The Double Edged Sword

Yesterday I was at a career fair in Auburn Alabama recruiting floppy haired, bow tie wearing twangy folks to come work for the nation’s largest and most successful leasing firm. After a few hours it started to occur to me that I was getting asked the same question over and over.

The conversations went something like this….

Floppy haired kid: “Isn’t the economy good for the multi-family housing industry?

Danny: “you mean because no one is buying because of the credit crunch?”

Floppy haired kid: “Yeah dude, it’s like, who’s going to buy a house right now if you can’t get a loan. I bet it makes yawls job pretty easy.

Danny: “Well there are other factors to consider, like the effect foreclosure and bankruptcy has on the buying power of the consumer, and particularly on their ability to pay rent.”

Floppy haired kid flips his Bama Bangs and thinks for a second: “Yeah, like my dad totally lost his job last month, so now I have to drink The Beast instead of Makers Mark before Auburn games.”

Danny: Yeah, Something like that.


It is really funny to me how people seem to forget that when someone goes through a foreclosure, their mortgage is the last of their debts to go unpaid. Most people will forgo other payments in an attempt to hold onto their house. This means by the time a foreclosure has occurred, they are in so much debt they will not have the means nor the credit score to rent an apartment.

Thus is the double edged sword of today’s economy. Even an industry that should be thriving off of the reduced credit available for purchasing a home, still suffers the same fate as the electronics store in the strip mall down the street.

That doesn’t even touch on the enhanced risk apartment owners take when trying to restructure their credit criteria for approvals in order to capture the “foreclosure market”

I guess Adam Smith’s invisible hand has slapped even the multifamily housing industry. So get a haircut young fella and come join us in the trenches.