Bloomberg News

Foreclosure Rentals to Add 1.8 Million Jobs, Morgan Stanley Says

February 23, 2012

Feb. 16 (Bloomberg) -- As many as 1.8 million permanent and temporary real estate-related jobs will be created as investors convert foreclosed homes to rentals, according to a report by analysts at Morgan Stanley.

The employment growth will come in the form of 1 million temporary positions to rehabilitate 4 million homes and 800,000 permanent jobs to manage and maintain the properties as rentals, according to the report, issued today by Oliver Chang, Vishwanath Tirupattur, James Egan and Jose Cambronero.

“Best of all, these jobs could be created by private capital without the use of taxpayer dollars and generally cannot be outsourced,” the analysts wrote.

Construction and real estate-related employment has fallen by 2.73 million jobs, or 23 percent, over the past five years because of the housing-market collapse, according to the report. Last year, 302,000 new homes sold, the fewest in Commerce Department records dating to 1963.

Owners of an estimated 8 million homes will lose their properties to foreclosure or through distressed sales in the next five years, according to the Morgan Stanley analysts. About half will be purchased by investors and converted to rentals, they wrote.

Fannie Mae, the government-controlled mortgage financier, invited investors on Feb. 1 to apply for bulk purchases of some of its almost 123,000 foreclosed homes, with initial transactions expected to be completed by the end of March.

Financial firms including GI Partners LP, GTIS Partners and Oaktree Capital Management LP have announced plans this year to spend almost $2.5 billion on the purchase of homes to rent out. Deutsche Bank AG, Fortress Investment Group LLC, Starwood Capital Group LLC, TCW Group Inc. and Wells Fargo & Co. were among firms that submitted ideas on the structuring of bulk sales in response to an invitation last year from the Federal Housing Finance Agency.

--Editors: Daniel Taub, Christine Maurus

To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net -0- Feb/16/2012 20:18 GMT


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