There's one bright side to the housing crisis: lower rents in some parts of the country.
The regions hardest hit by the housing downturn have seen ailing builders, rising foreclosure rates and a glut of homes, amid other signs of distress. But there are also stories like Laura Evans'.
The 38-year-old elementary-school teacher moved to Stuart, Fla., from Orlando with her husband and baby last fall. Looking for a rental apartment, they found plenty of choices at lower-than-expected prices, thanks to the multitude of owners trying to rent units they couldn't sell.
"When we got down here, we shopped and shopped around," says Evans, who rented a new 2,200-square-foot, three-bedroom townhouse with a pool and a playground for $1,150 per month.
The owners allowed the couple to bring their dog, despite a prohibition against pets.
To be sure, rents have continued to rise steadily in many markets. And the housing downturn means that more people are looking for rentals as well, increasing demand.
Many would-be buyers have become renters because they can't get a mortgage in the tight credit environment or because they're sitting tight in hopes that prices drop more.
But in the regions hit hardest by the subprime crisis, finding a rental apartment is easier and, in some cases, cheaper than it was before the crunch.
Some homeowners forced out by foreclosure are finding rental deals at "discounts of 50 to 70 percent off what they were paying on their mortgages," says Brenda F. Gerdes, who owns Management Specialists Inc. in Port St. Lucie, Fla.
Vacancies rose in 29 markets, including Las Vegas, Palm Beach, Memphis, Orange County, Calif., and Orlando, in the fourth quarter of 2007, according to Reis Inc., a New York real-estate research firm.
Ron Witten, a Dallas-based housing analyst, estimates there are 760,000 vacant condos and homes for sale nationwide beyond what the market could normally carry, in addition to a surplus of 350,000 vacant rental properties.
Behind the trend are tens of thousands of unsold condos being dumped on markets such as South Florida, Las Vegas and Phoenix.
While thousands of single-family homes also are coming on the market, renters prefer condos to houses, which typically have more expensive upkeep.
"Tenants have to pick up more of the bills," says Artur Ciesielski, a Phoenix real-estate agent.
More than 4,200 condos have been pulled out of the for-sale market and put into the rental pool in Florida's Palm Beach County alone, according to Mary Grace Breeding, president of McCabe Research & Consulting in Deerfield Beach.
Those include the 216-unit Aventine at Boynton Beach and the 450-unit Mizner Court at Broken Sound in Boca Raton, where rents range from $975 to $2,000.
In Brooklyn, N.Y., two luxury condo developments converted to rental apartments last spring, including 99 Gold Street, which had begun accepting sales contracts less than a year earlier.
Rentals at the 88-unit building range from $2,000 a month for 700-square-foot studios to $5,500 for two-bedroom penthouses. Even healthy markets are beginning to feel downward pressure on rents. Signs of a possible recession don't bode well for landlords, since people who lose their jobs will resist paying higher rents or will move in with friends or family. Many homeowners forced out by foreclosures also are doubling up, says Mark Obrinsky, chief economist at the National Multi-Housing Council.
That means that landlords are seeing what should be one of their strongest markets in years weakened by the increasing supply of unsold properties entering the rental market.
"Shadow inventory is coming out and competing against us for rentals," says Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate company that owns 70,000 apartments. That is weakening landlords' pricing power, he says, because homeowners are less concerned about getting full market value.
In five struggling markets in Florida, average rents have declined since the third quarter.
The Tampa-St. Petersburg area saw the largest drop. In 38 other markets, including Chicago, Boston and St. Louis, rents rose in the fourth quarter, but by less than the national vacancy growth rate of 0.9 percent.
Savvy renters in struggling markets are playing landlords off each other.
Evans, of Stuart, Fla., says the day she and her husband leased their apartment for $1,150 a month, the owner of a bigger home they had looked at called to lower his price from $1,500 to $1,200.
"If he had called earlier, we would have taken it," she says.
Christine Provencio, a 23-year-old legal secretary in Phoenix, considered buying a home with her fiance but instead traded a $580-per-month one-bedroom for a $740-a-month two-bedroom in the four-unit Phoenix home she has lived in for two years.
The news isn't gloomy for landlords everywhere.
Rents are rising strongly and vacancies are falling in many markets, particularly those with healthy economies that haven't been hurt by the housing industry carnage.
Vacancy rates fell in 47 of the 79 markets tracked by Reis, and average rents saw their largest fourth-quarter increase since 2000.Copyright © 2015, Los Angeles Times