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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: John McCarthy who wrote (94495)	2/21/2009 2:00:37 PM
From: Elroy Jetson	Read Replies (2) \| Respond to of 116555

Where did the foreclosed home owners go? People double-up. Foreclosed families who have lost their employment can't afford to pay rent, just as they couldn't pay their mortgage, so they move in with relatives. Or they move back home to a lower cost state where homes sell for $100k instead of $800k and rents are correspondingly lower. Certainly some people who lose their homes are still employed and can afford to rent a cheaper place in the same area. And this is a good thing as many renters have doubled-up to save on rent. They do this because they are now earning less, and a small minority may have had a revelation that they should save more with carnage all around them. Many home owners, who are in tough straights themselves, are renting out unused bedrooms in their home. I know one retired woman in Westwood Village (UCLA) who has even converted her dinning room into an apartment through the addition of a do it yourself wall. She now has four student apartments for students in her home and she shares the kitchen with them. Talk to people who own rental buildings. They'll tell you the average number of people living in each unit is now higher than it was. And if they have refused to go along with this, their vacancy rate is higher or they have needed to lower their rents significantly. During the Great Depression and the War that followed, in Los Angeles and San Francisco many large mansions were subdivided and remodeled into apartment buildings. I'm quite certain the same thing occurred in other cities where jobs were available. Just before the last downturn in 1989, my Grandparents sold their craftsman home in Hancock Park home to a Korean guy who was going to build a multi-story condominium building. He is just completing it now! During the long downturn he rented the home out in pieces. I would not have believed it if I hadn't seen it myself. He tore out the garage and back garden to provide sufficient parking spots. With plywood and two by fours he constructed temporary walls with locked doors - all without a building permit and quite illegal. The living room became a bedroom and a hallway. The very large dining room became two bedrooms. In total I believe the single-family home became 10 "apartments" for fifteen years before it was torn down to build the condo building. .