I have been living here since 1997 and always interested in renting in Palo Alto. I have never ever been able to find a decent rental value. Well, guess what? All the talk about rents rising in the BA got me searching just for fun. I have never seen this type of rental for this price. $2k/mth would be lucky to get you a room anytime I looked. All you rents are rising people have either just arrived or you are trying to get people to buy. Rents are falling or at most staying where they are from my eyes. Good luck to all.
Rents are rising in the BA. Yah right!
By RentingForHalfTheCost Follow Mon, 7 May 2012, 8:35am 2,947 views 38 comments
In San Mateo CA 94404
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San Bruno, CA
It's a scam listing obviously.
http://www.redfin.com/CA/Palo-Alto/1136-Webster-St-94301/home/1113210
Feb 03, 2012 Sold (Public Records) $1,950,000 -- Public Records
Feb 03, 2012 Sold (MLS) (Sold) $1,950,000 -- MLSListings #81204185
Feb 03, 2012 Delisted -- -- MLSListings #81204185
Feb 03, 2012 Listed $1,599,000 -- MLSListings #81204185
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47 male
Lafayette, CA
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That's a $2 million house obviously bought for speculative purposes.
Are you saying that rents are falling because investors are spending $2 million to gross $2000 per month on rents? Because if you're not, this data point is totally irrelevant.
Here's the real rental picture of San Mateo. Yes rents are increasing and up substantially yoy.
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Monterey, CA
RentingForHalfTheCost says
You really can't be that gullible, can you?
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47 male
Lafayette, CA
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woggs1 says
That's also possible and calls into question using Craig's List as a measure of the rental market.
As a landlord, it would be easy for me to create 3-4 free fake ads advertising a Concord unit for $2500 a month in a given area, then post one legitimate ad for $2100 to make people think they are getting a bargain.
Likewise it would be fairly simple for a potential rent seeker to try and create a false image of falling rents in order to entice a gullible landlord into renting for cheap.
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Dublin, CA
I can speak from personal experience that rents have risen substantially in the "luxury apartments" market segment. My last full year living at a specific 1 bd apt complex in fremont - lease started in June 2010 was going for $1575 a month. A year later when we bought, they wanted around $1900. Now, they are asking over $2100 a month. In my book, that is a huge increase. And a completely unjustified one at that. Does that mean that same percentage increase is occuring in "average" apartments and in SFH rentals? Probably not, but it's still happening, maybe not as bad.
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San Bruno, CA
iwog says
Good point Iwog, I thought about that myself. I am sure it is going on, with CL being free an all. That particular ad has the red flags raised especially at that price in that area. When I was looking for a rental a couple years back I emailed some of these type ads and I got a response with some BS story about how they are a missionary out of area and can't show the place. But they want you to western union them some money and they will Fedex the key.
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The same people DENYING that rents are at all-time highs and rising in most cases are just as bad as Iwog cherry picking the few areas where home prices have remained flat or risen since 2009. In Los Angeles.. And aside from a few once in a lifetime bargains in 2009, home prices in Los Angeles have definitely fallen 10-20% on average since 2009. It is hard to tell with 80% of sales being foreclosures and reos and 20% being unmaintained outdated homes of grandma and grandpa exactly what a fair price is though.
But at the same time rents have moved higher, especially luxury and large management company rentals. And if home prices keep falling, rents will keep rising or atleast straddle the alltime highs where they currently reside.
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47 male
Lafayette, CA
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BoomAndBustCycle says
That's actually not true at all.
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Pleasanton, CA
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iwog says
That really depends on what start and end data points you are using. The graphs I have seen as well as yours are all pretty close to being flat. Obviously you can pick a down well-point and call it rising. I'd rather look at the moving average cause it would be more telling.
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Corning, NY
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Just out of curiosity, is that Case-Shiller chart inflation adjusted? Most Case-Shiller stuff is, but since it says "raw data" I couldn't help but wonder.
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Lafayette, CA
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wthrfrk80 says
Raw data just means they aren't using their seasonally adjusted index. Case-Shiller doesn't like it for some reason.
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Pleasanton, CA
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woggs1 says
Could also be someone that realizes they can only get 2K/mth for the place currently. The fact that it sold for 1.95m just shows how easy the decision to rent verses buy is in the BA. I don't believe it is a scam. I believe that is all the owner can get for a 1063sqft 1920's house in today's rental market. The ad does say it is rent "as-is". So, I suspect everything works but just barely. Still, just a quick 10 minute search in the hot areas like Palo Alto, Atherton, etc. turned up rentals value that were never there before. Just my observation, obviously if your wealth is locked in real estate your view varies. :) Good luck to you.
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Lafayette, CA
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RentingForHalfTheCost says
I pulled the rents graph from Patrick's data, but I would caution against using Craig's List for any serious analysis. There's SUBSTANTIAL fraud and I'd say the number of cases is increasing. I just had another victim come into the law office last week complaining about being leased an empty pending-foreclosure home. Source? CL of course.
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Pleasanton, CA
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iwog says
I'd visit them all and then conclude that only one was real and it is still overpriced. :)
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47 male
Lafayette, CA
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RentingForHalfTheCost says
"I'm sorry sir, you're too late. The $2500 homes all rented."
"Oh that $2100 listing? That's not ours. You'll have to call them."
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Pleasanton, CA
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iwog says
"That is interesting. When I drove by your listings I couldn't help but notice that two had people still living in them, and one was obviously in need of major repair until it was livable. Out of curiosity I talked to both renters and they were very surprised when I asked them when they were leaving. Apparently, they just signed a new year lease. I figured they were not informed of your decision to evict them so suddenly, so suggested they get a lawyer and start investigating.
Oh, and by the way, the $2100/mth rental. I drove by that one too and couldn't help but notice all the windows were broken out, and lots of graffiti all over the siding. Strange how that could have happened. You must have really pissed someone off in life. Have a good day sir. "
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Monterey, CA
RentingForHalfTheCost says
If you really think that house in that part of Palo Alto would rent for 2k, then I've got some very nice investment opportunities I'd like to show you.
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San Carlos, CA
I didn't read every word of the thread - did anyone actually call and try to rent it?
1063 sq ft, rented as is with old appliances. Advising tenants to inspect carefully. Sounds like a dump. Sure, an attractive location but it looks to me about on par with what it should be. Maybe $2500 but how dumpy is it really? Is it livable? What should it rent for?
Put another way: I pay a bit more but for a better location (that's opinion I guess) and much better condition property.
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Pleasanton, CA
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pkowen says
I searched all over this area in 1997-1999 and this place looks great compared to some of the 3-4K/mth rentals I saw. One place that rented for 3k/mth was just a double car garage turned into a studio. This market is much much different for renters today. Anyone complaining about the rental costs was not here during the dot com days.
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iwog says
I know it's sorta cherry picking also.. But I just bought a home in a LA suburb with lots of 50s and 60s tract homes in mid-2011. I ZILLOWed all the homes in my neighborhood before buying and recently. There are lots of IDENTICAL houses since it's 50s tract housing. I have neighbors that bought in 2009-2010 the EXACT same home as mine that paid as much as $80k more. Sure, every home is different and ours required more TLC for sure than some of those.. But, ours also had a larger lot, pool, privacy and other perks to offset some of the lack of upkeep.
Homes were about 25-30% off the peak in 2009... they are now 40-50% off their peak prices in my neighborhood. It's all local I know.. But Los Angeles is HUGE.. so that graph is pretty meaningless.
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I suspect there is a difference between apartment complexes vs standalone houses .
Apartment complexes have been neglected in construction for a long time and now demand is up because many people with income have realized the benefit of renting vs buying. I personally have seen pretty steep increases.
Standalone houses are different, demand for renting is probably up, but so is supply...
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Dublin, CA
No apartment that I have ever lived in cost more than $1600 per month. At no time in any apartment was my share of rent greater than $788. Praise be to god! That is one of key reasons that I was able save up the necessary 20% downpayment. Unfortunately, if I was still renting, my rent would have skyrocketed starting last year unless I would have downsized AND downgraded. That is never a pleasant experience unless one has absolutely no choice.
If renting is so great and so peaceful uniformly, would someone please explain why luxury apartment complexes hit people with over 30% rent increase in the last 2 years and have obviously gotten away with it as the rents are holding up. Thanks!
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Lafayette, CA
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BoomAndBustCycle says
Case-Shiller numbers are for the greater metro area and not just Los Angeles. It isn't meaningless, it's the best measure of the market there is.
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iwog says
http://www.zillow.com/local-info/CA-Los-Angeles-home-value/r_12447/
Maybe 10-20% drop since 2009 is a little high.. But 5-10% drop in upper-mid-tier homes is pretty accurate. The under $200K homes bottomed in 2009.. But the middle class neighborhoods took a beating in 2010-2011.
So your right, housing probably bottomed in 2009 for low-income housing in big cities. But mid-tier housing has fallen. I think it's firming up now with mid-tier rent pressures and low rates causing rental parity. But we'll see what happens in the next 6 months. I'm rooting for economic recovery vs. more home price drops.
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San Carlos, CA
RentingForHalfTheCost says
Late 90's, height of the dot-com bubble. Not sure that scans well to right now.
Did you actually look at this place in person? Walk through it, smell it, feel it? I read nothing in the ad that makes me think anything other than it's a dumpy place with a good location. The price does not seem outrageously low.
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dublin hillz says
I shared a 2 bedroom with 5 guys in my twenties also... 2 per bedroom and 1 in part of the living room. Rent was a sweet $300 and change a month spit 5 ways.
Then again, none of us had girlfriends in those 2 years. Most people can't function in those extreme environments without snapping though. I know women never could live like that.
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Pleasanton, CA
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pkowen says
No, I never checked it out. I am not looking right now, happy where I am. Just tired of all the scare tactics the housing bulls use around here. In reality you couldn't even get a dumpy place for 2k/mth in Palo Alto until after the crash happened. Personally, I wouldn't pay even that for this place, so agree with you there. It is all relative I guess. Housing bulls keep claiming my rent is going through the roof and I should buy or be priced out forever. However, I keep seeing my savings going up every month and hear owners more and more in trouble. Just doesn't make any sense to me. It is like the bulls live on a different planet.
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Since the thread is about the San Francisco bay area, I can tell you that SF rents appear to have increased markedly in recent years. Patrick's earlier graph showed a 10% YOY increase. Older data show a sharp increase during the first dot-con bubble:
http://www.sfcontroller.org/Modules/ShowDocument.aspx?documentid=1063
Rents around here seem to have peaked with the housing bubble in 2007-08, then fallen 10%-20%, in 2009-10, then returned to peak levels in 2011-12. Supply is artificially constrained by (1) Fed propping up banks to keep properties off the market and (2) zoning and planning that limit new construction.
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Emeryville, CA
dublin hillz says
Total guess here, but I suspect that former homeowners who have strategically defaulted like the luxury apartments and conversion lofts, and can afford a 2500/mth rent, since it's still cheaper than their old mortgage.
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RentingForHalfTheCost says
Could you point to one time when someone said to buy now or be priced out forever? Since people keep claiming that, it should be easy.
And who are the housing bulls on this site?
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Mountain View, CA
bmwman91's website
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As a renter in Mountain View, I can say with certainty that rents have risen quite measurably in the last 18 months. Things were blowing up last summer when I was looking for a new apartment. The "high'ish-end" complex I was at with roommates was signing new leases for 40% more in 2011 than I was paying on my lease from 2010. Over the course of 6 months, a 1BR there went from $1500 to $2300, and the 3BR unit Was in for $2300 was going for $3400. As of now, rents there have backed off about 10% from there. The 2BR townhouse unit I am in now for $1775 was $1500 2 months prior, and although I hate it, it was the only damn option around here for under $2k. I went to 6 or 7 open houses to check out rental listings, and they all had 3-10 other people waiting there to check it out, some with manila file folders in their hands. Everyone I know that has tried to find a rental since last summer, anywhere in MV/PA/SC/SJ has said the same thing...it is expensive and options are limited.
Will this keep up? I don't know. It seems nonsensical. I think that all of the recent web-company hiring has been drawing a lot of people into the area. Combine that with many people in the "waiting to buy" camp, and people that are betting tossed out of the houses they they couldn't afford, and demand could stay higher than the supply of reasonably priced rentals...meaning that prices will increase to balance it out. I think that MOST of the rises have happened and are done with, but there isn't much reason for them to return to their 2010 levels right now.
Now, this still doesn't make me want to buy! It would still cost me considerably more than $1775/month to buy a SFH. I am NOT looking at condos or townhouses because...well, why would I want to shell out a significant fraction of $1million to buy something of about the same quality & with the same annoyances as my apartment?! So I can paint the walls? Pff, fuck that. All this REALLY does is make me look at out-of-state employment and living options. Buying is still unreasonable (to me) in most parts of the BA. If rents become unreasonable too...time to leave.
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Pleasanton, CA
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bmwman91 says
Finally, someone that has the same view as me on condo's and townhomes. I grew up in a townhome that cost my parents 35K. We lived in the crappy part of town. I remember the toddler in the room next to me as a teenager kicking the wall every night. If I find myself ever buying a condo or townhouse it will mean I have given up on myself. I swore to improve my life, not go back to my beginnings. Now in the BA some people call that crappy townhouse close to a million dollar lifestyle. Pff. You can have it!
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Pleasanton, CA
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tatupu70 says
See, another bull trying to push the buy now slogan! Give it up folks, 2006 is over. The gig is up, your home is depreciating and renters are winning. ;)
Before you chop my head off, this is all in fun. I am miss quoting tatupu70. Nothing to see here folks. Don't hit the reply and add hate. JK
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Pleasanton, CA
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Bigsby says
Yah, I agree. I think it is overpriced as well. ;)
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bmwman91 says
i noticed a couple of years ago, that rent prices were surprisingly low in mountain view. very affordable for such a good location (mid-peninsula).
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Pleasanton, CA
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Okay, I was wrong. I sent a few emails back and forth to the ad owner. It is a scam. Here are some pieces of the email exchange.
I'll go stand in the corner now. :(
-- Herry David wrote ---
May the peace of the lord be with you, Please drive by and fill out the application form if you love what you see to know the next step.
>
> --- RFHTC wrote
>
> Hi Herry,
>
> That is amazing that you are embarking on such a journey in life. I'll go and
> check out the place today. If I like it, who do I contact to check out the inside
> and also to sign the lease. Are you working with an rental agency or realtor
> since you will not be here?
>
>
>> -- Herry David wrote ----
>>
>> I and my husband just traveled to London U.K for a program called, HIV/AIDS, >> Poverty and Lack of Education, the program is taking place in three major
>> countries, Spain and South Africa’s.
>>
>> We will be away for 2 to 3 years or more that is why I have made up my mind to
>> put up my house for rent to whom ever that will take good care of it. Also how
>> long do you intend to stay? How soon do you intend to move in?
>>
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I'm paying $2500 for a 1900 sq ft home in south San Jose, and a nearby owner has had is home to rent on craigslist for months now, first at $2800, and now at $2600. He lives there, so it's not a vacant house gathering dust. Maybe he's just picky on whom he rents to, or $2600 (and even my $2500) may be too much for the area.
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San Bruno, CA
RentingForHalfTheCost says
I hope too many people are not falling for this crap. From the emails you posted it sounds like the same guy I communicated with when I was looking for a rental. I bet all he does is post phony ads way below market and if one in a hundred pay off its worth his time.