Nov. 28 - New sales of single family homes fell only slightly in October, but Americans may quickly be turning more into home renters than home buyers with the shock of the recent housing crisis still fresh in their memories. Rhonda Schaffler reports from Florida, the epicenter of the housing collapse.
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These Brazilian brothers, both models, have traveled to the Miami area to do a little apartment shopping. But unlike five years ago, they're not planning a quick flip for a big profit.
Flavio Mendoca is looking to buy and rent out an apartment in order to capitalize on the fact that more Americans are renting instead of buying.
SOUNDBITE: FLAVIO MENDOCA, APARTMENT BUYER (ENGLISH) SAYING:
"I would like to have my own apartment, something bigger like a three bedroom, I think that I can come with my family as I have a two-year old son and my wife, and a small apartment that I can rent."
The homeownership rate now stands at its lowest level since 1997 as the number of renters rose sharply during the housing bust
Rent demand is being driven by three specific groups of people... young adults who may finally get jobs that allow them to move out of their parents basements... immigrants moving to the U.S.... and those who lost their homes during the crash.
SOUNDBITE: LOUISE KEELY, CHIEF RESEARCH OFFICER, THE DEMAND INSTITUTE (ENGLISH) SAYING:
"Even as the homeownership market picks up and construction picks up, those three groups of people living in the U.S. are going to sustain the rental market in the U.S. and keep it relatively strong."
REPORTER STAND-UP: RHONDA SCHAFFLER, REPORTER (ENGLISH) SAYING:
"In places like South Florida, rental demand is soaring, that's resulting in a boom in apartment construction and conversions."
Florida also has the highest foreclosure rate in the nation - so single family homes are also being snapped up by investors at bargain basement prices and converted into rentals.
In fact, it was an investor who bought this home in Davie, Florida which used to owned by law enforcement officer Adam Reyes before he hit some financial difficulties.
Now Reyes lives here, a rental that he shares with his wife and four children.
SOUNDBITE: ADAM REYES, FORMER HOMEOWNER, NOW RENTING (ENGLISH) SAYING:
"Four or five years ago, places that would normally run the average $1,000-$1,200 are now 15/16/17-hundred dollars."
While much has been made about the housing market recovery, rent prices are outpacing those numbers.
This 750-square foot apartment in Pembroke Pines is about an hour's drive from Miami, where grad student Megan Thomas was priced out of the market.
SOUNDBITE: MEGAN THOMAS, RENTER (ENGLISH) SAYING:
"I would look at a place and one day it would be $875, the next day $925."
The market is also tight in nearby Fort Lauderdale.
Property Manager Milton Liedig:
SOUNDBITE: MILTON LIEDIG, PROPERTY MANAGER (ENGLISH) SAYING:
"In the three years I would say the increase has been 22% and there was a question whether the market would hold that, but obviously it did."
And still would be tenants are knocking on this building's door.
The bad news? Rents will outpace inflation, making it difficult to save for a down payment on a home, especially with tougher lending standards.
Cumberland Advisors David Kotok:
SOUNDBITE: DAVID KOTOK, CHIEF INVESTMENT OFFICER, CUMBERLAND ADVISORS (ENGLISH) SAYING:
"There is a reason why rentals are stronger and it's because buyers are having trouble buying even with low mortgage interest rates. They need a 20 percent down payment? They don't have it."
The strong rental market adds a wrinkle to the housing market recovery. Will the average renter be able to buy a house again? While experts and politicians ponder, the only sure thing is for now, millions have no choice but to continue Renting the American Dream.
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