Dad, Should I Sign A Lease Starting September, 2020?

My daughter in the pre-2020 economy

Only if you understand that a lease is a long-term debt.

If you sign a lease for $1,000 a month, in May of 2020, you’re promising that you will have paid the landlord $12,000 by September of 2021.

How can you be confident that you’ll have earned $12,000 by the September 2021? I’d put off signing the lease, even if your landlord gives you dirty looks, until you are reasonably certain of employment.

As you know, your eccentric Dad has been calculating unemployment in Massachusetts since the pandemic took hold. It rose from 12,000 people collecting unemployment insurance around March 1st, to 600,000+ as of today, May 2nd. It is still growing, weekly, by the tens of thousands!

The economy will re-open with a sickening thud. Many factors may drive the rents down. Supply may rise from the following. Foreign students not coming back in September. New housing coming on line. Investment property owners needing to generate income from their empty units. Renters moving home to cut expenses. And finally, sadly, people who will never return to their homes.

Unemployed people collecting insurance went from less than 1 person in every 100, to 17 out of every 100. I counted the houses along your block. From your the beginning of your block, down to Broadway, around 2 houses out of the 8 houses on your block are filled with unemployed people — like you!

For now you’re collecting unemployment insurance and can pay your rent. But what happens if you, or others, can’t get enough work before the insurance runs out in December? What happens when the economic slowdown hits corporate yuppies? Are yuppies still a thing? Anyway…

Let’s look at the insidious changes already happening. Changes that will affect everyone’s ability to pay their rents in 2021 and beyond.

For those people whose financial situations worsen, rents won’t be paid. What happens to their landlords? The landlords lose money of course. Most of those people will not regain that income any time soon, if ever. That doesn’t mean the landlord won’t stop trying to collect it for years, further depressing consumer confidence.

Life goes on. The landlords must pay property taxes and many have mortgages. Most landlords are not Kings or Queens with suitcases of cash. Many of them will default next year from damage already done, which will lead to higher mortgage rates for surviving landlords the following year.

Further, as less people pay taxes, the government must either cut expenses, fire workers (adding to unemployment) and/or raise property taxes further straining landlords and everyone else.

The pandemic has hit so quickly and deeply everyone is in shock, from renter to landlord. But the losses are real, mounting, and will be felt in the future. Every person, business and government will struggle to spend less and collect more it.

What’s a landlord to do against lost income and higher taxes? Raise prices of course! But how can they raise prices if renters don’t have the income to pay them? The smart ones know this, which is why they’ll try to get leases signed today at 2019 rates.

There is no fix for both renter and landlord. The renter needs to find a job. They need housing they can safely afford. The landlord needs to make sure they don’t charge too much and end up with an empty space (which they still have to pay taxes and utilities for, even if they own it outright).

So again, can you sign a lease when you don’t have a job for 2021? I don’t believe you can, or should. At least, not yet.

  • To sign a lease now at 2019 rates is to believe unemployment will go back to 3% in September and wages increase to pay for the losses incurred during the quarantining.
  • To sign a lease now you have to believe the universities will fill back up in September and businesses survive a few months of lost income.
  • To sign a lease now you have to believe your landlord can find someone comparable to you.
  • Are wages decreasing and renters moving into Massachusetts shrinking? The data says YES.
  • At what point will employment stabilize? UNKNOWN
  • At what point will wages and employment grow? UNKNOWN TO THE UNKNOWN
  • As the economy shrinks, how long does it take the rental market to adjust to real income? YEARS.
  • Will rents be higher or lower in 4 months? 6 months? 9 months?

None of this is about screwing your landlord, or you landlord screwing you. No one knows what rents will work the best for both renter and landlord next year. What we do know is that all leases are contracts. Leases are not designed to be re-negotiated.

It’s easy to move to a good job from your parent’s, where you’re debt-free. It’s almost impossible when you owe someone $12,000 by the end of the year and the job is a few hundred miles away.

Hopefully your landlord will accept a month to month arrangement. That way you both bear the same risks going forward.




I try to write stories that go where the general media doesn’t.

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Max Rottersman

Max Rottersman

I try to write stories that go where the general media doesn’t.

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