Home Seller's Pain Is My Gain As A Renter - Taking Advantage Of The Mortgage Crisis
Published 1/20/08 (Modified 3/8/11)
The housing and credit markets are a mess right now. Several major banks that engaged in questionable subprime mortgage lending are smoldering in ruins. The housing market that had been stellar until last year finally collapsed, leaving behind a wake of steadily depreciating homes. The number of home foreclosures continue to spike as many home owners who took advantage of interest only adjustable mortgages are now faced with the daunting task of dealing with mortgage rates that are resetting at higher levels. The U.S. economy has sputtered and is now possibly sinking into the initial stages of a recession, further sapping consumer confidence in the economy and the housing market. If you are a home owner, the situation certainly looks grim and valuation prospects don't look good. But if you are a renter and aren't looking to buy anytime soon, life is good. If you have been relishing the opportunity to take advantage of the current housing malaise as a renter, well now is as good of a time as any to reap the housing bonanza - through lower rental prices.
Failed Building Projects Result In More Apartment Conversions
During the height of the recent housing boom, it used to be that many apartments were being hastily and rapidly converted into condominium dwellings to take advantage of surging home prices. However, with the annihilation of the housing bubble, many housing projects stalled. With the housing downturn, there is now a significant glut of unsold homes being inundated with a continued influx of foreclosed houses into an already distressed marketplace. Many of the unsold residential buildings, condominium complexes in particular, are now being converted into apartment rentals as builders and developers have thrown up their collective hands and given up trying to sell in such a flat market.
I currently rent a one bedroom in a recently built condominium complex in Maryland near the adjacent Washington D.C. border. The condominium complex was a high flyer during the height of the real estate boom, but was not able to escape the market collapse. One bedrooms were previously priced at an astounding $330,000 upon construction completion a year and a half ago, but prices have since plummeted to $250,000 with no bottom in sight. Many of the units were originally snapped up by speculators looking for a quick pre-construction flip. Many of them are now left with dwindling selling prospects and have turned to renting units out as their only viable option. Unlike traditionally managed apartment complexes, home owners forced to become rental landlords are generally not as focussed on maximizing their rental value in my opinion. Many are in dire straights in need of immediate rental income assistance to fulfill mortgage payments or face foreclosure. If you are a vulture renter, you are in luck as sites like Craigslist are littered with plenty of desperate townhouse and condo owners looking for rental tenants. Their misfortune is helping to drive rental prices down in many hard hit markets, although a few stubborn markets continue to buck the trend.
It's Time For Me To Start Playing Homeowners Against Each Other To Get The Best Rent
I know it is terribly opportunistic of me as a renter, but I did not create the mortgage and housing mess. I am just reacting to current favorable and advantageous conditions in the housing rental market. Keep in mind, many of these same housing speculators were price gouging prospective buyers at the height of the real estate boom so it's hard to have much sympathy for them when the tables are finally turned.
As my current rental lease expires in the next few months, I look forward to securing a very favorable rental agreement at the same place or at least in the same neighborhood. Next door to my current complex are two major apartment projects simultaneously under construction, but nearing completion. They were originally slated as condominiums but were later converted to apartments when selling homes no longer became attractive. Many area projects have also followed a similar shift. As a long time renter who has no active plans to buy a home in the next few years, this is great news being piled upon already good news. With desperate homeowners and apartment conversions flooding my area, my bargaining power as a rental tenant continues to grow. I plan on pitting all apartment rental prospects against each other to capture a great rental price. If my current landlord hopes to get me to sign the same lease agreement, rather than produce to me a substantial price drop, he's in for a rude awakening in a few months.