Foreclosures and rental properties

“Today, investor-owned one-to four-family rental properties account for nearly 20% of all foreclosures,” said Nicolas P. Retsinas, director of the Joint Center for Housing Studies, in a news release. An abundance of capital available during the housing boom years led to a substantial rise in high-risk lending to these absentee owners. “Moreover, because many of the high risk home purchase and home refinance loans now in default are concentrated in low income and minority communities, the fallout from foreclosures is hitting the same neighborhoods where many of the nation’s most economically vulnerable renters live,” he said.
The number of renter households rose by nearly one million last year, which is more than four times the pace of renter growth between 2003 and 2006, accord­ing to the center’s report, “America’s Rental Housing: The Key to a Balanced National Policy.” The U.S. median monthly gross rent reached a record high of $775 last year.
The study also found:
• Foreclosures are adding to the number of units that are held off the market, in part because of the long foreclosure disposition process and also because some who are buying the foreclosed properties are waiting for conditions to improve before putting the units back on the market.
• In 2006, 42.6% of all working families didn’t earn enough to afford an appropriately sized housing unit. Nearly half of all renters paid more than 30% of their incomes for housing in 2006 and a quarter spent more than 50%.
• The minority share of renter house­holds increased from 37% in 1995 to 43% in 2005, and Hispanic renters accounted for nearly half of the gain.
• Newly built apartments in buildings with five or more units had a median asking rent of $1,057 in 2006, a record high. The median gross rent for all units that year was $766. Only 20,000 new, unfurnished apartments renting for less than $750 were completed in 2006, even though these units were most in demand.
• Condo conversions rose from a few thousand in 2003 to 235,000 in 2005. Only 60,000 units were converted from rentals to condos in 2006. Virtually no conversions were completed in 2007.
• From 1995 to 2005, two rental units were removed from the inventory for every three units built. The losses to inventory were the highest in the Northeast; there, two rental units were lost for every one built.