Editor’s Note: This is part two of a two part report appearing in the Record-Bee dealing with the California housing crisis. Part one published in Tuesday’s paper and may also be read at record-bee.com
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 of the late 2000s ravaged California’s economy and housing market, eviction lawsuits spiked. Adding to the misery of unemployment reaching levels not seen since the Great Depression, 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.
“You had individuals with bad credit, maybe not a lot of assets, and they moved into apartment complexes,” 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. “Inevitably those individuals, with the economy struggling, faced evictions as well.”
As California’s economy slowly rebounded, eviction cases began their decade-long descent.
But Nelson, the UCLA researcher, says that the state’s economic recovery is only part of the story. In L.A. County, the highest recorded number of eviction lawsuits were actually filed in the early 2000s, during the comparatively much milder recession associated with the dot-com bust. Eviction rates in the mid 2000s were higher in many Southern California counties than they are today, despite cheaper rents.
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. That included attorney fees, court filing fees, sheriff lockout fees and other costs — all costs renters risked having to pay if they lost. In the vast majority of eviction lawsuits, tenants represent themselves.
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 between $10,000 and $15,000. And a jury trial is a gamble for landlords.
Tenant attorney Gibson cites San Mateo as an example of how expanded tenant legal services can change landlords’ eviction calculus. Her legal aid organization, buoyed by increased philanthropic support, has seen its practice expand from a one person team to a six-person team over the last 12 years.
“Suddenly there’s more lawyers in the community, more defense to (court eviction proceedings), so it’s getting harder and more expensive for landlords,” she said.
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 judgement,” 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, and that was pretty much it.
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. “And we just didn’t have that 12 years ago or more, and I think that’s made a huge difference.”
Corporate landlords and real estate investment trusts, who over the last decade have snapped up a sizable chunk of California rentals, are major utilizers of sophisticated screening services. As opposed to “mom and pop” landlords who might own one or two properties, investment firms have rigid rules about who they will and won’t accept as tenants.
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.
Much as in San Francisco or Los Angeles, the cost of living in Washington D.C. exploded over the last two decades. At the same time, eviction lawsuits steadily dropped while the city’s low-income housing stock shriveled as neighborhoods gentrified.
“As DC 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. “So renters with low incomes have either been pressed out over the past ten or so years, or pressed into a ‘shadow rental market’” — when tenants live in warehouses or garages not sanctioned as legal dwellings.
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 its gained from other states — an exodus fueled by Californians making less than $50,000 a year.
But many more of those low-income Californians simply moved to cheaper places in-state. Bay Area rent refugees have flocked to the more affordable climes of Sacramento and Stockton. Los Angelinos are retreating to Riverside and the Inland Empire.
You’d expect eviction suits to tick up in those counties as more vulnerable renters move in. But they haven’t.
Michael Lens, an urban planning professor at UCLA, recently tried to determine what made one Southern California neighborhood more likely than another to see landlords initiate formal evictions. One hypothesis: gentrification.
“The conventional wisdom is that landlords will be more aggressive in trying to push people out…when they think they can get somebody who will pay more,” said Lens. “But that’s not what we find, on the court side of things.”
Instead two factors had a stronger correlation with eviction filings than rising rents: whether a neighborhood was very poor, and whether a neighborhood had lots of African-Americans.
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 awhile.
“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.”
