Once happy homeowners, now reluctant renters

Faced with foreclosure on their home, Gina and John Burnett are now looking for an apartment to rent
CBS News

(CBS News) DOUGLAS COUNTY, Colo. - About those rising home prices: In Phoenix -- hit hard by the housing meltdown, prices were up more than 16 percent in July. In Detroit, they jumped more than 6 percent. And in Denver, prices were up nearly 5.5 percent. All of that are good news for the folks who are keeping up with their mortgages.

But people facing foreclosure are running into a new problem. Nationally,the availability of rentals is now at its lowest rate since 2001.

When John and Gina Burnett bought their home 10 years ago in suburban Denver, they thought they would spend the rest of their lives here with Gina's son, Keith, who has Down's syndrome.

Home prices rise, but still only at 2003 levels

But John lost his job three years ago in the construction industry. "What happened to all the jobs?" John asked. "Where did they go?"

Now they face losing their house to foreclosure, and for them an unplanned transition from homeowner to renter.

"It's very hard. It's painful," said Gina. "It's frustrating." She acknowledged that is not all the way the American Dream was supposed to come out. "We've done everything that we possibly to keep this from happening. "

And as more foreclosed families need apartments, they are driving up demand and prices.

Nationwide vacancy rates hit a 10-year low in 2011, and rents increased 4.7 percent since last year.

"At one apartment," said Gina, "it would cost approximately $3,000-$4,000 just to get into the apartment." She added that she doesn't have $4,000 and doesn't know what they'll do.

Ron Throupe, a Denver real estate economist, said it will take at least two years for new construction to ease the tight apartment market, and much longer for foreclosed families to buy another home.

"They lost their equity so they're going to have to save in order to buy a new home someday." Throupe. As for how long it would take for them come back and do that, he said, "Likely 5 to 7 years."

Gina is 51, John is 60 -- ages when life should be about the good days ahead.

"At this age, we should be looking at retirement. And that's really hard," said Gina.

Instead, the Burnetts are looking for an apartment. They know that the longer it takes, the higher their rent may be.