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Foreclosures generating more renters and higher housing costs

Home ownership is a dream that many people in Washington, D.C., have. Often the road to reaching that goal includes getting a good college education, finding a job that pays well, and renting a place at a price that lets them save money for a down payment. However, many people who achieved that dream lost their homes when the economic crisis occurred. This led to thousands of foreclosures.

Now those foreclosures have created another issue – more renters and higher housing costs. As people lost their homes, investment firms on Wall Street were able to buy the properties for a significantly cheap amount. Former home owners and young professionals have to pay rent and the demand in some areas is so high, that rent prices have skyrocketed, providing property owners with a nice profit.

In Washington, D.C., revitalization of 14th Street has brought in more renters but homeownership decreased from 45.8 percent to 41.6 percent. The reason is that many renters are spending so much of their income on housing that they cannot save enough for a down payment. It is estimated that half of all renters are spending over 30 percent of their income on housing, putting them into the cost-burdened category. Furthermore, over the past 10 years, that category has increased by over 30 percent.

A foreclosure on people’s homes can leave them without a secure financial future. For those who are facing foreclosure, they may find it helpful to talk with an experienced attorney. The attorney can look at their situation and show them possible solutions.

Source: St. Louis Post-Dispatch, “Decade after housing peaked: Owners richer, renters hurting,” Josh Boak, June 20, 2016

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