Four years ago the very idea of the shadow market was foreign to people in this area when I expressed my concern that it would have an effect on the rental industry sooner rather than later. To some extent, it has in the Dayton market, especially for larger families. It is also an attractive option for people who would like to rent a house that has a fenced in yard for pets without the concern of a monthly mortgage.

In the Northern Indiana market, areas already depressed by the housing market's collapse, this will likely be a problem! I especially think this will be a factor for those people who are looking for more of an upscale rental, which simply does not exist there. The apartment rental market offers nothing newer than something built eight to ten years ago. I talk to people frequently who express their dismay over this and they do not want to pay exhorbitant pricing for something that has not been updated when they can rent in an upscale neighborhood of newer housing for the same cost. And some of these communities are villa communities that offer lawn care and snow removal.

I would not discount this option for potential renters. Thank you for the article.

In 2006, 40% of renters lived in a professionally managed apartment community in the Dayton, OH market. In 2010, housing prices fell 20% in the Dayton and Columbus markets; however, housing prices rose 70% in other major markets. That is how different it is in Ohio than in other areas. Meanwhile, the number of foreclosures just exploded. It is thought that by 2013, the number of foreclosures will rise to 6 million overall in the United States.

In the Northern Indiana cities of South Bend and Mishawaka, in 2011, there were 611 foreclosed houses that sold. Of those, 473 were cash sales. It is good to be an investor there. But that also means, that approximately 40% of those will become rentals.

I think in five years these two areas will still be struggling because in order for people to purchase a house, rather than rent (any where), there has to be a job base. The declining job market completely destroys the ability of people to move forward with the plan to purchase or to sell at top dollar.

This is one reason that the shadow market is a real threat to the rental market (those units professionally managed). I think our country is a long way from overcoming our economic problems.

I just acquired a property where there are no other apartment communities within a three mile radius...at first, I was happy to not have the competition, but you are right on point about the shadow market...private homes are just that-private. The homes are also bigger... We definitely have to shift our marketing efforts. Great article!