The millions of homeowners facing default on their mortgages will likely become renters once their home is foreclosed. Investment bankÂ Morgan Stanleycrunched the numbers and said the boost to the multifamily segment, that arm of commercial real estate that includes apartment buildings, will most likely see a multibillion-dollar boost from the looming migration.
Analysts expect a drop in the U.S. homeownership rate to 60% in the coming years from 69% at its peak.
The rateÂ tumbledÂ to 65% from a decade ago, theÂ Census BureauÂ reported this month. It's the largest drop in 70 years.
According toÂ RealtyTrac, there have been 8.9 million homes lost to foreclosure since 2007, the height of the credit crisis. And there is more to come in the fallout. And there are an estimated 7.5 million households either in foreclosure or delinquent on the mortgage. With the majority of these borrowers forced to pay rent over the next five years as their credit heals, this would equal $72.7 billion in incremental rent payments instead of mortgage payments.
The government is moving ahead toÂ take advantageÂ of the increase in demand. It's currently developing strategies to rent more of the thousands of government-owned foreclosure properties.
The mortgage industry refutes this idea and is at work tackling its plethora of problems and shortcomings. They range from what some call overly restrictive lending standards on the origination side, a dormant private-label secondary market, and ongoing issues in servicing.