The American Dream is on lease.
Among the casualties of the housing crisis – and recession – are families who were forced from their homes. As people try to rebuild from foreclosure, bankruptcy and job loss, some are moving into rental homes.
In fact, research company CoreLogic of Santa Ana, Calif., believes that this year, the nation could add another $100 billion in inventory to a market that already has $3 trillion of single-family housing in supply.
The market is strong and vibrant with high and stable rents, low months’ supply and a healthy pace of signed rental leasings, a report by CoreLogic said.
Scheumann Properties of Fort Wayne owns 142 rental homes in the city and 234 houses in the Indianapolis, Lebanon and Lafayette areas. They seldom lack tenants.
Nope, we fill up quick, said Traci Oberholtzer, property manager of the Fort Wayne homes that range from $985 to $1,095 a month. They are three-bedroom homes with two baths and two-car attached garages.
Some people prefer to rent. Some are still making their minds up about the area, she said. We do have a rent-to-own option available.
Financial constraints are a main reason for renting a house, officials say. Either a potential buyer has credit issues or doesn’t have enough money for a down payment. Once their circumstances improve, they move into their own homes, said Mark Heller, president of Heller Homes.
I’d say most of the people are renting until they get into a position to purchase, he said. Heller leases 11 three-bedroom homes ranging from $875 to $1,200 in Fort Wayne.
Most would buy if they could. The banks have really tightened up their credit (requirements), and for a lot of people, it’s almost impossible to get a loan for a house. I see this playing out over the next 10 years at least.
Phil Stinson, president of the Upstate Alliance of Realtors, said there is reason for optimism, based on recent home sales data.
The association, which tracks housing data from Allen, Adams, DeKalb, Huntington, Noble, Wells and Whitley counties, saw home sales rise 6.7 percent in July, compared with July 2011. The first seven months of the year, 3,569 homes have sold, up about 10 percent from the same period last year.
The average sales price this year also has increased about 6 percent to $122,511.
Stinson said he doesn’t see rental homes posing a threat to the buying market – no more than any other rental property.
Things are moving slow, but we’re seeing pretty strong sales and multiple offers on homes, he said.
Retirees John and Connie Meine are in the second year of a three-year lease at one of Heller’s homes and have no intentions of moving from their New Haven address.
We love it here, and most of our neighbors are seniors like us, Connie Meine said. We don’t have to be concerned about upkeep: roofs, water heaters and stuff like that. We’re too old to do the work. We just want to enjoy having a nice home without the worry.
Her attitude is shared by some of the younger set, too, said Greg McBride, senior financial analyst with Bankrate.com, a financial issues and resource website. The global economy continues to shake the confidence of some who would rather play it safe than be tied down to a house they may not be able to afford later, he said.
Owning a house is very cash-intensive and is a lot of work, McBride said. Home ownership is going to limit their ability to make progress in other areas, like retirement savings, college for their children and paying down debt.
It’s true rent may be higher than a mortgage in some cases, but there’s property insurance, taxes, maintenance and repairs with a house. Where does that money come from?
Still, Heller maintains that given the opportunity, most renters would opt to own a home.
That’s how it is in the Midwest, he said.
Not for Connie Meine. She said parents might like the idea of leaving their children a home as an investment, but it doesn’t always work out.
I went through a situation in my family where there was a lot of bickering over who gets the house, she said. This way, you don’t have to deal with all of that.