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Short Sales, Buyers' Cold Feet Mean Spike In Rent

People are looking to rent rather than own in Foster City.

While Foster City has not been spared from foreclosures, it has faired better than other Bay Area cities during the recent housing market meltdown.

Trulia.com, a real estate search engine, lists that there are 38 foreclosures in Foster City. These include single-family homes, townhouses and condos. Meanwhile, 32 properties are in pre-foreclosure.

"It didn't get hit as severely as some of the other communities with distressed properties," said Lenore Wilkas, a local realtor and longtime Foster City homeowner. She estimates that the foreclosure rate in Foster City is under 4 percent.

Although the area isn't yet seeing a staggering number of foreclosures, short sales and shifting attitudes towards buying a home are driving up the demand for rental properties, resulting in higher prices.

When a homeowner can no longer pay for a mortgage, the lenders or bank allow a short sale of the property for less than what was originally due to them from the owner or borrower.

"There are definitely short sales," she added. "I saw a lot and I showed a lot of them."

Short sale figures aren't as easy to come by as foreclosure ones, added Wilkas. However, from personal experience, she said she's seen about 26 properties that were listed as short sales since January.

With a number of struggling owners doing short sales or considering the possibility, more people are looking to rent --- and landlords know this. 

"The companies that own the big apartment complexes are beginning to up rent significantly in the larger units for that reason," said Wilkas, citing a particular case involving a couple renting a place her real estate firm had previously listed.

"They told us they were up $400 a month for a two bedroom, which I thought was astronomical," said Wilkas. "They had had a lease that had gone month-to-month and when they wanted to renew the lease, they said it would be an extra $400 a month."

Foster City resident Judy, who declined to give her last name, saw her rent go up at Miramar Apartments. She was paying $2,200 for her two-bedroom and two-bath apartment, but a couple of years ago, her rent rose to $2,600. Even though it costs more, she choose to stay.

"We could move to another place with the same quality, but the location would be different," said Judy. "The apartment that we live in is like new."

But it's not just high-end apartments like Miramar, that are raising their prices. At Franciscan Apartments, an older apartment complex, property manager Ron Leebig said rental costs went up by $200.

"Last year around this time, maybe we had some excess apartments that we had to discount to fill, but now it seems that we're getting a much higher price and that price is increasing," said Leebig. "$1,795 was a year ago and $1,995 is today's market."

Meanwhile, another trend has popped up as a result of the downturn in the housing market.

"What we've seen, not just here but everywhere, is the emergence of a new class of people who are renting by choice," said Tara-Nicholle Nelson, consumer educator with Trulia.com. "There are certainly people who can afford to buy right now that are less convinced as time goes on that's it's the strong investment that people once universally thought it was." 
 
T Ebeie, originally from Egypt, has been a renter in Foster City for 15 years and currently lives at Foster's Landing. He looked into buying a home once, but got turned off by the list of expenses. Seeing what's happened to the real estate market has convinced him even more that renting is a safer bet. 

"I see a lot of people who have foreclosed houses because the mortgage is high," said Ebeie. "I prefer to rent, because a house is so expensive."

Phyllis McArthur October 12, 2010 at 04:33 PM
This is absolutly TRUE! As a professional there are many more people renting, and offering over the asking rent to assure getting the home.

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