Second

The real goal here is to repeated get into the public's head an inflated value for both of these properties. We take the builder's word for the price of these homes and even when the market contradicts his appraisal; thanks to his gimmick of saying he will "give one house away free", the builder can continue the fiction that his houses are worth well more than the market will pay for them.

OT...a personal anecdote about the Bay Area housing market…

We’ve been renting a three-bedroom house in Los Gatos since 2005 (when we sold our home). The owner is a young doctor who had previously lived in the house, and decided to keep it as a rental when he purchased another home in town. This week he gave us 60 days notice, because he is going to sell. He says that the reason is that he is worried about the amount of debt he has, plus the risk of the housing market dropping further.

I wonder how many other 2nd home owners will be thinking this way in the future. The risk of holding a deflating asset may cause owners of investment properties to bring more houses on the market, thus adding to excess inventory (in addition to the truly distressed sellers that we know are driving up inventory).

One other thing. Several factors make this a difficult time to rent. Buyers are waiting for price drops and therefore competing for rentals. Distressed home-debtors are listing their homes at ridiculous rental rates. And when scanning the available rentals, you have to wonder whether the owner will be forced to sell soon and evict you. All of these factors are making us consider moving in with family to avoid the current rental market and save money for our eventual purchase, circa 1010… We most likely will rent our own place, for sanity’s sake, but…. How many families like us will decide otherwise and cause household formation to decline significantly?

I liked the way the Lady in the video pronounced Escondidio as "EsCONdido". Actually the locals call it Escondildo.

Ministry of Truth,

That's interesting, because we would've looked for a 1-year lease to avoid the folks who plan to sell it soon and evict us. OTOH, I don't think a lease matters when they decide to sell the house. They can break the lease in that situation, by law I believe.

Thing is, we don't want to be moving around every year or so. So we're just going to do due diligence on the landlord and try to be sure it's available for at least a couple years.

Before renting a place, particularly a single family home or duplex, you should do several things:

1. If the rent is too good to be true, pass it up. Lots of people facing foreclosure move to a new place and then rent the place going into foreclosure to the unsuspecting. And some landlords, whose previous tenants have discovered that the landlord is no longer paying the mortgage and have moved out, then rent the place to a new group of unsuspecting tenants. And the way to do these numbers is, of course, to charge less than market rent.
2. Make sure that the person who is renting to you is the owner of the building or an authorized representative. It has happened that people have made, shall we say, unauthorized entries, to abandoned houses, advertised them for rent, collected rent from one or more potential tenants, and then disappeared, in some cases with the tenants' social security numbers on rental applications.
3. Do not give any private information to anyone until you've checked out the building with the county recorder's office. You want to know when the last loan was taken out--pass if it's 2004 or later. And of course, check for notices of default or foreclosure auctions.
4. In California it doesn't matter whether or not you have a lease. Foreclosure voids the lease, which means that tenants only have 30 days to move once the notice to vacate is served. So the landlord's reluctance to agree to a fixed-term lease doesn't tell you much.

And finally, a lease is NOT voided when the landlord wants to sell the building. Nor is it voided when a new owner takes possession. The new landlord would be bound by the terms of the lease until its expiration.

PeonInChief ,

Thanks for the tips.

Are you sure about the lease holding if the owner needs to sell? True in all states including California?