Renters also suffer from foreclosures

Renters also suffer from foreclosures
Homeowners aren't the only persons who suffer greatly from foreclosure actions on residential properties. Renters often suffer pain as well. About 20 percent of all foreclosures are on investor-owned rental properties. That means many tenants face sudden eviction from their rented residence. More attention by all levels of government should be focused on those rental households currently being harmed by the mortgage market turmoil, according to Harvard University's Joint Center for Housing Studies. They recently concluded a study on this aspect of the market.

"Because many high-risk home purchases 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," said Nicolas Retsinas, director of the Joint Center.

The report examined recent mortgage market events in the context of long-standing affordability problems that plague millions of renters. Fueled by record foreclosures and sluggish home sales, the share of households owning their home is declining, while the number of renter households jumped by nearly one million last year. That's more than four times the rate of renter growth over the 2003 to 2006 period, according to the Joint Center report.

Despite current signs of economic weakness, monthly rents last year reached a record high. Also, the rising foreclosures and the resulting turmoil in credit markets raises the cost of financing rental housing construction and preservation. However, it should be noted that in recent weeks there has been a significant increase in construction starts of multi-unit structures, many planned as rental units.

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