Sule Aygoren Carranza is managing editor of Real Estate Forum and editor of Multi Housing forum, from which this article is excerpted.

Arlington, VA—In what may signal a shift in sentiment, more than half of a group of homeowners nationwide believe there are benefits to renting an apartment versus owning a home. In a survey conducted by Harris Interactive and commissioned by the National Apartment Association, 65% of 2,118 homeowners polled see renting more favorably than they did before.

Renters do not face the risks of foreclosure, an unpredictable real estate market or fluctuating interest rates, as many as 25% of respondents say. More respondents (62%) were concerned about a lack of privacy with renting than the fact that renters cannot build equity in their homes (54%).

Researchers attribute the results of the survey to erratic mortgage rates and rising numbers of foreclosures. NAA president Doug Culkin says the locally based organization commissioned the survey because of growing concern about the subprime mortgage market.

"A lot of people who were enticed into the subprime market really have no concept of what happens to those mortgages after the initial two- to four-year period, when interest rates and, therefore, the mortgage payments, go up. That's what's behind a number of the foreclosures that have taken place. We had in excess of 250,000 foreclosures in the first quarter alone. That would equate to a million per year, and there's nothing to indicate that those figures are dropping at any point in the near future," he explains.But, more importantly, he adds, the organization is concerned about the potential effect households going through foreclosure or bankruptcy will have on the rental apartment market. Specifically, the industry needs to take into account those former homeowners whose credit may be tarnished because of mortgages.

"We need to take into account those people who are still employed but in these positions because of subprime mortgages," Culkin says. "We need to look at our credit scoring system to see if there's a way to make allowances for these people who, through no fault of their own, have gone through difficult experiences."

The NAA president says the organization and other industry associations want to drive firms to be more proactive in how they deal with this situation. In some cases, apartment owners have relaxed or altered their screening methods for employed renters. Other companies, particularly larger ones, have established rent-to-own programs that enable a portion of the rent to go toward eventual purchases. "I think our members have been very proactive in helping people who would like to move into their own homes, but doing it in a way so they know all of the variables that go into it so when the time does come to buy a home, there are no surprises," he says.

So, what impact will it have overall on the apartment market? While Culkin doesn't believe that the recent times have significantly impacted most households' desire to own a home, it has made them smarter or more aware of the issues they could face. "Everyone has a right to housing, and our industry is very strong in making sure we provide that housing, be it in the conventional market or affordable," he says. "Our concern is that if the subprime bankruptcies continue to escalate, we're going to have a lot more people impacted by this. We want to make sure, all else being equal, that these people find good homes for themselves and their families."

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More Homeowners See Benefits to Renting

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