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I'm thinking the landlords need to net $X to avoid defaulting.
Surely if rents lower, there will be a whole new surge of distressed properties.
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Some are investors and need certain $ to cover their mortgage. But the question is do they have people ready to pay high rent they are asking? That's not a hard question at all.
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46 male
Menlo Park, CA
Yes, I checked my Property Finder graphs, and it does look like rents in the city of SF have increased recently.
I'm not sure how that can work when unemployment is still pretty high. Could be a mix change, where more expensive places are coming on the market, skewing the average.
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46 male
Menlo Park, CA
Oops, didn't upload the right graph from my Property Finder at first. Here it is:
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Patrick says
Well Iwog and Nomo will get a kick out of this.
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Pasadena, CA
Since there is serious rent control and tenant advocates in SF it's difficult to raise the rents that much unless there are folks moving out and then the landlord gets to reset the rates. I had friends in the Castro that were only paying $500 a month about 3 years ago and the landlord offered them thousands of dollars just to move so he could raise the rents. What the landlord didn't know was that they were getting ready to move anyway because they landed jobs at Duke University so they took the money and it worked out very well for them and the landlord. I have another friend that has a multi unit complex in SF and he tells me that it's very difficult to raise rents and he has a waiting list.
http://www.sftu.org/
http://www.sftu.org/rentcontrol.html
City of SF Page on rent control http://www.sfrb.org/
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47 male
Lafayette, CA
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I jacked up my Concord rents by $50.
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iwog says
Patrick, how does your chart look for Concord?
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46 male
Menlo Park, CA
OK, here's the Concord graph. Don't worry too much about that last point that's so low. There's not much data for that day.
But hey, subscribe to my Property Finder and get all this data for free! (For a month. After that, well, I charge $47/month if you haven't cancelled by then.)
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Redwood City, CA
Really, it shows how many variables are potentially involved on the demand side. Everyone points to unemployment numbers and states that there is no money out there. Or that people without a job, can't be living anywhere. In a city center, there will always be extra demand.
The suburbs probably hurt the most here, as the people with jobs move in closer as rents dip, and the ones currently in SF without jobs might start taking on room mates, but the demand is there.
Unemployment might be at 10%, but that still leaves 90% employed and needing a place to live.
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Patrick, call me ignorant, but what does "average rent" mean without a number of square feet (meters, etc.) to use in the denominator?
What does that $1200 in that municipality get you?
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46 male
Menlo Park, CA
Michinaga says
That's just the average of all advertised rents for that city. I also break it down by 1br, 2br, 3br, ... and mulitfamily vs SFH in my Property Finder service but didn't want to go into all that here. Any subscriber can run all the numbers for different size and type places for themselves, and by zip code too.
$1200 gets you the average place in Concord, which has 1.98 bedrooms. That's about as meaningful as the average family having 2.3 children or whatever. It does give you some information, but best to break down the stats more if you really want to know what's going on.
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Yes, rents are definitely higher. We pay 2800.00 for a four bedroom house in the Sunset and thankfully for us, our landlady hasn't raised it since we moved in. I am constantly checking to see how it compares--someday I would like more sunshine--but for now we are definitely staying put.
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We have a lot of college students that come in in the fall. Asking rents go up. Wait a few more months to find out if it's actually a trend.
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Scotia, CA
I agree with MarkInSF. It's all about the students. Late November/early December there are more vacancies than at the beginning of the school term (that is, now); but in May/early June there are the most.
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There's no standoff issue, vacancy peaked early 2010 and has reversed the past 3-6 months. A lower vacancy rate drives rental rates in SF.
Forget craigslists, It's really not that complicated to figure out, just call Archstone, Parkmerced, etc. and they will tell you all you need to know about rental trends (which is up since Jan 2010).
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Cupertino, CA
I agree with Vain above @1.
In addition, many many landlords heloc'd their rental properties just like residential homeowners did during the run-up.
The loans terms are coming due and it doesn't look good for them.
Any landlord that *has* to raise their rents in this present economy is financially distressed.
~Misstrial
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Patrick says
Patrick,
How far back does your Property finder data goes?
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So can I understand this as the new trend, "buying is to expensive so just rent". Rental properties becomes high in demand but very few people ready to buy?
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Bubblesitter,
That IS odd isn't it? People can't afford to buy, so they rent. But the "rent" is the same as the mortgage.
So, if you're renting a house, you're basically paying the owner's mortgage ... ?
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I'm in the process of SELLING a rental house I own. When you factor in the repairs, having to deal with tenant personalities, it's more hassle for me than it's worth.
Plus, if I "wait" and sell next year, I'd hate to see my value go down another $50K this year.
Having no idea when RE prices will "recover" ... seems to me I should bail out now.
Kinda like tech stocks in 2000 ... took TWO years for the dot com bubble to fully deflate.
There was no "recovery". The stocks just deflated to their proper valuations.
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Also, the financial bailouts money are finally reaching startups, which are re-populating SOMA and other trendy City locations. The City is still more attractive to many single employees than the Peninsula for all the apparent reasons. And it has gotten more attractive to employers as well now that the commercial rents are down to some semblance of sane levels.
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Cupertino, CA
I have been watching rental prices in Cupertino area for the past few months - and can tell fore sure that they are much higher than two years or a year ago. Good two-three-bedroom apartments priced "reasonably" are being taken literally 20-30 minutes after they are posted on Craigslist. This is amazing.
Rental price is a very good indicator of the demand/supply balance, so the average/median price is not set by someone needing to pay his mortgage - it's set by how much the people are willing to pay.
I would also think that with unemployment etc. the prices would go down - but the rental prices right now do not look like going down. Maybe people are not buying houses now, and thus there is an increased demand for rental property?
Max
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San Diego, CA
Just keep chanting....."There is deflation there is deflation, they tell me so".
Or we can all agree that deflation is the biggest propaganda our government has pushed on us ever to get us to sit and accept the massive printing of money.
The CPI was crafted to not show rising housing and stock prices as inflation so don't let them try and get you to believe that now that stock and housing prices are falling there is now deflation. It is not a part of the CPI.
But yes, rents are. Rents may be going up but are being offset (in the CPI) drastically by that blender that use to cost 100.00 made in the u.s. and would last 20 years but now is made in china and sells for 20.00 but lasts only 6 to 12 months. And by that DVD player that use to cost 200 but now costs 30.00.
The CPI is nothing more than a propaganda index that is a massive windfall for the governemtn. It allows them to pay less interest on the debt, lower cost of living increases to retirees and s.s. recipients.........................and the big one.....debase our currency via printing money.
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karennma says
Who told you rent is same as mortgage if you are going to buy the same property you are trying to rent? This is what this site is about.
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Right now I’m looking for a 2 bedroom apartment in the city and am noticing that the types of apartments that were being offered for $1850 to $2100 suddenly seem to be way higher, like in the 2500-2600 range.
Right smack during a recession which has no signs of reversal. Brillant!
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sobmaz says
No. You will find that Salaries in SV compared to 10 years ago are down as are the number of jobs and companies willing to pay locals. Deflation is very much a way of life here.
Retail price of a car or can of Pepsi has gone up year over year, yet retail prices of goods coming out of SV has dropped year over year.
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47 male
Lafayette, CA
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thomas.wong1986 says
I don't think anyone considers the well known phenomenon of technology getting cheaper to be deflation.
A television today might be plasma, and it might have better resolution, but a television in 2010 is still about the same real price as a television in 1980.
The same goes with a computer. It might be faster and have more memory, but I remember paying $3000 for a top of the line system in 1992. I also paid $3000 for a top of the line system 2 weeks ago.
This isn't deflation.
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Boulder Creek, CA
iwog says
That's like saying there's been absolutely no inflation.
Also, 3K for a new computer? Really?
You got ripped :)
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Cupertino, CA
Maxim_ershov:
One reason rents are going up in Cupertino, imo, is because some LLs bought their rental property with an Option ARM or some other sort of funny money loan and those loans are resetting to a higher rate.
Or, the LLs *residence* was purchased with an ARM etc and that loan(s) are resetting higher.
Or could be that the LLs business needs liquidity and the banks aren't really lending to small or medium-sized businesses these days and so the LL raises rents as a cash raiser.
EX: My LL in Cupertino has seen her Los Altos home drop about $700,000 (94022) since mid-June of '09 to now. Her husband is a doctor, and in order to keep his business with a liquidity flow, they have to get that money somewhere since the banks have tightened up on lending requirements and business sustainability.
So, if a LL has to raise the rent in this economy its because the cash flow isn't what they have gotten in the past for other businesses they own or they have helocs coming due or ARMs that are resetting.
~Misstrial
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Misstrial--
LL can try to raise rents to match their mortgage payments, but ultimately it's the market that determines how much the apartment is worth. If a LL asks too much, it will sit vacant.
Now--just because there is an ad on Craigslist doesn't mean the apartment is actually getting rented for that $$. But, if true rents are going up, it's not because ARMs are resetting--it's because the market is changing.
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Lafayette, CA
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CrazyMan says
Gamer systems are a tad more expensive than your average office desktop.
It's my hidden vice.
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Cupertino, CA
tatupu70 - We agree re raising rents - "what the market will bear" works in reverse too despite NAR hocum that it only increases.
And you are correct re ads on CL or anywhere else - some tenants offer lower rent or the LL does, just depends. Some LLs are willing to exchange lower rent for an excellent tenant with stellar credit history and no UDs.
I rec Bay Rentals simply because some good landlords want a filter to weed out renters with a recent foreclosure/bankruptcy.
http://www.bayrentals.com
This is how we got our current rental in Cupertino (Monta Vista) @ $1700/mo lease for a 2/2 w/a 2-car garage/ 1141 square ft.
Not sure about the markets changing part - many new renters these days have impaired credit and if they can get a rental, many LLs are asking for huge security deposits or the entire lease amount for 1 year upfront -
- although some homeowners who plan on letting their residence go to default are downsizing and going from Menlo Park to Cupertino and are seeking out rentals before their property goes into default. These are the folks who I suspect would be driving up rents.
~Misstrial
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dear sirs,
the rental ASKING numbers are for the EMPTY rents. The amount they are asking for those empty places is LOWER than it was last year, but they are empty now becasue the folks that used to live in them rented the LOWER priced rentals. The lower priced rentals are no longer advertised since they are rented. Trust me, the price of apples and oranges has went down. THe apples are all that is left because smart people rented the oranges. Soon, apples will cost the same as oranges.
My gut says it is all coming down, and this next leg should be much more rapid and steep. It be held back until after Nov and then turned loose .. you know ... maybe a little "payback" from Lord Barry for tossing out every bum in the swamp ... just let Cal-e-forn-e-ah slide off into the ocean. And then look around and say, "geeze, I thought all of these conservos were going to fix stuff!!" What I'm getting at is this, the market is only being pumped up by phoney money. WHen the politicos are done pumping it in, the true pain begins. I look for a cut or ending to the Section 8 welfare program as a indicator of the bottom.
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It's fascinating people would not just go to the residential reits site and find out what is happening in the rental market. They are EQR, AVB, ESS, CPT, AIV, BRE, HME, ACC. They manage about 500K residential units on aggregate and knows exactly what is happening. Every other comment comes down to what is happening in rents.
From following the residential REIT's, occupancy rates have stabilzied early this year and rents are being pushed up in both classes, new and renewal. This has been going on for six to eight months. Renewals are going up around 5% and possibly stronger in markets such as San Francisco, New York.
Then there is the macro factors which should be a real concern for renters. There are very little new supply in the market and even less in the pipeline. If people are less concerned about losing their jobs and household starts to unbundle, rentals have nowhere to go but up. Job Growth will take it to another gear.
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@Misstrial
"I rec Bay Rentals simply because some good landlords want a filter to weed out renters with a recent foreclosure/bankruptcy.
http://www.bayrentals.com"
Do you really find the price of this service to be worth it? $50.00 is a lot for 30 days use. I'd worry that I'd be able to find the same places on Craigslist for free. What is it that makes this service better than craigslist?
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Cupertino, CA
axmcmillan:
There are rentals on there that are not on CL.
Further, Bay Rentals does the paperwork, ie the credit reports for you.
That way, some random person on CL is not getting your SS# and other personal info.
Helps to avoid the scammers and people intent on letting their rental go to foreclosure while making off with your security deposit.
A number of good landlords are scared at what has become of the rental market with the influx of impaired credit history people.
They are used to dealing with renters who usually have at least 2 years of recent rental history.
Bay Rentals acts as a medium between the renter and landlord that makes the process less like crawling the infiltration course.
~Misstrial
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Hoard cash. Live in your car if you have to. Be ready for the housing prices we were used to in the 1970s to return - because those are the kinds of wages households are bringing in now.
And plant potatoes.
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The reality it the rental market is great, you have twice the number of renters in the market with all the foreclosures, can't qualify and jsut waiting. First step is get the H out of the Bay area, a place like CO offers a better lifestyle at half the cost, I know I used to live in SF. You can buy a minimansion on a golf course for same price as 2 bd rent in SF
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Start of the school year? New fiscal year for the mega agency that seems to own everything in SF? Just from anecdotal experience, looks like someone tacked on $50 - $100 to all the rents downtown (i'm look'n at you art academy..).