because rents are about to fall significantly making it even less attractive to buy. http://www.bloomberg.com/apps/news?pid=20601087&sid=a7INRK.nOrqc&refer=home http://www.usatoday.com/money/economy/housing/2009-01-29-freddie-mac-rent-foreclosure_N.htm http://www.dailybulletin.com/ci_11585567 Foreclosure to rental conversions are the direction that lenders are being pushed in, the market will soon be flooded with rentals and the rental market is already cheap!
don't know how this is gonna work for FNM. If a guy can pay for the rent, a foreclosure would not happen in the first place, as usually rent (market price) is higher than mortgage. The only way this is going to work out is FNM is willing to reduce the rent by at least 50%. For instance, a 2500 sf house monthly mortgage might be $2000, the market price for rental is $3000. FNM has to rent it out for $1500 in order for this plan to work.
another bs statement. "Leases will be on a month-to-month basis. â¢Tenants and homeowners will only have to pay market-value or existing lease rents, not the mortgage payments. Freddie Mac will hire a property management company to determine that amount. â¢Tenants and homeowners must be able to show proof that they have enough income to pay the monthly rental amount. " I don't think these management companies will give you much discount. You need to provide income statment, tax reports, and other proof that you can make monthly payments only to live on a month to month basis? what a plan.
The subprime is over already (2500 sq ft for $2K a month? maybe in the south or out in the boonies somewhere but not in any NE or mid atlantic city), the fastest acceleration in foreclosures is the jumbo prime and I can assure you that rents are still much cheaper in this segment than buying, especially here in the NE and in big citys in CA where the "good" areas have yet to see much more than a 10-15% discount from peak prices. I live in the inner burbs of Boston and pay 25% less a month in rent than I would be paying if I bought a similar property (this is taking in to account the mortgage interest tax deduction and I am in the highest tax bracket). There are lots of SFHs for rent already and more coming on each month in the $4-8K range. This is the segment that is going to get crushed and these are the people now facing layoffs. The demographic that is facing layoffs now is vastly different that in the great depression, this is a white collar recession every bit as much as it is a blue collar one. I know a few people who were prudent as I was and sold all their RE between 2002-2005, none of us are looking to buy yet as the properties that we are interested in are still looking like the dow at 11500 in Nov 08, reality still not priced in.
Agreed, some foreclosures are going for 50c on the dollar. For non foreclosure properties though, it really depends on geography and market segment.
rent on a single family is seldom more than the mortage payment. if houses with mortage paments of 2000 could rent for 3000 they would be snapped up in a day.
I agree and in many areas (outside of the rust belt), white collar jobs are being hit the hardest. At the end of the day, many of these jobs aren't THAT important and companies can become much more productive to make up for the lost man hours. I guess I can't really comment on blue collar jobs, if there is such a thing any longer. I really don't have many friends or family members that would fit that description, except an unlce who is in the welding business and specializes in nuclear plants, so he is doing very well right now. Most of my other extended family is in agriculture and doing just fine. My friends are mostly white collar and that seems to be where the most fear/pain is being felt. Of course this is all anecdotal.
No kidding. With 20% down, if you can break even when considering time and maintainance, your probably doing pretty well in the rental business on single family homes. Where making money comes in, in my opinion at least, is multi-family dwellings, etc