Magazine article Mortgage Banking

Foreclosure Crisis Not Hurting Apartment Sector

Magazine article Mortgage Banking

Foreclosure Crisis Not Hurting Apartment Sector

Article excerpt

The credit quality of prospective renters has held steady, suggesting that the foreclosure crisis is not spilling over to threaten the financial health of the apartment sector, according to a study by the Washington, D.C.-based National Multi Housing Council (NMHC).

The NMHC white paper--Renter Credit Quality in a Volatile Housing Market--noted that homeowners of foreclosed properties have not been flocking to the apartment sector, as evicted homeowners only represent between 2 percent and 6 percent of apartment applicants.

The white paper results run contrary to popular expectations of a potential "flood" of former homeowners washing into the apartment sector, according to Doug Bibby, NMHC president.

"The primary effect the housing downturn is having on the apartment sector is a dramatic slowdown in the number of renters leaving to become owners," said Bibby. "This, in turn, is raising the credit quality of rental applicants and helping insulate the apartment sector from the financial woes the single-family sector is currently experiencing."

The report--conducted by Bruce Innes of Innes Works Consulting, Lutherville, Maryland, at NMHC's behest--examines whether the overall quality of apartment applicants has declined because of the increasing number of households with some kind of "mortgage stress" in their credit history. …

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