One thing I’ve been wondering about for months is where exactly landlords think they will go for new tenants if there are mass evictions from apt rental units. This is cold comfort for people facing eviction. But it’s a basic structural issue I’m not sure people and perhaps landlords have fully internalized. When it affects a small subset of renters it makes economic sense for landlords. But in a climate of mass joblessness and lack of money to pay rents, it’s not like you can evict a high percentage of tenants and there’s a big population of employed people looking for new apartments. Obviously if a tenant already wasn’t paying rent, it seems like no loss. But at scale that’s not necessarily true. High vacancy rates hit landlords hard in a number of ways. There are economists and real estate experts who understand this stuff much better than I do. But there’s a pretty big disconnect here. – Josh Marshall on Twitter (August 4, 2020)
He’s talking about the US rental housing market, of course, which is a different animal than the Canadian (Ontario) rental housing market because it has a lot more supply and therefore competition. That means vacancies are much more of a daily, lived experience for landlords in the US than they are for landlords in Ontario.
He raises a good point, though: Where would replacement renters come from if mass evictions happen in rental housing? So far during the pandemic, housing foreclosures have not been the big problem that they were in the 2008-2009 financial crisis. That may change, but for the moment it means there isn’t a large supply of prospective renters hitting the rental market.
So, if mass evictions happen in rental housing, where would replacement renters come from? The fast answer is that without mass foreclosures there wouldn’t be mass replacement renters.
This question is one we can ask in ‘normal’ times, too. For existing rentals filling turnover vacancies, where do replacement renters come from? For a new rental building being leased for the first time, where will renters come from? Renters come from three main sources: rented dwellings, owned dwellings, or new household formation. What would motivate a renter, owner, or first-time householder to rent? The following list summarizes some of the main motivations:
- job change (adjusting to new commute)
- dropping income and reduced affordability (moving downmarket)
- rising income and increased affordability (moving upmarket)
- seeking better quality/amenities
- seeking lease stability (moving away from non-purpose-built rentals)
- downsizing (eliminating surplus housing)
- lifestyle simplification (moving away from high cost/labour intensive housing)
- foreclosure (reducing housing costs)
- liquidity problem (selling housing and reducing housing costs)
- household reconfiguration (divorce, separation, widowhood, and children forming new households)
- immigration from other geographies (from other cities, provinces, or countries)
Obviously this is only a partial list—after all, there are as many motivations as there are renters, and many will have multiple motivations for renting. It’s worth noting, I think, that a least half of the motivations summarized in my list are ‘forced’ in the sense that the households in question are being compelled by circumstances to rent, for the most part; readers can decide for themselves if that has significance or not.