Fallout: The Financial Crisis

From homeowner to landlord

Marketplace Staff Nov 7, 2008
Fallout: The Financial Crisis

From homeowner to landlord

Marketplace Staff Nov 7, 2008


Scott Jagow: I’ve got a joke for you. A young actor’s trying to get his landlord to wait on the rent. He says, “In a few years I’ll be famous and people will say Tom Smith used to live in that apartment.” And the landlord says, “If I don’t get the rent tonight, Tom, they can say it tomorrow.”

Being a landlord probably isn’t much fun, but some people facing foreclosure have to consider becoming one.

From KXJZ in Sacramento, Marianne Russ reports.

Marianne Russ: A lot of people in Christin Barron’s position might just give up. She and her husband Efrain paid $400,000 for their four-bedroom, three-bath home a year and a half ago. Now it’s worth maybe $300,000. It’s in a Sacramento-area neighborhood where foreclosure signs are about as common as mailboxes.

The Barron’s landscaping business went south with the housing market. Christin says she’s been late on the $2,100 mortgage payment for five months straight

Christin Barron: I’m afraid of that roller coaster. I don’t want to get behind. I don’t want to miss my bills. So I made a list of things I could do to bring in more income and one of them was renting out the room.

She put an ad on Craigslist for two of the four bedrooms. At first, no hits. Then she lowered the rent from $525 to $400. A woman in her 60s is taking one. The other’s still up for grabs.

The Barron’s 1,900-square-foot home is already pretty full. There’s Christin, her husband, 5-year-old Ally, 5-month-old E.J., and Efrian’s mother Ernestina. They’re giving up the office and Ally’s playroom to make space for new housemates.

Christin says she knows it’ll be a challenge.

Barron: I hope that, you know, it works out because I, myself… we’re just hard workers. We know whatever it takes we’re just going to have to push to make ends meet. If this is the first step of many things we have to do to keep the house, we’ll try our best to do it.

Laura Fannuchi: If they have a home and they have an empty room in their home, why not put that room to good use?

Laura Fannuchi is based in San Mateo, California. She’s on the board of the National Shared Housing Resource Center. It’s a sort of clearinghouse for groups that match homeowners with renters. She says it’s tough to track, but organizations across the country are taking more calls from people looking to find housemates.

Fannuchi: Whenever I talk to somebody either back east or in the Midwest, I mean, we pretty much have the same kinds of issues throughout the country, where people can’t afford their housing, whether there’s someone who is seeking housing or if they have a home, you know, they really are looking for somebody who can help share those costs and share those utility costs as well.

And she says it can be a good deal for both the owner and the renter. But there are risks.

Corey Koehler is with the Rental Housing Association of Sacramento.

Corey Koehler: The challenge is you’ve got an apartment-type setting inside of a single-family home.

He says there are several potential pitfalls. For example, homeowner’s insurance typically won’t cover a renter’s belongings. Or there could be local codes restricting the number of cars in a driveway. And he says homeowners are still required to follow fair housing guidelines when screening potential housemates.

Koehler: If they screen wrong and they get a fair housing complaint, perhaps they get the wrong person in there who vandalizes the place or the homeowner does need to contact an attorney and spends money to try and get the person out of there, you know, they need to consider that and at least try and do the homework before they decide to dive into this idea.

This isn’t the first time Americans have had to dive into the room rental business. Eric Rauchway is a Professor of History at the University of California, Davis. He says just as families across the country are feeling forced into renting a room today, families during the Great Depression had to do likewise to make ends meet.

Eric Rauchway: All these people would have felt like “I thought we were over this phase in our family’s existence” and they would have felt that they were being forced back into a previous stage of the way people had to live and I’m quite sure that a lot of people who are taking in lodgers feel very similar now.

Rauchway says taking in a housemate has historically been a temporary, not a long-term, way to stay afloat.

In Sacramento, I’m Marianne Russ for Marketplace.

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