STAYING HOME
Memphis renters avoid wave of evictions as landlords fret over lost income — but some fear ‘real pain’ is still to come
Memphis' massive rental housing market weathered the coronavirus summer with a sharp decrease in evictions led by a temporary federal law banning landlords from removing tenants.
After the law expired in July, the ban was continued in September by a broad federal order barring evictions nationwide for the remainder of the year.
But landlords and legal aid lawyers are concerned the housing rental market, home to almost half the city's residents, could still be roiled in the coming months.
In a sign of the turmoil, seven Memphis landlords went to federal court in an effort to overturn the federal order and open way for evictions of tenants behind on rent payments. The lawsuit was briefly dropped on Wednesday and refiled as a new case after some of the original plaintiffs were removed from the action.
The lawsuit contends the agency that issued the emergency order, the Centers for Disease Control and Prevention, or CDC, lacks authority to intervene in the nation’s rental housing market and provides no financial relief for landlords who lose income over the next four months.
For now, legal aid lawyers in the city urge unemployed Memphians to make use of the CDC order and protect themselves from evictions by formally declaring a pandemic-related layoff cut their income.
Just how many will seek the formal protection, and what happens when that federal order expires Dec. 31, has housing experts worried the new year could usher in a wave of evictions.
CDC put the measure in place effective Sept. 1. The agency has contended the temporary order is legal under CDC’S scope to cut down the spread of the virus among people in close contact by reducing homelessness.
With about 80,000 residents unemployed in metropolitan Memphis, the order amounts to a lifeline for jobless renters and many students enrolled in Shelby County Schools. Among all Memphis and Shelby County homes housing children 18 or younger, 47% are headed by a single adult. That means a second income may be unavailable to help with the rent payments. This contributes to the high level of so-called burdened households. In 37% of homes in the city and county, monthly rent payments exceed 30% of monthly income.
To take advantage of the no-eviction rule, however, renters must tell their landlord in writing they are declaring a financial setback. Forms are available for free at legal aid clinics.
“You don’t have to go to court and file any thing but you have to let the landlord know,” said Katy Ramsey Mason, a University of Memphis law school professor heading U of M’s Medical-legal Partnership Clinic.
While the CDC order can stave off a wave of evictions this fall, what’s less certain is what happens after the measure expires on Dec. 31 and if the area’s jobless rate, currently estimated at 13%, remains in double digits into the winter and spring of 2021.
“I think it will help,” said Memphis attorney Marcus Ward, referring to the CDC order. “But I will say this. It’s not a long-term plan providing tenants some form of relief. All the best-laid plans of the city and beyond will not last long term.”
Ward, a former assistant city attorney in Memphis, recently represented an apartment owner in a tenant dispute filed in Shelby County General Sessions Court.
Interviewed outside the courtroom, Ward said unemployed residents need further help. The $1.6 million in federal aid amassed by City Hall to help jobless residents needs to be replenished. And he figures the U.S. government will have to rush into place more emergency financial programs similar to the $600-perweek in supplemental unemployment compensation. The latter expired July 30 along with $1,200 stimulus checks sent to U.S. taxpayers.
Since then, members of Congress have discussed a new stimulus measure but have not agreed on a package to send to President Donald Trump for approval.
Without that further aid, jobless renters spared evictions this fall may be hard-pressed to pay the back rent when the CDC order expires. The order bars evictions but does not relieve people of rent that accumulates. They could face eviction in 2021 if the landlord chooses to turn them out of the home for unpaid rent.
In August, 1,173 eviction notices, formally called forcible entry detainer warrants, were filed in Shelby General Sessions, compared to 2,580 in August 2019, reports Memphis housing expert Harrison Austin, a consultant to community group Neighborhood Preservation Inc.
This August’s 53% decline rests in part on the temporary law Congress passed in the spring barring evictions in federally-subsidized housing through July 24. The law required landlords hold off from that date for 30 days before filing new evictions.
Next year, evictions could increase. One sign of pain appeared this month. In September’s first week, 32% of renters nationwide failed to make a full monthly rent payment, up from 10% in August, estimated housing analyst Chris Salviati of Apartment List, a market researcher in Boston.
The August-to-september upturn likely reflects financial hardship. “In the wake of a nationwide eviction moratorium and lapsed unemployment supplements,” Salviati’s report says, “renters continue to struggle to make housing payments.”
The eviction moratorium refers to a federal law that expired in July. It barred landlords from evicting tenants for 120 days if they lived in homes supported by federal housing subsidies or financed by a federallybacked mortgage. As many as 19.9 million households were covered, the Federal Reserve Bank of Atlanta estimated.
“All through the pandemic, money from Washington came in and really helped the residential market,” said Jim Reedy, chief executive of Reedy & Co., a Memphis real estate firm that rents out 2,100 apartments and 1,000 houses. Reedy & Co. is not part of the lawsuit filed Wednesday.
With the city’s $1.6 million assistance program for the needy, and the $600-per-week in supplemental federal unemployment compensation, Reedy said the vast majority of people made their rent payments during the summer even if they had lost work.
In August, the firm collected rent payments that totaled 94% to 96% of the full amount due in the month, Reedy said.
What’s not clear, he said, is what will happen in the market in the coming weeks. The $600 supplement ended in July. The jobless rate hasn’t receded. And the eviction moratorium will end Dec. 31.
“By the end of the year, the real shake-out is going to begin unless we get another stimulus worked out in Washington,” Reedy said. “That’s when the job losses are going to rear their ugly head. That’s when the real pain starts.”
Housing market specialists including Mason and Daniel Schaffzin, a University of Memphis law professor, point out landlords may wind up in foreclosure proceedings if they can’t make payments on the loans used to buy their properties. A spate of foreclosures in turn could result in less rental housing available in 2021 in the city. In the lawsuit filed in federal court Wednesday, the landlords strike a similar theme and ask a judge to issue an injunction halting the implementation of the CDC order.
"Failure to issue an injunction threatens to destabilize the housing market and reduce available housing,” says the lawsuit signed by attorneys Joshua Kahane and Audrey Greer of the Memphis law firm Glankler Brown.
Landlords who filed the case are named in the following order: Tiger Lily LLC, Applewood Property Management LLC, Hunter Oaks Apartments Utah LLC, North 22nd Flat LLC, Cherry Hill Gardens LLC, Churchill Townhomes LLC, and Brittany Railey.