WatchMillions of homes have been bought the last few years with the intent of renting them out. The rental bubble is bursting. Soon, real estate prices will also crash as investor returns are no longer a certain. The banks may regret not foreclosing while the market had a deadcat bounce.
http://www.nytimes.com/2009/02/01/realestate/01cov.html?_r=1
"......it’s a good time to be a renter in New York City. Prices are falling, primarily in Manhattan, and concessions like a month of free rent are widespread........"
http://www.eagletribune.com/latestnews/x748660882/Rent-prices-dropping-in-Southern-N-H/print
"....Median gross rental costs in Rockingham County for a two-bedroom unit are below $1,200 for the first time in three years and at their lowest level in five years, according to a recent survey from the University of New Hampshire and the New Hampshire Housing Finance Authority.."
http://www.rentcafe.com/blog/cities/chicago-il/rent-in-chicago
"......Rents are coming down in popular neighborhoods such as the Gold Coast (-13%), River North (-7%), and Streeterville (-4%) as compared to the fourth quarter of 2011........"
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The New York Times article is from 2009, a bit dated.
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Good catch. I sorted the google news search to show only results from the last month. I should have double checked to make sure it was recent.
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Mountain View, CA
bmwman91's website
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Well, at least the article is period correct. I was negotiating rent decreases 2007-2010. Things around here have sort of swung in the other direction since then.
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It just seems like the rental game is too hot. Millions of little guys wanting to be landlords. Hedgefunds getting in on it. New construction is mostly apartments. The foreclosures bought this year probably saw their prior owners kicked out last year. They already found a new place to live when they were kicked out. Home prices are rebounding which will give local governments an excuse to jack up property taxes. The new landlord who bought a home for $60k in Phoenix six months ago is assuming his taxes will be at that level. The taxman is going to double it since the homes value has doubled since then. The insurance company is going to jack his premium because the home is now higher. That will cut into his profits. Newer landlords are going to have to ask higher rents, because his costs are now higher than he speculated. Older landlords will lower theirs to attract renters..... Renters are going to see cheaper rents.
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bmwman91's website
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I agree that at this point, the herd is on the move and starting to get into the rental game now is sort of dangerous. Those that have been heavy into it for a few years will probably be OK, but at this point it is becoming the next "guaranteed easy money" thing that you hear everyone else on the airplane talking about (I fly for work weekly and fucking everyone I sit next to / overhear is talking about how RE "is back"). When Joe Blow decides that rentals are the new "loosest-slots in town" then it is probably too late to get in. The guys on here that have been loading up on properties for the last few years are probably OK since they were in well before the brainless general population started stampeding to the next marginally-greener pasture.
The real wildcard here is the hedge funds & institutional investing firms. If the government starts chopping huge chunks of the shadow inventory off to them for pennies on the dollar, I think that the relatively small private investors in here will get slaughtered. Actually, everyone will...renters, home owners, private RE investors, everyone. Housing will become corporate-run slums designed for maximum short-term profit, with all sorts of "protections" for tenants in the books and virtually none of them enforced. That's the short term. In the long term: cannibal anarchy. Odd as it may seem, my ability to keep a half-dollar grouping with my M1 Garand (30-06 battle rifle) at 100 yards might be useful someday.
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A search of Caigslist has a lot more rental ads with "free month", "bad credit ok", "reduced" and other incentives. For tuesday there were 37 pages for apartments/rentals. Only 11 pages with homes for sale.
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Cheeseus Sonofdog says
confirmation bias?
Should have just posted this link:
http://bit.ly/OmipSE
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Cheeseus Sonofdog says
Let's run the numbers. According to Roberto, a $60k property can rent for $800-$850/month. Say the reassessed property tax goes from $600 to $1,200/year. That's an additional $50/month. Say insurance will go from $500 to $600/year. That's less than $10/month.
With 100% financing at 5% interest rate, your PITI goes from $412 to $472/month. How much does rent have to drop for the landlord to lose money?
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bmwman91 says
It's in the transition period from cheap to fair market. There are only a few good deals out there now, but you must know how and where to look to increase your chances. Whoever buying now are riding the tail end of the wave. The easy money has sailed away
I remember some big players started to leave the SFH (buy and hold) market as early as August 2009. That was when the housing inventory started to contract. That same force entered the condo market last year and left early this year. It seems like the window of opportunity always open for 6 to 9 months at a time and then gone. Of course that's only one man's observation. I still have a lot to learn from the veterans.
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E-man says
A few months vacancy, tenants not paying rent, evictions, repairs, regular maintainace can all skew those numbers.
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lostand confused says
Except they don't. I've done one eviction in 4 years, and the deposit paid for all but a single month. Other than the above example, my vacancy rate is zero. Repairs and maintenance are easily budgeted for and in some cases insured.
Most landlord horror stories are exaggerated and can be mitigated.
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iwog says
Next time try to be little honest,buddy!
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Yeah I keep wondering who's paying these out outrageous rents.
Especially when we have a Government that champions a society where Men and Women stay at home and live with Mom and Dad until the ripe old age of 26. This of course in tandem with the idea that those adult simpletons should also be well saddled with Student debt. You know just to set them on the right path to servitude and pure destitution.
I think it's time Cities across America tax investor/landlords especially on single family homes 30% more than your live in home owner. Why should the landlords get all of the benefit, they are killing society by raising rents, sending young adults home to live with Mom and Dad, placing families on the couches of strangers if not in the streets. They are killing the pride of community, and home-ownership, thus driving down prices in most communities, save the fortress. That add nothing to a SFH community, but hardship and burden. Rent to low lives that burglarize neighbors they can give three shits about. Fuck'em all to hell I say.
Go buy a Multifamily unit if you want to play "The Supper".
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"......I think it's time Cities across America tax investor/landlords especially on single family homes 30% more than your live in home owner....."
Most states have a homestead exemption with caps on tax increases for owner occupants. Landlords may pay hundreds of percent higher taxes compared to a homeowner who got in years ago. They can also pay higher fees, license, rental inspections, etc. Not to mention a renter is often treated as a homeowner when they are in default. It can cost a landlord thousands to wait out the many months it takes the sheriff to kick out a non-paying tenant. If landlords weren't penalized rents would be much much lower as they pass on these costs to the renter.
I do agree with you about renters ruining neighborhoods.
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Cheeseus Sonofdog says
California treats all real estate the same as it does owner occupied. Property tax increases are limited to 2% forever. Landlords do not pay any higher fees.
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Cheeseus Sonofdog says
Yes, I parking my car on the lawn from day one. Took the wheels off too. I have an engine block next to the ratty old boat and the hedges have taken advantage of my laziness. I really like parking my old camper, work truck and many cars on the corner so drivers can't see around the corner. The collisions are far more entertaining than TV.
Oh wait, that's my owner neighbor...
Don't be hating on renters. We're not all bad.
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bmwman91's website
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Cheeseus Sonofdog says
You can't be serious.
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Of course I'm joking. I mean, when a newly married couple is looking to buy a home, they insist the realtor takes them to the area of town with the most renters, right? And renters add so much value that rental areas are priced way more than residential. Apertment complexes have almost no crime compared to the quiet residental street, right?.....
Most renters are fine people. Its the 20% which ruins things and prices, crime statistics and schools near them reflect it.
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Cheeseus Sonofdog says
Florida has homestead exemption but they make no distinction between those that use it as a 2nd home and those that rent them out as income producing.
It's not that they pay more, but those that get HE pay less.
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There isn't any way that the rental market could become a bubble.LMAO
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Florida has a homestead exemption but you have to have a current state ID to apply for it. Change your drivers license.
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I live in Florida. You can only claim homestead exemption for your primary house. Sure, you can rent it out, but the county does check and you lose your exemption if they find out you are not living there. Those with HE have their future tax asessed values capped at 3% per year. During the bubble, we had many properties increase 400% within five years. So, if you had HE your tax bill didn't go up much. But if you happened to rent that property, you saw your taxes triple.
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Why is this 2009 article on RENTS trending at all? The stock market was at 6000 in March 2009.. We were in the middle of a financial market crash.. of course rents were low!
Are bears really desperate enough to point to 2009 articles for confirmation rents are heading lower in 2012?
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Are housing pimps desperate enough to lie to the public about housing when rents are headed lower in;
Denver (-8.8%)
Chicago (-4.8%)
Los Angeles (-2.6%)
http://newsroom.transunion.com/MediaLibraries/TransUnion/Documents/graphics/1Q12/Q1-2012_SolutionsReport.pdf
you lying bastards.
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Re: 2009. The first post in this thread mentioned it and I already answered. I didn't check the date and relied on Google filtering articles from just the last month.
The stock market has risen by 100% since 2009. It rose on the excuses of "v shaped bottom", "green shoots", "recession is over". Looking back, that rally was 100% wrong. The federal reserve just told us things will suck until at least 2015. With interest rates this low, I would argue the bears are correct. Can you support a bull market in real estate and rents under these fundamentals?
Since you mentioned 2009, I will also mention that most of the new construction since then has been in apartments. Bulls want us to think once the deadbeats are kicked out due to foreclosure they will have to re-rent the very home they lost. Nope. They will have plenty of choices. From new apartments, to millions of novice landlords who are buying foreclosures thinking they will get rich renting them out. Supply and demand. Loads of rental supply coming....
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Cheeseus Sonofdog says
This isn't very impressive:
http://research.stlouisfed.org/fred2/graph/?s[1][id]=HOUST5F
...and this is simply shut down. If you expect the housing crash to continue, you better take a good look at this graph:
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iwog says
Yep, if that chart doesn't SCREAM recovery..... nothing does!!! Housing Starts are at the lowest level since records were kept, the future looks booming!!!
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Realtors® Are Filthy Liars says
Ahem, so what?
This is a Bay Area Centric website. Patrick got frustrated with how Different It Is Here, so he made the website.
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Call it Crazy says
So basically y'all want to hit me with both sides:
Cheeseus: New apartment construction is going to cause falling demand.
Call it Crazy: The total lack of new home construction is an indication of falling demand.
See how it works? There will be no greater truth determined when you decide on your conclusion first, then interpret the data to fit.
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Realtors Are Filthy Liars says
You are already inheriting our SF Bay Area high tech jobs... other states are booming benefiting from higher costs in CA.
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No one talks about how Gen Y/ The Millenial generation approx 1982-2001 is much larger than the baby boomer generation. So those that think there will be an oversupply of housing is just wrong. Maybe some surburban tracts will be demolished out far from work centers... But the millenial generation will keep rents high until they absorb boomer housing at their death rate or better with ease.
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B.A.C.A.H. says
You may want it to be.... but it's not.
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BoomAndBustCycle says
And how will they will be able to pay for their expensive houses? Their wages are low and anyone with a higher education will be straddled with debt. Their parents are likely tapped out. Do they have the ability to actually buy houses or will they be a generation of low income renters?
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Massive Housing Inventory says
I rented in Denver in Q2 2012 and my experience does not jibe with a 8.8% decrease in rents. The market was tight and rents were increasing. I was restricting myself to a relatively small area, but every indication I had was that rents in general had increased and were still increasing.
I don't buy it.
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"Yep, if that chart doesn't SCREAM recovery..... nothing does!!! Starts at the lowest level since records were kept, the future looks booming!!!"
LOL, too funny... that chart... LMAO The duck has been plucked!
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That is disgusting. Not only do you negative nancys have no fantasy world of riches to turn into reality you also have NO CONCEPT OF DECENCY. My god man how can you post a picture like that… its… its… simply HORRIBLE. How would you like me to start posting pictures of hanging naked humans??? As for this topic its irrelevant, no matter how low rents fall you will still be a landlord TYCOOOOOOON. As rents fall simply buy more and more houses. Tre Simple!!! KACHINGCHING
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duckhead says
Genius. Comedy gold.
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duckhead says
That's Chick-fil-A!
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robertoaribas's website
apocolypsefuck is still winning in my book, but duckhead is in a strong second position for the main reasons to read this site!
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During the US bubble, many said “Prices only go up…” because of X, Y and Z reasons.
Now that the buble popped, many of the (newer) regulars around here say “Prices only go down.” Because of X, Y and Z reasons.
The truth is almost always somewhere in-between.
For what it’s, all of my metrics indicate that prices have more or less bottomed. History will prove if I’m right or wrong (not that I care too much about being right). But please people, lets be rational. 1960’s prices… I don’t see that happening.