by Calculated Risk on 5/15/2010 07:54:00 PM

From Sharon Stangenes at the Chicago Tribune: Renting what you can't sell

When Ed Amaya put his Oak Park bungalow up for sale in mid-2007, homes in his neighborhood sold in a matter of days, weeks at the most.

"We had some showings; got close to a deal," recalled Amaya. But as the housing market soured, a sale proved elusive. So Amaya agreed to rent it to a family that was not in a position to buy.

"We stayed in that pattern for a couple of years," said Amaya, who expected real estate to rebound. "But guess what? The market got worse."

Like many homeowners in the housing downturn, Amaya became an unintentional landlord by renting out a property he once hoped to sell.

Like so many others, he should have reduced the price!

So many residences are now for lease that there is "a saturated rental market," with more available units than potential tenants, said Jeanine McShea, president of brokerage services for @Properties.

"Many people are renting out property, but most are not making money," said Sara Benson, a principal in Chicago-based Benson Stanley Realty.

My definition of "shadow inventory" are units that aren't currently listed on the market, but will probably be listed soon. This includes REOs, foreclosures in process and some percentage of seriously delinquent loans (some will cure, some are already listed as short sales), unlisted new high rise condos (these properties are not included in the new home inventory report) and homeowners waiting for a better market.

That last category includes all the accidental landlords that we've been discussing for years.