Althea Morrow considered moving into an extended stay hotel when the home she was renting went into foreclosure.

Instead, she’ll be living with her 24-year-old daughter, who has a four-bedroom apartment.

“It’ll save a little money, and I can help my daughter financially with the rent,” said Morrow, whose two youngest children also will be bunking with their big sister. “I’ll put the furniture [in storage] and stay with my daughter for a while, and probably start over.”

In these tough economic times, some metro Atlantans are bunking with family and friends, doubling up in rental apartments, homes or condos.

“Economically, it makes sense,” said Eric Bram, 23. He’s splitting the $1,785-a-month rent on a three-bedroom apartment near Lenox Square with two buddies.

The anemic housing market should be a boost to Atlanta’s apartment market. But the emerging shift in living arrangements is creating an unusual set of challenges for the industry.

Leasing agents are having to contend more with the “shadow market,” an industry term that refers to the glut of unsold homes, condos and townhomes that have become rental property. While there is no hard data, a recent industry report cited the shadow market as a contributor to the industry’s soft performance.

“Doubling up has happened before. What we haven’t had in previous downturns is the supply of [unsold] condominiums and homes now being rented,” said retired apartment industry executive Marvin Banks. He is now an adjunct faculty member at Emory University and Georgia State University.

“Those two factors are the unusual or over-the-top factors impacting apartments right now,” Banks said.

Terry Smith recently leased her two-bedroom townhome in Vinings after she was unable to sell it.

“Rather than give it away or lose what once was equity, I decided to rent,” Smith said. The tenants were to move in Friday.

The number of new apartment developments being built adds to the industry’s challenges. Metro Atlanta is expected to have 8,500 new units in some phase of development by the end of the year, said Robert Ito, chief informational officer at Dale Henson Associates, an apartment market-research firm in Atlanta.

Occupancy rates in Atlanta fell slightly for the fourth straight quarter to 90.4 percent, according to Databank, an Atlanta commercial real estate market research firm that tracks the apartment industry. A 95 percent rate is considered stable.

“People have been radically affected by the economy,” said Alan Wexler, president and chief executive at Databank. “Their disposable income has been affected. When they had extra money or credit to spend, they were able to be OK and pay the rent. Now they’re forced to move in … with relatives and friends to make ends meet.”

‘So many challenges’

This month, apartment giant Post Properties reported a $27 million second-quarter loss. The Atlanta-based company also plans to sell some of its properties, including five apartment communities in the metro area. Post cited declining land values and canceled projects as part of the problem.

Atlanta Realtor Julie Sadlier said she’s seeing more homes being turned into rental property as the economy continues to grapple with the fallout from the subprime mortgage crisis.

“We get more inquiries from people wanting to rent a nice condo rather than going into an apartment in town,” said Sadlier of

Re/Max Greater Atlanta. She also advises clients to rent their home if it’s not selling, which can add to the overall supply of available units.

Combine that with the current crop of twentysomethings who make up a good portion of the rental market and the problem can intensify, especially when they double up.

“I know a lot of people who are 22- to 30-years-old who were living the good life,” Wexler said. “They either lost a job or were forced to take something not paying as much or they had other economic impediments like higher gas and food prices.”

That was the case for Bram.

“I’m not getting paid as much as I would like right now,” the 23-year-old said. “My two roommates are both recent graduates as well. We’re all in the real estate business right now, and it’s not so good.”

Some move back with their parents, such as Dmitry Vitebsky did “to offset the enormous cost of law school. Living in an apartment would have been expensive with rent and utilities,” he said.

With those types of challenges, some apartment complexes are luring potential renters with rate specials and discounts. Some also are making it easier for credit-strapped consumers to rent.

“We relaxed our standards regarding [prospective renters involved in] foreclosures six months ago,” said Melissa Severson, property manager at The Villas At Hampton, a luxury apartment complex straddling the Henry and Clayton county line. “Once gas prices went up, it became apparent we had to re-evaluate [our standards]. There’s so many challenges right now.”

A mile away, another upscale apartment complex, Walden Landing, has seen its occupancy rate sit at 91 percent for the last few months.

“People are moving closer to work or they’re moving in with family and friends,” said Andrea Hartville, Walden Landing’s community manager. “We’re feeling the effects of it.”

While conditions are tough, they’re not the worst. That distinction belongs to the mid-1970s, when occupancy rates hovered between 80 percent and 85 percent, nationally and in Atlanta.

Industry observers expect current conditions to improve.

“This has a great ability to work itself out within … 12 to 18 months, when the economy starts to work itself out,” Wexler said. “When the consumer has a little more expendable income and a little more credit on his card, we’ll see a rise in occupancy and rental rates.”

Conditions will also get a boost from the demolition of many low-to-moderate income apartment complexes, tighter restrictions on home loans and the continued growth of jobs and residents in metro Atlanta.

Severson, a 15-year apartment leasing veteran, agrees.

“You just have to sit and wait and be patient,” she said. “It’ll come back.”