NorCalSci said:psychtobe said:rents and sales prices will need to converge; but rents are constrained by incomes... Like the price of gasoline?

Really?

Landlords will stop raising rents when they feel its too much of a burden on renters? They will wait until tenants get a raise at work and then kindly take only a reasonable percentage of the raise?


I know the alternative when somebody decides it is too expensive to buy a house; but what is the alternative when someone decides rents have gone up more quickly than their salaries?

The housing parameter that expands with population is demand. You need to live somewhere.
Comparing rents to price of gasoline is similar to comparing house prices to a plasma TV. Gasoline prices dont differ much depending upon location but rents do. If rents get out of whack of income growth, then ppl will start moving out. If majority of your salary goes towards rent and you are having hard time surviving, why would you keep l;iving there or for new immigrants, why would they move there? I think there is a limit to how high your rent can be comparable to your income. Once it crosses that threshold, local economy will suffer and demand will go down.

NorCalSci said:beadedmonkey said: There was a false shortage created by lending money to people who should never have been qualified for the loans, and then those people competed with one another for these type of places.

If borrowed money hadn't been made available to them, places such as these would have never sold for what they sold for.Sorry, but that is a tinfoil hat statement...

There is currently population and job growth in California. The state recently announced its treasury coffers are unexpectedly heavy.

New construction has slowed. The population is growing. Earnings are increasing.

What do you think is going to happen to rental costs in the next few years, particularly if home sales decrease?

(Hint: Look at the current vacancy rates in San Francisco...)


If people begin to pay more for rent, a lot more, are you going to claim there is an artificially stimulated rent bubble?

I am not familiar with San Francisco, not having lived there, and I understand that different neighborhoods vary, etc, but I went to craigslist.

It is 10:30am, as of right now, 600 ads have been placed on craigslist today, advertising rentals available in the San Francisco Bay area under APT/Housing for rent. SIX HUNDRED before 10am? That's a lot of possibilities, dude.

That doesn't include roommates wanted.

Tight rental market? I don't think so.....


How many square miles is the San Francisco Bay area? etc.

By contrast, Orange County, which takes almost an hour to drive from end to end on the 5 freeway, and which has 3 million residents, only had 150 or so ads posted so far today on their craigslist area for Apt/Housing for rent.

Wow, looks like it's easier to find a place in San Francisco Bay Area to rent, than in all of Orange County.

I think me and my foil hat will not take advice from someone trying to sell us a hand-scented, important faux evergreenery decorative scenting device.

Maybe people forget what triggered the 12 year slump in the Japanese economy to begin with; it was over valued real estate and all the loans against it as collateral that went sour. Banks made loans on Japanese properties both residential and commercial and businesses and so forth that were way out of line with reality and common sense. When it came time to pay the piper, the $1,000,000 plot of land in Tokyo was foreclosed upon and they could only get $350,000 dollars for it because of the glut and no body had any money. The domino effect quickly followed. What made it worse, was that the Japanese people are savers by nature (to the tune of almost 15% of their income) and as things got bad, their fists got tighter.

I can't tell you the number of people I work with who have a house appraised at $157,000 in value, but would be lucky if they could even get an offer for $85,000 for it. And this is in Texas where the housing market is doing pretty OK. Values are high because that's a cheap fast way for cities and municipalities to gain tax revenue. It doesn't necessarily mean the house is really worth that.

We rent, even though my wife works for one of the largest realty companies in the country. 3 of their 4 mortgage brokers in their regional office actually rent. Why?

Because a luxury apartment cost $790 a month for a couple and a small home mortgage is about $1250 at the cheapest around here with good credit. We merely save the difference and invest it (between $500 to $1,000 per month - we're cheap; sorry). That also doesn't include community dues, repairs, utility bills that are 2x or 3x higher then my tiny apartment utility bills, or caring for lawn and yard-work, and taxes going forward into the future(which only go in one direction . . . UP!). If we had kids, then a house would make sense, but we don't.

My rent over the last 15 year has never increased more then 1 or 2% per year. For two years now, it has stayed the same.

I think it was Jesus or one of his apostles that said, "Count the cost." Most people never do. "You have kids Bob?"

"Yea, the neighbors had some, so we did to?"


Read Kiplinger's this month about the three different people who got into foreclosure trouble. In one case, the couple realized, yes our house may be worht $500,000, but if we sell to bank the profit, we CAN'T afford anything in our town that we love. You have to live somewhere. We'll have to move out of state to get something cheap.

People are moving from California to Texas in droves because of that right now. They sell their house for $650,000, move to Texas, buy something for $250,000, and bank the profit and enjoy a cheaper standard of living UNTILL . . . the discover our state sales tax (almost 9%) and that property taxes are insane. A $135,000 home will have about $5,000 in just property taxes. Which begs the question, what will they be like in 5, 10, 15, and 20 years from now?

My grandfather sold his house and moved into a nice 2 bedroom apartment because the rent alone was less then the taxes on his house divided by 12 months out of the year.

You have to do what's best for your individual circumstances. One size does not fit all.

PSS: When the realty lady explains that a 4 bedroom house has a higher re-sale value then a 2 or 3 bedroom house, her real motive is that they cost more and she gets a bigger commission.

NorCalSci said:Some areas in CA will decline as jobs and population shift, and others will remain steady.

But it's a little more complicated than saying a bunch of spastic greedy speculators made all the prices go real high.

I agree that some area in Cali are almost bubble proof. However, let's look at the hard numbers, yes there more people moving into Cali... (Legal or not) But the problem is most people can not afford to buy the average houses that's on the market right now. Sure we got tons of rich people in Cali but the majority of the buyers come from average joe. And I believe last time I check the average income in California for a family of 4 is around 50kish. And an average house in Cali cost around 450k+-. In order for an average buyer to buy an average house the buyer would have to use ARM or 0% down. Because there is no way the buyer can come up with 90k downpayment unless the buyer wants to wait 10 years+ to save for the down.

Regarding rents, yes the rent payment could rise. However, that's not happening right now. Why? because all the people that brought houses with ARM during the past few years can't afford the payments and now they have to rent out rooms in their house. Actually in my area the rent actually dropped A LOT, 20% over the past year because people are moving out in drives...

Also, the renting vs buying is way out of wack in Cali. In my area alone it would cost me 4x my rent to buy the same place I am renting. Why in any sane world would I buy????????

NorCalSci said:nickmckinney said:Video of the 50% off auction that just happened in Fort Meyers Florida


If this doesn't show the true nightmare of Florida real estate, I don't know what else to say. Do you have anything new to add?

I'm just thinking if we wanted to read your posts from the previous thread, we would just read that thread instead of this one...

The original was to the printed story, this leads directly to the video with the interviews as reported on the newscast for those that are "internet challenged" Nothing more to add at the moment but when something really good pops up I will be sure to post it for ya

beadedmonkey said:NorCalSci said:beadedmonkey said: There was a false shortage created by lending money to people who should never have been qualified for the loans, and then those people competed with one another for these type of places.

If borrowed money hadn't been made available to them, places such as these would have never sold for what they sold for.Sorry, but that is a tinfoil hat statement...

There is currently population and job growth in California. The state recently announced its treasury coffers are unexpectedly heavy.

New construction has slowed. The population is growing. Earnings are increasing.

What do you think is going to happen to rental costs in the next few years, particularly if home sales decrease?

(Hint: Look at the current vacancy rates in San Francisco...)


If people begin to pay more for rent, a lot more, are you going to claim there is an artificially stimulated rent bubble?



I am not familiar with San Francisco, not having lived there, and I understand that different neighborhoods vary, etc, but I went to craigslist.

It is 10:30am, as of right now, 600 ads have been placed on craigslist today, advertising rentals available in the San Francisco Bay area under APT/Housing for rent. SIX HUNDRED before 10am? That's a lot of possibilities, dude.

That doesn't include roommates wanted.

Tight rental market? I don't think so.....


How many square miles is the San Francisco Bay area? etc.

By contrast, Orange County, which takes almost an hour to drive from end to end on the 5 freeway, and which has 3 million residents, only had 150 or so ads posted so far today on their craigslist area for Apt/Housing for rent.

Wow, looks like it's easier to find a place in San Francisco Bay Area to rent, than in all of Orange County.

I think me and my foil hat will not take advice from someone trying to sell us a hand-scented, important faux evergreenery decorative scenting device.Your "vacancy analysis" is so ludicrous you may want to retract it.

In the SF Bay Area there are nearly 7 million residents. Pretend each listing on average supports two residents. You found housing available for 0.017% of the population

I don't know if you have a real argument or you just don't accept the fact that demand drives prices.

If you want to do a real vacancy analysis, by all means do it, but "Orange County has apartments available for 0.015% of its population and the Bay Area has enough for 0.017% of its population, therefore it's easy to find a place to live in SF, na, na, na na na." Well, that's not a very convincing argument.

jayK said:beadedmonkey said:It is 10:30am, as of right now, 600 ads have been placed on craigslist today, advertising rentals available in the San Francisco Bay area under APT/Housing for rent. SIX HUNDRED before 10am? That's a lot of possibilities, dude.
...
By contrast, Orange County, which takes almost an hour to drive from end to end on the 5 freeway, and which has 3 million residents, only had 150 or so ads posted so far today on their craigslist area for Apt/Housing for rent.Congratulations, you just proved that Craigslist is more popular in the Bay area (where it initially started) than in Orange County.

Rental vacancy in CA statewide is among the lowest in the nation, 5.8% in 2006.
http://www.census.gov/hhes/www/housing/hvs/annual06/ann06t3.html

I wasn't able to find a breakout of rates by county though.

Vacany is low in NYC....
Manhattan

hope69 said:NorCalSci said:Some areas in CA will decline as jobs and population shift, and others will remain steady.

But it's a little more complicated than saying a bunch of spastic greedy speculators made all the prices go real high.
Also, the renting vs buying is way out of wack in Cali. In my area alone it would cost me 4x my rent to buy the same place I am renting. Why in any sane world would I buy????????I agree with you completely. You shouldn't buy until circumstances make that the right decision for you.

And it is true that in many places in California it is significantly less expensive to rent than to buy.

It is just far more likely that the imbalance will be corrected by rents rising than by prices plunging.

jayK said:
From this analysis it looks like the average 4-member family might be able to barely afford a median-priced single-family home, but the average family likely wouldn't be able to afford a median-priced single-family home in CA, so they would probably end up looking at houses below the median level or condos (which are still affordable at the median level).

http://www.svdaily.com/realestateprices.html
http://www.census.gov/hhes/www/income/medincsizeandstate.html

Hmm we got our numbers from different source I checked the wiki instead

Median household income

again the wiki can be completely wrong... but I really don't think the average house hold in Cali makes 70k+ per year... 60kish is pushing it I think... I know we got tons of high tech IT people but we got A LOT more low skilled immigrants as well....

Also my 450kish is for both house and condos. I just add the two number and averaged it out

But overall as per our data show average joe can not afford a house in California. So something has got to give.

In addition, even if the rents go up it wouldn't be like the price for house. And for me I would ruther buy a house when its cheap with insane high rates than buy same the house with higher value with low rates. Why? Because rates go up and down and I can refinance when the rates drop oh and the payment for the loan are taxe write off, I'll pay less taxe as well.

NorCalSci said:It is just far more likely that the imbalance will be corrected by rents rising than by prices plunging.


I somewhat agree here, I see rent pressure increasing as vacant foreclosed homes will sit on HUD until the next buyer arrives. Depends where you are though for prices to significantly drop as it won't happen everywhere just like the prices didn't bubble everywhere.