CLARKONOMICS: New foreclosure data shows that the 4 states with the worst situations are Nevada (where 1 in every 54 homes is a foreclosure), California, Arizona and Florida. Rounding out that list is Colorado, Georgia, Michigan, Ohio, Massachusetts and Connecticut. Meanwhile, the nation is facing a record high number of vacancies with 3 out of every 100 houses going empty. Unfortunately, REO properties (real-estate owned) are notoriously unkempt and invite crime of all kinds.

In related news, Dow Jones recently reported that the Miami/Ft. Lauderdale area has 3 years of backlog inventory to burn through. That's if another house never went on the market again! Only 3 markets are doing well by any standards. Seattle, Houston and Dallas each only have a 6-month supply of housing for sale.

So here's the good news: This is a great time for buyers (especially first-time homebuyers) and renters. Affordability is coming back to the market after going AWOL for years.

About 10% of rentals are vacant, which means that you can steal a deal as a renter. Try to shop around about 4 months before the end of your current lease. The greatest hazard and opportunity alike is in renting from an involuntary landlord who can't sell. They usually just need the money and don't know much about maintaining a property. But you'll get cheaper rent than in a traditional rental complex. The danger comes if they stop paying the mortgage and go into foreclosure. Then you'll be out on the street too.

California has a ballot initiative that will allow voters to decide whether or not to continue rent control. Rent control is, according to Clark, an enemy of people finding affordable, decent housing and of capitalism itself. When Clark was in college during the early '70s, he paid $249/month for a rent-controlled apartment. Despite rising inflation, his rent only reset from $249 to $257 at that time. Being 19 years old, Clark loved it and thought he hit the jackpot. But if something broke in the apartment, nothing ever got fixed because the owner didn't have enough money. When you interfere with the free market by dictating rents, owners have no incentive to invest or otherwise fix the property up. As a young person, Clark didn't understand the cause-and-effect relationship between rent control and poor living conditions. But now he does. New York is a case study in the drawbacks of rent control. Whenever you try to fix the price -- even though you think you're doing something nice for people -- you're really just asking for trouble.

Renters are about to enjoy the benefits of more competition for their cable business. The FCC plans to announce that landlords can no longer rip-off tenants by dictating which TV/cable/Internet providers they can use. Landlords previously could receive huge kickbacks from little private cable companies by signing exclusive deals for their buildings. When it comes to cable service, we don't have a lot of choice in this arena to begin with thanks to monopolies. The FCC's upcoming move will afford renters a little more wiggle room. Very rarely has a landlord dictating who you can go with for cable been a positive thing. In one unusual case, Clark's executive producer Christa once lived in an apartment where the management company offered her cable service at below-market price. Right now there's no telling how soon renters will feel the benefit of the upcoming FCC decision. On a related note, renters already have the right to go the satellite route. Under the Satellite Home Viewers Act, you can get satellite if you have a clear shot of the southern sky.

The troubles in the mortgage market are having an unexpected side-effect on renters. It all starts when people who own homes and condos that they can't sell become involuntary landlords. Those folks rent out their places while waiting for the market to recover so they can sell down the road for a profit. But what happens when an investor who buys multiple properties on spec gets into this situation? Even if those investors have tenants in their properties, they usually can't recoup all their costs when multiple mortgages come due every month. So they sometimes stop paying the mortgage on one of their properties while continuing to make payments on their others. You're going to find an eviction notice on your door if you're unlucky enough to rent at a property that's facing foreclosure. Tenants in this situation have fewer rights than if they didn't pay their rent for months.

Clark was in this situation at age 22 when he rented a condo with an option to purchase from a divorcing couple. One day he came home after playing tennis and found a notice on his door ordering him to vacate in just seven days. His landlords were taking his rent every month and not paying their mortgage. So Clark called the mortgage company's lawyer and asked for more time than seven days to vacate. He was denied extra time, but wound up working out a deal to purchase the townhouse for $36,000 with a five percent down-payment. He also got great loan terms because the bank didn't want to deal with a foreclosure. His mortgage payment actually wound up being lower than what he'd paid in rent! So out of adversity there can be opportunity. Clark still owns this property, which has been long since paid off. He's been renting it out for 25 years and it's been a cash cow for him.

The Wall Street Journal published a recent report about the areas of the country with the greatest risk in terms of the housing market. There are three main areas. One stretches from San Francisco south to southern California and west to Arizona; the second encompasses nearly all of Florida; and the third includes the mid-Atlantic states from New York down through Virginia. Why is it happening? Part of the reason is that speculators have pushed prices up by buying up homes they never intended to live in. They bought them thinking they could flip them someday and make money. Well, now these people are under water and they can’t get rid of them. So, what can you do if you have to move and need to sell your home? Well, first of all if you plan to sell, you’re not doing yourself any favors if you are listing your place for the same amount as others are. Becoming a landlord may be an option for you. If you don’t want to take the loss, put the place up for sale and wait it out. Be realistic about what the marketplace will afford you. You’re holding a bad hand right now, but you can work through it.

Are you a landlord? Or are you considering becoming a landlord? Clark has long believed that real estate is a key component in building long term wealth. He’s owned rental properties for about 23 years now, and has earned wealth slowly with those properties. But many think being a landlord is a way to get rich quick. Those people quickly become disillusioned or burnt out, especially if the tenants are less than desirable. What people need to know is in the first three years, you’ll have what’s called “negative cash flow.” The cost of acquiring and fixing up the property will cost more than the money coming in. So, you need to be prepared for that. Running a background check is also important in the screening process. Just add the cost of that check into the application fee you charge people. Being a landlord also requires a certain personality and temperament. If you have tenants calling all the time about fixing things or questions about the place, you have to be able to let that roll off your back. You also have to consider whether you want to own an individual home or condominium. Most professional real estate investors prefer single family homes, but there are some maintenance plusses to owning a condo.

Clark has long believed that real estate is a key to building long term wealth. He’d like it to be about a quarter of your assets but no more than a third. But in recent years people have started investing a lot more in real estate. Some people are betting the entire farm on real estate, and “get rich” seminars are popping up all over the country on how to make money by owning property. Sometimes that works but it’s rare. In fact, Money Magazine has a new article out entitled “Reality Check,” which is about how difficult it is to be a landlord. If you’re planning to be a landlord, be honest with yourself and be prepared for a challenge. Screening tenants is your first priority, and you should charge the potential tenant for that check. If you don’t think you’ll be a good landlord but you’d like to own property, have someone manage the property for you. You’re also better off owning individual homes as opposed to condominiums. It’s a better bet, even though you don’t have lawn maintenance and other property issues with a condo.

People have been able to get really good deals on apartments over the past few years. But that is about to change. In the past six months, the market has shifted from the tenant having the advantage to the landlord having the advantage. The vacancy rate in apartments is 6 percent, which means 94 percent of apartments are filled right now. That rate is slowly going to decrease, though. One in three condominiums is being rented out, as well. You might not think of renting a condo, but you could find a great deal. There are advantages and disadvantages to doing this. You have no maintenance company, for example. So, getting things fixed will take longer. But there is a sense of community in a condominium complex because it is mostly owner occupied and people there care about their community. So, when one door opens another closes.