patrick.net

"Any likely increase, she said, would still be insufficient. Construction of more affordable housing is also needed to close the gap."

any likely increase will just be taken by higher rents.

this is how rents and home values have gotten so high to begin with, a classic wage-price spiral.

to fix the problem we need to build so much housing that there's a significant vacancy factor, and also increase property taxes such that LLs and specuvestors can't afford to keep supply off the market for long.

Housing is unlike any other good or service. Try living without it for a day or two.

problem is the above fix directly hurts the majority who already own, and the politically powerful minority (Howard Jarvis, cough) who own a lot!

The renters, well they don't vote and have no money anyway. Fuck them, right?

Rent: $1695
Exact same size condo down on the same block $495k plus HOA.

/end thread

Bellingham Bill says

to fix the problem we need to build so much housing that there's a
significant vacancy factor, and also increase property taxes such that LLs and
specuvestors can't afford to keep supply off the market for long.

Yes, keep building to drive it down. There is no shortage of land to build on.

dodgerfanjohn says

Rent: $1695
Exact same size condo down on the same block $495k plus HOA.

/end thread

HOA is a joke (another racket).

>$495k plus HOA

thing is, when buying the interest cost goes down over time as principal is repaid, while renting, the rent goes up. . .

even LA's rent control would have me paying now more than twice the rent I was back in '91 ($700 -> $1500, the market rent is ~$1900).

Looking 30 years down the road, which is better, owning a $900,000 place free and clear, paying $600/mo +HOA in ownership costs, or still paying $3100/mo in rent?

On a $500,000 place with 20% down, the monthly TCO is ~$1600 + HOA, and this falls to $1400 + HOA in 2026, and goes under $1000/mo in 2039.

If the past is any guide, rents will be double what they are now in twenty years.

Even if buying "makes no sense" in any given year, over time, this rising rent dynamic shifts the decision to the buy side.

but . . . arguably the analysis is more difficult when considering the gains that were to be had in the stock market 1982-1999 vs. a housing market that was flat by comparison

http://research.stlouisfed.org/fred2/graph/?g=utz

shows rents have tripled since 1980 but the market is up 14X . . .

but again, rents seem to only go up!

https://research.stlouisfed.org/fred2/series/CUUR0000SEHA

simply brutal . . . over the next thirty years, rent starting at $1700/mo will result in maybe $800,000 in total rent paid, depending on inflation.

I've got to move to Japan to avoid it!

Analyzer says

There is no shortage of land to build on.

dunno if you're being sarcastic, but there is indeed no shortage of land to build on, if we are talking about increasing the supply of housing, which we are.

Very few areas are maxed-out, density-wise.

thing is, more people, more problems. Last-one-in-ism is a powerful limitation in planning.

My dream is that we fill the bay, LOL. Make a lot of Venices. Why the hell not.

looks nicer than Santa Clara!

That'd actually be an interesting SimCity-style app idea. . .

dodgerfanjohn says

Rent: $1695

Exact same size condo down on the same block $495k plus HOA.

/end thread

1 - you could have picked up that condo 3 years ago for $350000 or less but missed it
2 - your rent will go up eventually - slowly but surely
3 - at 500k your payment after tax deduction would probably be around $2k/month and that would be frozen for 30 years and then it goes away
4 - so you can save the difference every month of $300.- until rent will be a wash

not exactly a steal you got there

In the thread title you used the word "especially", but I think you mean "specifically".

Here in flyover country where there is no shortage of housing, we do better off renting and socking the savings away in the stock market. When that worm turns it will be much easier to sell.

I won't bet on further appreciation or rent increases in the immediate future.

jojo says

SubOink says

Why it's a terrible time to rent...especially in the bay area

It costs even more per month to buy so I'm not sure what your point is.

yes, it costs even more to rent - correct.

what my point is??? I posted an article. The point of it is pretty clear.

@SubOink

My rent is cheaper than owning. For me, I am happy renting a small 2 bedroom. I would be pissed off buying a small two bedroom at SFBA prices. I do save the difference between my rent and a house that I would be willing to buy.

So, eventually, I will have saved enough for a 50% down payment here or to buy a house outright someplace else.

I refuse to pay half a million dollars for a rotting, shit-box of a house. It sits much better for me to rent and let the landlord pay the taxes, insurance and repairs.

I am one of the few people I know who maxes out their 401k and saves a couple grand a month beyond that. I have an 8 month emergency fund. The only thing that may force me to rethink that are the taxes. At some point, that *might* tip the balance toward buying, but it hasn't yet.

There is really no definite answer that renting is cheaper than renting. Those determinations are based on unknown future factors like future rent and future price that are unknown.

I never really buy the fact that cheap price to rent ratio means something. Based on that metric, you would have bought in Vallejo instead of Palo Alto anytime for the past five decades when the towns established and made a million or even multi million dollar mistake. If it doesn't work, I have no idea why so many worship it. Let's put in this way in 1990-2013, it is about location, location, location. In 2043, it will no doubt be location, location, location, location and location. lol

The opposite of mobility is uncertainty. There are plenty of headlines that old long time renters are being evicted, poor renter is being evicted after many years, so unfair, protest, hire a lawyer, yadda. Let's put it this way, if they would have bought decades ago instead of renting, they would not be begging not to be eviced and be the greedy landlord instead. I'll take greedy landlord over a charity case. Well just turn the clock to 2043 and see if you want to be old, helpless and renting and beg the lawyer or tenant union can save your butt.

>> I'll take greedy landlord over a charity case.

So I take it you will vote to repeal Prop 13?

WhatchaKnow says

>> I'll take greedy landlord over a charity case.

So I take it you will vote to repeal Prop 13?

voting is a waste of time and I don't even care either way. When has ever a bill passed not passed and your vote make a difference.

SFace and bg - agreed!

SFace, you're argument that you should ignore rent vs buy ratios sounds to me like a variation of "buy now because prices only go up".

wave9x says

SFace, you're argument that you should ignore rent vs buy ratios sounds to me like a variation of "buy now because prices only go up".

I didn't say ignore it. The rent to buy ratio is a long winded way of saying of buy in the Ghetto and not buy prime. (becuase the results reflect that correlation) That has proven to be a mistake.

Location was, is, and will be the most important aspect of buying.

jojo says

That's not what its saying at all. You look at the relative price to rent ratio over time (plot a chart over time) to see if the ratio is more or less favorable at any point.

I think SFAce is saying that historically.. mouth watering below rental parity options usually don't exist in prime locations.. but can be found even today in undesirable locales like Detroit. That doesn't mean you shouldn't buy in prime locations, just because price to rent ratios are out of whack.

I do agree... I avoided looking in Santa Monica and Culver City in 2009-2011... thinking prices MUST come down... and instead bought in a LA suburb. I'm happy with my purchase, but had i "stretched" to buy a place in say Culver City... (which didn't make sense at the time). I'd be sitting on a much larger gains.

It is totally incorrect that buying is only ever cheaper than renting in ghetto areas. Nice areas are expensive to buy in but also have high rents. Ghettos are cheap to buy in but have low rents.

Buying was significantly cheaper than renting in most parts of the Bay Area (nice parts of SF and Palo Alto included) in 2011 after rents went way up and prices hadn't yet. If you were following this you would have realized (correctly) that it was a good time to buy then.

Also, if you had followed the ratio in 2007 when buying was 2x more expensive that renting, you would have realized (correctly again) that it was not a good time to buy.

exactly