More fallout from the debt crisis. BTW, its NOT a credit crisis, though people are having trouble getting mortgages because they have too much debt. We're actually back to the way things used to be before all the subprime loan vehicles were created to give credit to people with existing debt problems.
Anyway, this isn't a surprise but analysts are now saying that the housing problem has created -- are you ready -- a rent problem! I have already written on this extensively, but now its official, according to CNN Money.
What happens is that as people, often who either bought a house to flip (don't get me started) in hopes of a short-term big gain, or bought a new home and have their old for sale, cannot get that house they desperately need sold. So they rent it.
Which is exponentially increasing the inventory of available homes for rent.
Which puts pressure on rents.
See the vicious cycle? Read the CNN story here. Fortunately, this is only being felt worst in those market that have been hit hardest by the debt/credit/housing problem. That is, those markets that saw huge, fast run-ups in home prices as speculators took over the market. Atlanta and Houston rents are dropping the most, the report says. But resort areas like Lee County (Ft Myers) in Florida have a similar problem. In fact, according to a mind-boggling New York Times story, one out of every four homes in Lee County is vacant. That is an incredible number. And if you are a house renter there, you can pretty much name your own price, for some owners are in such rough shape that they will gladly negotiate on rent.
Much of Ohio is far stronger economically in that regard and has not seen the steep declines in values, nor the intense pressure on rents. In fact through much of Central Ohio, rents seem to have stabilized. But other parts of the nation are not faring so well.
For investors who understand the value of holding real estate for 5-10-years, the next two years are going to represent a boom time to pick up nice single family homes in strong neighborhoods at a discount. The market will come back, they will appreciate in value, and all the while the rents will pay the note.