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Woes of the Renter in Today's Real Estate Market

The only good news about the recession is the return to record low interest rates for borrowers. For most of us though, this is a tough time financially, and the economic stimulus package worked like a band-aid trying to cover up a deep gash. Homeowners are not the only ones in probable peril with today's real estate market and economic lows, renters too face many tough obstacles. Despite the real estate pundits talking about how now may be the time to rent a home, renters are far from rejoicing.

 

Most renters in America fit a particular economic profile. They are less likely to have substantial savings or assets, may be recovering from traumatic events that wreaked havoc on their credit score, or they are brand new to the adult world and looking to gain their footing. Any of these scenarios make it more difficult for a renter to adjust to economic turmoil. It is also more likely a renter will turn to revolving credit to help defray some of the upfront costs of "bad luck."

 

One of the worst things to happen to a renter is when a house he resides in unexpectedly goes under foreclosure. When this occurs, very little notice is given before eviction and a renter may find himself scrambling to find funds to pay for a move and to cover a deposit in another location. Not only that, but if the homeowner is in more serious financial dire straits, getting the deposit back on the original rental may prove to be difficult and time consuming.

 

There are many signs a renter can look for that make a foreclosure less likely. Run a background check on the landlord with as little as a name and birthday, as any bankruptcy proceedings will likely pop up. Public tax records, if not up to date on a  property can be a sure sign that mortgage payments are not as well, and the future renter is a last ditch effort at a bail out. Another tell-tale sign is when a landlord places extraordinary pressure on a renter to purchase the property, or lease-to-own. Well-informed renters will have ears prick up and eyes looking for other places to live if they hear the landlord cry about personal financial woes, or rising mortgage payments on the property.

 

Despite attempts by the federal government to help cushion the blow of the lending crisis, there is a great disparity in lending terms from market to market, nationwide. Large metropolitan areas like Los Angeles, New York, and even places like Atlanta, do not have the same housing availability or lending terms as areas less affected by the earlier atmospheric rise of property values. In markets where the greatest gains were found on real estate just two years ago, the foreclosures are through the roof, and rental property pickings are slim. The only advantage a long time renter may have over someone unexpectedly finding themselves in the rental market is a clean history of payments and numerous references from previous landlords.

 

Even with the advantage of a solid renting history, renters are stuck in a high demand but low supply situation. The dilemma renters face from tons of demand and little supply is rental prices that keep going up. The real estate market may be flooded with foreclosures, but all of those properties are tied-up in legal proceedings and auction sales that it may be months before they return to rental property status, if at all. This places a tighter squeeze on the rental property market, where renters may find their rents rising at lease renewal time beyond what they can afford to pay.

 

The woes of renters in today's real estate market are many, indeed. Foreclosures, while certainly painful to homeowners, are financial hardships for renters that few can afford to handle. Moving supplies and resources are expensive, in addition to finding funds to cover a new deposit and first months' rent. Renters may also have a hard time finding a replacement domicile in their price range. The foreclosure fiasco has forced many more tenants into the rental market, and in especially hard hit metropolitan areas there is simply not enough rental properties to go around. Remember, real estate speculators purchased many of the houses foreclosing now just a few years ago. Renters who remain alert to the signs of an impending foreclosure will rule the day. Who knows, one renter's bad luck with foreclosure may yield a house in the perfect price range for another renter to get into the homeowner club.

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