Seattle Now: The city's next housing crisis

Seattle's eviction moratorium has been extended for another three months, meaning folks who are hurting financially can stay in their homes, even if they can't afford rent. But the extension delays a reckoning over housing that could have disastrous consequences.

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Guest: Abby Vesoulis, Time staff writer covering economic policy

BILL RADKE: Hey, good morning. It's Bill Radke filling in for Patricia Murphy. It's Tuesday. This is Seattle Now.

The city's eviction ban will be around for another three months, but that leaves a lot of tenants and landlords in a tight spot.

RIAN DE LAAT: I don't want to evict my tenants and I don't want to leave them without a place to live, but I can't go on indefinitely paying for everything.

BILL RADKE: We'll talk about it with TIME Magazine writer Abby Vesoulis in a minute. First, let's get you caught up.

Seattle passed its unofficial melting point of 85 degrees yesterday, but it should cool off the next couple of days before getting even hotter this weekend. If you like that, you'll love the summer outlook from the National Weather Service. They're predicting higher temps and less rain this summer. The bad news: they also say drought is likely and all of that adds up to an active fire season.

Seattle Public Utilities says it's safe to drink the water as it works through a chlorine shortage. Westlake Chemical in Longview provides chlorine to SPU and other utilities across the Northwest. It's been out of commission since an electrical transformer failed earlier this month. The company says it'll be offline until the end of this month, at least. State Health officials say they'll have an update this week.

And no shortage of Seattle Storm players on the US Olympic team— they make up a quarter of the roster! Sue Bird, Breanna Stewart and Jewell Loyd were named yesterday to represent the U.S. in Tokyo next month. It's the first trip for Lloyd, Stewie has been once before in 2016, Sue Bird is back for her fifth Olympics. The U.S. women are going for their seventh straight gold medal.

BILL RADKE: It's always tough to find affordable housing in Seattle. It got harder during the pandemic for folks who lost work and can't afford rent. The city just extended its ban on evictions until the end of September. But that's just delays reckoning with the problem. Some landlords are out many thousands of dollars and some tenants are still afraid they'll lose their homes.

My guest today laid out the situation in TIME Magazine economic policy reporter Abby Vesoulis, thanks for joining us.

ABBY VESOULIS: Thanks so much for having me.

BILL RADKE: You describe the situation as the next housing crisis, what do you mean?

ABBY VESOULIS: So if you look back to the 2008 housing crisis, what you had was people who overbought a little bit, based off of a bad lending industry that was being too flexible with mortgages, but when those people lost their homes, for the most part, they had a safety net under them: you lose your home, you you sell it, maybe you take a hit for it, but then you can move into an apartment.

But these people, in their apartments now, if they're facing an eviction, they have nowhere else really to go, there's really no step under being evicted from an apartment, unless you have a friend's couch to crash on. Which isn't a permanent solution, and so, beyond that, there's just homeless shelters, in Seattle especially, and San Francisco, and New York City, but really everywhere, do not have enough beds and homeless shelters to house all the people who are going to be facing evictions when the eviction moratorium finally expires.

And in Seattle, they've, I think this is the fifth time it's been extended, but really, all it's doing is punting the problem down the road. Because while there is federal funding —over 40 billion of it that is designed to pay back landlords and to pay back the rent that some tenants have built up— it's not being distributed in an efficient way. And it's likely not going to be distributed in time before the eviction moratorium expires nationally, but who knows if it'll be distributed in time in Seattle, which, now the deadline is in September.

BILL RADKE: In this TIME Magazine piece Abby, you spoke to a Seattle landlord whose tenant couldn't pay rent. Her name is Rian and her tenant's name is Ollie, what was their situation?

ABBY VESOULIS: They had a really interesting but also sad dynamic. Rian had... she wasn't necessarily intending to be this big landlord, she never was. She rented to Ollie because he was a friend and then Ollie lost his job because of the pandemic and over time, he accrued over $20,000 in back rent that he owed her. But both Ollie and Rian had experienced bouts of of housing insecurity in their youth. And so Rian, even though there are outs, there are loopholes to the eviction moratorium —such as moving back into the property yourself or selling your home— she really struggled with taking one of those options because she didn't want to be the person responsible putting somebody out on the street in the middle of a pandemic.

RIAN DE LAAT: I showed up to do that, and I was going to move back in personally and they were talking about putting their stuff in storage and that they didn't have anywhere else to go. And, you know, we were in the middle of a pandemic, and it just made me feel awful. And like I couldn't do that, as a person. I couldn't evict them, or, you know, make them move out.

ABBY VESOULIS: There's a stereotype that... that landlords are always these awful people who are nickel-and-diming their tenants, and they're slum lords, and they're not fixing the things they need to fix. And while I'm sure that's true, Rian did not fit that stereotype. She wanted to be a good landlord. She had hoped to make a little bit of side income to supplement her, you know, regular-person job. But now her and so many other landlords across the U.S. are out tens of thousands of dollars. Dollars that they might have depended on to pay their own mortgages, to pay the mortgages on the houses, they rented, to pay property taxes. Forty percent, approximately, of rental units in the U.S. are owned by individuals or small landlords: that's a lot of just regular everyday people. It's not these huge corporations with high rises.

BILL RADKE: This story is a perfect illustration of the bind that landlords and tenants are in. This eviction issue is huge, and it's nationwide, so what solutions are on the table?

ABBY VESOULIS: So over 40 billion has been allocated by... by Congress to go to individual states to stave off the... the eviction crisis around the corner. The issue with that is that all of this money is going to states who have never before had to distribute this much money in... in rent relief. And so, the states are doing their best, but they're struggling to keep up with it and to vet applications, because the government did outline some rules, saying 'you have to make sure that these people were below a certain average income,' they had to prove that they had been affected by the pandemic, and then each individual state knowing that they did have a limited supply of funds. For the most part, they added their own requirements. Some said that the landlord has to agree to take a lesser amount of rent than they are owed, perhaps they will take 80% of the back rent. So, while it is a good amount of money, and some experts have told me they actually think it's it's close to enough money, the issue is then getting it into everybody's hands. And then the other issue is that just overall there's affordable housing crisis in America. Before the pandemic, there was this widely cited report that said that the average American, or, sorry, 40% of Americans could not afford an emergency expense of $400 because they didn't have the cash on hand. The other thing that some experts are saying is that we shouldn't have gotten to a place where people can't afford that $400 expense. There should be a housing voucher to make sure that people aren't spending half of their income or 60% of their income on rent. And there is a government program called Housing Choice Vouchers, formerly known as Section E vouchers, that pays a portion of tenants rent to make sure that they're not paying more than approximately 30% of their income towards housing. But only 25% of people who meet that threshold get a voucher because it's a very underfunded program. So some advocates —and also President Biden— have pushed to try to make that a universal benefit, but I am not confident that will happen soon.

BILL RADKE: Abby, do you foresee jobs coming back, and tenants paying back rent, and the pandemic effect as eventually over?

ABBY VESOULIS: Yeah, so we definitely are seeing hospitality jobs and events jobs, and obviously restaurant jobs are opening up in... incredibly over the last couple of months. But unfortunately, a lot of those open jobs don't pay very competitive wages. And so even if the people, who did lose their jobs for months and months during the pandemic, were to get these jobs, they're not going to have tens of thousands of dollars suddenly saved to pay their back rent or to pay off their credit card bills. And so, I'm worried about that. But the thing that I'm most worried about is that once you are evicted, once you go through an eviction court proceeding, you are going to be extremely hard pressed to ever find a landlord to rent to you again. It is a huge, like, scarlet letter on your... on your shirt to have an eviction on your record. It's called a financial cliff. And once you fall off this financial cliff, and you have nowhere else to go, no other landlord to rent from, you're going to have such a hard time ever getting housing. And like, housing is really the key basis towards success in every other realm: in education, and getting a good job, and having enough to eat. Without help for states and in communities to allocate all the funds that they have been given, I'm worried that evictions are going to go up astronomically in the next couple months after the eviction moratorium ends. And perhaps this eviction moratorium, that extra couple months until September, will give Seattle time to... to distribute these funds. But the rest of the country doesn't have that long. The eviction moratorium, just nationally, is supposed to end at the very end of June.

BILL RADKE: That is a grim thought, Abby, and obviously this would have a huge impact on people in that position. I wonder what long term impact it could have on the rental market in places like Seattle?

ABBY VESOULIS: So if you look at these landlords, the small landlords who have had non-payers as tenants... You know, Rian, the landlord in my story, told me she's down approximately $30,000 in income, that's how much her tenant owes her. These landlords are looking to sell, because being a landlord is no longer an economically efficient thing to be, especially as housing laws become more pro-tenant and less pro-landlord.

RIAN DE LAAT: I'm leaning towards that myself as well. We had a great relationship before all of this happened, and I've still maintained a good relationship with them, like I try to speak to them often and send them links and get them as much help as I can, but it's put me in a very tough financial position.

ABBY VESOULIS: So, they're going to sell their homes because they can make a decent profit during this very hot real estate market. But then, that's really bad for the future of affordable rental properties. Because as they sell their homes, wealthy single family buyers are going to purchase their homes, and there will be fewer rental properties left for the for the lowest income group who are... have always been priced out of traditional homeownership,

BILL RADKE: Abby Vesoulis is a staff writer for TIME, covering economic policy. Abby, thank you for joining us today.

ABBY VESOULIS: Thank you so much for having me, Bill. I appreciate it.

BILL RADKE: Thanks for listening to Seattle Now. If you like this show, tell a friend about us or leave us a review!

Clare McGrane produced today's show. Our production team is Caroline Chamberlain Gomez, Diana Opong and Jason Pagano.

Matt Jorgensen does our theme music.

I'm Bill Radke. See you tomorrow!