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Evictions, tenants and the fragility of a “correlated” world

Evictions, tenants and the fragility of a “correlated” world

As eviction moratoriums around the United States come to an end, it is expected that landlords will begin evicting nonpaying tenants en masse. Eviction by itself is an unremarkable phenomenon in America. Some 900,000 per year have been occurring routinely in the last several years affecting about 2.3 million people annually.

The scale this time is different. No one knows exactly how things will play out in the United States (or elsewhere for that matter). But, barring new moratoriums on eviction one estimate suggests 23 million people will be subject to eviction by the end of September, more than 10 times the number for an entire year.

Where all those households would go is a puzzling question as the limited space in facilities for the homeless could never hold them. And, given the continuing coronavirus pandemic, those facilities that are observing proper social distancing have had to limit their capacity.

Perhaps the U.S. Congress will come to its senses and pass aid for renters just as it has done for businesses. I am doubtful about such prospects.

But, I am also interested in another important question: Who will replace evicted tenants? Here the problem of correlation looms large. Generally speaking, landlords don’t worry too much if Joe in apartment 238 and Sally in apartment 424 both lose their jobs. Their job losses are usually related to their specific circumstances, a company moving its operations or a firing due to poor performance. These losses are uncorrelated to the situations of other tenants. There will therefore be paying tenants to take the place of Joe and Sally should the landlord have to evict them.

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