Foreclosure crisis forces rental crisis

from The Salinas Californian

This is a little off topic, but it was an angle of the foreclosure crisis that I haven't seen explored before. - Kale

By NICK RAHAIM

After a few, futile months of perusing classified ads, talking to property managers and checking out houses for rent, it took a connection through a family friend for Penny and Tom Bubnis to find a place to live.

"It was a major pain to find an affordable, clean house in a good neighborhood," Tom Bubnis said.

The Bubnises - like thousands of other families in Salinas - entered the rental market after their house was foreclosed upon.

"Rental units are in high demand at this point," said Michael Rodriguez, broker/owner of Platinum Capital Mortgage & Estate. "The folks who were displaced outnumber the number of rental units available."

In 2007, roughly 24 percent of Salinas residents were renters, but the number skyrocketed to 46 percent in 2008, Rodriguez said.

While the market may be tough for those looking for housing, it's great for landlords. Salinas was recently ranked the sixth-strongest rental market in the country by AXIOMetrics, a Dallas-based research company.

A typical, one-bedroom apartment now goes for $1,400 to $1,600, and two-bedroom apartments go for $1,600 to $2,000, Rodriguez said. Rent has increased by 5.6 percent in Salinas from 2007 to 2008, and the vacancy rate - the lowest in the nation - has dropped to 2.4 percent, down from 4.3 percent two years ago.

The family friend who helped the Bubnises is a Realtor who had a vacant house in south Salinas that the owners didn't want to sell at current market prices. For a "steal" at $1,800 a month, the Bubnises now live in a three-bedroom, two-bath house. They keep up the landscaping that became disheveled after more than a year of vacancy and perform other small household repairs as a condition of "cheap" rent.

As recently as October 2007, many property managers advertised they would pay the first month rent on a month-to-month lease to fill rental units, Rodriguez said. Now, those same units come with a 14-month minimum lease, first and last months' rent and a long waiting line, he said.

Sally Backus, owner of Backus Property Management, said she only has one vacancy out of her 370-rental unit portfolio, and the apartment prices have increased 5 to 10 percent in the last year.

Increased demand for rental housing in Salinas has also put a squeeze on low-income renters.

Former homeowners can afford higher rent, which has put additional upward pressure on rental prices, said Jean Goebel, director of housing management for the Housing Authority of Monterey County.

The Housing Authority received more than 5,000 applications for Section 8 housing assistance during the application filing period in July, Goebel said, significantly higher than the number received in years past.
Foreclosure ripple effect.

Link to full article. May expire in future.