Joyce Ann Cato is out of work and about to lose her San Bernardino home to foreclosure.
The 62-year-old special-education teacher filed for bankruptcy protection last April in a bid to keep her house, which is worth less than what she owes on a mortgage she can't afford anymore. As Cato searches for another job, she and her daughter, Minjoy, have landed in a Pomona house that they rent for $1,795 a month, substantially less than the old mortgage payment but still a hefty chunk of the mother's $2,500 monthly income.
"Well, it is reasonable because I don't have to pay the house now," Cato said. "I am able to pay that."
Joyce Ann Cato is one of the many housing-bust refugees finding haven in Southern California's weak rental market. Typically, rents and home prices head in opposite directions. But the glut of foreclosures that has driven home prices to some of their cheapest levels in years is also working in tandem with the ailing economy to send rents falling across the region.
For those like Cato who have emerged on the other side of the housing market's wreckage -- their equity gone, credit shattered and pride bruised -- this increase in affordability is a thin silver lining.
Southern California rents peaked at $1,501 in the third quarter of 2008 after 12 years of consecutive gains. Since then, rents have fallen 4.9%, to an average of $1,427 in the third quarter of this year, according to a survey of larger apartment complexes by property research firm RealFacts. The drop came as the occupancy rate of the buildings ticked down 0.8% to 93.7%. The data don't include homes converted into rental units or smaller apartment buildings.
Some lenders and policy experts are looking at the rental market as a tool to keep more foreclosures off the market.
Mortgage titan Fannie Mae recently announced a program that would allow homeowners who are foreclosed upon to rent back their properties at market rates. Another proposal being considered by the Obama administration would encourage banks to sell distressed properties to investors who would agree to rent the home to the previous owner.
The decline in prices marks a significant reversal from the boom years, when rents increased as people flooded into the Los Angeles area, attracted by a diverse economy. Now many of the region's key industries -- construction, trade, manufacturing, tourism and entertainment -- are reeling. Los Angeles County's unemployment rate soared to 12.8% last month, up from a revised 12.6% in September.
