Saturday, October 29, 2011

Morgan Stanley predicts foreclosed homeowners will pay $72B in rent annually « HousingWire

Morgan Stanley predicts foreclosed homeowners will pay $72B in rent annually « HousingWire
The millions of homeowners facing default on their mortgages will likely become renters once their home is foreclosed. Investment bank Morgan Stanley (MS: 19.31 -0.52%) crunched the numbers and said the boost to the multifamily segment, that arm of commercial real estate that includes apartment buildings, will most likely see a multibillion-dollar boost from the looming migration.

Oliver Chang, a housing and securitized products analyst at Morgan Stanley, the lead author of a report released this week, detailed the migration of ownership to rentals. He expects a drop in the U.S. homeownership rate to 60% in the coming years from 69% at its peak.

That's why the only construction sector showing an increase in activity is "multifamily residential." It isn't condos. It's apartment buildings. The building industry expects these folks who lost their homes in foreclosure to join the ranks of renters...permanently. And with the horrible job market and the crushing burden of student loans, many young people will find it impossible to get financially established and buy anything for many years, if ever.


Anonymous said...

Well Morgan Stanley might want to look at the credit application process utilized by apartment complexes. It's doubtful that many of those foreclosed homeowners will be permitted to rent in any conventional apartment complex. The putative renter will be denied due to a foreclosure in their credit history within the last 2-4 years.

Fred Fischer said...

Allowing and forcing millions of recent property owners to become renters will economically be catastrophic to the US very soon. This also in many ways applies to CID members, who each year lose more and more control and the use and enjoyment of their own private properties as it reduces them to being renters and owners in name only.

Unfortunately when the municipalities started mandating the privatization of housing to manage portions of CIDs they forgot or ignored that under a capitalist system. When one gives a private corporation/business an inch they will always take a mile and that’s exactly what’s happened in privatized housing and this must be changed. Or more members will be joining the ranks of renters as the States grant yearly more authority to the HOAs over the member’s private properties.

Finally as more residence within CIDs become renters. The CID model will become even more unsustainable economically and further erode the traditional meaning of community. Since non owners don’t have the same motivations, responsibilities, attitudes or goals as the onsite owners do and will not necessarily be improving or maintaining the properties no matter how many Cc&Rs or rules the HOAs have. So much for the standard municipal policy’s of requiring a private entity to mange CIDs when other better governance has always been available !!!