law relinquished his management role at Kushner Cos. and divested from some assets in the family business when he became senior White House adviser. At that time the company held more than $500 million in loans from Fannie Mae and Freddie Mac, according to Bloomberg.
But Kushner remains a key stakeholder in the company and real estate deals. The real estate holdings and other investments of Kushner and his wife, Ivanka Trump, were worth as much as $811 million last year, according to 2018 financial filings.
Peter Mirijanian, a spokesman for Jared Kushner’s attorney Abbe Lowell, emphasized to Bloomberg that Kushner no longer manages the company, adding that he is “walled off from any business or investment decisions and has no idea or knowledge of these activities.”
Fannie Mae and Freddie Mac are regulated by the Federal Housing Finance Agency, which is headed by Trump-appointee Joseph Otting. He used to be chief executive of OneWest Bank, which was founded by now-Treasury Secretary Steven Mnuchin, who is considered a close “ally of Kushner” in the White House, Bloomberg notes.
Kushner Cos. properties have been the target of several lawsuits. New York state is investigating charges by tenants that they were illegally forced out of their apartments in a Brooklyn building owned by Kushner Cos. so their homes could be sold as luxury condos.
Last year, New York City fined the company $210,000 for filing false construction documents claiming there were no rent-protected tenants in apartments the firm planned to sell.
The Maryland Attorney General also launched an investigation of operations at some of Kushner Cos.′ Baltimore-area apartment complexes after a lawsuit by tenants accused the company of charging them improper fees.
Kushner Cos. representatives have denied any wrongdoing.
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The following is NAR Chief Economist Lawrence Yun’s reaction to the release from the U.S. Commerce Department on new home construction:
“The latest month’s decline in housing starts is nothing to be concerned about. This housing data is quite jumpy. What is important is the trend line, which is clearly on an upward path. Higher housing permit issuances are also a positive indicator for even greater production in the months ahead.
Housing starts of 1.57 million units (annualized rate) in January following 1.63 million in December marks the only two months in over a decade where activity has been above the historical average of 1.5 million a year. More construction will mean more housing inventory for consumers in the later months of this year. Spring months could still be quite tough for buyers, since it takes time to convert housing starts into actual housing completions. As trade-up buyers move into these new completed homes in the near future, their existing homes will be released onto the market.”
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Oregon may soon be the first state to impose mandatory rent control.
Senate Bill 608, which would limit annual rent increases and strengthen tenants’ rights, was approved Tuesday by the state’s House on a 35-25 vote. It had already passed the state Senate on Feb. 11.
Gov. Kate Brown (D), who has expressed support for the bill, is expected to sign it into law on Thursday, her office told HuffPost.
As well as capping rent increases at a yearly 7 percent, plus inflation, the legislation would prevent landlords from evicting tenants without a reason after the first year of tenancy.
There are exemptions to the rent increase cap, including cases where the rent is subsidized or when tenants leave the residence of their own volition. For month-to-month tenants, the landlords would also have to give 90 days’ written notice before raising their rent.
“This new legislation is one of many actions Oregon needs to take to address our housing crisis,” Gov. Brown said in a statement following the House vote. “While it will provide some immediate relief, we need to focus on building supply in order to address Oregon’s housing challenges for the long term. It also is extremely important to educate tenants and landlords and help them navigate the tight rental market as this new law is implemented.”
Rising rents are an issue in Oregon and in major cities across the country.
Median rents in Salem, Eugene and Bend ― three of Oregon’s largest cities ― have increased by a quarter over the last four years, according to Willamette Week. In Portland, the state’s biggest city, median rents have jumped by 30 percent since 2011, The New York Times reported.
State Rep. Jack Zika (R) expressed concern about the bill’s passage, tweeting on Tuesday that it could “reduce the quantity and quality of housing available.”
House Speaker Tina Kotek (D), in contrast, applauded the bill’s passage, calling it a “groundbreaking tenant protection bill” that “will make a real difference for Oregon renters.”
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