Housing Crisis Hits Renters Hard

Foreclosures have forced rental prices to skyrocket around the nation.

ByABC News via logo
April 24, 2008, 7:58 AM

April 24, 2008 — -- The housing crisis gripping the nation now has hit the renter's market.

Some residents, like Beth Stoneback, are finding that their homes are being foreclosed. But Stoneback didn't own her Stockton, Calif., home. She rented the house and was shocked to find a foreclosure notice tagged to her door one day late last year.

"We went out to dinner and we came home. And we couldn't get in the house. They changed the locks," said Stoneback. "We don't own a house. We don't have to worry about anything. You know, we don't own the house. I'd heard it was happening out there, but I never expected it to affect us."

"Because we hadn't gotten any other notices, I assumed it was a mistake," said Stoneback's daughter Kathryn Bueche.

The family thought it was immune to California's foreclosure troubles because it didn't own the house and continued to pay the rent on time.

So, the family was in disbelief when it was forced to scramble for another residence because the owner of Stoneback's home hadn't paid the property's mortgage.

The Stonebacks became a casualty in California's hard-hit housing market, where during the first three months of 2008 the state's foreclosures skyrocketed by more than 327 percent, according to DataQuick.

Complicating the matter for Stoneback was the fact that rental prices drastically had increased in California and across the nation.

In fact, rentals in San Francisco rose more than 14 percent during the last quarter, while Seattle's prices have increased more than 10 percent and Washington, D.C., has had 5 percent increases, according to an analysis by Newton, Mass.-based Investment Instruments.

But the housing troubles may have a silver lining for potential homeowners.

"Once prices get too high on the rental side, it means buying might start to look enticing again," said "Good Morning America" financial contributor Wendy Bounds.

She said some people may be able to find a lender in order to purchase a home.

For Stoneback, buying is not an option and as she settles in her new rental, she fears what could happen.

"I'm worried about the house I'm in now," she said.