Renters can't escape housing foreclosure crisis
— -- On a chilly night after work last November, Christopher and Jenell Chow relaxed, watching the evening news while their children scampered around their rented two-story stucco home. Someone knocked at the door.
An officer was standing on the doorstep, eviction papers in hand. That's when the Chows learned that the North Las Vegas home they'd rented for two years was in default. They had 30 days to move out and find a new home for their five children, Jenell's live-in mother, their two black Labs and a cat. The stress was severe: Jenell says she suffered a miscarriage the day before they moved out.
"We felt dumbfounded," says Jenell, a stay-at-home mom. She and her husband, an electrician, lost their $5,000 rental deposit. "We would have been homeless if someone from our church hadn't loaned us money for a deposit on another place. I believe the stress caused my miscarriage."
The most brutal real estate slump in decades is reverberating through the rental market. Renters in properties that are being foreclosed on are being evicted. Homeowners forced into foreclosure are becoming tenants again and driving up rents. And renters not yet ready to buy a home — shut out by stricter lending rules or hoping to buy after prices fall still further — are creating a dynamic shift: Even as real estate is sputtering, the rental market is surging.
Rents, in fact, are accelerating in many markets across the USA. Vacancy rates are down from last year, and average rent is projected to rise 5.3% in 2008, up from a 3.1% increase in 2007, according to the National Association of Realtors. In some cities, rents are climbing at a double-digit clip.
In San Francisco, the median rent rose 14.6%, to $1,810 a month in the first quarter this year compared with a year earlier, according to an analysis by Newton, Mass.-based Investment Instruments. The median rent in Seattle rose 10.3%, to $1,211, in the same period. In Washington, D.C., the median rent rose nearly 5%, to $1,687.
And in 2007, the number of renters in professionally managed apartments leapt by the largest amount since 2000, according to the National Multi Housing Council's March report. That increase was as large as the increase for the previous five years combined. From 2004 through 2006, 1.2 million households joined the ranks of renters, more than making up for the loss in renter households sustained from 2002 to 2004.
"The rental market is now very, very strong," says Allison Atsiknoudas, CEO and co-founder of Investment Instruments, which provides Web-based tools for the real estate industry and tracks rental market rates. "It's stable. The increasing number of foreclosures in the market has definitely increased demand for rentals."
