The government and the private real estate market are both aiming for the rental market. While bank owned homes are being purchased by the bulk and converted into rental dwellings, the government is also stepping up efforts to sell its own foreclosures to investors to have them converted into rental houses.

The thriving rental market, most analysts claim, will help lead the housing market out of the bottom and towards a more pronounced recovery by cutting down the supply of low-priced distressed residential properties. More investors are expected to enter the rental market as the second quarter starts.

Popularity of Single Family Homes

Single family dwellings are some of the hottest real estate properties in the country, according to housing industry observers. A report from the National Association of Realtors has revealed that in 2011, sales of investment homes rose by nearly 65% compared with the previous year.

Investors have taken to converting bank owned foreclosures into rentals and the government is also doing the same for the distressed properties under Fannie Mae's books. This is helping bring the inventory of distressed dwellings down, analysts further added, a development that is considered significant for the recovery of the real estate market.

Homeownership Growth to Follow?

Some analysts predict that it will not be long before people look again at homeownership in a positive light. They expect that the thriving rental market will cause rental rates to rise, which will convince more people that buying a home instead of renting will be more practical and cost-effective. The prices of houses are still very low as they continue their downward path from the fourth quarter of 2011.

This, analysts claim, will further fuel homebuyers' interest in purchasing residential properties. And although there have been accusations that banks are exerting more effort in marketing foreclosures in more prominent areas compared with those in low-income neighborhoods, experts believe that the chances for both areas of getting their distressed dwellings sold are pretty even at this point.

The advantage of the low prices of bank owned houses is not lost on investors. Majority of them have re-entered the real estate market and purchased these cheap properties to convert them into rental dwellings as the apartment market surges.

The benefits of such a move have not been lost to the U.S. government as well. Authorities are very much aware of the opportunities that the thriving rental industry is presenting, particularly when it comes to diminishing the supply of government-owned distressed properties.

Government Making Rental Move

The Federal Housing Finance Agency has recently announced that it will be inviting bids from investors to buy foreclosed real estate by the bulk that will be offered as rental dwellings. The news was not a surprise, given that reports have earlier surfaced that the administration is considering this scheme.

The program, sources from the FHFA have revealed, will be limited to those foreclosures owned by Fannie Mae. The focus, according to agency reports, will be on metropolitan areas hit hardest by the housing crisis, such as Las Vegas, Phoenix, Chicago, Atlanta and the state of Florida.

Non-Government Foreclosures Ahead of the Race

Although the government program is limited to Fannie Mae-owned foreclosed dwellings, bank owned properties have long been ahead of the race, with most of them getting sold as early as last year to investors who are interested in entering the rental market. Investors have already anticipated that 2012 will be a much stronger year for housing and housing prices will likely start gaining ground as early as the second quarter.

With mortgage rates improving slowly, investors will likely take advantage of the low rates until they last. The improving rates, rising home sales and the government's recent announcement are expected to help buoy the housing industry towards a more pronounced recovery. Independent homebuyers are also expected to take advantage before prices start to rise and mortgage rates jump beyond the four percent mark.

Several proposals have been put forward to address the issue of the huge supply of bank owned houses that are still in the market. Getting these properties occupied, according to some housing experts, should be the priority of the government and the industry.

Who Will Benefit?

If the proposal is approved and put into action, the primary beneficiaries will be those areas that have the highest number of foreclosed houses in their market. In Massachusetts, for example, more than 1,000 bank owned homes are currently unsold. If the program is approved; it will help diminish the number to a more manageable level.

Atlanta, Georgia is another area that may benefit from the proposed conversion, with the city having close to 4,600 government-owned distressed properties. Although local authorities in these areas admit that the program will provide great benefits, they also state that managing these properties will be a challenge.

Nationwide Implication

It is true that there will be some challenges in handling a huge amount of rental properties. However, it is also true that getting these empty distressed properties occupied will help boost the housing industry. Home-buying activities have surged in the past few months and reducing unoccupied dwellings further will help supplement home buying's effect on the nation's housing prices.

Primarily, those areas hit hardest by the housing crisis will be the first to benefit, such as Florida, which has the highest number of cities considered to be in poor condition due to the housing sector crisis. The proposal is generally good for housing, but careful planning should be done to make sure that potential problems in managing these rentals are minimized.

Most Americans currently have a very low opinion about homeownership, but this has not stopped them from taking advantage of the cheap bank owned properties that are available in the market. The strengthening rental housing market has given them a new option when it comes to real estate investing.

With so many investors entering the rental market, does this mean that the real estate industry will see a massive recovery in 2012? Most industry observers believe that this is too much to hope for, but most also agree that things will be better this year.

Rental Market Thriving

Although residential properties, especially bank owned homes, have remained highly affordable and mortgage rates are at their lowest in decades, a lot of people still prefer to rent rather than purchase a home. The apartment market has recorded its lowest vacancy rate since 2001 during the latter part of 2011.

Investors’ interest in low-priced bank owned foreclosures has contributed greatly to keeping the housing market afloat; or at least, not worse than it was a few years back. But is this enough to pull the housing market out of the doldrums? Is it making any difference when it comes to the condition of the general economy?

Cautious Optimism Called For

Data showed that the job market is slowly making some progress as hiring figures exhibited improvements that are quite unexpected in some fronts. Analysts believe that the labor market is gaining momentum, although the question of whether it can be sustained is still hard to answer.

A lot of experts agree that the economy is on the mend, albeit at a very slow rate. They remind the public that just because the job market and the housing industry are showing signs of improvement; it does not necessarily mean that the country is out of the crisis. They expect bank owned foreclosures to continue to weigh down housing prices, but any sales activity and any improvement at the job market front are a plus and should not be taken lightly.

The whole rental market, including bank owned homes for rent, is doing quite well in Austin, Texas. Some analysts have noted the increasing number of people preferring to rent rather than buy new houses, which they said might be part of the reason why sales of residential units in the area has gone down during the third month of the year.

Sales of regular single family houses and bank owned homes in Austin declined by 10% in March 2011 compared with March 2010. Nearly 1,600 existing housing units in the metropolitan region were purchased by investors and traditional buyers in March, with total dollar value pegged at $396 million. Meanwhile, sales of dwellings statewide also dipped for the first three months of 2011, but prices of homes did go up.

Data from the Texas Association of Realtors showed that 40,192 non-distressed single family houses and properties under Texas bank owned home listings were sold during January-March 2011, representing a decline of 7.3% when compared with the same three-month period of 2010. For the first quarter of this year, the median selling price of single family dwellings was $143,300, up by 1.3% from the 2010 first quarter.

According to housing industry analysts, Texas was not hit as hard by the foreclosure crisis and the recession compared with other U.S. states, but the decline in sales showed that the region did not escape unscathed. Aside from the economic downturn, some analysts also cited the growing number of residents opting to rent apartments and bank owned homes for rent as part of the reason for the dwindling residential sales.

However, analysts noted the stabilizing prices of bank owned real estate for sale and non-foreclosed houses as a sign that the region's housing market will likely recover faster than most U.S. markets. The housing sector though, is still facing various challenges, not least of which is the considerable amount of for-sale homes that are still in the market. As of the first quarter, Texas' inventory was around 7.5 months, higher than the 2010 first quarter supply of nearly seven months. Market observers though, expect sales to pick up in the coming months.

Apartments and bank owned homes for rent are expected to continue to thrive in the region for the rest of the year as more people stay away from homeownership. However, analysts believe that prices will continue to strengthen and sales will likely increase in the spring and summer.

The impact of foreclosures and bank owned home rentals on values of properties in several areas of Wisconsin is still being felt four years after the start of the housing market crisis. Various areas of the state are still experiencing declining real estate values, although in most cases, the pace of decline has slowed down.

Real estate experts revealed that Green Bay bank owned properties and Milwaukee foreclosures are still hurting the real estate market of the state, but the impact is starting to diminish. In Milwaukee, for example, values of real estate have declined for two years in a row. As of January of this year however, values have remained almost flat compared with one year earlier.

However, analysts asserted that this does not mean that the effects of foreclosures and Wisconsin bank owned home listings on the overall real estate sector have already ended. They stated that values will continue to crawl along, although declines will probably be minimal or values will remain flat for some more years. Between January 2010 and January of this year, the assessed value of residential properties in Milwaukee declined by 0.3% compared with one year ago. The drop was lower than the 3.1% recorded in 2009 and the 2008 decline of 7.2%.

Commercial properties though, did better than the residential real estate market over the same period. Despite increased number of bank owned home rentals and distressed commercial structures, values of commercial real estate in Milwaukee increased to $9.3 billion, representing a jump of 1.3% from one year ago. The increase was definitely better than the 2009 decline of 1%, analysts have stated, although values did increase in 2008 by 1.6%.

The excess supply of bank owned property for sale and foreclosures in the region has also made property sellers more cautious, analysts have revealed. They reported that homeowners who are planning to sell their homes and owners of for-sale condominiums have slowed down when it comes to putting their properties in the market. Analysts stated that most of these sellers are unwilling to lower their prices, a move that they would need to do if they want their properties to get sold at the current market.

They also revealed that a big number of condo sellers are renting out their properties instead of selling them. The same thing is being seen among distressed homes, with the number of bank owned home rentals increasing in the region as sellers wait for the market to improve.

New reports reveal that the number of bank owned rental property in Puget Sound is now becoming limited and that banks are convincing real estate developers, particularly condo builders, to list their remaining units in the market.

Realogic Sotheby’s International Realty says that only 32 new units are expected to roll out in Seattle this year. These condominium units were part of the 2008 construction projects that were later foreclosed by lenders. Realogic says that it is possible that these seized units will be bought and offered as apartment units.

It further said that demand for bank owned properties in Seattle will most likely be met by those that are still left in the inventory from the last building construction cycle. Only 351 new condos are now left for market offerings, down from 570 units last year.

As the supply of bank owned rental property becomes more limited, the real estate inventory continues to dwindle as the current listings are being quickly absorbed by the market. Many believe that the reason why sales are moving fast is because of the lower prices of bank owned foreclosures.

The developer of Gallery condominiums recount having experienced slow sales as a result of the recession but has since recovered when it organized an auction that helped induced market activity for them. The auction was successful as it featured properties with reduced prices and buyers were given incentives for instant purchases. Since then, they have already sold at least 90 percent of their condo units and have repaid their loans completely.

Many bank owned homes in Washington are also now being offered with greatly reduced prices, some even going below 50 percent of their original listings.

Developers who offered price reductions in their inventory as well in their other foreclosures were able to sell their inventory at a faster rate. Many of these developers have also paid their construction loans.

Another reason for the limited supply of bank owned real property in the area is the increasing demand for rental spaces. More people are now seriously considering renting spaces rather than buying them. This means that people may now have different outlook when it comes to home ownership and purchasing property.

Due to this increasing demand, many developers are also now keenly interested in opening new construction projects in order to meet them. Those who have lost their interest in investing in condo units because of the longer period for a return on their investment are now again ready to look into the possibility of new construction projects.

Of course, this development may soon head into increased home prices but for now, there remains the fact that there is a lot of room for some more rental spaces and that the market is more than ready and willing to have them.

Although the housing market is still sliding, it is being boosted by the increasing demand for rental properties as well as bank owned homes for rent. Property developers are coming out of their shadows since such activity is softening the deep blow they suffered from when the mortgage industry collapsed.

Homeownership has become difficult to come by these days as lenders tightened lending guidelines. Once an easy enough dream to achieve, homeownership is now out of reach for many Americans. It does not help that the housing market continues to be bombarded with new listings of foreclosed homes, including bank owned property in Louisville.

Such addition can drag home prices down and even result to a decline in sales activity, such as the one observed this February, when national sales of existing homes dropped by 9 percent. The drop ended the three-month streak of increased sales activity.

During the same month, construction of single family homes dropped 28 percent. The story is different when it comes to multifamily units since there were about 104,000 properties are in the works. This figure is 33 percent more compared to a year ago. It is obvious that the industry is responding to the need to provide those who lost their homes to foreclosure with rental properties. Although there are plenty of bank owned homes for rent, it is still not enough to meet the present demands.

The large inventory of foreclosed single family properties, which include Kentucky bank owned homes, is being seen as one of the reason why the home building industry is concentrating on multifamily dwellings. Home prices for this type of home are dropping and developers have accepted they could not compete with such low prices.

Compared to 2005, when there were not as many bank owned foreclosures for sale, the share of multifamily units out of the total construction starts is now at 19.7 percent, up from 17 percent. The increased share is even expected to rise as the level of demand for these rental properties is also going up. Home builders consider this as the right response in order to avoid any future shortage for the next two or even three years, as the housing market is yet to stabilize.

And according to Milk Creek Residential multifamily construction, in terms of the total units started, it has always been fewer compared to single family homes. But come 2011 through 2012, the proportion will be reversed. Such demand for rental properties, even for bank owned homes for rent, will surely pave the way to a housing recovery.

The number of bank owned rental homes and foreclosed houses is projected to increase again this year in Massachusetts and the rest of the U.S. The problem is further aggravated by the high number of unemployed both locally and nationally. To top it all, the Emergency Homeowners Loan Program, meant to assist unemployed homeowners meet their mortgage obligations, has been delayed.

Homeowners in the region who are about to lose their properties to bank owned homes in Boston and foreclosures in various areas of the state have recently heard news that the implementation of the program has been delayed and will not be put in place until spring. The initiative was designed to provide a total of $1 billion worth of loans to homeowners who are suffering from income reduction or financial difficulties due to underemployment or job loss.

Under the program, the state was set to receive over $60 million to be provided to troubled homeowners in an effort to prevent Massachusetts bank owned home and foreclosed property numbers from further increasing by helping borrowers pay off their loans. Qualified homeowners can receive as high as $50,000 worth of bridge loans each under the initiative.

With the number of foreclosed houses and bank owned rental homes continuing to rise all over the U.S., the program became highly anticipated, particularly by homeowners who are finding it difficult to meet their monthly loan obligations due to employment loss. The initiative was approved in the summer of 2010 and was projected to be operational by the end of last year. However, the implementation date was moved to around March of this year, which has now arrived.

For homeowners facing possible loss of property to bank owned foreclosure, the delay was a bad thing. Congress has also recently approved a legislation meant to eliminate the initiative. The bill was reportedly approved as part of plans to reduce government spending. However, sources have stated that an administrative veto will be used to keep the program in place. A number of housing market analysts have estimated that around 30,000 borrowers will be assisted by the mortgage payment program.

Meanwhile, housing advocates continue to lobby for the program, arguing that it will help stem further increases in foreclosed dwellings and bank owned rental homes. They also asserted that the program should be implemented, given that current foreclosure problems have more to do with unemployment rather than bad loans as was the case during the start of the foreclosure crisis.

Demand for apartments and bank owned rentals has been increasing in Salt Lake City, Utah in the past few years. Analysts stated that the housing industry crisis has scared off a lot of people from homeownership, which partly benefitted rental properties as increasing number of residents move to rental dwellings.

Local market observers have reported that even the low prices of Salt Lake City bank owned homes have failed to convince more residents to purchase residential properties. For real estate developers, the current housing trend offers profitable opportunities and most of them took advantage. A number of properties are reportedly getting converted into rental housing as owners cash in on the flood of potential tenants in the city.

Realtors have reported that even those who purchased bank owned homes in Utah are converting these properties into rental dwellings instead of selling them outright. A few hotel properties are also getting renovated to be offered to renters. One example is the Chase Suites, an extended-stay property hotel which will soon be made into an apartment complex that will be comprised of 128 units. The hotel was reportedly bought by WLA Investments and the owners have decided to join other property owners in entering the rental market.

Just like bank owned rentals in the city, the hotel will be refurbished to fit the needs of future renters. Owners of the property have stated however, that the overall plan will not change since the hotel rooms are constructed much like apartment units. A bit of touch up on the outside area is all that is needed, owners have reportedly stated, so as to make the property even more attractive.

According to local realtors, the recession and the increase in the number of bank owned properties for sale have also affected hotels in the city, with most of them suffering from declining values. This has convinced a lot of hotel owners to convert their buildings into rental dwellings. For the part of local officials, most of them welcome the news and have stated that such projects will benefit the city's real estate market.

Industry analysts are expecting more bank owned rentals and apartments to be built in the area in the coming months. According to them, the demand for rental housing has escalated and further growth is projected for the rest of 2011 as more people recognize the benefits of renting during times like this when values of homes are at an almost record low.