A California housing crisis mystery: Rents are way up, but eviction filings are way down

Shirley Gibson isn’t quite sure how to feel about these numbers.

As directing attorney of the Legal Aid Society of San Mateo County — which offers legal services to low-income tenants caught between the preposterously priced southern suburbs of San Francisco and the preposterously priced suburbs of Silicon Valley — she’s seen firsthand how California’s housing affordability crisis has overwhelmed her clientele.

Rents in San Mateo County have increased nearly 55% since the start of the decade. A two-bedroom in Redwood City, the county seat, now goes for $3,500, according to data from Apartment List. Strong demand, fueled by the influx of high-income tech workers, means vacancy rates are low.

“I don’t know what a normal housing market is anymore,” said Gibson. “There’s a tush for every seat right now. You can rent any unit you want within a week.”

Theoretically that should have swelled the ranks of tenants needing help in eviction court. Ever-escalating rents should make it harder to pay rent on time, and delinquent payments are the most common reason a landlord sues to remove tenants from their property.

Yet eviction lawsuits against San Mateo County renters from 2010 to 2018 dropped nearly 50%.

“This year is going to be the lowest you’ve ever seen,” said Gibson. “I don’t have a perfect explanation for why that is the case.”

It’s counterintuitive amid a worsening housing crunch, but it’s happening statewide. While the median rent in California increased 23% from 2011 to 2018, the number of times California landlords sued their tenants to evict them dropped by nearly 40% over roughly the same period, according to data collected by UCLA researchers.

Two caveats: Those dropping numbers nonetheless represent a significant number of California renters facing the prospect of a court-ordered eviction — landlords initiated more than 137,000 of them in fiscal year 2017. And there’s no data on evictions that don’t end up in court, although researchers estimate they’re about twice as common as those that do.

Still, the data shows a steep drop in eviction court cases this decade in every sizable county.

“It’s a puzzle that I’m not sure we have an answer to,” said UCLA eviction researcher Kyle Nelson.

Neither academics nor landlords nor tenants can say definitively why. But here are some of their best guesses.

Evictions outside court could be rising, but we lack data to know for sure.

An unfavorable court judgment hangs an enduring legal albatross on renters. In California, evictions stay on a tenant’s rental history for seven years, during which it becomes incredibly difficult to find another place to live.

But eviction lawsuits are one of the few forms of eviction that actually leave a data trail. And that only happens if a renter stays in an apartment after being served with an eviction notice, forcing a landlord to go to court.

Landlords have other options. California doesn’t know how many families move out after a “three days to pay rent or quit” sign is affixed to their door, let alone how many strike “cash for keys” arrangements to leave. (If a renter moves out because the rent is raised, that’s not an eviction).

Eviction researchers say even absent data, there’s good reason to think these undocumented evictions could be on the upswing.

“Say there’s more rent increases and more tenant harassment, and either way a tenant has to move,” said Aimee Inglis, program director with Tenants Together, a statewide renter advocacy group.

Gibson, the San Mateo tenant attorney, says she’s seen a dramatic uptick in “no-fault” evictions over the past decade, even as court cases have declined.

Why have landlords used “no-fault” evictions?

Say a landlord suspects a tenant is dealing drugs on their property, but lacks proof. If the tenant fights that in eviction court, the landlord could very well lose. But if the landlord simply sends a “no-fault” notice that a tenancy will end in two months, the renter is typically out of options.

Renter advocates say landlords often abuse “no fault” evictions to retaliate against tenants who ask for expensive repairs or maintenance.

In 2013, roughly half of the eviction notices clients brought to her legal aid clinic were “no-fault” lease terminations. By 2018, that share had increased to 75% — a more common reason than non-payment of rent.

There’s no statewide data on the number of “no-fault” notices. Reports of their prevalence have surged in recent months because a new state law is about to restrict them. After Jan. 1, most landlords will be required to cite one of several acceptable reasons for evicting a tenant.

It’s partly the economy — but that’s not the whole story.

As the Great Recession ravaged California’s economy and housing market, eviction lawsuits spiked. Banks and corporate landlords frequently served eviction notices to families who lost their homes in foreclosures. The result: nearly 230,000 eviction court cases in fiscal year 2010.

Landlords say eviction lawsuits also increased during that time because the same population most vulnerable to foreclosures — families with shoddy credit histories and incomes too small for their mortgages — were likely to miss rent payments after they moved from foreclosed homes into rentals.

“Inevitably those individuals, with the economy struggling, faced evictions as well,” said Chris Evans, an attorney with the firm Kimball, Tirey and St. John, which represents landlords in more than 15,000 eviction lawsuits a year.

As California’s economy slowly rebounded, eviction cases began their decadelong descent.

Most mysteriously, eviction lawsuits have continued to drop years after the state emerged from recession, even while rents have outpaced gains in renters’ incomes.

Has legal aid for tenants helped?

Tenant groups and landlord lawyers agree that over the last decade, it’s become a lot more expensive to take a renter to court.

“Because of the cost of eviction, landlords really started working to avoid it,” said Evans.

He estimates that a decade ago, his firm’s landlord clients spent under $1,000 to get rid of a tenant who contested an eviction.

Now, if the renter takes the case to a jury trial — an option tenants have increasingly threatened over the last decade on the advice of counsel, says Evans —it costs his clients $10,000 to $15,000. And a jury trial is a gamble for landlords.

As a response to the foreclosure crisis, in 2009 state lawmakers created low-income legal aid pilot programs in several high-cost counties. An independent evaluation found that renters represented by state-funded attorneys were nearly 20% less likely to lose by “default judgment,” where landlords win simply because a renter doesn’t show up to court.

Is technology allowing landlords to better screen tenants?

As recently as a decade ago, the process for screening a rental application was fairly basic. Landlords ran a potential tenant’s credit report.

Now, due to an explosion of third-party renter screening services, landlords can quickly and easily view much more data about prospective renters — whether they pay utility bills on time, whether they pay rent on time, whether they have a prior criminal conviction.

Fueled by technological innovations, the screening services are fairly cheap — $50 gets you a lot of info.

“It’s just a much better picture of a resident’s ability to pay prior to them moving in,” said Cynthia Wray, who’s been in the apartment management industry for nearly three decades.

Corporate landlords and real estate investment trusts, who over the last decade have snapped up a sizable chunk of California rentals, are major users of sophisticated screening services.

Has the state gentrified so much that those at risk of eviction just left?

Possibly. That appears to be exactly what happened in Washington, D.C.

“As D.C. got more expensive, it got too expensive for people to rent if there was any chance they had any financial problem,” said Maya Brennan, senior policy associate at the Urban Institute.

Brennan says it’s more likely these low-income renters are now in more affordable suburbs in Virginia and Maryland.

That logic could extend to California, which for nearly two decades has lost more residents than it has gained from other states — an exodus fueled by Californians making less than $50,000 a year.

Despite lots of national publicity in recent years, eviction research is still in its infancy. Which means a definitive answer for California’s counterintuitive trend may not surface for a while.

“Evictions are incredibly complex, and the world of people thinking about them deeply expanded dramatically over the past couple years,” said Brennan. “But the number of people with enough regionally specific knowledge has actually not increased that much.”

Matt Levin wrote this for CalMatters, a nonprofit, nonpartisan media venture explaining California policies and politics. This is an abridged version of the full story, which is available at calmatters.org.

Article source: https://www.sfchronicle.com/bayarea/article/A-California-housing-crisis-mystery-Rents-are-14937678.php

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