Amidst the wave of foreclosures in today’s economy, houses may not be selling, but they’re definitely renting.
While some predicted that the recession would benefit the apartment market, that hasn’t been the case, at least not in Georgia.
Apartment vacancies are up to 15 percent in the Hall County area, compared with a high water mark of about 8 percent vacant six years ago, said real estate executive Frank Norton Jr.
Some apartment complexes in Hall have vacancies as high as 50 percent.
“I would have thought apartment occupancy would strengthen with the foreclosures,” Norton said. “But what happened is, if a family loses their house, they tend to want to rent another house.”
And these days, home rental prices are competitive with apartment rents.
“You can rent a rental house right now for the same amount as an apartment, so a lot of people opt to go for a house,” said the Norton Agency’s vice president for asset management, Tricia Ruth. “Rental houses are doing very well.”
Ruth’s company manages about 200 lease properties, about 20 percent of which would have been up for sale in the pre-recession economy. Most rents range from $650 to $1,000 per month.
“Under $1,000 is really key for people,” she said. “They don’t want to pay more than they have to. Even though they can afford it, people are just more cautious now.”
Rental properties in Gainesville and South Hall in that price range typically don’t stay listed for more than a month, she said.
“A lot of times they will rent within a couple of weeks,” she said.
People forced out of their homes due to foreclosure can often still qualify to rent a house, which they would find preferable to a smaller apartment or moving in with family.
“Most people want to maintain that family connectivity that a house would have that an apartment would not,” Norton said. “They’re trying to stay in the same school district, have the backyard playset and keep the dog. Yes, they’ve lost their house, but they want to transition into something else, and so there is an extraordinary demand for rental houses.”
Besides traditional landlords, demand is met by people who are renting houses they can’t sell if they have to move out of town for a job, or people who bought a better house at a good price but can’t unload their old home.
Also in Hall County, some investors are buying foreclosed houses to convert into rental properties, with the people renting them having themselves lost their homes to foreclosure.
“It’s somewhat like a shell game,” Norton said.
Rental houses are also popular among young adults who have never owned a home and are shying away from taking the plunge after witnessing the mortgage meltdown, according to a recent report.
“Generation Y,” the children of baby boomers who are in their 20s and 30s, will be renting their houses for longer than did past generations, according to John McIlwain, a senior resident fellow at the Urban Land Institute and author of “Housing in America: The Next Decade,” a report released earlier this year.
“Generation Y’s attitudes toward home ownership have been changed by the housing crisis and the recession,” McIlwain wrote. “They will be renters by necessity and by choice rather than homeowners for years ahead.”
And, at least for now, Ruth said, “it is a renter’s market.”