But homebuilders have more leeway to lower prices and if existing home sales where up due to lower prices, wouldn't new home sales be up even more.
Or did the media just get the whole thing wrong...AGAIN>
So, based on the inventory chart and its parabolic shape, it looks like inventory levels won't be back to normal for at least a few more years. Prices won't stop falling until the inventory returns to normal levels. People searching for a bottom in this market right now are fools.
US pension funds seek emergency block of Bear deal
Two Michigan pension funds are seeking emergency court action to stop the planned takeover of Bear Stearns Cos Inc by JPMorgan Chase & Co from moving forward, according to court papers.
The funds have asked the Delaware Chancery Court for a temporary restraining order blocking the sale of 95 million newly issued Bear Stearns shares to JPMorgan. The stock sale, set to close around April 8, is expected to give JPMorgan a big boost in its efforts to win shareholder approval of the proposed buyout of the ailing investment bank.
My wife is a real estate agent. The post easter boom just happened in our neck of the woods. 21 new listings yesterday. Our neighborhood's inventory just went way up. Prices are holding steady where we are (upstate ny) but sales volume was down 30% vs YAG.
That's great the spring listing boom if going off! With mortgage rates on Jumbos near 9%, I can just imagine all "these buyers with pent up demand" just snapping up these great values!
Oh, I forgot to mention conforming rates are still in the 7% range for ARMs and near 6% on 30yrs before all the hits to YSP and declining market index. Business is booming!
The revisions to back months' sales were +20k. Unless I counted wrong, that is the first upward revision since Nvoember of 2006. The direction of revisions is not magic, but I do think this is somewhat hopeful. Prices rose, but prices are noisy. After the big dump in December, the rise in February is probably not a big deal.
Sales prices are still holding steady. We never saw the big boom. You can still buy reasonable stuff for a couple times median salary around here (although 6-10 unit apartment buildings are selling at prices well above what rents willl support). Sales prices will most likely go down this spring. Buyers are getting very picky. We just rented an apartment to buyers that my wife had been working with for 6 months. They prefer to wait. There are plenty of buyers out there. But the days of bidding wars are long gone.
So, based on the inventory chart and its parabolic shape, it looks like inventory levels won't be back to normal for at least a few more years. Prices won't stop falling until the inventory returns to normal levels. People searching for a bottom in this market right now are fools.
Well, that inventory chart has a big problem in that it does not account for cancellations as CR points out.
To some extent an increase in cancellations may be offseting what appears to be a decline in reported inventory. There may be no actual downcrease, or perhaps even an outright upcrease when you factor the cancellations back in.
So even your assessment may be overly optimistic.
BTW, I got the new Paulson's Dictonary of Economic Terminology in the mail today.
--
CR, good blogging. However, the most important number, in terms of working off the inventory, is months of supply. For example, if inventory is falling lot more slowly than the demand the absolute number might be low but that is an illusion.
I will buy into working off the inventory when New Completed Homes For Sale falls below the previous cycle high of 125K. BTW, months of supply of Completed New Homes is close to 4 months for the past three months. This is bleeding the builders.
My solution....just make it law that every homebuilder and bank must sell their inventory via no reserve auction within the next 3 months at whatever price, even $1. Force the buyers to get a Fannie or Freddie loan at 10%. Investors would flock to buy half million homes at $50 or $100 grand, even at 10% interest (they could refi later) Banks would make a killing on the loans, investors would make a killing buying cheap houses, homes wouldn't be empty, property taxes would get paid, home builders would clear inventory and begin building again, realtors and loan officers could start working again, you could make the distressed sales illegal to use as comps, it would immediately clear all inventory, and you could start anew.
The truth is they know this inventory would drive down rents and comps anyway and price drops are what they fear. It would be the most successful governement action to provide low cost housing in history, and they fear that more than anything. It puts the lie to whole problem.
The reason this doesn't happen is price drops are what they fear.
Albany and Schenectady counties showed February median sale price increases of 6 percent and 4 percent, respectively, when compared with the same month a year ago.
the increase in local median prices is happening during a sharp fall in the number of homes sold.
According to GCAR, closed home sales in Albany, Schenectady, Saratoga and Rensselaer counties fell 29 percent in February, compared with a year earlier.
Looking through the sheriff's auctions for the KC area this morning, I noticed many of them were new construction. Would they be considered 'new home inventory' after the auction?
The reason this doesn't happen is price drops are what they fear.
Price drops are inevitable. The places selling where I am are the ones where the owners have gotten religion and dropped. Of course, these are people that either bought before the boom or have the capital to take the loss and get out. From what I can see, price declines are accelerating, and I think this is a really hopeful sign. That and declining new house inventory. It doesn't show a bottom, but it does help to indicate we're at least headed there.
And I suppose sellers can be stubborn and hold the line on the price. The market will eventually catch up to them via inflation in about 20 years.
We were concerned about a run on the bank, the economists write. We never imagined we would be the bank!
They also fault Mr. Bernanke for helping create the current crisis with his positions from as early as 2003, when he advocated the interest-rate cuts that pushed the federal funds rate to 1%, the lowest level in four decades. Mr. Bernanke served as a Fed governor from 2002 to 2005 under former Chairman Alan Greenspan. He never dissented on rate decisions.
WASHINGTON - The crash of Wall Streets once mighty Bear Stearns underscores the need to bring investment houses under the kind of federal oversight that has long been given to commercial banks, Treasury Secretary Henry Paulson said Wednesday.
In a speech to the U.S. Chamber of Commerce, Paulson said the Bush administration will soon release just such a blueprint in an effort to promote a smoother functioning of financial markets.
Our area in the inter mountain west has seen home prices at 7 to 8 times family income for several years. That was up to this year anyway. The only reason was that price increases in the market put the HELOC in to play. Now that is gone so prices are going to drop substantially. Maybe like upstate New York at two or three times earnings. Very painful times!
Hey CR, 12th, anybody..
Is there a way to update home prices versus incomes nationwide factoring in the new Case-Shiller data? How much closer are we to homes = 3x income?
It also crushes prices when I see a new sales sign stuck in the ground that reads... 3/2,2100 sqft,Including lot,88,900". Just a month ago these homes were marketed at 140-150k. A few of the smaller builders in North Port and Charlotte county bought lots at 1-5k each and can build for cheap now.
The poor bastards that bought at 300k during the peak just got kicked in the nutz.
Let your home finance its own remodeling. Or your childs education. Or a European vacation.
Unlock the value in your most valuable asset - the home you already own and the funds you need are at your command quickly and easily.
Pay interest on only what you use with a HELOC from Citibank. (interest is 100% tax deductible)...Rates as low as prime minus .51% (currently 5.49% APR).
I was using household rather than family income when I calculated average house sale prices at 7 or 8 times income. Based on family income, it was 5 times. Still a problem.
upward revisions are a good sign along with 'beating expectations' as we did today
i am not calling bottom
i am not calling bottom
but the other day, another guy i know who is active in many different product types of real estate said to me "does it feel like the market is heating up?"
and after we both stopped laughing at that idea we did talk seriously about the following:
it appears the 7th grade dance part of the crash is over. and by that i mean people aren't just standing there staring at each other with boys on one side and girls on the other.
deals are getting now whereas for a while nothing moved because sellers were hanging on.
just in the last few days i've had deals come to me at my price and terms that i've been offering for months and now they are finally coming around. things i had written off as dead dead dead.
so i expect to see some additional velocity in some sectors.
whether that means anything for new home sales is another story
Credit crunch could be a new health food bar or cereal, or is that surreal?
In other OT, what about Helicopter Ben as Jack Palance in that stunning Easter movie Barabbas? Ben is just now taking off the helmet and getting ready to really show us what he has (or not). Meanwhile, the confused Barabbas plots the next move with money market funds....
Red Alert: $29 Billion? Just a coincidence, I'm sure. The Fed: "Hey, we want our 2006 dividend back, need to bailout our friends on Wall Street."
Quote: The Delaware company will liquidate the assets over 10 years, with JPMorgan absorbing the first $1 billion in losses, with the Fed bearing any that remain. Any such losses would hurt the Fed's balance sheet, and ultimately the taxpayer, because they would reduce the stipend the Fed pays to the Treasury from earnings on its portfolio. The dividend was $29 billion in 2006.
Lookin at the report, builders are finally making consistant progress on trimming total inventory, down about 70K units YOY.
I know you like to measure in # months inventory, but sales velocity is the next problem to focus on. The numerator and denominator both need work (my math teacher would be proud).
Nobel, I think GMAC, Countrywide (BAC), etc will show a lot of losses on loans they mad after the obvious credit crunch and falling house prices in the 4Q 07. It's just hard to adjust thinking more than marginally until it hits ya on the head.
In the last few days the DOW and SPX hit the upper band (resistance) after a nice bounce (but on low volume). For everyone who is complaining that stocks just go up, we are likely to see a down trend again for a week or two or three.
I also noticed an increase in the credit offers I have to shred. I suspect they might have a more difficult time getting the rest of us to go into debt.
The poor bastards that bought at 300k during the peak just got kicked in the nutz.
Around here the same thing. If you bought during the peak, even in a desirable area, you are now staring at over 20% down. Condos seem to be a bit of an exception, but I'm thinking that's just the tail end of supply and demand and will tank as soon as the new lending standards take a lot of first time buyers out that don't have a downpayment yet. That segment will go down very, very fast and very soon.
I have a summer place in a "this place is different here" town. It isn't different at all. There are two similar houses in my hood, one bought during the peak, and one bought about a year after the bust. A year's difference was 20% (the off-peak one's former owners dumped as they had it for quite a few years and put a good price on it effectively re-pricing the area). And it declined even from there a few more points. OUCH. The ones that bought at the peak are going to be waiting many, many years to see it even come back to even.
Allen, same for Cap One. they actually send 3 offers/week lately. Of course, they do have a plan. One offer will say prominently, no transaction fees, and then the next will come the next day, looking the same, but has transaction fees. They expect some percentage of customers to mix up the offers and incur the fees of course. But just the same, I can't help but wonder if they'll end up losing money.
Sebastian - I know the 3x thing is used alot, I remember my lender looking at Loan:income as 3:1, not Price:income. Geez.... most of my home purchases over 27 years have been 4.5-5:1. You might ask how? down payments my friend. Skin in the game.
The popularization of interest only loans likely increased the loan ratio from 3:1 to 4:1, zero down teazers did the rest, but not all those products are going away, so I don't see 3:1 as a good baseline anymore, especially in Krugman's "2 Americas".
Thanks for the link Sebastian.
Sippn, if 3:1 is the historical ratio but no longer applies, what do you think reversion to the mean would consist of as far as prices go? If the bottom line for this entire crisis is "affordability, stupid" how do we not go back to 3:1, especially with the savings rate below zero?
But homebuilders have more leeway to lower prices and if existing home sales where up due to lower prices, wouldn't new home sales be up even more.
Or did the media just get the whole thing wrong...AGAIN>
So, based on the inventory chart and its parabolic shape, it looks like inventory levels won't be back to normal for at least a few more years. Prices won't stop falling until the inventory returns to normal levels. People searching for a bottom in this market right now are fools.
OT
US pension funds seek emergency block of Bear deal
Two Michigan pension funds are seeking emergency court action to stop the planned takeover of Bear Stearns Cos Inc by JPMorgan Chase & Co from moving forward, according to court papers.
The funds have asked the Delaware Chancery Court for a temporary restraining order blocking the sale of 95 million newly issued Bear Stearns shares to JPMorgan. The stock sale, set to close around April 8, is expected to give JPMorgan a big boost in its efforts to win shareholder approval of the proposed buyout of the ailing investment bank.
US pension funds seek emergency block of Bear deal
| Reuters
Fun and games
My wife is a real estate agent. The post easter boom just happened in our neck of the woods. 21 new listings yesterday. Our neighborhood's inventory just went way up. Prices are holding steady where we are (upstate ny) but sales volume was down 30% vs YAG.
High fives for Ben. He managed to fend off the nightmare scenario of surging commodity prices with a collapsing dollar for almost a week.
Baby steps.
Prices are holding steady where we are (upstate ny) but sales volume was down 30% vs YAG.
Asking prices or actual sales prices???
That's great the spring listing boom if going off! With mortgage rates on Jumbos near 9%, I can just imagine all "these buyers with pent up demand" just snapping up these great values!
Oh, I forgot to mention conforming rates are still in the 7% range for ARMs and near 6% on 30yrs before all the hits to YSP and declining market index. Business is booming!
The revisions to back months' sales were +20k. Unless I counted wrong, that is the first upward revision since Nvoember of 2006. The direction of revisions is not magic, but I do think this is somewhat hopeful. Prices rose, but prices are noisy. After the big dump in December, the rise in February is probably not a big deal.
"Asking prices or actual sales prices???"
Sales prices are still holding steady. We never saw the big boom. You can still buy reasonable stuff for a couple times median salary around here (although 6-10 unit apartment buildings are selling at prices well above what rents willl support). Sales prices will most likely go down this spring. Buyers are getting very picky. We just rented an apartment to buyers that my wife had been working with for 6 months. They prefer to wait. There are plenty of buyers out there. But the days of bidding wars are long gone.
ac
So in 3 or 4 months when they can't cut rates further, what do you think is going to happen?
So, based on the inventory chart and its parabolic shape, it looks like inventory levels won't be back to normal for at least a few more years. Prices won't stop falling until the inventory returns to normal levels. People searching for a bottom in this market right now are fools.
Well, that inventory chart has a big problem in that it does not account for cancellations as CR points out.
To some extent an increase in cancellations may be offseting what appears to be a decline in reported inventory. There may be no actual downcrease, or perhaps even an outright upcrease when you factor the cancellations back in.
So even your assessment may be overly optimistic.
BTW, I got the new Paulson's Dictonary of Economic Terminology in the mail today.
--
CR, good blogging. However, the most important number, in terms of working off the inventory, is months of supply. For example, if inventory is falling lot more slowly than the demand the absolute number might be low but that is an illusion.
I will buy into working off the inventory when New Completed Homes For Sale falls below the previous cycle high of 125K. BTW, months of supply of Completed New Homes is close to 4 months for the past three months. This is bleeding the builders.
Jas
12th %
Do you know the stats for the Albany
area? Have friends who live there.
My solution....just make it law that every homebuilder and bank must sell their inventory via no reserve auction within the next 3 months at whatever price, even $1. Force the buyers to get a Fannie or Freddie loan at 10%. Investors would flock to buy half million homes at $50 or $100 grand, even at 10% interest (they could refi later) Banks would make a killing on the loans, investors would make a killing buying cheap houses, homes wouldn't be empty, property taxes would get paid, home builders would clear inventory and begin building again, realtors and loan officers could start working again, you could make the distressed sales illegal to use as comps, it would immediately clear all inventory, and you could start anew.
The truth is they know this inventory would drive down rents and comps anyway and price drops are what they fear. It would be the most successful governement action to provide low cost housing in history, and they fear that more than anything. It puts the lie to whole problem.
The reason this doesn't happen is price drops are what they fear.
ac
So in 3 or 4 months when they can't cut rates further, what do you think is going to happen?
Well, I think it's notable that the Fed was forced to raise rates during the Depression due to a currency crisis.
I've always argued that rate cuts are just as likely to do harm as they are to do good, and I still have no reason to think otherwise.
The Fed may have to start focusing more on controlling the damage that its rate cuts have caused (e.g. $100+ oil).
Rancher
Here you go
Albany and Schenectady counties showed February median sale price increases of 6 percent and 4 percent, respectively, when compared with the same month a year ago.
the increase in local median prices is happening during a sharp fall in the number of homes sold.
According to GCAR, closed home sales in Albany, Schenectady, Saratoga and Rensselaer counties fell 29 percent in February, compared with a year earlier.
Stocks are down 100+ points.
Call Ben, time for a money drop. I thought we agreed that stocks wouldn't drop anymore after the Bear deal.
Darn bears. Always screwing things up.
/snark
I've always argued that rate cuts are just as likely to do harm as they are to do good, and I still have no reason to think otherwise.
The Fed may have to start focusing more on controlling the damage that its rate cuts have caused (e.g. $100+ oil).
I'm just looking forward to the headlines saying the stock market surged 2% due to the new rate increases. Increases will be the new decreases!
Looking through the sheriff's auctions for the KC area this morning, I noticed many of them were new construction. Would they be considered 'new home inventory' after the auction?
Paulson said the Bush administration will soon release just such a blueprint in an effort to promote a smoother functioning of financial markets.
The reason this doesn't happen is price drops are what they fear.
Price drops are inevitable. The places selling where I am are the ones where the owners have gotten religion and dropped. Of course, these are people that either bought before the boom or have the capital to take the loss and get out. From what I can see, price declines are accelerating, and I think this is a really hopeful sign. That and declining new house inventory. It doesn't show a bottom, but it does help to indicate we're at least headed there.
And I suppose sellers can be stubborn and hold the line on the price. The market will eventually catch up to them via inflation in about 20 years.
scotty in the blue room | 03.26.08 - 11:06 am
Oh my god! Please don't let these feckless boobs try to fix this. Think Katrina, only this time it's you and me.
They should focus on stem cell research or Faith-Based Initiatives, for now. Let the market take care of itself.
If they get further involved, we are doomed.
Economists at Bear: Blame Bernanke for recession
Claim central banker acted too slowly, while easy-money policy fueled excessive leverage
Economists at Bear: Blame Bernanke for recession - Financial Week
We were concerned about a run on the bank, the economists write. We never imagined we would be the bank!
They also fault Mr. Bernanke for helping create the current crisis with his positions from as early as 2003, when he advocated the interest-rate cuts that pushed the federal funds rate to 1%, the lowest level in four decades. Mr. Bernanke served as a Fed governor from 2002 to 2005 under former Chairman Alan Greenspan. He never dissented on rate decisions.
Paulson calls for broad look at financial rules
Treasury Secretary: Bear Stearns debacle shows need for regulatory review
http://www.msnbc.msn.com/id/23810019/
WASHINGTON - The crash of Wall Streets once mighty Bear Stearns underscores the need to bring investment houses under the kind of federal oversight that has long been given to commercial banks, Treasury Secretary Henry Paulson said Wednesday.
In a speech to the U.S. Chamber of Commerce, Paulson said the Bush administration will soon release just such a blueprint in an effort to promote a smoother functioning of financial markets.
Our area in the inter mountain west has seen home prices at 7 to 8 times family income for several years. That was up to this year anyway. The only reason was that price increases in the market put the HELOC in to play. Now that is gone so prices are going to drop substantially. Maybe like upstate New York at two or three times earnings. Very painful times!
MA,
Re: "They should focus on stem cell research"
Hey CR, 12th, anybody..
Is there a way to update home prices versus incomes nationwide factoring in the new Case-Shiller data? How much closer are we to homes = 3x income?
ipodius | 03.26.08 - 11:09 am
It also crushes prices when I see a new sales sign stuck in the ground that reads... 3/2,2100 sqft,Including lot,88,900". Just a month ago these homes were marketed at 140-150k. A few of the smaller builders in North Port and Charlotte county bought lots at 1-5k each and can build for cheap now.
The poor bastards that bought at 300k during the peak just got kicked in the nutz.
Chris
Credit Crunch? I just got this from Citicards...
Let your home finance its own remodeling. Or your childs education. Or a European vacation.
Unlock the value in your most valuable asset - the home you already own and the funds you need are at your command quickly and easily.
Pay interest on only what you use with a HELOC from Citibank. (interest is 100% tax deductible)...Rates as low as prime minus .51% (currently 5.49% APR).
SNIP
ac writes:
High fives for Ben. He managed to fend off the nightmare scenario of surging commodity prices with a collapsing dollar for almost a week.
heh heh. good point.
I do think Ben's doing well in preventing that embarrassing all-at-once crash (of a lot of banks etc) that no one wants on their record.
Just wish he would not socialize too much of the losses.
I was using household rather than family income when I calculated average house sale prices at 7 or 8 times income. Based on family income, it was 5 times. Still a problem.
big divergence in stocks today. financials obviously down but pm, energy and ag up big.
upward revisions are a good sign along with 'beating expectations' as we did today
i am not calling bottom
i am not calling bottom
but the other day, another guy i know who is active in many different product types of real estate said to me "does it feel like the market is heating up?"
and after we both stopped laughing at that idea we did talk seriously about the following:
it appears the 7th grade dance part of the crash is over. and by that i mean people aren't just standing there staring at each other with boys on one side and girls on the other.
deals are getting now whereas for a while nothing moved because sellers were hanging on.
just in the last few days i've had deals come to me at my price and terms that i've been offering for months and now they are finally coming around. things i had written off as dead dead dead.
so i expect to see some additional velocity in some sectors.
whether that means anything for new home sales is another story
Credit crunch could be a new health food bar or cereal, or is that surreal?
In other OT, what about Helicopter Ben as Jack Palance in that stunning Easter movie Barabbas? Ben is just now taking off the helmet and getting ready to really show us what he has (or not). Meanwhile, the confused Barabbas plots the next move with money market funds....
Barabbas -- Gladiators in the Arena
YouTube - Barabbas -- Gladiators in the Arena
Red Alert: $29 Billion? Just a coincidence, I'm sure. The Fed: "Hey, we want our 2006 dividend back, need to bailout our friends on Wall Street."
Quote: The Delaware company will liquidate the assets over 10 years, with JPMorgan absorbing the first $1 billion in losses, with the Fed bearing any that remain. Any such losses would hurt the Fed's balance sheet, and ultimately the taxpayer, because they would reduce the stipend the Fed pays to the Treasury from earnings on its portfolio. The dividend was $29 billion in 2006.
Taxpayers May Be Liable From Bear, Mortgage Rescue (Update3) - Bloomberg.com
Lookin at the report, builders are finally making consistant progress on trimming total inventory, down about 70K units YOY.
I know you like to measure in # months inventory, but sales velocity is the next problem to focus on. The numerator and denominator both need work (my math teacher would be proud).
Nobel, I think GMAC, Countrywide (BAC), etc will show a lot of losses on loans they mad after the obvious credit crunch and falling house prices in the 4Q 07. It's just hard to adjust thinking more than marginally until it hits ya on the head.
In the last few days the DOW and SPX hit the upper band (resistance) after a nice bounce (but on low volume). For everyone who is complaining that stocks just go up, we are likely to see a down trend again for a week or two or three.
anyone have a link to intraday Libor?
"I just got this from Citicards... "
I also noticed an increase in the credit offers I have to shred. I suspect they might have a more difficult time getting the rest of us to go into debt.
The poor bastards that bought at 300k during the peak just got kicked in the nutz.
Around here the same thing. If you bought during the peak, even in a desirable area, you are now staring at over 20% down. Condos seem to be a bit of an exception, but I'm thinking that's just the tail end of supply and demand and will tank as soon as the new lending standards take a lot of first time buyers out that don't have a downpayment yet. That segment will go down very, very fast and very soon.
I have a summer place in a "this place is different here" town. It isn't different at all. There are two similar houses in my hood, one bought during the peak, and one bought about a year after the bust. A year's difference was 20% (the off-peak one's former owners dumped as they had it for quite a few years and put a good price on it effectively re-pricing the area). And it declined even from there a few more points. OUCH. The ones that bought at the peak are going to be waiting many, many years to see it even come back to even.
Allen, same for Cap One. they actually send 3 offers/week lately. Of course, they do have a plan. One offer will say prominently, no transaction fees, and then the next will come the next day, looking the same, but has transaction fees. They expect some percentage of customers to mix up the offers and incur the fees of course. But just the same, I can't help but wonder if they'll end up losing money.
I signed up for the dont send me anymore crap in the mail list. Its amazing how my mail has gone down in size.
BusinessTime asked: "How much closer are we to homes = 3x income?"
I use this as a rough rule-of-thumb for those price/income values.
HousingTracker.net: Affordabilty Measures
S.
Sebastian - I know the 3x thing is used alot, I remember my lender looking at Loan:income as 3:1, not Price:income. Geez.... most of my home purchases over 27 years have been 4.5-5:1. You might ask how? down payments my friend. Skin in the game.
The popularization of interest only loans likely increased the loan ratio from 3:1 to 4:1, zero down teazers did the rest, but not all those products are going away, so I don't see 3:1 as a good baseline anymore, especially in Krugman's "2 Americas".
Sippn,
It's a good ratio, as the nation will learn over the next year.
--
"Krugman's "2 Americas"."
Krugman is an economist, though not a rogue economist. Did he borrow this from Edwards? There are at least three Americas:
I am sure more categories would be even clearer in reflecting various Americas.
Jas
Thanks for the link Sebastian.
Sippn, if 3:1 is the historical ratio but no longer applies, what do you think reversion to the mean would consist of as far as prices go? If the bottom line for this entire crisis is "affordability, stupid" how do we not go back to 3:1, especially with the savings rate below zero?
Good link Sebastian, but an important missing piece from their crucial mortgage to rent ratio:
2 pieces missing. the time value (interest at 6% for example) of the down payment should be included.
And even bigger, the real estate taxes, which are of course always included in rent.
With these two inclusions, the numbers would become meaningful.
Even if he's reasonably lazy, the old rule of thumb of 2% real estate taxes is a good approximation.