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Interested to see how this plays out. Should we expect new political measures and subsidies? If so, when will the 'stimulus' end or will it become the new nor

Interested to see how this plays out. Should we expect new political measures and subsidies? If so, when will the 'stimulus' end or will it become the new normal? Will lenders, landlords and tenants negotiate among themselves? Bulk foreclosures and massive vacancies will hurt landlords and lenders respectively.

SQueeeeeL 6y ago
I feel like worrying about the "political" response of this is a pretty narrow few. What we've seen in the last few weeks is massive social unrest; so it seems likely that will be extended if they actually start evicting millions of people...
Mediterraneo10 6y ago
> Bulk foreclosures and massive vacancies will hurt landlords and lenders respectively. Will they? At least for commercial real estate in large cities where shops are going bust due to high rents, it is often claimed that owners are fine with letting the space stay unoccupied for long periods of time, because they are playing some kind of long game.
- AlgorithmicTime 6y ago
  That "long game" requires a landlord with particularly high reserves to pay the property's expenses AND an expectation that the return from selling the property down the line will be greater than the missed rent.
- Spooky23 6y ago
  The tax system is architected to benefit commercial landlords. The government basically pays you to hold underutilized property, as you can use the losses to offset income in other parts of the business at a premium rate. On top of that, property taxes are usually based on revenue, so holding property is cheap. I did work for a guy who owned a bunch of vacant lots that paid less taxes than my house. He "rented" the lots to some other affiliated company, who in turn made a bunch of money on parking, etc. The tiny tear that I would shed for real estate people is smaller then even cable and telephone companies.
coldcode 6y ago
Evicting millions of people (or foreclosing in the case of houses) is a recipe for disaster for the whole country. If there were tons of employed people waiting on renting a place than from a business standpoint it makes sense. However if you toss people out on the street for non-payment, you still don't get any money, and you make life difficult for all those people. Yet the property itself might be foreclosed on if no rent comes in, and that owner might owe money to some bank and be shut down, but then the bank is holding properties it can't unload. In the end the whole real estate market collapses. There is no easy solution, and we in the US have no political answers either (especially today). But in the end the banks are getting cheap/easy money from the Fed and are less likely to suffer than all the preceding layers. But even that money will eventually cause mass "stagflation" because its not free either. I have no good idea how the country will look in 3 months.
- aww_dang 6y ago
  I understand there are two rounds of forbearance of 6 months each? This may depend on the region. Agree with your thoughts about evicting, but I'll add that there's an incentive for landlords to keep people in their apartments/houses. A homeless person is much harder to employ. Vacancies will decrease rents. Similarly mass foreclosures will hurt real estate values.
psychlops 6y ago
Great questions. I, too, watch for the answers here but am not above fanciful predictions. The trillions will create continued inflation which will push up rent prices and evictions will continue. Certainly there will be an increase in subsidies and any political tactics, it is an election year. Lower unemployment and continued pay cuts are trends that will stay in place for a while.

SQueeeeeL 6y ago

I feel like worrying about the "political" response of this is a pretty narrow few. What we've seen in the last few weeks is massive social unrest; so it seems likely that will be extended if they actually start evicting millions of people...

Mediterraneo10 6y ago

> Bulk foreclosures and massive vacancies will hurt landlords and lenders respectively. Will they? At least for commercial real estate in large cities where shops are going bust due to high rents, it is often claimed that owners are fine with letting the space stay unoccupied for long periods of time, because they are playing some kind of long game.

AlgorithmicTime 6y ago
That "long game" requires a landlord with particularly high reserves to pay the property's expenses AND an expectation that the return from selling the property down the line will be greater than the missed rent.
Spooky23 6y ago
The tax system is architected to benefit commercial landlords. The government basically pays you to hold underutilized property, as you can use the losses to offset income in other parts of the business at a premium rate. On top of that, property taxes are usually based on revenue, so holding property is cheap. I did work for a guy who owned a bunch of vacant lots that paid less taxes than my house. He "rented" the lots to some other affiliated company, who in turn made a bunch of money on parking, etc. The tiny tear that I would shed for real estate people is smaller then even cable and telephone companies.

coldcode 6y ago

Evicting millions of people (or foreclosing in the case of houses) is a recipe for disaster for the whole country. If there were tons of employed people waiting on renting a place than from a business standpoint it makes sense. However if you toss people out on the street for non-payment, you still don't get any money, and you make life difficult for all those people. Yet the property itself might be foreclosed on if no rent comes in, and that owner might owe money to some bank and be shut down, but then the bank is holding properties it can't unload. In the end the whole real estate market collapses. There is no easy solution, and we in the US have no political answers either (especially today). But in the end the banks are getting cheap/easy money from the Fed and are less likely to suffer than all the preceding layers. But even that money will eventually cause mass "stagflation" because its not free either. I have no good idea how the country will look in 3 months.

aww_dang 6y ago
I understand there are two rounds of forbearance of 6 months each? This may depend on the region. Agree with your thoughts about evicting, but I'll add that there's an incentive for landlords to keep people in their apartments/houses. A homeless person is much harder to employ. Vacancies will decrease rents. Similarly mass foreclosures will hurt real estate values.

psychlops 6y ago

Great questions. I, too, watch for the answers here but am not above fanciful predictions. The trillions will create continued inflation which will push up rent prices and evictions will continue. Certainly there will be an increase in subsidies and any political tactics, it is an election year. Lower unemployment and continued pay cuts are trends that will stay in place for a while.