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 2,944 views 38 comments
In San Mateo CA 94404
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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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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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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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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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47 male
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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47 male
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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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.