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Featured Story
Stanford University Study Reveals Cost Implications
Iof Tenant Protections By Daniel Yukelson, Executive Director
t is difficult to fathom the possibility, but “what if?” What if eviction and rent increase moratoriums, and the seemingly never-ending tenant protection programs put in place to help renters facing eviction actually might lead to increased homelessness rather than prevent it? Impossible you say? Think again...and read on.
This brilliantly, counterintuitive question has been raised in an academic paper that came out of Stanford University addressing how our
society has been dealing the housing crisis, particularly the affordable housing crisis and homelessness. The study, “The Welfare Effects of Eviction and Homelessness Policies,” was published late last year and was written by Stanford University Ph.D. candidate Boaz Abramson using detailed data from the City of San Diego to measure the impact of eviction moratoriums on homelessness like those introduced during the pandemic. The paper also examined the long-term impacts of tenant protection ordinances such as right-to-counsel which are imposed to slow and sometimes prevent evictions.
Summary and Introduction
Research conducted at Stanford University by Ph D. candidate Boaz Abramson on the implications of rental market policies that address evictions and homelessness concluded that such policies ultimately lead to higher default costs that are borne by landlords resulting in higher rents and lower housing supply. The study, titled “The Welfare Effects of Eviction and Homelessness Policies,” looked at the impacts of tenant protections that make it harder for landlords to evict delinquent tenants such as, for example, providing tax- funded legal counsel in eviction cases (“Right-to-Counsel”) or by instituting eviction moratoria, which policies the study points out imply eviction and homelessness are less likely in the event of payment default. Yet, the opposite is true.
The study quantified the impacts of renters’ protections by modeling the City of San Diego rental market to look at effects on rents and evictions as well as how income and family structure impact delinquency rates. The study determined that “Right-to-Counsel” increased rents so much that homelessness increases by 15% and resulting tenant welfare is diminished. The study also concluded that increased tenant payment defaults are the ultimate result of tenant protections: “defaults on rent are driven by persistent income shocks, stronger protections are ineffective in preventing evictions of delinquent tenants, and lead to a large increase in default premia.” Measures implemented
by government in response to the pandemic, the study also concluded, should only be temporary measures: “eviction moratoria can prevent a spike in evictions following a rare economic downturn..., and should only be used temporarily.”
In contrast, the study found, that rental assistance lowers renters’ default risks and, as a result, reduces homelessness by 45% and evictions by 75% while at the same time, rental assistance increases tenant welfare.
Some “Key” Take-Aways from the Stanford Study
The Stanford study emphasizes that there are approximately 2.2 million eviction cases filed against renters each year in the U.S. of which the majority are due to payment defaults, and (despite tenant protections in place) 600,000 people sleep on the streets or are in homeless shelters every night. In response to this, tenant rights groups have been pushing for action, and policymakers across the country have considered enacting more stringent tenant protections against evictions, such as by providing free legal counsel in eviction cases (“Right-to-Counsel”), controlling pricing (“rent control”), or by imposing eviction moratoria in extreme cases and a variety of other tenant protections (“just-cause” eviction rules).
The study describes the impacts associated with evictions, including homelessness and partial repayment of rent debt, and impacts of health deterioration and material hardship that renters experience. The study surmises: “Evictions are costly for society both because they impose a wealth loss for individuals, and because they lead to homelessness, which imposes an externality cost in terms of expenditure to a local government. The government finances the cost of homelessness through a lump-sum tax on investors.”
The study also found that the moratoriums put in place as a result of the pandemic were beneficial for tenants, allowing those who perhaps lost their job temporarily during lockdowns to stay in their homes and resume paying rent when the economy recovered. However, the longer-term tenant protection policies such as “right to counsel” have had unintended consequences of causing housing to become more expensive for those at the bottom of the income scale, and as a result, homelessness increased because a percentage of low-income tenants could not afford to rent in the first place.
While policies that make it harder to evict tenants who default on their rent protect renters from the costs of eviction in tough times, such policies can also lead to higher
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