It just makes soooooo much sense, right now, to rent. Pay pennies on the dollar vs. owning. Don't suffer the depreciation and financial devastation of the imploding housing bubble.
And live stress free, until real estate makes sense again to buy.
In the home-buying frenzy, renters could reap bargains
Almost since the turn of the millennium, the "housing bubble" has been front page news and editorial page speculation. But that's only half the housing story. What has been happening in the rental housing market is unprecedented; also, it is important for understanding what has really been happening to home prices and home sales.
The rental market is the other side of the boom - the dark side, for rental property owners, the bright side for families looking for a bargain. For the first time in US history, the absolute number of renters has been falling. There are fewer now than there were 10 years ago. The number of renters peaked at 35.7 million families in early 1995. By mid-2004, it was down to 32.6 million. There has been a modest increase since then, to 33.7 million; at that rate, the 1995 peak will not be reached again until the end of the decade. At the same time, the number of owners has increased by more than 11 million, from 64 million in early 1995 to 75 million today. It will be close to 80 million by 2010.
Rental property owners face extraordinarily high vacancies. Currently the national vacancy rate is just under 10 percent. To put this in context, the traditional dividing line between "tight" and "loose" rental markets is a 6 percent rate. In several large metropolitan areas, the rental vacancy rate is above 15 percent - not just older slow-growth industrial areas like Cleveland and St. Louis, but also rapidly growing areas such as Atlanta and Houston.
April 22, 2006
Ah, renting... The sweet life...
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14 comments:
I'm sorry - Can't see renting being better than owning.
"I'm sorry -- can't see renting being better than owning."
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I just said that in one of those mumbly, idiot voices. Why don't you go ahead and say "Prices will always go up...there's less land to build on...etc etc" in your mumbly, idiot voice.
Yes, building negative equity is always better than renting...you got me.
This blog has the best pictures of any real estate blog on the web.
The homeowners are now panicking and visiting the HP blog to find out what's going to happen to them. I'm sorry but the market is "TOAST". Just like a tsunami wave that looks small as it arrives, it is now rising up and it will keep coming with no end in sight. Your mortgage will soon seem more like an anchor as it pulls you under the rising water preventing your escape. This renter has already left for the highest ground. At least the view is nice up here.
Renting is the right call right now in most markets. Long term, owning is the way to go, but not at a historic market peak which is likely to be followed by 30-50% declines in the hottest markets.
One of the things that interests me most about this market is how strongly embedded is the ethic of homeownership. People want to buy even when they know it makes no sense, financially -- even when they say they accept the bubble thesis!
One day, not too far in the future, we'll look back on that and wonder what was wrong with us. Madness on a mass scale.
Here in (north) Scottsdale, AZ, rents have gone up 35-55% in the last two years. It's still better than owning, though. I told my whore blood sucking landlord, " Why not raise it to $10,000 per month?"
People want to buy because most landlords are scum of the Universe.
The rental market is all relative and local, unfortunately.
You know what to do when homes are too expensive and rents are also too expensive? That means it's time to move to a different area.
"I'm sorry - Can't see renting being better than owning." - In Maryland, the difference between the mortgage I would have to pay and the rent I'm paying for the same house covers the private school tuition for my kid and 2 week vacation trip to Europe.
anon in scottsdale - rents have not gone up 35% - 50% in scottsdale.
your situation is likely a change in ownership (from apartment complex to individual owners of condo conversions) with a rehab, yes?
My personal experience I saw rents flat to declining throughout the valley. Including trying to rent my condo out before I sold in Tempe (couldn't find a renter)
Scottsdale is a bit different (it's the nicest part of phoenix for the non-natives)
rents did increase 10% last year, mainly because that's where condo-conversion has happened the most:
http://tinyurl.com/eee7h
solution: move to where the spec homes got built and rent one from a desperate investor - get out of scottsdale
Sonoma County, CA has a 7% median housing affordability rate. This indirectly translates to rent on houses being 1/3rd of the cost of mortgage + tax for the same house.
I get to sock away the difference for savings, trips, entertainment, etc.
Rents for the first time in 5 years , are going up in the boston area. I should know because I'm a ( evil, scum ) landlord
oh, and yes it is still much cheaper to rent than to owe
If hp is touting oil and gold, they should be touting renting. I hope all three markets will be affected by this panic.
Atlanta Midtown market is cooling. Just opened Spire, a 28-story building with 388 condos has 104 units on the market.
The builder, Novare, sold out Spire quickly, after enjoying great success in 2002 with the 498-unit Metropolis across the street, but Spire's 96 resellers (flippers?) and 6 owners hoping to rent out their units are in deep trouble.
Prices range from $167k to $768k for 1 & 2bedroom units.
http://ianmarshall.mlsb.com/mls/results_fields.cfm?ClientID=2671&SearchType=Address&HOUSE_NUMB=860&STREET_NAM=peachtree&CITY_NAME=%276198%27
New stuff sells in Atlanta because Atlantans are willing to pay a premium for the latest & greatest--but as Metropolis resellers are finding out--that premium doesn't last long.
Atlanta's condo market is probably going to have a soft landing. New buildings are probably going to do well--just not as well as before. But existing condo owners inside the Perimeter can forget about making a fast buck. In fact, Fulton County property records show that many condo dwellers had to sell for 10 to 15 percent less than what they paid if they purchased at inflated prices during the 1999-2001 period.
The problem with many condo buyers is that their purchasing decision is based on what they can afford for a monthly payment instead of a realistic resale value 2 to 4 years later. Many find that prices declined two years later instead of rising.
Not to speak of the rest of ATL--just the Midtown area has no less than 1,200 units coming on line and 4,200 in the planning stages. Let’s name a few mega projects: Atlantic Station, Plaza Midtown, Centennial Park, Onyx, Aqua, 13th St conversion, and we’re not even considering all the new supply in Buckhead and elsewhere inside the Perimeter.
The resell market for condos is really bad. It's going to be an expensive summer for condo resellers who hold out for 95% of asking price. If that magical offer comes, it will have been at a very high holding cost--but most resellers have this myopic view that its better to lose $10k in monthly payments than to lower their price by $5k to unload their property. This is not a luxury that many can afford thanks to option-ARMS and cash-strapped speculators.
Who’s hiring? Who’s relocating here? I suspect a lot of Atlanta’s recent job growth is explained by tourism and conventions coming here instead of New Orleans. That could explain some of the success of the new Georgia Aquarium. Moreover, Atlanta got several thousand evacuees, who are here to stay. Ticker counters can’t afford a Midtown condo.
Midtown white-collar condo-paying jobs are booming right? No. Atlanta has a great long-term future, but the short-term is dismal. Besides the announced closure of Ft. McPherson, there are mergers, layoffs, and shutdowns affecting GM, Ford, ATT/Bellsouth, Cingular, Hewlett Packard, Delta—just to name a few.
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