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Another mind F*&!


By Buster   Follow   Thu, 27 Oct 2011, 4:02pm PDT   7,849 views   73 comments   Watch (1)   Share   Quote   Permalink   Like   Dislike  

The last weeks I have, like most of you, been thinking very intently on the state of our union, the economic disparities, the corruption of our systems and institutions, real estate and even OWS.

So here is another kicker. I decided to toss in the towel and buy a place, in spite of most here and elsewhere reminding me of my potential folly. But I finally found a place that we adore and it made financial and spiritual sense so to speak. It just feels right. Tomorrow we close on the deal.

Tonight under the door, our rental complex 'landlord' slipped a rent increase notice under the door. When I read it I about sheet a breek. We rented a place DT on the Embarcadero as we are new to the city and didn't really know where we wanted to live and didn't have time to visit the city to shop around for rentals. What we rented is nice, but nothing great. It does have a stupendous view of the Ferry Building and overlooks a huge chunk of DT and the SF Bay. Stunning. 600sf, an equally large balcony on the 18th floor and a block to Bart/Muni and the Transbay Terminal. Rent $3200. Rather steep but manageable and I get it for the convenience and view. Tonight I find out that if we choose to stay, our rent is going up to.....drum roll....$5200/month. No lie.

So of course I am elated that we have someplace to move to, for quite a bit cheaper, 3x as big and in a great setting and neighborhood just north of the city. But I truly get why the 99% are so pissed and why OWS is more than justified in their anger. It is like everyone is now out of their homes or folks with good jobs and cash can't even buy a place if they wanted to are all flooding into the rental market, allowing landlords such as mine an open opportunity to screw everyone. Pay it or get out.

So my question is this; do they now have us pinned in a double whammy? Is this the beginning of skyrocketing rents even as housing prices continue to drop lower? Is the middle class just so screwed that it has gone completely numb with the shifting realities? Quite frankly, I am joining OWS. I used to even be a loyal democrat. I am now, simply, the 99%.

So what are your thoughts? More rent increases? More social unrest due to what I describe above? I am just a little freaked out at the moment I guess. I do well financially and can only feel compassion for those who make far less. Not even sure how folks are making it. I know, I know, some will say that they are renting someplace an hour or two from the city for 400/month and they don't know what I am talking about....Love to hear what you are all seeing/hearing/and experiencing out there....thanks.

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Buster   befriend   ignore   Thu, 27 Oct 2011, 4:14pm PDT   Share   Quote   Like   Dislike     Comment 1

Oh, perhaps I should also add that I think a lot of OWS, perhaps more than most, because I over look the OWS site in front of the Ferry Building.

¥   befriend   ignore   Thu, 27 Oct 2011, 4:31pm PDT   Share   Quote   Like   Dislike     Comment 2

Land rent is a very critical imbalance in the system, yes.

If you are familiar with my rants here you've heard what I have to say about that.

One thing that interests me is that the home ownership rate is much lower in the big cities compared to Krugman's "Flatland"

(http://krugman.blogs.nytimes.com/2007/10/20/the-two-americas/)

Parasitical wealth has in fact captured a massive tap on working America via its ownership of the housing stock.

This is even more so in California thanks to the wonderful Prop 13 protection long-term LLs enjoy.

I don't know where rents are going but I do know rents only go down with vacancy, and people go where the jobs are and will pay whatever's necessary to the LL for the privilege of existing on this planet.

I think this decade is going to be a coinflip between deflationary collapse and inflationary quasi-catastrophe (if you're a renter).

Chances are very good the Republicans capture all 4 branches of government next year, and who knows WTF they're really going to do.

It's in their immediate strategic interest to make sure 2014 and 2016 isn't a repeat of 2006 & 2008 for them. This can only mean literal money drops -- shit like $3000 tax credits sent to everyone, $20,000 cash if you buy a car, who the hell knows really.

Whatever happens, things are going to get pretty weird here, and that's just the Federal level. What happens to Blue states in a Republican regime is not something I am comfortable pondering.

clambo   befriend   ignore   Thu, 27 Oct 2011, 5:46pm PDT   Share   Quote   Like   Dislike     Comment 3

We're curious if you join the OWS people how will you pay your mortgage? You can't go to work and hang out with the complainers all day.
Rents in San Francisco reflect that it is one of the few places where there are jobs, and there is pressure from foreigners to buy/rent there. San Francisco is one of the preferred places to buy for rich Communist Chinese officials who have gotten rich by corruption. Evidently, the building owners have determined that someone will pay that huge rent to enjoy the views. What is there to complain about?
Why are you freaking out? What you are seeing is just a repeat of the 1970's. I suppose you don't remember them.
As far as predictions, house prices will fall in many places that were a bubble, which means many in California. A house will be a roof over your head, not an investment probably.

There won't be social unrest because there is government welfare that can be *withheld*. See how they are thinking of drug testing people on welfare, housing, etc? That'll keep them in line.
The situation will improve but after the USA finally decides to produce what it needs. Interestingly, we are unique because we can actually produce everything we require right here. We have resources and food production sufficient for our needs if we decide to get them.
There are 285 trillion cubic feet of natural gas under our feet. We can run all the cars, trucks and buses on it for over 100 years. That is a saving of $500 billion every year that we would NOT be sending to enrich foreign oil producers.
Where I live, houses, water are heated by it, and our buses run on it. The electricity is supplied by it (Moss Landing), so any electric car also runs on natural gas actually.
I agree with those who may be at OWS that the bankers are a bunch of clowns, but they've always been. The bankers I refer to are Rubin, Summers, Geithner, Weill, and their ilk who got Glass-Steagall repealed when Clinton was still president. The banks then started their trading desks when they began gambling and of course they lost big eventually.

StoutFiles   befriend   ignore   Thu, 27 Oct 2011, 10:30pm PDT   Share   Quote   Like   Dislike     Comment 4

I have a lot of thoughts about the current system, both good and bad. However, all I'm going to say is "Entitled" and "Accountability".

At some point, we need to realize that our dreams of great schooling, a large house, nice cars, a huge family, and a great location can't happen for everyone...at least not without crippling debt. It's the American Dream, not the American Right.

At some point, we need to own up for our mistakes and not blame everyone else. If you borrow money to make the Dream happen, you have to also be ready for the possible consequences.

I'm not even close to rich...I rent, I drive a Toyota, but I have enough money to eat, have shelter, drive, and do fun things. When did that become a horrible life? In a global economy, I see the lives of other countries people and I wonder why exactly we're complaining. It could be much, much worse.

mdovell   befriend   ignore   Thu, 27 Oct 2011, 10:32pm PDT   Share   Quote   Like   Dislike     Comment 5

Bellingham..just a question but what do you think the chances are of consolidation of major home builders? (Lennar, D.R Horton etc)

FortWayne   befriend   ignore   Thu, 27 Oct 2011, 11:20pm PDT   Share   Quote   Like   Dislike     Comment 6

rent at $5200 a month, are you living next door to Donald Trump? That's more than most families make pretax.

Buster   befriend   ignore   Thu, 27 Oct 2011, 11:31pm PDT   Share   Quote   Like   Dislike     Comment 7

Fort Wayne, no I don't and that's my point. Our apartment tower admittedly is in a decent neighborhood, but the actual building or apartment is nothing grand in the least. Hell, it still has an 80s kitchen! Yes, they just upgraded the hallways, but I don't live in a hallway....

Buster   befriend   ignore   Thu, 27 Oct 2011, 11:36pm PDT   Share   Quote   Like   Dislike     Comment 8

Clambo, I will join OWS physically from time to time on we and in the evenings, just like Robert Reich does....I literally bumped into him last week. Should you not know he was the former Clinton administration US Secretary of Labor. I have joined OWS and as such will continue to advocate....even when I can't physically attend. Sort of like you can be a person of faith without being in the actual place of worship...jeeesh.

bubblesitter   befriend   ignore   Fri, 28 Oct 2011, 12:14am PDT   Share   Quote   Like   Dislike     Comment 9

Buster says

Rent $3200. Rather steep but manageable and I get it for the convenience and view. Tonight I find out that if we choose to stay, our rent is going up to.....drum roll....$5200/month. No lie.

Keep an eye on it. Just curious if it is really gonna rent for $5200.

FortWayne   befriend   ignore   Fri, 28 Oct 2011, 1:18am PDT   Share   Quote   Like   Dislike     Comment 10

Buster says

Fort Wayne, no I don't and that's my point. Our apartment tower admittedly is in a decent neighborhood, but the actual building or apartment is nothing grand in the least. Hell, it still has an 80s kitchen! Yes, they just upgraded the hallways, but I don't live in a hallway....

Move the hell out of there man. Because this LL is just trying to rip you off.

Patrick   befriend   ignore   Fri, 28 Oct 2011, 1:34am PDT   Share   Quote   Like   Dislike     Comment 11

Why the F are we exempting landlords from fair property taxes? Prop 13 is truly insane.

What's needed is just the opposite: a Prop 13 for tenants. Germany has laws like that: where once you're renting, you have a certain security in your rental. The landlord can raise the rent only so much each year, and must offer you a lease renewal.

Germany is doing just fine with laws that protect renters.

¥   befriend   ignore   Fri, 28 Oct 2011, 2:02am PDT   Share   Quote   Like   Dislike     Comment 12

Patrick says

The landlord can raise the rent only so much each year, and must offer you a lease renewal.

The problem with rent control is the oddities that happen when the market rent and the actual rent diverge significantly. Supply tends to lock up I think.

Just this morning I read Steve Wozniak's account of his Apple days -- in 1980 he was paying $150/mo for the Park Holiday apartments near the airport.

Today the market rent is $1100. Inflation calculator says $150 should be $400 today.

It's a wonderful world.

¥   befriend   ignore   Fri, 28 Oct 2011, 2:02am PDT   Share   Quote   Like   Dislike     Comment 13

mdovell says

just a question but what do you think the chances are of consolidation of major home builders? (Lennar, D.R Horton etc)

I know less than nothing about their business.

Patrick   befriend   ignore   Fri, 28 Oct 2011, 2:24am PDT   Share   Quote   Like   Dislike     Comment 14

Bellingham Bill says

The problem with rent control is the oddities that happen when the market rent and the actual rent diverge significantly. Supply tends to lock up I think.

Tenants should have some security against unreasonable rent increases though, no? Would a land value tax help renters?

If anyone is going to be for Prop 13, they must also necessarily be for that same protection for renters, or they're not being consistent. Tax control and rent control are very similar.

Hey, SF does actually does have rent control. So how can this guy's landlord raise his rent so much?

edvard2   befriend   ignore   Fri, 28 Oct 2011, 2:26am PDT   Share   Quote   Like   Dislike     Comment 15

I can't exactly put my finger on it but in some ways it feels like there is definitely some "bubbleicious" activity going on in the bay area. Especially in the city and the Peninsula. At the moment the high rents and so on seem to be contained in those areas. I'd say 60% of the people I work with live in those two places and it sounds like rent has been going up a lot lately. What's scary is that I was here at the tail-end of the dot-com and back then high rents had spilled over into the east bay and other areas. I hope we're not about to see that again.

Believe it or not we received a rent increase this week. Luckily we have great landlords and after 8 years this is our first raise and it was drum roll.... $75. They love us and we could probably stay forever and as of now we pay very reasonable rent: $1,775 for a 4 bedroom house with a sizable yard.

That said... I am sort starting to actually think about buying a house. I only say this because I'd say that for the last 3-4 months there has been a number of seemingly nicer houses that have come up for sale in our neighborhood- houses that just a few years ago could reliably be counted on to cost at least $500k. Several have been 350k-450k. Still pricey. But we've been saving for years and could knock out most of the cost of a house like that and have a small mortgage. Then again I'm not sure if I want to stay here and if we wanted to we could buy outright just about anywhere else and almost semi-retire before we're 40. Arg. decisions.

Patrick   befriend   ignore   Fri, 28 Oct 2011, 2:30am PDT   Share   Quote   Like   Dislike     Comment 16

The legal limit to annual rent increase for the same tenant in San Franciso seems to be very small, since it's tied to inflation:

http://www.sftu.org/rentcontrol.html

So that large rent increase should be illegal. What am I missing?

thomas.wong1986   befriend   ignore   Fri, 28 Oct 2011, 2:33am PDT   Share   Quote   Like   Dislike     Comment 17

FortWayne says

rent at $5200 a month, are you living next door to Donald Trump? That's more than most families make pretax.

More hype if anything... such high rents on wide scale wont last.

thomas.wong1986   befriend   ignore   Fri, 28 Oct 2011, 2:35am PDT   Share   Quote   Like   Dislike     Comment 18

Patrick says

So that large rent increase should be illegal. What am I missing?

On a commercial side, many rents are limited to rate of inflation, which is so stated in the contract. So large rents are cap'd.

bubblesitter   befriend   ignore   Fri, 28 Oct 2011, 2:39am PDT   Share   Quote   Like   Dislike     Comment 19

Bellingham Bill says

Just this morning I read Steve Wozniak's account of his Apple days -- in 1980 he was paying $150/mo for the Park Holiday apartments near the airport.

Today the market rent is $1100. Inflation calculator says $150 should be $400 today.

You forgot to consider what the rent/income ratio then and now.

SFace   befriend   ignore   Fri, 28 Oct 2011, 2:40am PDT   Share   Quote   Like   Dislike     Comment 20

Patrick says

So that large rent increase should be illegal. What am I missing?

It's an exempt building.

having said that, I was looking at Archstone (Fox plaza and St Francis website) today and it seems rents are up at least 10%-15% accross the board vs last year. A two bedroom is now starting at 4,200 now vs 3,600 about a year ago.

clambo   befriend   ignore   Fri, 28 Oct 2011, 2:45am PDT   Share   Quote   Like   Dislike     Comment 21

You don't think I know who Reich is? He's all over the place.
The OWS people will make no political influence because they represent the same anger everyone has towards bankers. The other feelings of fear, angst, resentment, envy are pointless emotions.

The Tea Party people also were annoyed that TARP was used to bail out Goldman's bad bets, Timmie made them whole on their bad AIG bet, 100Cents on the dollar. Merkel by comparison just said the banks get 50Cents on their bad Greek bond investments. Tea Party people were also pissed that TARP was misued by Obama to bail out the United Auto Workers union, stealing from and screwing the bondholders and giving the UAW equity they didn't deserve.

Your post was incredulous about a rent increase. Why? San Francisco is still the most scenic, most liveable city in the USA. Manhattan is exciting but the place is stressful unless you are a zillionaire, and no city has the climate to compare with San Francisco.

edvard2   befriend   ignore   Fri, 28 Oct 2011, 2:56am PDT   Share   Quote   Like   Dislike     Comment 22

clambo says

Your post was incredulous about a rent increase. Why? San Francisco is still the most scenic, most liveable city in the USA. Manhattan is exciting but the place is stressful unless you are a zillionaire, and no city has the climate to compare with San Francisco.

Others would argue against that claim. I live in the Bay Area and personally try and avoid SF because it is:

1: Overpriced
2: sort of grubby and dirty
3: traffic is awful
4 overrun with tourists

Also- I have friends who live in NYC and they wouldn't dare ever leave because they think the place is just the absolute most amazing place on earth and you know they don't think that for the weather.

Patrick   befriend   ignore   Fri, 28 Oct 2011, 3:11am PDT   Share   Quote   Like   Dislike     Comment 23

SFace says

Patrick says

So that large rent increase should be illegal. What am I missing?

It's an exempt building.

How did that building get to be exempt? Kind of defeats the whole rent-control thing.

fil   befriend   ignore   Fri, 28 Oct 2011, 3:26am PDT   Share   Quote   Like   Dislike     Comment 24

Patrick says

SFace says

Patrick says

So that large rent increase should be illegal. What am I missing?

It's an exempt building.

How did that building get to be exempt? Kind of defeats the whole rent-control thing.

I believe units built after 1989 or 1986 or some designated year are not covered by rent control. Also Single family homes are not covered and i think in some cases converted condos.

In my opinion, living in a downtown apartment tower is nuts. You could get a pretty good size place in some nice neighborhoods for $3200 and for over $5000 you could rent a fab place in very nice neighborhoods.

clambo   befriend   ignore   Fri, 28 Oct 2011, 3:46am PDT   Share   Quote   Like   Dislike     Comment 25

I grew up in NYC and it's fun. But, you must have a ton of money to live well in Manhattan.
NYC has about 4 weeks of weather per year that is as nice as San Francisco for 8 months per year.
Manhattan is cool, the rest of NYC can be scary, some just slightly nicer than the area inhabited by the "prawns" in Discrict 9.

tatupu70   befriend   ignore   Fri, 28 Oct 2011, 3:48am PDT   Share   Quote   Like   Dislike     Comment 26

clambo says

and no city has the climate to compare with San Francisco.

I'll take San Diego, thank you.

TPB   befriend   ignore   Fri, 28 Oct 2011, 4:10am PDT   Share   Quote   Like   Dislike     Comment 27

Kudos on the move and decision to buy. You're paying 3.2 grand for rent and aren't sweating that, then you should be fine with your purchase.
What will your mortgage be, less or equal to what you were paying I hope.

Which brings me to another question, you can afford 3200 a month, and you're all up in arms and participating in the OWS movement?

I just don't get this OWS movement?

OWS should consist of pissed of Wal-Mart greeters, and Fry Cooks, not Brokers, day traders, engineers and software developers living posh ruffing it in the park in the day, then driving home in their Beamer and parking in their lighted security garage.

Jimbo in SF   befriend   ignore   Fri, 28 Oct 2011, 4:20am PDT   Share   Quote   Like   Dislike     Comment 28

Using a 30yr mortgage @ 4.25%

The $3,200 rent is the same as a payment on a $650k mortgage
The $5,200 rent is the same as a payment on a $1,050k mortgage

I think this helps explain why buying is not as crazy as it seems in SF, when the only other option is to rent at these prices.

StoutFiles   befriend   ignore   Fri, 28 Oct 2011, 4:27am PDT   Share   Quote   Like   Dislike     Comment 29

Jimbo in SF says

I think this helps explain why buying is not as crazy as it seems in SF, when the only other option is to rent at these prices.

I would argue that living in SF in general is crazy at those prices.

Teri   befriend   ignore   Fri, 28 Oct 2011, 4:27am PDT