• Lisa Simpson
• Dec 2,2009
• In: Bank Foreclosures

Dropping Rents are of Help to the Foreclosure Victims

Dropping rents are of help to those who are facing foreclosures. In south California those who are surrendering their homes to foreclosure are now finding shelter in cheap rentals. In large complexes the monthly rental rates have fallen on an average by about 4.9% during the last one year.

One of the foreclosure victims is Joyce Ann Cato. She is poised to lose both her home and job in the immediate future. Last April Cato who is in her sixties, filed for bankruptcy protection in trying to keep the roof above her head. The value of the property had become less than her loan dues. While looking for another employment she and her daughter have rented a house in Pomona. The rent is modest at $1,795 per month – the amount being much less than what she paid monthly for her mortgage. But nevertheless it sliced out a good piece from her monthly income of $2,500. Cato sighed and said, “Well, it is reasonable because I don’t have to pay the house now. I am able to pay that.”

Cato is one of the many busted by the foreclosure crisis who is finding shelter in the low rented quarters. Generally rents and house prices have tended to move in opposite directions but the choking of the real estate market with foreclosure have pushed down house prices to lowest record levels and causing rents to fall right across the worst affected regions in the country.

Many like Cato have gone underwater having lost their equity and endured shattering of their credit not to mention their pride. The availability of affordable housing in rented quarters is like a silver lining amidst the dark clouds.

During the third quarter of the previous year the rents reached a peak of $1,501 in south California after having gained in 12 running years. But after that rents have dipped by 4.9% to touch an average figure of $1,427 in the third quarter of 2009 as per the findings of a research company RealFacts. The decrease came following the fall in occupancy from 0.8% to 93.7%.  The data was exclusive of houses that had been converted into rental quarters or into more modest apartments.

The lenders lobby is now thinking of depending on the rental market to stave off foreclosures. Fannie Mae announced a plan that would permit those who had been foreclosed upon to continue to stay in their occupied units as tenants at current rates.