Stalled Home Sales, Foreclosures Creating Competition For Tenants

Washington, D.C. (AHN) - The so-called "shadow market" rentals of investor-owned homes and condos has been joined by hordes of frustrated sellers renting out homes that don't sell, in some cases just to have enough cash to cover part of the mortgage payment.

Thousands of vacant homes that are for sale or foreclosed have flooded the rental market in states such as Florida, Southern California and Las Vegas. In some areas of Florida, real estate firms are reportedly renting more homes than they are selling.

Rental vacancy rates are expected to grow to 6.1 percent nationally, with more than that in some areas.

That growing surplus of rental properties has depressed rents in some areas as vacancies creep up and tenants with inflation-squeezed budgets move if they can find a better deal for less money.

Fierce competition for tenants has also caused apartment owners in some areas to offer lease incentives, making it difficult for landlords to raise rents. That is despite the fact that the number of tenants is rising as homeowners go into foreclosure.

But displaced homeowners are more likely to rent a owner-leased home than an apartment or traditional rental home.

Investment analysts expect rent increases to be around 3.6 percent nationally, with less than that in some areas with higher vacancy rates.