Are renters the real victims?
May Rental Advice: When the mortgage crisis hit, all eyes were on homeowners. But tenants, who didn't take out risky loans, have had to pay the price for the follies of others.
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The link is undeniable: One reason rents are so darn high right now is that homeowners got in over their heads back in the boom days.
Blame the banks, if you like, for aggressively marketing too-good-to-be-true home loans. Or blame buyers for failing to understand the risks. Either way, the result is the same: Once the bubble burst, it's renters who have had to pay the price, and all without a single bailout in their name.
It may seem counterintuitive at first, but the connections are clear.
First, the housing crash caused a serious slowdown in residential construction, including of apartment buildings. Now that tenants are back on the market, thanks to a pickup in jobs, they're finding that supply hasn't kept pace with demand. Net effect: The landlord can raise the rent and somebody will pay it. (Bing: How to negotiate a lower rent)
Second, the great foreclosure crisis still has banks trembling, a condition that seems to interfere with their ability to open the vault and issue new home loans, even to qualified buyers. Add people who have lost their homes to foreclosure and you have thousands of new renters crowding the market.
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Third, the accompanying Great Recession created a boom of accidental landlords, some of whom offered illegal and even dangerous rooms for rent. Given the scantily regulated nature of the housing market, no one's the wiser and plenty of tenants have paid with their health and sanity. One reader wrote us to say that she lost three different rooms after complaining about untenable conditions.
(Renters: What tough choices have you had to make to pay the rent? Please write to us at email@example.com.)
Another reader, a landlord in Texas, wrote to say that tenants now come to her with "horror stories" about these accidental landlords: collapsed ceilings, untreated mold and sky-high heating costs due to insufficient insulation.
- On our blog, 'Listed': Is this a good time to buy your first home?
"The truly unfair aspect of the housing downturn has been, in my opinion, the inexperience, unpreparedness and generally unprofessional behavior on the part of new and accidental landlords," wrote Shannon Victory of Cleburne, Texas.
The accidental advocate
It's these kind of overlooked consequences to renters — the other third of the nation — that got William Deegan, a retired housing-finance wonk, thinking.
Incensed by what he considers the inordinate attention and financial breaks that go to homeowners — federal mortgage relief, tax write-offs, respect — Deegan formed in 2009 what he calls the first national tenants advocacy group, The American Tenants Association. The group, which is now called Renter Nation, aims to mobilize tenants and, ultimately, to generate tenant-protection laws at the federal level.
"Tenants don't have political clout," says Deegan, who owned four homes before choosing to rent later in life. "There's discrimination that weaves its way through our system, our culture, our tax system.
"I personally know people who have not made a mortgage payment in a year and they're still in their home," Deegan says. "It's a basic sense of fairness. I thought, 'This isn't right. Here I am paying my rent every month, and these people are being financially irresponsible.' It's just not right."
To date, Deegan has provided tenants with advice through the organization's Facebook page, by phone and via a radio show. His goal is to amp up Renter Nation and mobilize tenants to vote. As it is, renters, who typically earn less than homeowners, have a lower turnout rate at the polls.
"Residential renters in the United States are the largest demographic group that are not represented by a national group," Deegan says. "Ninety-five million people and we don't have an advocate."
Stay tuned, as they say.
- MSN Money: Is renting the new American dream?
Occupancy rates drop; rents to follow
While rents continue to rise, as they have for the past two years, there are strong indicators that we've hit a peak and prices may drop.
In its first-quarter survey of 47 counties, the apartment-research firm RealFacts found that while rents, on average, were up, to a national average of $1,008 per month, occupancy rates were dropping in more areas than not, indicating that demand for units is finally letting up.
"As long as the demand is there, [landlords] can continue to increase prices," says Nick Grotjahn, a RealFacts sales and client representative.
In 53% of the areas surveyed, occupancy rates fell. Many are places where the occupancy rate, and rental prices, climbed dramatically in 2011. The turnabout indicates that prices may have maxed out.
"Now there comes a point where people are saying, 'Hey, I can't afford this anymore. The rent is too high,' so they'll make other arrangements, decide to stay at home, maybe look at buying, and so the occupancy slows or stalls." Grotjahn says.
Fastest growing first-quarter rents:
- Boulder, Colo., up 4.5% to $1,107 per month
- Seattle, up 4.3%, to $1,121 per month
- San Jose, Calif., up 4% to $1,857 per month
Highest first-quarter growth in occupancy rates:
- Charlotte, N.C., up 1.2% to 94.9%
- Houston, up 1% to 91.5%
- Las Vegas, up 0.7% to 91.7%
Greatest first-quarter drop in occupancy rates:
- Oklahoma City, down 2% to 92.2%
- Baltimore, down 1.9% to 93.1
- Kansas City, Mo., down 1.2% to 93.4%
Help, am I being foreclosed on?
We continue to get questions from tenants who suspect that the landlord isn't paying the mortgage and that they're about to get kicked to the curb.
One reader midway through a two-year condo lease in Scottsdale, Ariz., says notices from the bank started appearing on her door this spring. She called the landlord, who said he was simply negotiating a new rate and not to worry. "He said everything is fine and if I have to move he'll help me," she wrote. Odd thing for the landlord to add if everything is fine, right?
We turned to Ken Volk, founder of Arizona Tenants Advocates, for advice.
First, Volk says, determine from official records who currently owns the property. A title company will have the most up-to-date information. "They're usually only a week behind," he says. "They're going to have quicker information than even if you call the county."
That should at least put your mind at ease, as you'll know whom to send the rent to. Either way, you have the right to stay for the duration of your lease, provided you don't skip out on the rent or otherwise violate the terms of the lease.
The Protecting Tenants at Foreclosure Act of 2009 is a federal law that allows renters to remain in a foreclosed unit for the duration of their lease. The only exception is if the new owner intends to use the property as his primary residence, and even then the tenants have 90 days from the date they receive a written eviction notice.
Arizona law may provide even greater protections to tenants in foreclosure. If the property has been transferred, contact the Arizona Tenants Advocates, a tenant lawyer or a local tenants union for information on how to protect your rent payments and deposit by notifying the new owners in writing.
Finally, good financial questions being asked of current economic situation in real-life America. Renters, certainly in Florida, are surprised by (and terribly exploited by) another foreclosure-related issue: Property owners who do not advise renters that foreclosure action is looming, or worse, that landlords have not kept up building maintenance fees. Renters are often left on the street because they had no idea the landlord had filed bankruptcy and given up the property outright - while still receiving rent pay. Also, when renters' gate keys or elevator cards suddenly don't work, they discover homeowners fees (maintenance) have not been kept up. A common solution is to pay the HOA directly to the building management and only the difference to the landlord. This works until the financer sends a court representative (that's a really loud, vulgar knock !) with a subpoena saying the property must be evacuated in 30 days (Florida). P.S. It can take months, if not years, since financers have always been such a mess. Let's face it: This cycle worked only when we all paid monthly no questions asked or felt frightened to death a the first menace of credit report injury via collections.
Thanks for an article that begins to scratch the surface of today's real economy and the information readers really need.
Republicans want lower taxes, a larger income gap; abolishment of the minimum wage, worker's rights, social safety nets, and government regulations; tort reform, arbitrary agreements, and corporate personhood.
In other words, they want the middleclass to merge with the poor, have no rights in the workplace, to a livable wage, protection from an unsafe work environment, the ability to sue their employer if they are harmed in an unsafe workplace, or protection if disabled or laid-off.
The Republicans want the American Dream to only be available to the wealthy (the new aristocrisy) while the middleclass (the new poor) are left to toil as wage-slaves and serfs.
The landlords need more money, regardless of what the reason. If I'm a landlord and not up to my neck in refinancing bills I'll still raise the rent to match what everyone else is charging. I have to live because the heating and oil people are raising their prices so they can live good. So when the landlord raises his rents to live good, there's a problem with that? Why doesn't everyone go after the bigger culprits, the oil industries, the companies that pay everything to the top few and the bottom people that are the renters get the lowest pay possible. Why don't you bitch about that? Go after them and the price of everything will go down for all, not just the renters.
I am sorry for the liber socalist mindset, Obama and the democratic socalist party is really affecting everybody and "transfoming" everyone into feeling "owed"!
As a landloard i purchased a couple of my houses during the housing boom, and guess what i paid to much. But unless i want forclosed on i have to charge as much rent to cover my morgages, taxes and insurance.
The same uninformed and uneducated socalist that voted for the government union employees to get 5% raises when the rest of the country is loosing there jobs. These jobs are paid for by realestate taxes, you vote for the unions to get automatic raises and guess what you just caused the property taxes to go up!!! Retired people on fixed income are loosing there homes and families that can barley make ends meet must come up with more money for realestate taxes!!! Landloards are forced to raise the rents to cover the taxes you Obama union supporters voted for!!
This is why you must think of the results of stupid liberal thinking.
Maybe in some cities where people can get jobs rents are higher.
In the small cities and towns where there are no jobs, rents not only aren't up, they are down.
We have only to blame those who we pay to be our elected officials, to help oversee this mess,
and have done next to nothing now for four years. From President Obama, the do-nothing President, except be a great liberial socialist....to even our congress. No, one in government wants to lead anymore. No one wants to make the tough, big choices. It is sad, we need to Fire...all of them and start over, with men with backbone, and character, and a desire to help the people. That is something we do not have in the White House or Congress right now.
Rents are sky high? Where? Round here rents are down about 20-25%. Why? People dont have jobs, and people that do have jobs can't pay the rents we were getting 5 years ago.
Check it out. Rents nationwide are DOWN from 5 years ago. Meaning, another ill-informed idjit writing a bad article on msn(bc)
"Clear" as mud. Another article about its someone else's fault. I have lowered rent for my tenants during tough times. They are still held low today.I have not raised rent in years. I have improved neighborhoods by fixing up distressed properties. It takes a lot of hard work and time away from video games, television, and such. Hard work pays off. All people have to do is get going and be productive. Their hard work will be rewarded. If rent is too high, then go somewhere else.
I did not come from wealth. My mom is a refugee. I have a son with special needs, and I am about to go in for my fourth surgery. There are very few excuses to be made!
Someone: When those properties were NEW, and literally maintenance free, you were making money on rent end over end, and it probably was when the markets were booming. Now that these same markets are tanking, and your apt's are years older, requiring more and more maintenance, it's costing you more money than your taking in. Now nothing for nothing, (if you are the businessperson I know), you had to know the risks that were involved in being a landlord. Being at the top has it's perks, but it also has it's headaches. So take your aspirin, and either deal with them, or get out of it. Nobody wants to hear the whining about being a business owner. Get over it.
Why don't you ask Nobama for a bailout skip....
GO ROMNEY 2012!!!