August 05, 2008

It's all about the rents. How's your town looking?

47 comments:

gwk said...

Nice two bedroom pvt. house near elevated train, shopping, Pelham Bay Park, church across street with lovely chimes all for $1300 per month landlord wishing he sold years ago.

Anonymous said...

Rent 1/3 the price of own in UK

Anonymous said...

You can down-bid any rent in NoVa/D.C.
I lowballed a floplord last year
He wanted 2300.00 p/m for a 3500 sg ft house & I got him down to 2K & he paid the 150.00 HOA Monthly to boot

Governor David Paterson said...

"Harsh" times beckon, warns state Governor David Paterson.

Anonymous said...

I am not seeing this large downturn in rent prices in both towns that a own property in. I always try to keep rent lower then others and find high quality renters to pay it off for me. Its worked so far, but who knows in the future. I have property in Norfolk/Virginia beach area and also in Oregon.

Anonymous said...

Rents in Santa Rosa california area are heading up. Northern California Mendocino and Humboldt counties you will have a hard time finding a rental so prices are way up on rentals.

Anonymous said...

I'd stay away from people that desperate personally. I'd rather pay a little more but know that my landlord is in good financial shape. Why does that matter? Well someone who is broke will not pay for repairs or maintenance and is in danger for foreclosing any day.

I rent a gorgeous house with lots of land and a pool. It's an older house so things do break. In the past year the furnace has been replaced, the a/c repaired, pool pump repaired, there was a pool leak that was sealed and the garage door motor was replaced.

All this was done practically as soon I called him. The next day a repair guy was at my front door.

Get a floplord who doesn't have a dime to his name, and you'll be waiting a long time for repairs like that to be done. And also just general maintenance which is as important. My landlord pays for pest control, termite control, monthly weed killer service, weekly pool service. Yeah it's in his best interest to keep the house in good shape. But again a broke FP floplord wouldn't pay for that simply because he has no money for it. End result is you live in a house that's falling apart. To me that's not worth saving a couple of bucks a month.

keith said...

Here's a view from London - and going to get cheaper and cheaper as the finance jobs go away and the property crash destroys tens of thousands of other jobs

http://tinyurl.com/55x466

Buy-to-let hit as rents fall by 20%

Rents are falling by 20% across London as landlords are forced to slash prices because of over-supply.

Anonymous said...

I have in-laws in San Diego and rental market are heading south. He still working on this massive addition/remodel SO he can cash out and live the high life (he does not have a clue ) and I tried to tell him 3 years ago to get that house done and sold and he was too busy spending all that HELOC money on toys and trips. I have given up on them, I once told him he was wasting his money on some crappy toy and he got real mean and said don't worry about it. Oh he is a contractor and work has really dried up, he has not worked in 2 months. I like the guy, but this is what a lot of people are doing.

Anonymous said...

falling rents? where? I'm paying $2200 for a 2 bedroom condo. My lease is up in Nov and I expect it to go to $2300 or $2400.

michael said...

"I'd rather pay a little more but know that my landlord is in good financial shape."

ditto.

Anonymous said...

They left Detroit off of the list.

AZDavidPhx said...

We live in Scottsdale in a 1 bedroom apartment. The landlord had the balls to try to raise our rent by over 100.00 to stay another year. We went up the street and found a failed condo conversion that was desperate to find renters offering great incentives.

So, in 2 weeks we are moving into a 2 bedroom with almost 500 more square feet for the same price that our landlord wanted to up our rent to. When we went to the office to file our notice to vacate, they were all trying to negotiate with us to get us to stay.

The days of jacking up rent every year are over. Adios amigos.

AZDavidPhx said...

2200.00 for a 2 bedroom condo? LoL

Good lord, what a waste of money. I'll never understand why some people are willing to spend so much of their money on housing expenses.

Bryan said...

The chart indicates the price of a home in terms of equivalent years of rent. The narrative is that things are becoming more affordable, but I honestly do not see the value of this statistic for an HP'er sitting on down payment money but not enough to buy outright.

You have to do the amortization. (Fixed 30 yr 6.25% for the heck of it)

Down payment -> total paid over 30 yrs
<20% hasn't read HP
20% 1.97x the principal
30% 1.85x
40% 1.73x
50% 1.61x
60% 1.49x
70% 1.37x
80% 1.24x
90% 1.12x
100% 1.00x

So for Washington DC area (16.9), it would take 35% down for the total purchase price to match 30 year's rent. Forgetting insurance, upkeep, property taxes, etc.

Positive Bob said...

Everything is still way up

this country is slowly but surely bleeding to death.

cut 80% of the rents and asking prices and we can rebuild again

if we do not do this soon we as a country will become very weak bleed to death and then we will either get taken over by a third world country or worse, at the very least we will get sliced up into little pieces with the new super powers fighting over the scraps.

Anonymous said...

"falling rents? where? I'm paying $2200 for a 2 bedroom condo. My lease is up in Nov and I expect it to go to $2300 or $2400."

Same thing here (Arlington VA). Far out areas are getting killed due to high gas prices causing renters to look closer in. Vacancy rates in the 4/2 mcmansions is sky high, but in the close in areas, vacancy rates remain tight and rents are rising.

Agent #777 said...

Our ex-rental 3/2.5 townhouse in Heathrow area of north Orlando cost us $1275/mo. However, I went by a week later when our landlord was holding an open house and heard her tell someone the rent was $1175...and that maybe they could "work something out".

Anonymous said...

Who has time for this meaningless housing drivel? Where are the reports and pictures of Brangelinas twins!? Housing will always be here, those wonderful babies of our 2 most important public figures will grow up in no time! Damnit Keifer, PRIORITIZE!

frede said...

great, except the places where price over rent is low enough to justify buying have no jobs.

Ohio Loan Officer said...

I think what we are going to find is rents in close to urban areas will remain steady or climb. As leases expire in outlying areas, A lot of these people will pay a premium to move in closer to jobs.
What I'm seeing in suburban apartment complexes is the adevrtized rents are not coming down. But what people are actually paying isnot always what's advertized. Most complexes areholding the line on rents, but they are also suffering with higher than normal vacancy factors.
I finance large complexes and in the last 4 years I have yet to see one where the vacancy factor is over 90%.

Rational Renter said...

I always prefer the price/income ratio over the price/rent ratio. That's because the psychology of most Americans is that they want to own.
Most will pay a premium to own vs. rent (of course, that premium doesn't bridge the gap between current rents and prices). But with the price/income ratio, we know that those people can't buy homes even if they want to.

Anonymous said...

Rents here in the SF Bay Area have jumped up quite a bit in the past year or so. They are still well below the dot com levels, but they did definitely rise.

Part of the issue here is that the home prices are still so astronomical, that many have no choice but to rent. Lots of failed property owners also renting nowadays.

I have a friend who works for B of A in one of the more posh areas of the Bay Area and he told me they are turning down mortgage applications left, right and center. Nobody can qualify for anything.

It will be an interesting ride over here. My guess is we will see a reversal where home prices will continue to drop while rents rise simply to accomodate the displayed f&*ked borrowers.

At some point, the two trend lines will cross. Once the prices drop to reasonable levels, more will be able to qualify for a loan and they will start buying. I think we will likely see quite a few reversals of the rent/buy trend lines for the next few years as this housing bubble unwinds.

Refuse to buy overpriced said...

Don't buy OR rent.

Live at home with mom and dad, and save every cent you make.

If you do rent, pack as many roommates as possible into your house/apartment.

Landlords losing money will help drive down prices. The more empty unrented housing units on the market, they better for us.

Its time to fight back. Boycott the bloodsucking real estate investors.

Anonymous said...

AZDavidPhx said...
2200.00 for a 2 bedroom condo? LoL

Good lord, what a waste of money. I'll never understand why some people are willing to spend so much of their money on housing expenses.

August 05, 2008 2:45 PM


-----------------

When I lived in Boston, I was paying $1900 for a 1 bedroom. And this was 10 years ago. $2200 for a 2 bedroom would have been a steal.

Anonymous said...

It's stupid to talk about rents in a whole metro area. Comparing apples to oranges. In-town rents are going up. Rents on houses way the hell out in the burbs are falling like a rock.

If you work in the suburbs or work from home, or don't work at all that's great. But if you work in the city, you're not gaining anything. Any savings in rent (or mortgage if you buy) is offset by the cost of gas.

So what have you really gained? A whole lot of nothing.

JordanT said...

That's because the psychology of most Americans is that they want to own.

That's what it is right now, because owning equaled double digit appreciation. Were people that eager to own in 1995-1996 when housing had crashed for 6-7 years?

Anthony said...

Uh, azdavidphx, why is my $2200 rent a "waste" of money. I need to live somewhere, right?

let's see. I love my neighborhood. 3rd st. in Los Angeles, near the Grove, Beverly Center, farmers markets, all the best restaurants in LA, etc. I can walk to everything. I have a two bedroom, hardwood floors, great landlord with a good sized private backyard.

Houses here cost around 1 to 2 million. That's million! I make $16,400 a month and spend 14% of that on my rent. No other debt at all. There is no other place I would rather live right now. Wow, I must be an idiot.

Ola Dunk said...

Rents going through the roof in Norway as fewer people want to buy.

Frank@Scottsdale-Sucks.com said...

I'd stay away from people that desperate personally. I'd rather pay a little more but know that my landlord is in good financial shape.

Agreed, we checked out our landlord ahead of time and made sure he is financially solvent and can afford the loss.

Interestingly, because the guy can afford to lose the money (he's a very wealthy venture capitalist), we got our place even CHEAPER than all the other great deals out there. He didn't care much about the loss as long as he has SOME money coming in from the property.

Our rent dropped 15% in the past year. Nice.

bitterrenter said...

Sorry, I don't buy the theory that the outlying areas are hurting due to gas prices. Even if they DOUBLED you'll still spend much much more to live in an urban center than pay the increased fuel costs.

Reminds me of people who will pay $20K a year in interest on an overpriced house to be able to write off $5K in taxes.

Anonymous said...

plenty of people will loan to housing investors after doing it sometime over the last 20 years and losing purchace power on their dollars that were in the 80 to 90 percents..........not so government is going to do it and prop up the housing prices and the deflated dollar on the back of taxpayers who will also pay property taxes on higher evaluated houses thinking they are "worth" whatever high price or higher price because they "own" it. such tho socialists housing or communist?..........

Anonymous said...

AND WHILE PRINTING MORE DOLLARS TO BAIL OUT HOME DEBTORS DECREASING THE DOLLAR VALUE MORE BY RAISING THE AMOUNT OF THEM TO COMPETE ON THE BIDING PROCESS ON A SLICE OF BREAD.......................AND BAIL OURT BANKS TOO AND FOREIGN BANKS TYHAT BOUGHT UP FANNIE MAE AND FREDDY NACS HOUSEHOLD DEBT OBLIGATIONS WHICH ENABLED THE BIDDING PRICES ON HOUSESD TO GET TO THOSE UNREALISTIC PRICES..........

Anonymous said...

I DO NOT LIKE TO LET VULTURE CAPITALISTS INTO MY POCKETS AND LESS DO I LIKE TO PAY FOR THEIR GAINS............

Anonymous said...

bitter idiot,

please stop posting.

your truly, HP regulars

bitterrenter said...

Anonymous 10:03 brainstem,

Too bad you don't have the intellect to refute any of my posts. Alas, it's doubtful that you'll develop one being, well, a brainstem.

xoxo,

BR

Anonymous said...

"falling rents? where? I'm paying $2200 for a 2 bedroom condo. My lease is up in Nov and I expect it to go to $2300 or $2400."

"Same thing here (Arlington VA). Far out areas are getting killed due to high gas prices causing renters to look closer in. Vacancy rates in the 4/2 mcmansions is sky high, but in the close in areas, vacancy rates remain tight and rents are rising."


At that rate, the LL knows that if you leave, one month of vacancy eats up all his expected revenue increase. Then there is the management company fee of one months rent usually if one is used.

A bird in the hand is worth two in the bush.

Learn to negotiate and use the math to your advantage.

Anonymous said...

You can down-bid any rent in NoVa/D.C.
I lowballed a floplord last year
He wanted 2300.00 p/m for a 3500 sg ft house & I got him down to 2K


Hmmm...so let me do a back-of-the-envelope calculation here: $24,000 in rent / 0.25 = $96,000 in optimum annual income to afford that rental. If you add the humongous cost of utilities for a 3,500 sq ft home, that income should be even higher.

So my question is, do you really earn $100k in annual income? If so, why would you blow more than 25% of income in rent, while you could rent something much cheaper instead, around 20% or less of income, to save tons of money to buy a property?

I see a lot of people here saying how they rent for $2k, $3k, etc, but they never seem to pay attention that they should stick to a low 20% of income to save tons of money to buy a home later on.

I bet you're voting for Obama, aren't you?

Anonymous said...

I rent a gorgeous house with lots of land and a pool. It's an older house so things do break. In the past year the furnace has been replaced, the a/c repaired, pool pump repaired, there was a pool leak that was sealed and the garage door motor was replaced.

My landlord pays for pest control, termite control, monthly weed killer service, weekly pool service.


I wouldn't count with your landlord being in business for long the way he's losing money with your rental. Or he'll be increasing your rent soon. Even if your landlord is well capitalized, why would he hold an investment with apparently such a terrible IRR?

Anonymous said...

falling rents? where? I'm paying $2200 for a 2 bedroom condo. My lease is up in Nov and I expect it to go to $2300 or $2400.

Let's do it again. $28,800 in annual rent divided by 0.25 = $115,200 in optimum annual income to afford such a rental.

So I ask again, are you telling us that you earn $115,200 in annual income? If so, why would you blow 25% of your gross income in rent, if you could get something around 20% or less to save lots of money to buy a home?

It seems that HP has a bunch of high income earners who've been whining about Bushco while earning a ton of money the last 8 years. Funny how that works.

Anonymous said...

Rent? Why rent? Prices in Green Bay are so low they don't even list them.

Why buy when you can get a nice 3 bedroom ranch for $50,000 to $65,000????????

Anonymous said...

"Don't buy OR rent.

Live at home with mom and dad, and save every cent you make.

If you do rent, pack as many roommates as possible into your house/apartment."

Mom and dad, yeah at 38 I'm going to give them a call.

Not everyone is a loser like you. My parents raised me to be independent. In fact the day I moved away from home at 18, my mom told me to not think there was a roof, bed, and meal there for me - I was on my own. Rightfully so!

Yeah, I'm going to live like an immigrant with 10 people crammed into a 1BR apartment.

You know, attitudes like yours are why people pay more to own. Obviously all you need is one dimwit like yourself to screw up a whole apartment building.

I feel sorry for you. You would actually consider leeching off your parents in order to save money. You are all adults - what place is it of theirs to support you? Do you buy food for your friends or coworkers? What a bum you are.

spunky said...

"So my question is, do you really earn $100k in annual income? If so, why would you blow more than 25% of income in rent, while you could rent something much cheaper instead, around 20% or less of income, to save tons of money to buy a property?"

Your answers:

We make MUCH more than 100K

Our Utilities weren't any more than any place else we lived (newer units, etc)

We SOLD pur existing home in 2005 (BTW, it was a 5,000 sq. ft McMansion, so the rental was a downgrade)

Will buy with CASH when the Market bottoms

What does it matter who I vote for?

Anonymous said...

"At that rate, the LL knows that if you leave, one month of vacancy eats up all his expected revenue increase. Then there is the management company fee of one months rent usually if one is used."

Dude - your not getting it. If I leave, it not skin of the LL nose. Vacancy rates are so tight close in that there are now waiting lists. In fact, my neighbor said the LL offered him $100 to leave a month early!

If I dont pay, the guy behind me on the list will. LL has me by the nutsack and he knows it. God it sucks being a renter!!!

Anonymous said...

[i]I think what we are going to find is rents in close to urban areas will remain steady or climb. As leases expire in outlying areas, A lot of these people will pay a premium to move in closer to jobs.
...
It's stupid to talk about rents in a whole metro area. Comparing apples to oranges. In-town rents are going up. Rents on houses way the hell out in the burbs are falling like a rock.[/i]

It's a new paradigm, and everybody who doesn't buy close-in will be priced out forever. Anybody who does buy close-in will be rewarded with a lifetime of riches, as their property will continue its 30% yearly price increase.
Anybody living in far flung suburbs will not be able to afford a $10,000,000 starter home in 15 years. Far out suburbs will become tent/Honda cities.
This close-in property asset bubble is different than all of the others - it will never slow down, or pop. The close-in housing gains are permanent.

Anonymous said...

falling rents? where? I'm paying $2200 for a 2 bedroom condo. My lease is up in Nov and I expect it to go to $2300 or $2400.

Let's do it again. $28,800 in annual rent divided by 0.25 = $115,200 in optimum annual income to afford such a rental.

So I ask again, are you telling us that you earn $115,200 in annual income? If so, why would you blow 25% of your gross income in rent, if you could get something around 20% or less to save lots of money to buy a home?


==========

I posted the original comment about paying $2200. To answer your question, my gross income for 2007 was just under $200,000. For 2008 I expect it to be somewhere around $215,000 give or take.

I don't own a car since I live in the heart of the city. I did own one but it was more trouble than it's worth. Now if I need a car, I rent one. Costs me less than what I was paying for insurance every month. Only utilities I pay is water which is about $15 to $20 a month, all others are included in rent. I have a rooftop pool. I have a kick ass gym in the building, another $50 a month saved by not needing a membership. I have a doorman which is pretty cool. I have access to about 50 bars and restaurants within a 10 minute walk from the building. I am a 15 minute cab ride to the airport and since I do a fair amount of travel that's amazing, especially when coming home on a late flight.

To answer your second question, why do you assume I want to buy a home? I like living where I am just fine.
Why would I want to give all that up so I can take on a mortgage, pay property taxes, pay for maintenance, do yard work and live out in the middle of nowhere suburbia with an hour commute just so I can say I "own" a house?

Thanks but no thanks. Instead I'll stick where I am, put $10,000 a month away into savings and retire before I turn 45 hopefully. The same time when you'll have about 25 more years of a mortgage albatross around your neck. But you go ahead and buy that dream house. I wish you luck.

Anonymous said...

Rents should be rising.

Rents for investment grade rental property will continue to rise. These properties are usually operated by cash flow - not the buy low, sell high model.

Homes purchased by speculators to rent out, and then lost to foreclosure will be removed from rental inventory, as banks don't rent out their REO holdings. Less houses available to rent.

Oh sure, deep pocketed speculators will try to hold on to their houses, but the rents they collect usually don't cover their mortgage.

The only thing left that's putting downward pressure on rents is tenants doubling up.