Broker: Slow Housing Market Creating Valley Rental Boom
Riverside County in the state of California is the ground zero of foreclosures.
Every one in 30 homes is in some phase of foreclosure, according to the Irvine-based real estate tracking firm RealityTrac.
That is creating a rental boom, real estate experts said.
Countywide, from January to June, nearly 25,901 bank repossessions, mortgage defaults and auction sales notices were recorded, and not just in blighted neighborhoods.
“(There’s a home in La Quinta) that the people owed way more than the house would sell for,” said Lori Bowers, a broker associate for La Quinta based Intero Real Estate Services. “This home was worth around $650,000 less than two years ago, and now it just sold for 320.”
Typically, when people hear that a home has been foreclosed on, the piece of property is associated with a bad neighborhood, but Bowers said, “that’s not the case all the time.”
The market has been slow for Bowers, but just one day ago she sold three homes.
Still, for those who’ve recently foreclosed, there’s still a need for the space that a house offers, but without the long-term commitment or financial responsibility associated with a mortgage, said Bowers.
She showed News Channel 3 two homes that sold short or were foreclosed on in a quiet La Quinta neighborhood — the owners opted to rent.
Brock Berry has a full-time job, but on the side, he rents two pieces of property he owns: one in La Quinta and the other in Indio, which along with Desert Hot Springs, have the highest foreclosure rates in the Coachella Valley.
He said the majority of his clients recently lost a home.
“I guess if we weren’t going to rent to them because of that, it’d be really tough to get renter right now, because the majority of people have foreclosures on their record,” said Berry.
But despite the high percentage of foreclosures, Bowers said this may also be the best time to buy.
“If you buy a $150,000 to $200,000 house, and right now you can go with FHA for only 3.5 percent down — get the seller to credit your closing cost, and your payment on you house at 5 percent interest is going to be under $1,000 a month on a 30-year fixed loan,” she said.
During the first half of 2011, the Riverside-San Bernardino-Ontario metropolitan area ranked fifth in foreclosure filings, according to Realtytrac, but that number is down 26 percent from the same period last year.
