More and more neighborhoods in Arizona and throughout the country are becoming renter-occupied as opposed to owner-occupied as the foreclosure crisis continues.
According to U.S. Census data, the fastest growing portion of the rental market between 2005 and 2010 correlated to single family homes. In fact three out of four homeowners who lose their homes due to foreclosure will go on to rent, according to estimates of a real estate consulting firm. This translates to roughly 3 million former homeowners moving into single family rentals between 2010 and 2015.
As the foreclosure crisis continues, investment companies have started buying homes to convert them into rentals in Arizona. Despite the increasing trend of rentals, 83 percent of renters surveyed still express a desire to own a home.
Some Arizona homeowners accumulate the money they save by paying a lower rent compared to a higher mortgage for down payments on their next home.
In one Arizona neighborhood of 484 homes, 38 percent are now rentals. As home values fell after the housing market collapsed, homeowners moved out and renters moved in. Some homeowners who still own a house in such neighborhoods are worried about how the rental trend will affect their property values.
A Penn State University economist conducted a study 10 years ago to compare home values and rental patterns. In the study sponsored by the Fannie Mae Foundation, he found home values increased by approximately 3.6 percent when neighborhood ownership rates increased by 10 percent.
Some states have actually passed laws to limit the percentage of rental homes in a neighborhood to ensure property values do not decline and homes are well-kept. However, some of these laws have been challenged in lawsuits.
Homeowners facing foreclosure proceedings may not be aware that filing for bankruptcy halts proceedings for a number of months. Those struggling with debt and threats of foreclosure may want to consider filing for Chapter 7 bankruptcy to put a halt to creditor harassment, wage garnishment and foreclosure proceedings.
Source: witx.com, "Home rentals-the new American dream?," Derry London, June 6, 2012