South Bay Homes and Real Estate

Renter Troubles

In Torrance and across the South Bay, renters are starting to face issues as a direct result from the real estate crash.

This has caught many would-be Torrance renters off guard, as many assummed they were protected from the market problems, due to the fact they did not have mortgage payments. It seemed like an excellent strategy at the time; renting property until the market is more balanced and home purchases are more secure.

Renters in a growing number of markets – not just Torrance – are finding that they are not as safe from the housing crash as they previously believed. One of the largest issues is that although the renter does not have a mortgage payment; the landlord does. If the property owner has an adjustable mortgage, it is very possible that skyrocketing interest rates will make monthly payments unaffordable, which would send the rental home into foreclosure.

What if your Landlord goes into Foreclosure?

When this situation occurs, renters may find themselves searching for a new place to live. I personally seen many Torrance renters relocated – with one month notice – from the location where they had lived for several years. This can be a huge problem for renters in two ways. For one, it can be extremely tough to find affordable housing, and second, many of the renters have trouble making the necessary rental deposits.

Also, the quickly rising rental prices have affected renters. The national average for rental rates has started to rise. As it stands now, the highest rates can be found in New York and San Francisco. Cities such as San Jose, Cleveland, and Seattle are also showing the potential to have significant rate increases. San Diego and San Bernardino are also areas that may not be kind to renters in the future. Torrance investment property rental prices do not compare with these cities. But we are affected by the same phenomenon. 

Read also: How To Get Rich Slowly With Torrance Rental Property

One explanation for why rental rates are climbing in Torrance is that builders have not had the ability to erect a large number of new apartment complexes. This has caused demand to soar, while supply has remained the same. Also, a much greater number of property owners in Torrance are forced to leave their homes because of foreclosures or quickly sell their property to try and recover as much value as possible. These former homeowners need a place to stay, which raises the demands for rental properties even more.

Statistics have shown that in the past four years, rental occupancies have increased by 10%. This is a clear indication that more people are renting now than during the pinnacle of the market. In the same time, the Census Bureau reports that national rental rates have risen 14%.

A few other certain situations have resulted in higher rental rates. One of the largest factors is that consumers are buying fewer homes, as they rent and wait for the market to balance itself and create a more favorable buying climate. A high number of renters believe house prices are going to drop even farther, so purchasing property does not seem like an intelligent fiscal decision. Essentially, they want to avoid the troubles that many homeowners have faced in the past several years.

Another factor that must be taken into account is that many renters would not be able to meet the standards for a mortgage, even if they wished to purchase property. After all the problems with subprime mortgages, most lenders have greatly tightened the mortgage guidelines and require nearly spotless credit. The necessity of a larger down payment has especially made it tougher for consumers shopping for their first home to find something affordable.

The status of the rental market is being studied carefully, as the rental market affects other economic areas. For example, apartment complexes are usually only constructed after the rental market is analyzed.

If you are a Torrance resident feeling the squeeze of the rental market and want help call me immediately at 310-809-0203. We can help you determine if you could actually afford to purchase a Torrance condo or home and take advantage of today’s low home prices.

Additional Real Estate Articles of Interest:

• First Time Homebuyers Tax Credit: Torrance, Palos Verdes and Beach
  Cities
• Torrance BPO for Dummies: Understanding the home foreclosure
  process
• Torrance Home Buyer’s Delight: Torrance among real estate markets
  hit by downturn
• Carson real estate investor’s delight: Foreclosure