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.