 With all that we hear in the news about COVID-19, it’s easy to believe what you hear about the real estate crises, especially since so many are unemployed and unemployment benefits have stopped for many. Many are sitting on the edge of their seats waiting to see how much of a stimulus payment they may receive to tie them over until the next mortgage payment is due.
It has been reported that more than 400,000 Coloradans are at risk of being evicted. Many are indeed hurting, however, this claim is not true. The formula used to create this narrative is by taking the number of eviction lawsuits that have been filed during low levels of unemployment and rent rates, then exaggerate higher levels of evictions based on increases in unemployment and rental rates. The problem with this formula is that there is no relationship between the number of eviction filings, unemployment rates, or rental rates. There are 5.8 million people and 627,000 rental units in the state of Colorado. Eviction filing rates are typically less than 0.5% of the state's rental transactions, which accounts for up to 3,000 eviction lawsuits filed every month even when we are not experiencing a pandemic. The number is stable. There have been 38,353 filings in 2001 and 38, 183 in 2019, despite Colorado's population growth of 1.2 million during that time. Eviction filings have never been below 36,500 in a single year no matter what the economy is like. On record, the high was 50,220 cases in 2007, which was 37% above the state's all-time low. Again, there is no connection between eviction filings and changes in unemployment rates. The eviction rate has remained stable despite the high unemployment rates. 2007 to 2010 saw unemployment rates escalate, and eviction filings fell. In 2010, while unemployment was at 8.7%, annual evictions fell and were 42,689, which is a big decline from 2007. However, unemployment was at 3.7%. There have been some significant improvements in the unemployment rate between the years of 2010 and 2019 with a small decrease in eviction filings. The number of eviction filings will not increase with an increase in rental rates. Colorado’s rental rates have only increased by 2.2% since 2001, which is consistent with overall inflation rates. If it exceeds inflation then it will reflect fewer housing units built to keep up with the population growth. On record, the highest eviction filings in Colorado were in 2007 with 50,220 eviction filings when the average rent was less than $900. When the average rent was over $1,000, there were 38,143 eviction cases filed. Over the past decade, rental rates have steadily increased and eviction numbers have been flat. While evictions are probably, they are not as likely as most would believe. Simply put, it is not always in the best interest of the property owner to file suit. It is often too tedious and expensive.
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