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It's a good question. Certainly many of these landlords have mortgages that need to be paid on their properties and the usual maintenance and upkeep of said pro
by FillardMillmore 7y ago
It's a good question. Certainly many of these landlords have mortgages that need to be paid on their properties and the usual maintenance and upkeep of said properties. If landlords cant pay their mortgages, I'd assume the properties would be foreclosed by the banks - they'd likely give tenants a notice of some period of time before they'd be required to vacate. I don't know all the ramifications but my guess is that property valuations are going to go down fairly steeply as well. I've seen some efforts to hold rent strikes and I think those efforts will have more negative than positive results. I'm sympathetic to those that don't have enough to pay the rent because of job loss and economic shutdown but there are certainly those out there that will take advantage of the situation as an opportunity to try to shirk payments.
I wonder if policy could be useful here: temporary rent and mortgage freezes perhaps?
- _curious_ 7y ago"my guess is that property valuations are going to go down fairly steeply as well." Yes and how much depends on how much the gov props them up?
- FillardMillmore 7y agoThat plus possibly the banks' actions: the availability of things like mortgage deferrals and extensions. Another thing to consider, which is a big unknown at this point, is what immigration policy will look like after the dust starts to settle. If it becomes more stringent than it was, that means less demand for housing in the future, and the valuations of property would likely reflect that.
- _-___________-_ 7y agoNot disagreeing at all, but note that the article is about commercial property, not housing.
- crispyambulance 7y ago> I wonder if policy could be useful here: temporary rent and mortgage freezes perhaps? That's the big question. Can't everyone just be cool with deferring payment on rents and mortgages? Ultimately this all bubbles up to banks and investment products, right? I wish it were possible to just declare this "the lost Spring of 2020" and allow the market to take a hit and then recover steadily without entire cities beset with many months of boarded-up storefronts and foreclosed properties.
- imtringued 7y agoWhy not just give those who need the money a loan? Deferring rent payments and mortgages is basically a non formal loan but it is shifting all the risk into the banks. Let's say you are a bank and you defer 4 months of mortgage payments and then the landlord defaults. Those 4 lost months are now the liability of the bank. This is basically a non formal form of economic stimulus. So what you have done is take a problem that was caused by the government (the economic loss from quarantine dwarfs the economic loss of everyone having the corona virus [0]) and shift all responsibility away from it into a fragile system that is known to break frequently. The idea behind this bullshit is to say "no bailouts" but the reality is that once the banking system is collapsing there will be far severe bailouts than before and all the work you have to prevent them was a complete waste and completely distorted the economy. Events like 2008 were entirely about markets destroying themselves but now the situation has reversed and it's the government that is trying to deliberately destroy the economy and then people shout louder and want even more destruction.
- amluto 7y agoFor what it’s worth, interest rates are very, very low, so commercial mortgage rates should be fairly low. If tenants don’t pay, the landlords are just as screwed. And if commercial real estate values crash, the lenders may have problems.