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How can landlords need renters at the same time people are getting forced out of their homes?


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2009 Nov 18, 2:31pm   3,778 views  19 comments

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I've been trying to figure this out and really just cannot make sense of it. There are so many great renting opportunities right now in the South Bay area. I've been here for 8 years and have never seen as many places for rent under $1000 a month. To top it off I am seeing some "cottages" and small homes in the thousand a month price range as well.

How can there be a lack of people renting, causing competition, vacancies, and generally making the renting opportunities great right now in addition to the mass amounts of foreclosures going on in homes?

The only reasonable thing I can come up with is that people are leaving the area, due to lack of jobs, or are downsizing and moving into cohabitation type living arrangements.

Anyone else have ideas on this? Seems to me there are truly more for rent and for sale signs on lawns these days then I have ever seen before. Or do you think I am just hypersensitive to them being a bubble blog/Patrick.net reader? :)

Thanks all.

#housing

Comments 1 - 19 of 19        Search these comments

1   elliemae   2009 Nov 19, 12:09am  

probably a chunk of homes that are behind & going into foreclosure are being rented out for some income whilst the process marches on.

I don't know if banks are renting out once they're in foreclosure. That would be the smart thing, but banks aren't know for their intellect.

2   anghrist   2009 Nov 19, 4:37am  

Rats don't tend to remain on sinking ships.

BTW, sales rates are dropping as well. I guess we're running out of lemmings as well.

3   LowlySmartRenter   2009 Nov 19, 6:16am  

Some possible answers to your question (from the WSJ):

Landlords Offer Incentives to Stay Put
http://tinyurl.com/ycx4cjk

5   Misstrial   2009 Nov 19, 9:09am  

They are leaving the area due to job loss and an inability to put down all the money to rent another place. Relatives are taking each other in as job losses march on.

Have a look at the interactive map of unemployment in the US:

http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

Kinda tells you something, no?

~Misstrial

6   Lectrician   2009 Nov 19, 10:29am  

Watch the U-haul dealer on Monument Blvd., Concord ... busy as all Hell ...

7   wisefool   2009 Nov 19, 11:52am  

I think it has to do with overbuilding.

8   rdm   2009 Nov 19, 12:27pm  

One reason for declining rents that I observed first hand last spring when I was looking for a place in the North Bay is consolidation. In one case a women who was separated from her husband was moving back in (reluctantly) with him because she lost her marketing job. In another case a guy and his daughter who were living in a separate granny unit behind a main house were moving into the main house (also a rental) because the woman who rented the main house had her hours cut in half and could no longer afford the rent by herself. This sort of consolidation, plus people just bailing out of CA explains why rents are declining in the face of foreclosures that should open up more housing for rent. This in my opinion presents a potential problem for the new owners of foreclosed houses that intend to rent them out to pay expenses while waiting for the market to turn.

9   jeffmgreg   2009 Nov 19, 12:56pm  

Where is the rent going down? I'm living in downtown San Jose and I'm still paying $1700 for a two bedroom apartment, that's what I was paying three years ago. I started looking around for other places about 6 months ago for a one bedroom and they still wanted $1300 min. Studios ware going for $1100!

Can you guys tell me where you're getting rent for under a $1000 that's not in the ghetto?

10   Misstrial   2009 Nov 20, 12:15am  

jeffmgreg:

Look on craigslist and put your criteria in the search box. Also depends where you want to rent. MV is still pricey but is coming down.

Here's a link to some MV units for rent on craigslist. Using 1700 as your max, I came up with some 2 bedrooms. With that amount, you should be able to get a garage (for 1700).

~Misstrial

11   CrazyMan   2009 Nov 20, 1:34am  

Yep, look on craigslist. I've been watching rents go down for the past year and a half.

Keep in mind asking prices are just like wishing prices for property sales, you have a lot of bargaining leverage. Use it.

For comparison, I rent a 3 bedroom 2 bath 2 car garage corner lot house on the border of Campbell and West San Jose for $1800. It probably should rent for 2K, but I drive a hard bargain and I'm a good tenant.

12   thomas.wong87   2009 Nov 20, 8:16am  

... an what do you hear... everyone wants to live here.. its usually from idiots who been here for a few years.

I been here for 3 decades and gets into my claw the hype and stupidity !

What your seeing is a long term trend. We had a blip up in 1998-2001 but the declines are long term.

"where is the rent going down? I’m living in downtown San Jose and I’m still paying $1700 for a two bedroom apartment,"

Campbell and Santa Clara. May try Fremont. The Bay Area isnt all about Mt View or Palo Alto.
Downtown SJ, is too hyped up. Your 1700 is paying for all the marketing hype.

13   thomas.wong87   2009 Nov 20, 9:58am  

"The only reasonable thing I can come up with is that people are leaving the area, due to lack of jobs, or are downsizing and moving into cohabitation type living arrangements"

At one time all the jobs were here. Now days the employers local headcount is a minority while the majority are outside of the region/state/country. 3-4 out of 5 actually live outside of California but work for a California company. We could say employers are giving incentives to move people, with salary cuts to other states. I seen it done.

14   Leigh   2009 Nov 20, 11:35am  

Portland, Oregon resident speaking here: rents are dropping here, too. I'd say they are down about 20% from peak in 2007. Reasons: way overbuilt, lots of condo towers turned into rentals, and they are still building SFD, condos, townhomes, and apartments in the suburbs though not much going up close-in or downtown. U6 is 20%!. Our foreclosure rate is increasing, 22% of RMLS are distressed sales.

i think many are doubling, tripling up in rentals and folks needing help with the mortgage. I personally know 5 folks renting out bedrooms or basements to help with the mortgage. I'd guess that people are leaving the area for work though no data to back that up. A few neighbors went back to Sweden and Germany (Nike and high tech workers).

we sold in May 2007 and our rent has dropped 9% 'to keep us' here though we will be heading back to our old hood since rents continue to drop. Can't imagine what they will be like in June when the lease is up.

Where is Portland gonna get the jobs? We've been bubbly for 20 years, first the dot com rise and fall and now real estate. Where is the stability? Where ever Honda, Kia, Hyundai, or Toyota put an auto plant?

15   pkennedy   2009 Nov 23, 2:52am  

I guess a combination of people moving out and a few renting out rooms would really make a difference. It wouldn't take that many people changing their living conditions to really change the numbers in favor of renters.

I moved when rents really dipped and most places I was looking at said they had already reduced the rent 20% and it was going to go fast.

Most of the apartments around the bay area are pretty crappy. Until you reach the 2K+ mark, they're old 70's style buildings with the absolute cheapest fixtures possible. If I was single and had an option of 70's crap, or a room in a beautiful new house with most likely professional room mates I would definitely go that route.

I'm not sure how many of the poorer are shacking up, because they already do a lot of that to afford rents around here. There are only so many people who can fit into a 2bd apartment. If there are 4-6 people in a 2bd at $1500-1600, thats already only $300 or so per person.

Is there any site out there that keeps track of craiglist postings? It would be interesting to see if there are more rooms for rent in large homes listed now, than there were 2 years ago

16   permanent_marker   2009 Nov 23, 3:03am  

I am in Mtn View, paying $1700 for a two bedroom town home.

I looked a few months ago... similar units are down $50-$100.

17   zzyzzx   2009 Nov 23, 3:23am  

A lot of people are moving in with friends or relatives, or living in their car, or leaving the country.

18   pkennedy   2009 Nov 23, 5:32am  

@permanent_marker:

I found a lot of people start off with higher rents and then quickly realize no one is even remotely interested and then they slowly start to drop the rates. It takes a bit of searching for larger discounts, but they're definitely out there. There are a lot of hopeful landlords out there as well!

19   thomas.wong87   2009 Nov 23, 6:07am  

"A lot of people are moving in with friends or relatives, or living in their car, or leaving the country."

The Early 90s recession lasted a long time. California didn't recover as quickly as other states.

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