Evicted Homeowners Tend To Move In With Friends And Family Instead Of Renting, Data Show

nakedcapitalism.com:

On Naked Capitalism, blogger George Washington looks at housing data and finds that people who lose their homes are not necessarily moving into rentals:

"It thus appears that many of the people who used to own their homes, and no longer do, are doubling up with friends and family. This is probably not their first choice of living arrangements, but they are doing so because they have no other choice economically.

In other words, the correlation between falling home prices and rising defaults, on the one hand, with increasing rental demand and higher rental prices, on the other hand, doesn't hold in a really tough economy."

Read the whole story: nakedcapitalism.com

Comments

[MeinNH]

09:36 AM on 04/25/2010

Again with blaming the victim......Okay so if you lost your job or jobs, defaulted on your mortgage because your savings are now gone and you only have unemployment as your income and then you try to rent.....it is your fault if you can't find a rental. What kind of logic is that?

The topic is how people are moving in with friends and family...perhaps to share expenses until they get on their feet or to help keep the mortgage paid so that everyone isn't homeless? Perhaps the cost of rents is high because landlords know that they can charge primo prices for slums and maybe they need to stay in the neighborhood so the kids can finish out the school year?

No they defaulted so they deserve whatever they get....I cannot wrap my head around that. I bet you are all Christians too.

[Y3rMawm]

04:51 PM on 04/11/2010

This partly explains where all the money is coming from to keep the economy afloat. Underwater mortgages not being payed, and cheap to free rentals.

[realitytrumpsbull]

12:58 AM on 04/11/2010

Housing is still overpriced, but the banks aren't about to knuckle under, that is, unless a lot of people just start defaulting on their mortgages nationwide by choice. If enough people did that, some banks would likely go permanently out of business. But, assuming that doesn't happen, which it probably won't, where can people go when they've been totally priced out of the housing market, and the mexican drug dealers or international real estate speculators step in, and start buying up everything?

[Kye154]

05:58 PM on 04/09/2010

The basic reason why many who have defaulted and forced into foreclosure on their homes do not move into rentals, is because most rentals require a background check to see their credit ratings. Most renters will not rent to people who have defaulted on their loans, filed for bankruptcy, or have had their homes foreclosed. Credit ratings are nothing more than a system to punish you, if you have financial problems. It should be outlawed entirely.

[floodberg]

02:08 PM on 04/09/2010

In the last two years huge amounts of unused consumer credit got collapsed on customers who were in good standing. Banks raised rates on everyone, raised fees and made more (which seemed impossible but true), and wrote a lot more 'fine print.' The protection act comes into play AFTER all these changes, and doesn't protect any of those people. As a matter of fact, consumer lending isn't moving at all. This quiet collapse is spurring more foreclosures and defaults, which have not yet hit the legal fan.

There's no lending, because there's still a shoe left to drop, and the banks, mortgage lenders and brokers know it, as do the politicians and the experts.

The question is why the administration is trying so hard to convince us that the worst is over. The answer; terrifying.

[vmlinux]

02:27 PM on 04/09/2010

Also rates got raised on everyone because the banks were acting progressively because they couldn't do it after the law went into effect. If they had waited then their hands would have been tied.

Also I just learned today that I have to raise rents by 4 percent to my tenants that haven't have their rates raised in years because of the Obamacare rental property taxes. I guess he wasn't lying when he said that he wouldn't raise taxes on the lower income people, he'll just raise cost of doing business to the point where the taxes will directly impact the lower income people.

[reno1190]

02:58 PM on 04/15/2010

tro// stop whining

[AxelDC]

01:01 PM on 04/09/2010

If you can't pay your mortgage, how are you going to pay rent? If you can get enough money for the deposit and and first and last months' rent, why didn't you use it to save your home?

What landlord wants to rent to someone who just defaulted on a mortgage?

[Adartist777]

01:30 PM on 04/09/2010

Not only that, but many rents were priced ridiculously high as were many home prices. If any good comes out of this recession, it will be the leveling off of rental and home prices on a more realistic level. The McMansion will probably end up being a dinosaur as people will find that a smaller home is more practical both in price and savings on utilities.

Perhaps we'll see the return of moderately priced ranch style homes as we had back in the sixties.

[vmlinux]

02:35 PM on 04/09/2010

Rents are directly correlated to house values. My favorite calculation on how much I need to charge for rent is based upon the houses purchase value. If I can't make that much in rent I can't buy the rental property or I must divest myself of it.

As house prices increased many landlords cashed out of houses because they could make more by selling the house than renting it, or they raised their rents because the current home value suddenly warranted it. That may sound greedy, but it's common sense with any investment. Such as; If you own a stock, and the stock price goes up to the point where the shares split, every time you analyze your stock you have to decide whether the stock is still worth that price as an investment, and decide if your dividends (rent on your money) is enough to keep the stock. If the dividends aren't enough to keep investors (especially if the stock has just gone way up in value) then the company must pay higher dividends to keep investors since the chance of the stock going even further up is probably much lower.

[medicontheedge]

02:12 AM on 04/10/2010

WOW... so they should be homeless???

[AxelDC]

04:32 PM on 04/16/2010

Tell that to the landlord who can't pay his mortgage because his renters defaulted.

The bank doesn't care if you have deadbeat tenants, so landlords can't afford to be charities, or they will be homeless themselves.