Falling rents aid homeowners in mortgage trouble

The L.A. Times reports:

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.

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