How Will the End of the Eviction Ban Affect Your Personal Finances?

• Author: Jeffrey Simmons
• Posted: 2024-05-13

Whether you rent or own, the housing market has a big impact on your finances. Due to the COVID crisis, there have been a lot of changes to housing lately, and many people are struggling to make ends meet. For the past two years, there has been a ban on evicting people. However, the Supreme Court just ruled that the eviction moratorium cannot be extended without extensive legislation from Congress. Starting on October 3, landlords will be able to evict people again. This will have some surprising impacts on people's financial situations.

You Might Not Need to Budget for Such a Pricey Rent

For the average renter, rent has quickly become one of the main parts of their budget. In cities across the nation, renters report rents rising by as much as 50 percent in just a few short months. This sharp increase in rent prices has happened because many landlords were anxious to sign new contracts while an eviction ban was in place. To mitigate this risk, they were charging higher rents and requiring more stringent background checks.

Some financial experts predict that the rent hike will start to calm down a little. Though this does not necessarily mean you can expect your rent to drop, it does mean rents might not skyrocket. This is good news for renters who have been watching prices rise with concern. As long as you can currently afford the rent in your area without overextending yourself, your finances might remain in good shape.

Housing Prices Might Start to Drop

The end of the eviction ban might also have some other surprising effects on housing availability. In most areas, the value of homes has risen sharply due to the lack of options. However, a lot of homes are about to go on the market. The eviction moratorium has been devastating for "mom and pop" landlords who are having to upkeep homes without getting any rent to help with costs. Many of these landlords will be looking to unload the properties as soon as they can evict nonpaying tenants.

When this happens, the sudden surplus of homes on the market may reduce the amount of bidding wars happening. If your financial goals include owning a home, now is a good time to really ramp up your savings. Within the next few months, you may be able to find more affordable homes, and interest rates are still low enough to make it a good time to buy a home. Really focusing on saving money for a downpayment is a wise move.

What to Do If You Cannot Find Affordable Housing

The pandemic and the eviction moratorium have highlighted some major problems with the housing market. Inflation and salary increases have not kept up with the increase in the cost of housing. In the past decade, the cost of housing has increased by 70 percent, while the salaries people earn have increased by only 30 percent. This means housing is often one of the biggest obstacles to getting your finances in order.

Conventional wisdom says that no more than 30 percent of your total monthly income should be spent on rent. Unfortunately, with the current housing market, this is not always affordable. Though you might have to pay a little more for housing, it is important to try to cut costs in this part of your budget when possible.

The most effective way of reducing housing costs is by sharing them. If you are willing or able to get a roommate, you might find it a lot cheaper to rent a property. Another tip is to look for unconventional finds. Instead of browsing the internet for apartments, consider working with a real estate agent. They can let you know about options like leasing mother-in-law suites or other lower-cost alternatives.

How to Prepare Your Budget For These Changes

Wondering how all the changes to the housing market will affect your personal budget? If you currently have a budget that works for you, there is no reason to change it. The end of the moratorium is likely to help stabilize soaring prices, so you can continue as planned.

However, now might be a good time to take advantage of the upcoming increase in housing availability. Buying a home can be one of the wisest financial investments because it lets you build equity instead of throwing away money on rent. If you have some savings and can get a mortgage without overextending yourself, purchasing a home is a smart move.