Rents are down 25% in Miami over the last year. Those imaginary foreigners buying grossly overpriced condos (Realtor propaganda) must be getting a royal ass pounding.
tj & the bear writes:
Yawn. Dawg & I were just making this point yesterday.
Yesterday? Yeah and in 2006 when people were laughing at me for getting rid of low cost basis rental properties beause Isaw a huge drop in real returns because of... well let's see... everything in the article.
Maybe tenants should re-negotiate with the landlord every year. Heck, if rents are coming down, it'll be easier for the landlord to lower the rent $50 than to start looking for another tenant. They'll have to advertise, show it, and spruce it up with paint (at least). Not to mention, maybe even have it 1 or 2 months vacant.
It will be interesting if large enough numbers of tenants start to re-negotiate during these hard times in the real estate market.
Yah, greenlander. Look around a bit. It seems like the big property management companies here in Seattle are still trying to raise people's rent the maximum amount every year, but there are deals to be found in the shadow market. A friend of mine just had his landlord (a big, Denver-based company) jack up his rent to almost $2000. He looked around and found a nicer unit in a condo building nearby for $1600. The owner is a condo-flipping relitter who's now stuck with her purchase.
It's funny, I've been having this very discussion with a workmate who thinks rents will go up (due to the displaced "owners"). I predict lots of investors who bought based on expected rental income from bubble rental costs are going to be sucking up the difference for a while, at least until the double-digit inflation Obama's going to cause catches up and bails them out.
I think it depends on where you are. Here in LA (Hollywood, WeHo, Fairfax area) Rents are stable, certainly not coming down yet. Will they? I hope so, but I'm not holding my breath. Hell, RE prices here are hardly dropping. I mean, they are, but at a glacial pace... Still a lot of knife catchers. :-/
And let your landlord know that you are looking or if you find a better price. He might back off a bit. We did for our market rate rentals; but we still have a number of way below market rentals that we're bringing up gradually.
Black Swan,
Where is your brothers building? Is it in Manhattan (if so what is the name or what area is it in)? My rent just got jacked 14% to 3K a month (for a one bedroom in Midtown).
Santa Clara's rate would be a dream.
I meet with a great deal of distressed home-owners. The sad irony is that when they get foreclosed (or whatever) their standard of living regarding housing is boosted because they can rent something much nicer than they "owned".
doom...many peeps dont realize you can negotiate lower rent with your current landlord. I did it twice from 2002 to 2003 in SF. Its more than fully recovered the 20% since. But it can and likely will again. Long way to go for SF housing mkt. (down)
I'm not the brightest starfish in the sea, but if rents are going down doesn't that put a big dent in that rent/own price ratio I keep reading about? How can home prices hit bottom if the ratio is a declining moving target? Maybe the optimists need to readjust their thinking.
Norm-
Nah, we're mainly in San Diego and your rent is probably higher than any two of ours. We have an self imposed limit of fifty bucks because I seriously doubt any of our tenants could handle the cashflow change. When they leave, wooohoo! we make it up in one step. But for some reason they're reluctant to leave.
It's great that falling rents is finally getting some play in the MSM.
There's been a lot of fear mongering about "rising rents" going around the US. A clever way to get people to think perhaps they should be buying now, since rents are "going up".
And rents should fall. A lot of Americans have been paying out way too much of their monthly incomes on rent for the past several years.
Rent may have looked like a bargain compared to overinflated home prices, but rents were still too high in a lot of places.
James B: It seems like every 3 years like clockwork, Seattle landlords try to raise rents. As far as I know, it really only worked once and that was at the beginning of the RE bubble in '96/'97. Ever since then, smart tennants just give notice when the landlord says he wants to raise the rent. More than half the time, the landlord responds by lowering your rent.
Also, the weak economy has to be adding to this problem. I've got two 20-something sons who have moved back in since leaving college because they are still waiting on that big break. Until then, they are both working sub-living wage jobs. Of course, the tea leaves suggest that the economy might not be getting better anytime soon.
40% of June SFR sales were investor driven in Sonoma county. Those are now hitting the rental market. Craigs list is very active these days with lots of rental deals.
funny I questioned this scenario after reading about how a huge percent of OC forclosure purchases were picked up by "investors" who intended to rent them. my thought was the lower than expected cap rate might cause another mini forclosure cycle.
unfortunately at the time I was laughed off od the board.
We've got a higher end apartment in Ventura County (CA). Our complex raised rates 5% for our renewal. A few tenants have moved out since that time and now they were advertising rates 6% lower than what we were originally paying. I know there are still a handful of vacant apartments (at least 2 right next to us).
In March we'll be looking to move.. Hope there is still significant pressure on the market, as I'd rather be under a private-owner instead of a property company, and I'd like to get into a house instead of an apartment...
I don't know why I said , "hope"... of course there is still going to be rental market pressure...
I grudgingly accepted a 3% rent increase on a nine month lease extension here in Seattle. My salary just increased by much more than that, and I can't be bothered to move right now. But the property managers are kidding themselves if they think this can hold much longer. There are four new apartment buildings coming on line just five blocks from my place. Not to mention new condos.
I agree that rent decreases add an interesting (somewhat ignored) factor to this bust going forward. Did rents decrease in any previous housing bust?
YLSP,
VenCo has unbelievably high rents. One of the reasons home prices went so high, they were justified by those high rent comparisons. The cap rate formula is bout to strike with a vengance. Even though only about 55% are owner occupied nearer 70% of the dwelling units are owned by county residents.
The good news is that there are a lot of places to live here who's owners have a very low cost basis. They can afford to bring rents way down once the uhhh.... "population pressures" are addressed.
"The sad irony is that when they get foreclosed (or whatever) their standard of living regarding housing is boosted because they can rent something much nicer than they "owned"."
You mean a part time maid who lived in a $500k house with a liar's loan and a no-money-down, interest only mortgage and who didn't make payments for 15 months before he/she got foreclosured upon can rent an equivalent place for $0 for 15 months? Sign me up!
Greenlander would get better deals in other parts of the country, or even farther inland towards Contra Costa or farther south of San Jose. But rents for apartments in the valley and in SF proper are still going up. I imagine it's the same in NYC.
Housing prices too are still going up or leveling off in most parts of SF (basically in the northern 2/3rd section of the city.) Mostly supply is small and demand is still high.
Now if these markets start to decline then we might really be heading into a deflationary market. And you'd still be getting a poor deal if that scenario were to come about.
Sorry for the OT question, but what does "end cap" lease mean in CRE? I've been seeing a sign at a local strip mall for this and can't find out with a minimally diligent Google. Thanks in advance.
Thanks, Elvis. I kinda thought that might be it, but both ends are (currently) filled. One leaving means this particular strip is going to be half full. Joining most of the other lovely strip malls in our Midwestern town.
The two things that put in a base for real estate are investment returns and wages. Both are in the crapper and losing out to the very inflation the RE shills were secretly counting on to bail them out of nominally high prices. Home price and wage and rental deflation and vicious grinding inflation everywhere else. The perfect storm.
Rob Dawg,
You are right, but, I think the root is basic supply and demand. When supply grossly outweighs demand, prices will fall. Or more simply, the law of supply and demand, like gravity, will prevail.
Joe Six Pack writes:
I'm not the brightest starfish in the sea, but if rents are going down doesn't that put a big dent in that rent/own price ratio I keep reading about? How can home prices hit bottom if the ratio is a declining moving target? Maybe the optimists need to readjust their thinking.
The annual rental income from a comparable house would be lower. But, if a comparable purchase price goes down by just as much to compensate then the rent ratio would stay constant:
Rent Ratio = Purchase Price / Annual Rent
Purchase Price = Rent Ratio x Annual Rent
The question is what is falling more rapidly, actual purchase prices or rents?
greenlander: 2050 sounds a bit on the high side for a 1BR, but I'm not disputing those prices are possible for "prime" inventory here.
Unless the very location is not negotiable for you (e.g. walking distance to wherever you go), you are looking at substantial moving costs, or your dwelling is really prime material, you should find sufferable to good apartments for less. There seem to be much more choice of 1BRs than 2BRs.
When I decided to sell my home and rent last summer I was in rather a hurry due to a simultaneous job change, and so with only a little shopping around settled on a very nice 3-br 2-1/2 bath townhome at $1950/mo (northwest suburbs of Chicago). The owners of a much nicer 4-br SFH I looked at started with an asking rent of $3000 and dropped to $2400 when they learned I'd found the other place, which I'd have been happy to pay, had I not already committed to a one-year lease on the other.
A year later, the 4-br home was again on the rental market (having gone unrented the whole time), and I am now living there with a $1900/mo two-year lease (having verified that the owner is current on the mortgage, and that my rent covers her PTI).
Meanwhile, many of the homes that were listed for rent on the MLS last year (esp. the more expensive ones) remain on the market, most until recently still asking the same amounts. But in the last few weeks some of the asking rents are beginning to come down, while simultaneously the number of homes for rent has abruptly risen about 20%. (It had been rising more slowly, with several plateaus and even a few declines, for the last year.)
greenlander, seems like your landlord hasn't gotten the memo. Couldn't find any 1 bedrooms in Santa Clara much over $1600. There are 3 bedrooms in Los Gatos for $2,500 and that's a much nicer area than Santa Clara, imho:
From Reuter's piece on expanded shorting rules, dealing with the original "experiment" on 19 stocks...He said the SEC's emergency rule was never intended to prop up the stock prices of the 19 companies.
"We expected and intended to have no impact whatsoever on the direction of prices," Cox said. "That's not the purpose of regulations."
Phoenix is like every real estate market. You have to drill down a long ways to find the truth.
The apartment vacancy rate in Phoenix is as high as 13% and approaching six or seven percent depending upon which class of apartment that you choose to measure. Specifically, A, B, or C grade apartments. The city tends to have and has always had a larger percentage of units concentrated in the B minus to C grades which is where the outsized vacancy rates have occurred.
Those types of units have been hammered by two factors. One, the decline in the number of construction related jobs due to the housing depression and two, an ill considered anti-immigrant initiative that forced a number of undocumented families to leave the state. The vacancy problem began showing up immediately after the passage of the initiative.
I read the Arizona Republic article and didn't find it worthy of even a mention on my blog. It was one shoddy piece of superficial journalism.
The housing crisis has caused a lot of problems and economic dislocations but other economic forces are at work as well.
I think your landlord is taking the piss, unless your apt comes with gold plated toilets.
I'm in Mountain View, walking distance to my work and downtown Castro street, Caltrain and barely 5 mins drive from Google. 3 months ago landlord tried to raise the rent on me by a ridiculous amount, I laughed at them and now I'm in a nicer condo right next door for less than I was paying before they tried the rise.
2 bed 2 bath, 1200 sf, nice outside patio, pool, tennis courts, secured parking, in unit washer/dryer, very quiet. $2000/month, includes water/sewer/garbage. Electricity $30/month so far.
And we have cats so about 75% of landlords won't even talk to us even when you offer an extra $1000 deposit to cover the crappy carpets.
Seriously, you have to get cheaper than that - try the south end of Sunnyvale, lots of nice ranch style houses there for that much.
"My momma has updated her sayings to declare that Misean is an idiot."
This is disputable? Do I look like a man with a plan? My only question Mr. Troll...why the f do you care?
But of course there will be no debate from you...numbskull...just noise. You gotta bitch bring it...but of course you don't...because forming thoughts is painful...so knock yourself out at my expense. I have a rather large bank roll.
mutha is a pussy and does not need any further response. Sad really. He came on with such bravaro...but turns out he's just your typical coward. Hasta la Vista piece of shit.
I read the postings here...it's all over, we are all doomed, so it's all good, right? Doesn't matter one way or the other, so here's to the end....cheers...adios.
I saw the NYT's story on Section 8 housing vouchers moving less than desirable public housing residents out into these new suburban 'rental properties'.
That is a surefire way to keep rents and property prices down. Move mama from the public housing projects out into a suburban tract home and have here teenage sons 'patroling' the neighborhood.
I saw the NYT's story on Section 8 housing vouchers moving less than desirable public housing residents out into these new suburban 'rental properties'.
Yes, also a very interesting piece. Many people leave the inner city and less desirable neighborhoods to get away from all that, and then the government uses their tax money to plop it right back down in their midst.
Under the Section 8 federal housing voucher program, thousands of poor, urban and often African-American residents have left hardscrabble neighborhoods in the nations largest cities and resettled in the suburbs...Law enforcement experts and housing researchers argue that rising crime rates follow Section 8 recipients to their new homes, while other experts discount any direct link...The foreclosure crisis gnawing away at overbuilt suburbs has accelerated that migration, and the problems. Antioch is one of many suburbs in the midst of a full-blown mortgage meltdown that has seen property owners seeking out low-income renters to fill vacant homes. The most recent Contra Costa County records available show that from 2003 to 2005, the number of Section 8 households in Antioch grew by 50 percent, to about 1,500 from 1,000.
The United States and Poland formally signed a deal on Wednesday to station elements of U.S. missile defense on Polish soil, a move rising Russia-West tensions over Moscow's intervention in Georgia.
I don't see this anywhere in Maryland - rents go up and services are reduced. That's the way of things here: pay more, get less. But it's okay because "everyone in Maryland is rich because of DC" or so I am told... Right!
Yes, also a very interesting piece. Many people leave the inner city and less desirable neighborhoods to get away from all that, and then the government uses their tax money to plop it right back down in their midst.
eh | 08.20.08 - 6:40 am | #
Do people really believe they can simply run away from all of their problems? That the problems won't keep following them where ever they go?
I find it particularly funny that the real estate shenanigans were used to destroy vibrant minority communities and force the creation of housing projects, real estate shenanigans were used to drive people from housing projects into Section 8 (the projects were sitting on land that was too valuable), and real estate shenanigans that brought the Section 8 housing into the nice suburbs and next door to the typical suburban American who needs real estate shenanigans to eek out a selfish lifestyle.
"...typical suburban American who needs real estate shenanigans to eek out a selfish lifestyle."
So not wanting to live among gang-bangers and ghetto trash is now considered "selfish." Hmmm... and I assume you have great luck talking local punks into behaving since just leaving the decaying area isn't fair by your standards. Right, whatever!
Pondering,
My father had some retail stores in or close to ghettos. In addition to the danger, it was depressing to see people ruining their lives. Count me selfish.
Incentives offered prospective renters here on Florida's West coast were oddities last year, but have become far more common this year. First month free, or no rent 'til October have become a common feature of rental complex advertising.
Rather than an outright discount of the monthly figure, this reads as an 'introductory offer' which some (many?) current renters won't recognize as a factor to use in their lease renewal negotiations. And there's no implication of future concessions for new renters when their leases roll over.
I haven't seen any examples yet of condos reverting to rentals - folks over at Patrick's call them repartments - but expect those will come along in time.
The telling quote in your link IMO is "The VIX underlines the fact that there is far less fear in the market of any imminent financial collapse than there was in March and even in early July."
That's not at all reassuring where potential failures among the financials are concerned, not to me. If only because it presumes this market has begun to recognize risks accurately and to price them in.
But it's okay because "everyone in Maryland is rich because of DC" or so I am told... Right!
There's some truth to that. the DC area doesn't have busts as large as the rest of the country because the fed is a very stable employer. Federal employees almost never get fired.
On the downside, we don't have economic booms like the rest of the country. Gov't employees don't get big raises and big bonuses. There are no stock options for gov't employees.
Not to say we're not immune. I know my house has been and will continue to drop in value. It just won't drop in value like a house in Detroit would.
burnside,
I was more impressed by the last sentence of the second paragraph:
A very heavy volume session with shorts scrambling to cover as we approach the $18 level on the XLF chart could signify the market's belief that, no matter what new major surprises there are in store for the banks, the Fed and US government, as well as strategic global holders of dollar assets, will continue to remind investors of the fact that there is an implicit public sector underwriting of private sector liabilities in the financial system."
I am in Northern Virginia, near a metro. With gas prices so high and traffic so thick the rental prices are creeping up. The biggest increase is in family size rentals (townhouses and SFH). They fly off the MLS in days.
Outside the beltway the rentals stay on the MLS for much longer and the prices are falling.
Sure. But it presupposes a Tennessee Williams scenario. Kindness of strangers. Or at a minimum, it presumes the self-interest of strangers aligning with some propping up here.
Perhaps, but some of those strangers have a history of humiliation at the hands of the West generally and of the US in particular, of which they are highly conscious. It's not nearly so clear some would have it.
Pittsburgh is a very different market than some of those I read about here.
I had to tell my landlord that he was undercharging us and that I couldn't pay him any less than $500 per month for our two bedroom. I refused to negotiate one cent lower.
burnside,
I have an excellent article I suggest you read. At least, I find this source extremely helpful. Unfortunately, the site does not lend itself to an easy post. If you will, allow me to walk you to it:
[2] On the lowest grey box on the left, choose "economic"
[3] On the next screen, choose "U.S. Economic Outlook"
[4] On the next screen, choose "July 2008 Base Case vs. Checkmate"
[5] This is an economist I admire who has put our discussion in context - you gotta admit there is a lot of context. But examine the second paragraph carefully.
I live in N. VA, outside the beltway, but walking distance to a metro. My complex when I moved in last year gave me the one bedroom w/ den at the one bedroom with no den price. And first month free.
When it came time to renew, my rent was flat. Why? 1/3 of a mile away (farther away from the metro unfortunately), a new condo complex turned to apartment complex started accepting renters.
burnside,
I appreciate the welcome sign. I am new here, and, coupled with all the current confusion in the market, I found the conversation here difficult to follow. Indeed, I've almost abandoned it a couple of times {including yesterday}. However, I perceive there is also insight provided here, and I'm now working on a new theory of simply reading between the lines. In any event, I thank you.
It's as simple as this - trying to extract maximum market rent entails risk of 1) not finding takers and losing rental income - and 2) not having the luxury of choosing among potential tennants (if only one person is willing to pony up for your at-the-top-of-market rental, you'll probably be less picky about credit/references).
If you're willing to take these kinds of risks to extract the last $100 or $200 a month out of your rental - more power to you. But I sure wouldn't go that route - not these days.
"Interested Principal writes:
Pittsburgh is a very different market than some of those I read about here.
I had to tell my landlord that he was undercharging us and that I couldn't pay him any less than $500 per month for our two bedroom. I refused to negotiate one cent lower."
I had to do that once; the apartment was decent, and 'way cheap for the market. But I was the only sane person in the building; most "respectable" tenants wouldn't give the place a look, because something that cheap must be a pit.
So not wanting to live among gang-bangers and ghetto trash is now considered "selfish." Hmmm... and I assume you have great luck talking local punks into behaving since just leaving the decaying area isn't fair by your standards. Right, whatever!
Pondering the Mess | 08.20.08 - 9:24 am | #
What's not fair is creating a problem and then leaving it behind. As long as the crime, poverty and problems are somewhere else you can just ignore it. But God forbid it ever shows up in your neighborhood.
Where I live, there is a bad ghetto just inside the city limits, right off the freeway. There is always a steady stream of suburbanites that get off the highway, buy their drugs, get on the highway and head home to their idyllic suburb.
My neighbors raise hell at the prospect of Section 8 residents. Keep those gang-bangers where they belong! We should only have to see them once a week, over by the highway!
Observer: Don't give me crud about "creating the problem." I didn't give the punks weapons or drugs or encourage them to commit crime. I didn't tell them to date thugs and produce offspring that they cannot support. I didn't instill in them the idea of being loud, nasty, trashy excuses for people. They made those choices, and they can live with them someplace else, thank you very much.
"...But it's okay because "everyone in Maryland is rich because of DC" or so I am told... Right!"
"There's some truth to that. the DC area doesn't have busts as large as the rest of the country because the fed is a very stable employer. Federal employees almost never get fired."
You are right in this regard, but while stability of the DC area is generally true, I cannot see how housing prices can "stabilize" at 5 times household income or more. That just doesn't make sense to me. But the Bubble made no sense either, so who knows - maybe they'll suceed in keeping NoVa, Maryland, etc. unaffordable. Such a great accomplishment that would be.
My heart bleeds for the "managed" apartment buildings with vacant apartments. Try getting into one, with their obscene rules about levels of income (which could easily disappear tomorrow, once your applicaton has been approved and you lose your job, but they just love their rules).
If someone has a history of paying their rent on time, and does not have a criminal record, shouldn't that be enough? The answer is "no" and they would rather have their apartments sit empty for months and months. Go figure.
It is something like that. The guy is a nice dude, mid-20's, who just didn't have enough confidence to ask enough for the first property that he has ever rented out. The first year, we told him that he needed to raise the rent $25 when we renewed the lease. He was delighted, as he had realized that he had gone too low, but wouldn't have been assertive enough to ask for the increase himself. Then, when we added a new roommate, we told him that for the extra utilities she would use, he really needed to be getting an extra hundred, bringing the rent up to $500. He had only been going to ask for another $25.
It isn't all altruism and good nature on the part of his tenants, however. I mean, we do like him, but we also want to make sure that he stays cash flow positive, particularly in the current market. I like the place far too much to risk having to move when he goes BK or gets an FC notice. Also, I want him to think of us first if he does find himself in a position of having to sell it at a discount.
Where I live, there is a bad ghetto just inside the city limits, right off the freeway. There is always a steady stream of suburbanites that get off the highway, buy their drugs, get on the highway and head home to their idyllic suburb.
My neighbors raise hell at the prospect of Section 8 residents. Keep those gang-bangers where they belong! We should only have to see them once a week, over by the highway!
I'll concede that NIMBYism is strong in some suburbanites who oppose any form of apartments or 'affordable' housing in their neighborhoods. However, making the leap that suburbanites are somehow single-handedly responsible for all ghetto/inner city social problems is crazy. Personally, I don't recall ever driving to my local ghetto to buy crack, sell weapons to gang-bangers, or ask the locals to produce more out-of-wedlock children they cannot support.
Those types of units have been hammered by two factors. One, the decline in the number of construction related jobs due to the housing depression and two, an ill considered anti-immigrant initiative that forced a number of undocumented families to leave the state. The vacancy problem began showing up immediately after the passage of the initiative.
Oh... if only I were lucky enough to live in a neighborhood with such a "problem"! Less petty crime, less traffic, less grafitti/trash, better schools, and less 10-people-per-unit competition for rental housing. How awful!
Observation: why is it so hard for some people to refer to illegal immigrants as just that? A legal resident who lost his wallet could be considered "undocumented". OTH, a border-hopper who makes his living in the black market economy (despite being pervasive & sanctioned by the PTB) is, by definition, an illegal alien. Is that really so hard?
I share Joe Six Pack's concern: I'm not the brightest starfish in the sea, but if rents are going down doesn't that put a big dent in that rent/own price ratio I keep reading
about? How can home prices hit bottom if the ratio is a declining moving target? Maybe the optimists need to readjust their thinking.
As CR wrote about the price-to-rent ratio last month, "This ratio has flaws, but it gives a general idea of how far prices need to fall (or rents increase)." So if rents are decreasing, does that suggest we're in for a longer, larger drop in home prices?
For what its worth, my company tracks residential (multifamily and single family) real estate market data primarily for investors in over 220 markets around the country. We track most primary markets, as well as secondary and tertiary markets demonstrating some intriguing feature (ie consistent job growth, population growth, etc.) which has supported housing demand.
For the markets we track, multifamily rental rates are up an average of 2.5% over the past year (median 2.2%), with the range 11.6% to -5.0%. Our data also suggests that multifamily occupancies in the markets we track to have increased very nearly a full percentage point in the past 12 months an expected occurrence given market issues.
Is haloscan acting up again and forcing me to post to see the comments?
Mike in Long Island, "Is Haloscan acting up again?" is a common question. I'm hoping this gets resolved soon with Haloscan's new owner.
Best Wishes.
It sure isn't the case in Santa Clara, California. My landlord is raising my rent to $2050 a month for a one-bedroom.
I guess those recent "investors" buying foreclosures might have to adjust their expected cap rates down.
I think the term best to describe these recent "investors" would be "Knife Catchers".
Yawn. Dawg & I were just making this point yesterday.
my brother is paying 15% less for rent in nyc - from last year - and for a bigger and better place
Ahhh - the start of the next phase of the real estate downturn, the beginning of the rent collapse. Right on time.
Sorry for the OT question but I gotta ask, "What's the average cost for a foreclosure?"
Meaning after all is said and done, how much does the bank pay out of pocket between legal fees, realtor fees, insurance, property taxes, etc.?
greenlander, you need to find a new landlord.
Rents are down 25% in Miami over the last year. Those imaginary foreigners buying grossly overpriced condos (Realtor propaganda) must be getting a royal ass pounding.
tj & the bear writes:
Yawn. Dawg & I were just making this point yesterday.
Yesterday? Yeah and in 2006 when people were laughing at me for getting rid of low cost basis rental properties beause Isaw a huge drop in real returns because of... well let's see... everything in the article.
Maybe tenants should re-negotiate with the landlord every year. Heck, if rents are coming down, it'll be easier for the landlord to lower the rent $50 than to start looking for another tenant. They'll have to advertise, show it, and spruce it up with paint (at least). Not to mention, maybe even have it 1 or 2 months vacant.
It will be interesting if large enough numbers of tenants start to re-negotiate during these hard times in the real estate market.
Yah, greenlander. Look around a bit. It seems like the big property management companies here in Seattle are still trying to raise people's rent the maximum amount every year, but there are deals to be found in the shadow market. A friend of mine just had his landlord (a big, Denver-based company) jack up his rent to almost $2000. He looked around and found a nicer unit in a condo building nearby for $1600. The owner is a condo-flipping relitter who's now stuck with her purchase.
It's funny, I've been having this very discussion with a workmate who thinks rents will go up (due to the displaced "owners"). I predict lots of investors who bought based on expected rental income from bubble rental costs are going to be sucking up the difference for a while, at least until the double-digit inflation Obama's going to cause catches up and bails them out.
I think it depends on where you are. Here in LA (Hollywood, WeHo, Fairfax area) Rents are stable, certainly not coming down yet. Will they? I hope so, but I'm not holding my breath. Hell, RE prices here are hardly dropping. I mean, they are, but at a glacial pace... Still a lot of knife catchers. :-/
Yah, greenlander. Look around a bit.
And let your landlord know that you are looking or if you find a better price. He might back off a bit. We did for our market rate rentals; but we still have a number of way below market rentals that we're bringing up gradually.
Black Swan,
Where is your brothers building? Is it in Manhattan (if so what is the name or what area is it in)? My rent just got jacked 14% to 3K a month (for a one bedroom in Midtown).
Santa Clara's rate would be a dream.
I meet with a great deal of distressed home-owners. The sad irony is that when they get foreclosed (or whatever) their standard of living regarding housing is boosted because they can rent something much nicer than they "owned".
doom...many peeps dont realize you can negotiate lower rent with your current landlord. I did it twice from 2002 to 2003 in SF. Its more than fully recovered the 20% since. But it can and likely will again. Long way to go for SF housing mkt. (down)
greenlander, make sure to check what the set municipal limits are when they attempt to increase your rent.
I just won a negotiation with my landlord who was trying to increase my rent beyond the 2.7% annual limit increase.
Feels like victory.
20 year old Glenlivet was had by all.
sdtfs - are you my landlord? I negotiated with my LL - he gave me a $75 reduction in the $375 rental increase. xxxooo
I'm not the brightest starfish in the sea, but if rents are going down doesn't that put a big dent in that rent/own price ratio I keep reading about? How can home prices hit bottom if the ratio is a declining moving target? Maybe the optimists need to readjust their thinking.
Norm-
Nah, we're mainly in San Diego and your rent is probably higher than any two of ours. We have an self imposed limit of fifty bucks because I seriously doubt any of our tenants could handle the cashflow change. When they leave, wooohoo! we make it up in one step. But for some reason they're reluctant to leave.
This is going to be painful for a lot of the low income tenants:
Low-cost housing at risk in L.A. - LA Daily News
It's great that falling rents is finally getting some play in the MSM.
There's been a lot of fear mongering about "rising rents" going around the US. A clever way to get people to think perhaps they should be buying now, since rents are "going up".
And rents should fall. A lot of Americans have been paying out way too much of their monthly incomes on rent for the past several years.
Rent may have looked like a bargain compared to overinflated home prices, but rents were still too high in a lot of places.
James B: It seems like every 3 years like clockwork, Seattle landlords try to raise rents. As far as I know, it really only worked once and that was at the beginning of the RE bubble in '96/'97. Ever since then, smart tennants just give notice when the landlord says he wants to raise the rent. More than half the time, the landlord responds by lowering your rent.
Don't be a whimp, play hardball!
Also, the weak economy has to be adding to this problem. I've got two 20-something sons who have moved back in since leaving college because they are still waiting on that big break. Until then, they are both working sub-living wage jobs. Of course, the tea leaves suggest that the economy might not be getting better anytime soon.
40% of June SFR sales were investor driven in Sonoma county. Those are now hitting the rental market. Craigs list is very active these days with lots of rental deals.
funny I questioned this scenario after reading about how a huge percent of OC forclosure purchases were picked up by "investors" who intended to rent them. my thought was the lower than expected cap rate might cause another mini forclosure cycle.
unfortunately at the time I was laughed off od the board.
Recession means all the twenty-somethings move back in with their parents.
I wish I could share a photo of each evenings sunset...makes all the stress melt away.
've got two 20-something sons who have moved back in since leaving college because they are still waiting on that big break.
I didn't even see this before I made a similar comment.
I actually see it though -- especially with recent college grads.
We've got a higher end apartment in Ventura County (CA). Our complex raised rates 5% for our renewal. A few tenants have moved out since that time and now they were advertising rates 6% lower than what we were originally paying. I know there are still a handful of vacant apartments (at least 2 right next to us).
In March we'll be looking to move.. Hope there is still significant pressure on the market, as I'd rather be under a private-owner instead of a property company, and I'd like to get into a house instead of an apartment...
I don't know why I said , "hope"... of course there is still going to be rental market pressure...
I grudgingly accepted a 3% rent increase on a nine month lease extension here in Seattle. My salary just increased by much more than that, and I can't be bothered to move right now. But the property managers are kidding themselves if they think this can hold much longer. There are four new apartment buildings coming on line just five blocks from my place. Not to mention new condos.
I agree that rent decreases add an interesting (somewhat ignored) factor to this bust going forward. Did rents decrease in any previous housing bust?
YLSP,
VenCo has unbelievably high rents. One of the reasons home prices went so high, they were justified by those high rent comparisons. The cap rate formula is bout to strike with a vengance. Even though only about 55% are owner occupied nearer 70% of the dwelling units are owned by county residents.
The good news is that there are a lot of places to live here who's owners have a very low cost basis. They can afford to bring rents way down once the uhhh.... "population pressures" are addressed.
"The sad irony is that when they get foreclosed (or whatever) their standard of living regarding housing is boosted because they can rent something much nicer than they "owned"."
You mean a part time maid who lived in a $500k house with a liar's loan and a no-money-down, interest only mortgage and who didn't make payments for 15 months before he/she got foreclosured upon can rent an equivalent place for $0 for 15 months? Sign me up!
Oh, yes, that is called a REO bando rental.
Responders to greenlander about Santa Clara:
Greenlander would get better deals in other parts of the country, or even farther inland towards Contra Costa or farther south of San Jose. But rents for apartments in the valley and in SF proper are still going up. I imagine it's the same in NYC.
Housing prices too are still going up or leveling off in most parts of SF (basically in the northern 2/3rd section of the city.) Mostly supply is small and demand is still high.
Now if these markets start to decline then we might really be heading into a deflationary market. And you'd still be getting a poor deal if that scenario were to come about.
Sorry for the OT question, but what does "end cap" lease mean in CRE? I've been seeing a sign at a local strip mall for this and can't find out with a minimally diligent Google. Thanks in advance.
End cap means a space on the corner of a strip mall, for instance. No neighbor on one side.
Shanghai Composite extends gains, up 4% at 2,437.30
You can now call me your semi-minimal diligent Google.
Thanks, Elvis. I kinda thought that might be it, but both ends are (currently) filled. One leaving means this particular strip is going to be half full. Joining most of the other lovely strip malls in our Midwestern town.
Whether a strip mall is lovely depends on the caliber of workers.
Semi-minimal sounds a little ... odd, no?
Lol!
REwhores lose again. Now what will yun say?
The two things that put in a base for real estate are investment returns and wages. Both are in the crapper and losing out to the very inflation the RE shills were secretly counting on to bail them out of nominally high prices. Home price and wage and rental deflation and vicious grinding inflation everywhere else. The perfect storm.
Rob Dawg,
You are right, but, I think the root is basic supply and demand. When supply grossly outweighs demand, prices will fall. Or more simply, the law of supply and demand, like gravity, will prevail.
What about the Blunt Nosed Leopard Lizard?
Joe Six Pack writes:
I'm not the brightest starfish in the sea, but if rents are going down doesn't that put a big dent in that rent/own price ratio I keep reading about? How can home prices hit bottom if the ratio is a declining moving target? Maybe the optimists need to readjust their thinking.
The annual rental income from a comparable house would be lower. But, if a comparable purchase price goes down by just as much to compensate then the rent ratio would stay constant:
Rent Ratio = Purchase Price / Annual Rent
Purchase Price = Rent Ratio x Annual Rent
The question is what is falling more rapidly, actual purchase prices or rents?
greenlander: 2050 sounds a bit on the high side for a 1BR, but I'm not disputing those prices are possible for "prime" inventory here.
Unless the very location is not negotiable for you (e.g. walking distance to wherever you go), you are looking at substantial moving costs, or your dwelling is really prime material, you should find sufferable to good apartments for less. There seem to be much more choice of 1BRs than 2BRs.
Let me see...rents falling...house prices falling...banks falling...commodities rising...
Check.
At this point my brain's trans starts grinding and slipping...and smoke start s pouring out my ears.
I mean at least rents falling should equate to house prices doing something else. Or maybe not.
Well at least this should lead to a 500 point pop in the DOW in the morning.
Cheers,
Hey tranches of lunesta(tm)what part of Seattle are those apt complexes? I currently rent in Magnolia.
Thanks,
ADP
Thread music, as so much is "Under Pressure"
YouTube -
Cheers,
When I decided to sell my home and rent last summer I was in rather a hurry due to a simultaneous job change, and so with only a little shopping around settled on a very nice 3-br 2-1/2 bath townhome at $1950/mo (northwest suburbs of Chicago). The owners of a much nicer 4-br SFH I looked at started with an asking rent of $3000 and dropped to $2400 when they learned I'd found the other place, which I'd have been happy to pay, had I not already committed to a one-year lease on the other.
A year later, the 4-br home was again on the rental market (having gone unrented the whole time), and I am now living there with a $1900/mo two-year lease (having verified that the owner is current on the mortgage, and that my rent covers her PTI).
Meanwhile, many of the homes that were listed for rent on the MLS last year (esp. the more expensive ones) remain on the market, most until recently still asking the same amounts. But in the last few weeks some of the asking rents are beginning to come down, while simultaneously the number of homes for rent has abruptly risen about 20%. (It had been rising more slowly, with several plateaus and even a few declines, for the last year.)
Yawn. Dawg & I were just making this point yesterday.
tj & the bear
I believe we discussed this in 2007. So Dawg has me beaten by a year.
Remember when the housing bulls taunted that foreclosed homes would only drive up rents?!?
We're almost into the most brutal 18 months of the decline. Its about to get very interesting.
Got Popcorn?
Neil
NIKKEI doesn't want to concede 13k easily. Noble fight, but not one it will win.
Neil -
Actually, "Rents never go down."
Kinda like housing and preferred stocks, I guess.
"Kinda like housing and preferred stocks, I guess."
Ah shit...I need to make some fanny and freddy prefered buys!
Cheers,
My momma always said "if you can't say anything positive, then don't say anything at all."
As usual, I always questioned the reason of her statement.
But, as usual, I later learned that she was right. My momma wouldn't like CR one bit.
And that's all I have to say about that.
greenlander, seems like your landlord hasn't gotten the memo. Couldn't find any 1 bedrooms in Santa Clara much over $1600. There are 3 bedrooms in Los Gatos for $2,500 and that's a much nicer area than Santa Clara, imho:
south bay area apts/housing for rent classifieds - craigslist
O/T, but good for a laugh...
From Reuter's piece on expanded shorting rules, dealing with the original "experiment" on 19 stocks...He said the SEC's emergency rule was never intended to prop up the stock prices of the 19 companies.
"We expected and intended to have no impact whatsoever on the direction of prices," Cox said. "That's not the purpose of regulations."
Geez...
oldtrader,
""We expected and intended to have no impact whatsoever on the direction of prices," Cox said. "That's not the purpose of regulations.""
BWAHAHAHAHAAHAHAAAAHAHAHAHAAHAA!
And the purpose of a bear taking a shit in the woods isn't to empty it's colon.
In other news:
The Pope's refusal to give up on Cathalocism does not make him a Catholic.
BWAHAHAHAHAAHHAHHA!
Cheers,
Go figure - bad news makes everything seem okay and Asia sees a lot of green.
Whats up is down and whats down is up.
Cant wait 'till Sept. Lets move on already. We know where this train is headed.
My momma always said "if you can't say anything positive, then don't say anything at all."
Funny, my momma always said "Don't let your babies grow up to be cowboys." Too bad I play safety for the Cowboys now.
We know where this train is headed.
Barley
To China?
Elvis,
"My momma always said "if you can't say anything positive, then don't say anything at all."
Must've had to do with with grandma
YouTube - Grandma Got Run Over by a Reindeer by Dr. Elmo
Cheers,
Good night now.
Phoenix is like every real estate market. You have to drill down a long ways to find the truth.
The apartment vacancy rate in Phoenix is as high as 13% and approaching six or seven percent depending upon which class of apartment that you choose to measure. Specifically, A, B, or C grade apartments. The city tends to have and has always had a larger percentage of units concentrated in the B minus to C grades which is where the outsized vacancy rates have occurred.
Those types of units have been hammered by two factors. One, the decline in the number of construction related jobs due to the housing depression and two, an ill considered anti-immigrant initiative that forced a number of undocumented families to leave the state. The vacancy problem began showing up immediately after the passage of the initiative.
I read the Arizona Republic article and didn't find it worthy of even a mention on my blog. It was one shoddy piece of superficial journalism.
The housing crisis has caused a lot of problems and economic dislocations but other economic forces are at work as well.
Elvis has left has left the building!
Cheers,
My momma has updated her sayings to declare that Misean is an idiot. God love my momma!
Fannie, Freddie Bailout May Hinge on $223 Billion Debt Rollover
Fannie, Freddie Bailouts May Hinge on Debt Rollover (Update4) - Bloomberg.com
Fannie Mae and Freddie Mac's success in repaying $223 billion of bonds due by the end of the quarter may determine whether they can avoid a federal bailout.
Greenlander
I think your landlord is taking the piss, unless your apt comes with gold plated toilets.
I'm in Mountain View, walking distance to my work and downtown Castro street, Caltrain and barely 5 mins drive from Google. 3 months ago landlord tried to raise the rent on me by a ridiculous amount, I laughed at them and now I'm in a nicer condo right next door for less than I was paying before they tried the rise.
2 bed 2 bath, 1200 sf, nice outside patio, pool, tennis courts, secured parking, in unit washer/dryer, very quiet. $2000/month, includes water/sewer/garbage. Electricity $30/month so far.
And we have cats so about 75% of landlords won't even talk to us even when you offer an extra $1000 deposit to cover the crappy carpets.
Seriously, you have to get cheaper than that - try the south end of Sunnyvale, lots of nice ranch style houses there for that much.
mutha,
"My momma has updated her sayings to declare that Misean is an idiot."
This is disputable? Do I look like a man with a plan? My only question Mr. Troll...why the f do you care?
But of course there will be no debate from you...numbskull...just noise. You gotta bitch bring it...but of course you don't...because forming thoughts is painful...so knock yourself out at my expense. I have a rather large bank roll.
Cheers,
mutha writes:
My momma always said "if you can't say anything positive, then don't say anything at all."
My momma always said "Stay nervous, Nervous."
Stop dissing the hosts.
Mission accomplished.
btw, my momma says your "large bank roll" claims are a form of phallic compensation.
mutha,
tick, tick, tick...come on MF bring it ass hat.
Cheers,
Or you can live in a 1/1 penthouse in Santa Clara with a 42" LCD for less than $1900: River Terrace
Hey Misean, probably not worth the effort of responding to mutha and the like.
Greenlander, unless you're living in a nice apartment in, say the marina, I think you should put up a fight, or move elsewhere.
Mish's Lehman Piece! talk'o'da'town.
mutha is a pussy and does not need any further response. Sad really. He came on with such bravaro...but turns out he's just your typical coward. Hasta la Vista piece of shit.
Cheers,
Pincha mi juevos, mi amigo.
I read the postings here...it's all over, we are all doomed, so it's all good, right? Doesn't matter one way or the other, so here's to the end....cheers...adios.
mutha,
"Pincha mi juevos"
Well shit...at least an apology or "hey you're right" would have been cool. No ones chasing you off...but ya gotta be cool.
Cheers,
The reader comments to the Arizona Republic article are fascinating.
Owners versus renters.
CONJURE'S POPSICLE RIDDLE
Q: How can you spot a dogwood tree?
A: By its bark.
Night all.
Elvis ha dejado el edificio
Cheers,
OT and perhaps already covered, but people who are interested should read the article about FNM from the WaPo of 19 August:
Fannie's Perilous Pursuit of Subprime Loans
Then google the term "diversity recession" and do the same for the major results.
I saw the NYT's story on Section 8 housing vouchers moving less than desirable public housing residents out into these new suburban 'rental properties'.
That is a surefire way to keep rents and property prices down. Move mama from the public housing projects out into a suburban tract home and have here teenage sons 'patroling' the neighborhood.
I saw the NYT's story on Section 8 housing vouchers moving less than desirable public housing residents out into these new suburban 'rental properties'.
Yes, also a very interesting piece. Many people leave the inner city and less desirable neighborhoods to get away from all that, and then the government uses their tax money to plop it right back down in their midst.
NYT - As Program Moves Poor to Suburbs, Tensions Follow
Under the Section 8 federal housing voucher program, thousands of poor, urban and often African-American residents have left hardscrabble neighborhoods in the nations largest cities and resettled in the suburbs...Law enforcement experts and housing researchers argue that rising crime rates follow Section 8 recipients to their new homes, while other experts discount any direct link...The foreclosure crisis gnawing away at overbuilt suburbs has accelerated that migration, and the problems. Antioch is one of many suburbs in the midst of a full-blown mortgage meltdown that has seen property owners seeking out low-income renters to fill vacant homes. The most recent Contra Costa County records available show that from 2003 to 2005, the number of Section 8 households in Antioch grew by 50 percent, to about 1,500 from 1,000.
The United States and Poland formally signed a deal on Wednesday to station elements of U.S. missile defense on Polish soil, a move rising Russia-West tensions over Moscow's intervention in Georgia.
Poland and U.S. sign shield deal
| Reuters
Cold war is back but this time the US isn't going to win it.
Commercial property prices declining
REG - Financial Week
I don't see this anywhere in Maryland - rents go up and services are reduced. That's the way of things here: pay more, get less. But it's okay because "everyone in Maryland is rich because of DC" or so I am told... Right!
unearthly writes:
Or you can live in a 1/1 penthouse in Santa Clara with a 42" LCD for less than $1900: River Terrace
Ok! But wait ... what the heck is an 'immaculant'? Is that someone who cleans a lot?
$1879 / 1br - Immaculant 1 Bedroom Penthouse!83108!Top Flr!
Yes, also a very interesting piece. Many people leave the inner city and less desirable neighborhoods to get away from all that, and then the government uses their tax money to plop it right back down in their midst.
eh | 08.20.08 - 6:40 am | #
Do people really believe they can simply run away from all of their problems? That the problems won't keep following them where ever they go?
I find it particularly funny that the real estate shenanigans were used to destroy vibrant minority communities and force the creation of housing projects, real estate shenanigans were used to drive people from housing projects into Section 8 (the projects were sitting on land that was too valuable), and real estate shenanigans that brought the Section 8 housing into the nice suburbs and next door to the typical suburban American who needs real estate shenanigans to eek out a selfish lifestyle.
,i>Then google the term "diversity recession" and do the same for the major results.
Fuck off, Steve Sailer. You're a deluded, egotistical moron.
speaking of LEH...
News out this morning that LEH was unable to get more kim-chee from the pot o money known as korea.
LEHMAN LOOKED TO EAST - NYPOST.com
Weeks of life turned into mere days IMO...
Ciao
MS
"...typical suburban American who needs real estate shenanigans to eek out a selfish lifestyle."
So not wanting to live among gang-bangers and ghetto trash is now considered "selfish." Hmmm... and I assume you have great luck talking local punks into behaving since just leaving the decaying area isn't fair by your standards. Right, whatever!
Technical Analysis Morning Trader: stock picks, scans and ideas for day trading and short-term trading using technical analysis.
Pondering,
My father had some retail stores in or close to ghettos. In addition to the danger, it was depressing to see people ruining their lives. Count me selfish.
well, pretending you can move and buy your way out of the having to deal with problems may or may not be selfish but is probably short-sighted.
Incentives offered prospective renters here on Florida's West coast were oddities last year, but have become far more common this year. First month free, or no rent 'til October have become a common feature of rental complex advertising.
Rather than an outright discount of the monthly figure, this reads as an 'introductory offer' which some (many?) current renters won't recognize as a factor to use in their lease renewal negotiations. And there's no implication of future concessions for new renters when their leases roll over.
I haven't seen any examples yet of condos reverting to rentals - folks over at Patrick's call them repartments - but expect those will come along in time.
Anonymous,
Sorry, my last post was a follow up on your comment. For your convenience, I'll post it again:
Technical Analysis Morning Trader: stock picks, scans and ideas for day trading and short-term trading using technical analysis.
http://bigpicture.typepad.com/photos/uncategorized/2008/08/19/4ppi.jpg
sparks,
The telling quote in your link IMO is "The VIX underlines the fact that there is far less fear in the market of any imminent financial collapse than there was in March and even in early July."
That's not at all reassuring where potential failures among the financials are concerned, not to me. If only because it presumes this market has begun to recognize risks accurately and to price them in.
Morning Trader seems to see it otherwise.
To modify someone else's phrase:
Someday this war will end, but, at least so far, today looks like just another battle.
But it's okay because "everyone in Maryland is rich because of DC" or so I am told... Right!
There's some truth to that. the DC area doesn't have busts as large as the rest of the country because the fed is a very stable employer. Federal employees almost never get fired.
On the downside, we don't have economic booms like the rest of the country. Gov't employees don't get big raises and big bonuses. There are no stock options for gov't employees.
Not to say we're not immune. I know my house has been and will continue to drop in value. It just won't drop in value like a house in Detroit would.
burnside,
I was more impressed by the last sentence of the second paragraph:
A very heavy volume session with shorts scrambling to cover as we approach the $18 level on the XLF chart could signify the market's belief that, no matter what new major surprises there are in store for the banks, the Fed and US government, as well as strategic global holders of dollar assets, will continue to remind investors of the fact that there is an implicit public sector underwriting of private sector liabilities in the financial system."
burnside,
remember it is those "strategic global holder's of dollar assets" who have 'lotsa money
Cold war is back but this time the US isn't going to win it.
It could if the military-industrial complex hadn't gotten its new cold war with the Islamic world.
Can't win two at a time. And the Russians understand this very well.
Anonymous,
I'm rather happy that I covered when I did; as the apple is again ripe.
I am in Northern Virginia, near a metro. With gas prices so high and traffic so thick the rental prices are creeping up. The biggest increase is in family size rentals (townhouses and SFH). They fly off the MLS in days.
Outside the beltway the rentals stay on the MLS for much longer and the prices are falling.
sparks,
Sure. But it presupposes a Tennessee Williams scenario. Kindness of strangers. Or at a minimum, it presumes the self-interest of strangers aligning with some propping up here.
Perhaps, but some of those strangers have a history of humiliation at the hands of the West generally and of the US in particular, of which they are highly conscious. It's not nearly so clear some would have it.
Williams may be correct.
Pittsburgh is a very different market than some of those I read about here.
I had to tell my landlord that he was undercharging us and that I couldn't pay him any less than $500 per month for our two bedroom. I refused to negotiate one cent lower.
burnside,
I have an excellent article I suggest you read. At least, I find this source extremely helpful. Unfortunately, the site does not lend itself to an easy post. If you will, allow me to walk you to it:
[1] Economic Research - Northern Trust
[2] On the lowest grey box on the left, choose "economic"
[3] On the next screen, choose "U.S. Economic Outlook"
[4] On the next screen, choose "July 2008 Base Case vs. Checkmate"
[5] This is an economist I admire who has put our discussion in context - you gotta admit there is a lot of context. But examine the second paragraph carefully.
[4]
(nice name!)
I think Paul is a kind of local hero. Regulars on CR find themselves citing him pretty often.
So you should feel right at home here. Good work, sir or madam or integer as the case may be.
I live in N. VA, outside the beltway, but walking distance to a metro. My complex when I moved in last year gave me the one bedroom w/ den at the one bedroom with no den price. And first month free.
When it came time to renew, my rent was flat. Why? 1/3 of a mile away (farther away from the metro unfortunately), a new condo complex turned to apartment complex started accepting renters.
burnside,
I appreciate the welcome sign. I am new here, and, coupled with all the current confusion in the market, I found the conversation here difficult to follow. Indeed, I've almost abandoned it a couple of times {including yesterday}. However, I perceive there is also insight provided here, and I'm now working on a new theory of simply reading between the lines. In any event, I thank you.
It's as simple as this - trying to extract maximum market rent entails risk of 1) not finding takers and losing rental income - and 2) not having the luxury of choosing among potential tennants (if only one person is willing to pony up for your at-the-top-of-market rental, you'll probably be less picky about credit/references).
If you're willing to take these kinds of risks to extract the last $100 or $200 a month out of your rental - more power to you. But I sure wouldn't go that route - not these days.
[4]
it's a terrific soap opera. past archived posts and their comments can give a clue to the history of this conversation.
"Interested Principal writes:
Pittsburgh is a very different market than some of those I read about here.
I had to tell my landlord that he was undercharging us and that I couldn't pay him any less than $500 per month for our two bedroom. I refused to negotiate one cent lower."
I had to do that once; the apartment was decent, and 'way cheap for the market. But I was the only sane person in the building; most "respectable" tenants wouldn't give the place a look, because something that cheap must be a pit.
So not wanting to live among gang-bangers and ghetto trash is now considered "selfish." Hmmm... and I assume you have great luck talking local punks into behaving since just leaving the decaying area isn't fair by your standards. Right, whatever!
Pondering the Mess | 08.20.08 - 9:24 am | #
What's not fair is creating a problem and then leaving it behind. As long as the crime, poverty and problems are somewhere else you can just ignore it. But God forbid it ever shows up in your neighborhood.
Where I live, there is a bad ghetto just inside the city limits, right off the freeway. There is always a steady stream of suburbanites that get off the highway, buy their drugs, get on the highway and head home to their idyllic suburb.
My neighbors raise hell at the prospect of Section 8 residents. Keep those gang-bangers where they belong! We should only have to see them once a week, over by the highway!
Observer: Don't give me crud about "creating the problem." I didn't give the punks weapons or drugs or encourage them to commit crime. I didn't tell them to date thugs and produce offspring that they cannot support. I didn't instill in them the idea of being loud, nasty, trashy excuses for people. They made those choices, and they can live with them someplace else, thank you very much.
"...But it's okay because "everyone in Maryland is rich because of DC" or so I am told... Right!"
"There's some truth to that. the DC area doesn't have busts as large as the rest of the country because the fed is a very stable employer. Federal employees almost never get fired."
You are right in this regard, but while stability of the DC area is generally true, I cannot see how housing prices can "stabilize" at 5 times household income or more. That just doesn't make sense to me. But the Bubble made no sense either, so who knows - maybe they'll suceed in keeping NoVa, Maryland, etc. unaffordable. Such a great accomplishment that would be.
My heart bleeds for the "managed" apartment buildings with vacant apartments. Try getting into one, with their obscene rules about levels of income (which could easily disappear tomorrow, once your applicaton has been approved and you lose your job, but they just love their rules).
If someone has a history of paying their rent on time, and does not have a criminal record, shouldn't that be enough? The answer is "no" and they would rather have their apartments sit empty for months and months. Go figure.
I lived in Antioch, CA for 3 months before moving to NC.
That town should be burned to the ground and rebuilt. What a crap-hole
Bob Dobbs:
It is something like that. The guy is a nice dude, mid-20's, who just didn't have enough confidence to ask enough for the first property that he has ever rented out. The first year, we told him that he needed to raise the rent $25 when we renewed the lease. He was delighted, as he had realized that he had gone too low, but wouldn't have been assertive enough to ask for the increase himself. Then, when we added a new roommate, we told him that for the extra utilities she would use, he really needed to be getting an extra hundred, bringing the rent up to $500. He had only been going to ask for another $25.
It isn't all altruism and good nature on the part of his tenants, however. I mean, we do like him, but we also want to make sure that he stays cash flow positive, particularly in the current market. I like the place far too much to risk having to move when he goes BK or gets an FC notice. Also, I want him to think of us first if he does find himself in a position of having to sell it at a discount.
Always be calculating!
Where I live, there is a bad ghetto just inside the city limits, right off the freeway. There is always a steady stream of suburbanites that get off the highway, buy their drugs, get on the highway and head home to their idyllic suburb.
My neighbors raise hell at the prospect of Section 8 residents. Keep those gang-bangers where they belong! We should only have to see them once a week, over by the highway!
I'll concede that NIMBYism is strong in some suburbanites who oppose any form of apartments or 'affordable' housing in their neighborhoods. However, making the leap that suburbanites are somehow single-handedly responsible for all ghetto/inner city social problems is crazy. Personally, I don't recall ever driving to my local ghetto to buy crack, sell weapons to gang-bangers, or ask the locals to produce more out-of-wedlock children they cannot support.
And what Pondering said...
Those types of units have been hammered by two factors. One, the decline in the number of construction related jobs due to the housing depression and two, an ill considered anti-immigrant initiative that forced a number of undocumented families to leave the state. The vacancy problem began showing up immediately after the passage of the initiative.
Oh... if only I were lucky enough to live in a neighborhood with such a "problem"! Less petty crime, less traffic, less grafitti/trash, better schools, and less 10-people-per-unit competition for rental housing. How awful!
Observation: why is it so hard for some people to refer to illegal immigrants as just that? A legal resident who lost his wallet could be considered "undocumented". OTH, a border-hopper who makes his living in the black market economy (despite being pervasive & sanctioned by the PTB) is, by definition, an illegal alien. Is that really so hard?
I share Joe Six Pack's concern:
I'm not the brightest starfish in the sea, but if rents are going down doesn't that put a big dent in that rent/own price ratio I keep reading
about? How can home prices hit bottom if the ratio is a declining moving target? Maybe the optimists need to readjust their thinking.
As CR wrote about the price-to-rent ratio last month, "This ratio has flaws, but it gives a general idea of how far prices need to fall (or rents increase)." So if rents are decreasing, does that suggest we're in for a longer, larger drop in home prices?
For what its worth, my company tracks residential (multifamily and single family) real estate market data primarily for investors in over 220 markets around the country. We track most primary markets, as well as secondary and tertiary markets demonstrating some intriguing feature (ie consistent job growth, population growth, etc.) which has supported housing demand.
For the markets we track, multifamily rental rates are up an average of 2.5% over the past year (median 2.2%), with the range 11.6% to -5.0%. Our data also suggests that multifamily occupancies in the markets we track to have increased very nearly a full percentage point in the past 12 months an expected occurrence given market issues.
Ouch.
Should be bad news for Lehman's & BoA's buyout last year of Archstone Smith.....
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Hey, CR, do you now understand the concept of NEGATIVE DEMAND for housing?
Sam Zell was decieving the public by his false claim of 1M household formation, currently, in the US.
Rents will go down 40% from the peak and housing prices in CA down 80% from the peak. We are still in the second inning.
Jas