American Homeowners Becoming Renters
The prolonged turmoil in the US housing market, while devastating to much of the nation, will likely have one positive effect, driving up demand for multiple-family dwellings as more and more Americans sell their homes and opt for renting. With foreclosures totaling more than 200k per month across the nation and lending criteria getting stricter, more Americans will be forced to rent their primary residences, which will in turn drive demand for multi-family housing units.
Even though foreclosures dipped in February, analysts see the drop as temporary, and expect the numbers to climb back up as homes that were alleged to have been taken improperly work back through the system. There were just over 225,000 foreclosure notices received by American households in February, meaning that about one out of every 577 homes received one. A program initiated to stem the tide of foreclosures, meanwhile, has been largely ineffective and is in jeopardy of being halted by Congress.
Insiders almost unilaterally agree that the foreclosure epidemic will escalate before it starts to get better, especially considering there are currently 4.3 million American homeowners seriously delinquent or in some stage of the foreclosure process. There are also 3.5 million homes in modification, half of which experts say will end up in foreclosure. Another 1.3 million homeowners are at least two months behind on payments.
Estimates vary, but most housing insiders agree that there will be well over 7 million foreclosures entering the market over the next three years, meaning there should be a steady stream of foreclosures turning into rental properties. Despite the flood of foreclosures, the US rate of homeownership remains at 66.5 percent, though analysts expect that number to drop to 63 percent or lower over the next five years.