Rising Number of Foreclosure Home Auctions Affecting Rental Market

by Peter Vernon on Foreclosure Crisis

Finding family homes for rent in Phoenix, Arizona has become more difficult, with available houses declining in numbers and more families are looking to rent properties. According to local market observers, this is one of the ripple effects of the rising number of properties going under foreclosure home auctions.

Local market observers have also added that as the list of bank foreclosures expands, more families are losing their homes and most of them are seeking to rent instead of buying another property. Meanwhile, available homes for rent are also declining since landlords are also losing them to foreclosures.

Based on local statistics, the first onslaught of the housing market crisis actually increased the number of for-rent properties in Phoenix as more people in the city found that they can save more if they rent instead of keeping their mortgage-troubled properties or opting to buy bank owned properties and foreclosed homes.

However, the first few months of 2010 saw the rental market getting saturated by people looking for cheaper alternatives and more properties falling under foreclosure home auctions. Realtors have reported that demand for single family residences are at its highest, while rental agencies have to cope with long waiting lists.

Realtors further added that short sales and foreclosures escalated in March, but available rental properties to accommodate displaced homeowners have declined, effectively creating a market imbalance. In 2009, a big number of investors buy bank owned properties and turn them into rental properties.

In 2010, more lenders and property owners are opting to hold on to their properties as they try to catch up with delinquent mortgage backlogs. This, realtors have speculated, will contribute to further decline in available for-rent real estate which is expected to continue for the rest of the year.

Because of the supply and demand imbalance, rental rates surged to record highs and are now almost as much as mortgage rates. Real estate analysts predict that if this trend continues, rental rates will reach a point where they will be even higher than comparable rates for mortgages.

Rental properties are declining in Phoenix as more residential properties enter foreclosure home auctions and more displaced homeowners seek residences that they can rent. Realtors are not seeing any sign that the rental market will stabilize in the coming months.

disclaimer