The high unemployment rate in some U.S. cities has created a new type of home buyer, according to media reports. Buyers who have credit problems that could prevent obtaining a traditional loan are now seeking rental housing options. The New York Times is reporting the rise in first time home buyers now turning to rentals as a cost effective solution.
View the New York Times original article online here.
A shortage of home buyers is creating new options for investors and buildings in the rental industry. Model homes that used to be constructed for new home sales are now being used as rental housing in some parts of the country.
Jacksonville, Atlanta and Phoenix are some of the cities that have experienced growth in the rental industry, according to the New York Times report.
One Jacksonville native featured in the New York Times report recently purchased a JWB Real Estate Capital home. Viviana Bowens, who is a nurse, was forced to sell her home after splitting with her husband and going into foreclosure.
"If I can afford $1,100 in monthly rent, I could definitely afford a home," Ms. Bowens said in the report.
The negative credit rating that arrived with a home foreclosure is one factor that motivated her to purchase a rental from the available homes in the JWB portfolio.
The U.S. Census figures report an all-time high for homes under new construction for the rental market. The 6.2 percent of homes calculated in the 2012 report are currently used for rentals in the U.S.
The market crash of 2007 in the real estate industry has been one factor that has damaged the financial independent of some young adults who would normally become first time homeowners. One report is estimating that more than 2.4 million new homes have not been purchased due to the economic slowdown.
More than 100 homes have been constructed by JWB Real Estate Capital with at least 125 more that are scheduled to be constructed. The rise in the rental market is one issue that has been covered by JWB President, Alex Sifakis, at conferences and other industry events.
The low maintenance and cheaper rent for a rental home were detailed in the New York Times article to introduce the new concept of renting instead of buying for most young adults or those who have been displaced by less than average credit scores.