patrick.net

Gas would need to go up another dollar to force people to pay $2k for an apartment in SF... then again, $4.50 gas would probably spell more than just people moving closer. It would spell economic disaster, which isn't that far away anyhow even if gas prices go down.

SQT,

Frankly I'm suprised that rents haven't gone up more. Given that there have been so many cancellations on new homes and so actual closings. Then again I suppose just in the same manner we felt that the entire year of 2005's outrageous "appreciation" couldn't go on forever rents too are proving "sticky". Some have mentioned that the rent increases we've seen are more energy cost driven than actual market/demand inreases.

uh, that should read, so FEW actual closings.

DinOR I think rents in the BA will skyrocket. Afterall the run-up in housing is a result of the mind bendingly strong BA fundamentals. You see as the common average BA salary is 250K a year, even for the most lowly of tech worker, the housing costs aren't really that expensive. They merely reflect the nature of the area. To quote the most famous of Patrick Bears (now in hibernation), it's the "intangibles" of the area that make it just so gosh darn expensive. Besides wouldn't you pay to hang out with the trolls that frequent this site? The BA is full of them. But then again they merely reflect the amazing BA, replete with amazing weather, amazing food, amazing insular economy, and gold paved roads. As rents reflect the true cost of housing why would they not skyrocket? Remember there is a chronic housing shortage in the BA.

I'm actually on the opposite end of the spectrum. This summer will be a great time to pick up a late model, low mileage Suburban! They are already going so cheap! True, not an ideal commuter car but for golf outings in the summer and hunting and fishing trips, they're great! I'm thinking July maybe August. A lot of Suburbans in Oregon sit about as much as RV's but they are great fun for the "drive-in" season. Remeber the drive-in?

I believe it was Peter P that said a few threads back that “rents” in his area while firming would just about cover the taxes and HOA’s due on a monthly basis.

For SFHs, this may still be the case.

However, condo rent should cover more than half of PITI now. I tried to look at a 2/2 in Menlo Park that asks for 2500+ a month but it was already gone (in a week). Last year, no one would pay 2500 for an old 2/2 in MP.

Rent appear to be volatile and very location specific right now.

Surfer X,

Damn that it is a scary thought! Paying a "premium" to hang out with the trolls!

I tend to think that even if rents rise, home prices will have to get down to "pre-bubble" pricing levels for there to be any semblance of sanity! When I first got out of the service it was actually a *little* cheaper to own than rent in Oregon. Right now (with trad. financing) it would cost us about double to own vice renting.

Like I say I went through the actual closings for our area YTD and it was NOT impressive! Only about 2 or 3 higher end homes sold and one of those was to a local realtor. Most of the inventory that was moving were older homes below the median and mobiles. Stuff like that.

SQT,

I commuted with a 4 cylinder Volvo 940 for about 10 years. You actually had to prepare and ramp up your speed so you weren't doing 45 mph at the top of Sylvan Hill (elev. 450 ft.). When my oldest daughter "took over" she would ask for 20 bucks for gas and I doubt 5 of it found it's way into the tank. Oh, come on! We all did it!

My impression is that higher-end homes are selling but lowering-end homes are not. This alone would keep the median price up there even if many homes are selling for less.

Surfer X,
While I realize you were being sarcastic above, let's pretend that rents do skyrocket anyway, and that BA fundementals come into play. I would think that if rents did go through the roof, all those liberals that have been focussing 90% of their attention on Iraq and Tibet would suddenly call foul and start on the warpath. Come to think of it, why in the hell aren't those 10's of thousands of protestors, who spent all that time and energy protesting over an event that likely wouldn't affect them directly choose NOT to protest over something that is actually affecting them all? Or- could it be that the majority of them already own their homes? Interesting... Sort of paints the picture diffrently doesn't it as far as their "values" really lay.

If you haven't browsed Wiki lately, it's a good read. There's a cite to Patrick.net and a quote attributed to Lereah. If it's really him he's sounds like he's ready to cop a plea:

http://en.wikipedia.org/wiki/United_States_housing_bubble

Peter P,

I couldn't remember the exact quote but I believe that was the "spirit" of what you shared. I can definitely see how a few high end closings can skew the numbers. What does that say about the mindset of potential buyers and your local economy at large though? Sounds sloppy?

What 'Ben Jammin' (MP, Jukubot?) is referring to is the one-month spike, mostly in 3 & 2-Bdms apartments displayed on the rental search engine page of this site:

/

True, I also see a big one-month spike... after 5 solid years of flat-to-declining rents. Big whoopiety-do... If it continues sharply upward beyond one-month, I'll be impressed, As DinOR & SQT pointed out, you'd need to see years of big, sustained increases to come close to balancing the price-rent ratio. This would also mean WAGES would have to be increasing as well, as you cannot pay your rent with borrowed NAVVLP monopoly money.

If the housing market corrects entirely through wage/inflation increases vs. nominal price drops, you won't see me crying about it. Can't really complain about having my wages double or triple while RE proces stay flat. The only challenge will be how to inflation-protect my savings/investment $$. Given paltry-to-negative real wage growth over recetn years, I find this a rather unlikely scenario, though.

What does that say about the mindset of potential buyers and your local economy at large though? Sounds sloppy?

In the Bay Area, higher-end homes did not enjoy a bubble boom during recent years. Buyers of there homes are not credit-dependent and so they are likely to buy when inventory goes up.

In Mountain View, Google-effect is raising rental prices. :(

Rent is not back up to 1999 level yet but it is higher. If this continues, a soft-landing is not impossible for some type of housing units in some locations.

surfer-x: Gods, I love these roads. Whenever I'm short of cash, I just take a garden trowel and pry up some of that gold.

DinOR: The Latin you were looking for is "Res ipsa loquitur" (the thing speaks for itself).

Peter P,

Even fresh off the assembly line in 1994 the Volvo 2.1 liter engine put out an impressive 110 HP! Now imagine years of idling in stalled traffic, an "iffy" rear main seal and about 300K miles. nomadtoons2 could have given me a run for my money with his lawn tractor!

To quote the most famous of Patrick Bears (now in hibernation), it’s the “intangibles” of the area that make it just so gosh darn expensive.

Hey, 'X',

Did you mean "most famous of Patrick BULLs" (Jack)? :-)

To quote the most famous of Patrick Bears (now in hibernation), it’s the “intangibles” of the area that make it just so gosh darn expensive.

Did you mean “most famous of Patrick BULLs” (Jack)?

"Reasonable bull" was the term we used.

Hmm, I thought bears hibernate but bulls do not...

requiem,

Thank you! We don't say it enough.

In Mountain View, Google-effect is raising rental prices.

Rent is not back up to 1999 level yet but it is higher. If this continues, a soft-landing is not impossible for some type of housing units in some locations.

Ok, that tears it! I'm going up to my manager right now and *demanding* a rent-driven salary increase. If rents are really going to double or triple to meet housing prices, then the boss is just going to *have* to pay me a lot more to stay here. I'll just point out to him how I'm a lot more productive than 12 illegals or overseas workers, not to mention my sparkling personality and smile!

Think this approach will work?

Harm,

It's too bad that it went until almost 11:00am before someone found the energy to challenge Benjamin's faulty premise. Now had that happened on a Tuesday!

Thank you.

I finally realized why there is so much open space protected here. It gives us all something to look at as we waste our lives in our cars.

Finally someone truly groks the BA.

@HARM, yup Bull not Bear. But Jack might be a bear, I don't know as I've never seen him with his shirt off. But I digress.

Joe Schmoe,

That old Volvo I had with a "four banger" would have protected you in a crash but the sheer weight of the thing was unbelievable. It sill weighed the better part of of 4,000 lbs. This made it even slower out of the hole and I'm not kidding when I say you had to "play the momentum" in anticipating an incline!

Who was it that had the quote about "the last bear relenting" signaling the peak of a market? Tomorrow on Bloomberg's Steven Roach will be on saying why he is now bullish on the global economy! I know I'll be tuned in.

@DinOR, np.

Bulls love to cherry-pick information and ignore the rest. BA Rents have gone up sharply for a whole MONTH now. See?? --SEE??? It's obvious this is a permanent macro-trend and wages are sure to follow. Never mind skyrocketing inventory and mortgage/tax delinquincies, while sales are falling off a cliff. It's a SOFT LANDING, boys!

Btw, nice to see Patrick posting again (this & last thread).

http://rismedia.com/index.php/article/articleview/14291/1/1/

RISMEDIA, April 25, 2006—RealtyTrac(TM) (www.realtytrac.com), a leading online marketplace for foreclosure properties, has released its 2006 Q1 U.S. Foreclosure Market Report, which showed that 323,102 properties nationwide entered some stage of foreclosure in the first quarter of 2006, a 38 percent increase from the previous quarter and a 72 percent year-over-year increase from the first quarter of 2005. The nation's quarterly foreclosure rate of one new foreclosure for every 358 U.S. households was higher than in any quarter of last year.

RealtyTrac publishes the largest national database of pre-foreclosure and foreclosure properties, with more than 600,000 properties in more than 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate, AOL Real Estate and Knight Ridder Online.

"The sharp increase in foreclosures in Q1 continues a steady upward trend that we've observed since the beginning of last year," said James J. Saccacio, chief executive officer of RealtyTrac. "Foreclosures have now increased in four consecutive quarters and are on track to go above 1.2 million in 2006, which would push the nation's annual foreclosure rate to more than 1 percent of U.S. households."

Harm,

Yeah, it just seemed like someone "clutching at straws" and after the first *nice* weekend in OR since Sept. I just wasn't up to it. I was curious though what yourself and others thought about Stephen Roach finally turning bullish?

On a different note, my former neighbors I feel are about to put their "dream house" on the market. Now you may ask, "That's funny DinOR, how can you tell they are about to put it on the market?"

Ahem, "Because they have finished their landscaping".

I’m going to say that outside of a narrow spectrum of higher end housing (whose rent is currently ridiculously cheap compared to owning), rent will stay at the rate of wage inflation. Most people rent not by choice, but because they can’t afford to buy. Any rent increase will quickly run into demand inelasticity. Furthermore, the future economic hardship will force a lot of middle class people to rent out converted garages, basements, and bedrooms to make ends meet. That fresh supply may even depress low end housing.

Nomad,

Thank you! If you were going to buy a small car, just go with the one with the best test crash ratings and good handling and good braking. Surviving a crash is good news, but not having a crash in the first place is much better news.

Astrid,
Interestingly enough,I recall watching a thing on ABC news years ago shortly after I bought my tacoma. The clip was of various trucks and how they stood up in crashes.At first it seemed unfair that my tiny truck and the other 2 compacts- a Ford Ranger and Nissan were up against full sized Chevy and Dodge trucks. Well... the front ends of the large trucks caved in on impact, causing massive damage to the dummies. On the other hand, 2 of the smaller trucks- thr ford and toyota did really well, with no damage to the interior of the cab structure.Made me feel better.

nomad,

Yup, that's the dirty little secret about SUVs, they're basically a minivan body strapped to a truck undercarriage. They got size going for them, but many SUVs have poor structural integrity. You add the likelihood of serious crashes and the poor handling, and I don't think they're safer for the average driver and they're certainly quite deadly for everybody else.

Well… the front ends of the large trucks caved in on impact, causing massive damage to the dummies. On the other hand, 2 of the smaller trucks- thr ford and toyota did really well, with no damage to the interior of the cab structure.Made me feel better.

One thing: frontal crash tests is valid for comparison only with vehicles of the same weight and size. If one of those large trucks hit one of those small trucks, the result will be totally different. Be careful!

My advice*: get a LARGE SUV/seden with a good frontal crash test rating.

*Not an advice

I was curious though what yourself and others thought about Stephen Roach finally turning bullish?

Honestly, I don't know much about him, other than him being M.S.'s main financial guru. My impression of him from the few pieces I've read in the past is that he's pretty much a trend follower who carefully hedges his forecasts. He's had some intelligent things to say about global outsourcing/wage arbitrage, but I wouldn't accept his opinions as the word of God.

They got size going for them, but many SUVs have poor structural integrity. You add the likelihood of serious crashes and the poor handling, and I don’t think they’re safer for the average driver and they’re certainly quite deadly for everybody else.

Some SUVs have pretty good structural integrity (as domostrated in offset tests):

http://www.iihs.org/ratings/summary.aspx?class=50

Nomad-

Sort of agree, and sort disagree. My sister-in-law has a 2004 Toyota Tacoma, the same truck you have. I've driven it several times. On the one hand, it is an exceptionally well made car. It is the most practical vehicle I have ever seen and the attention to the little details that make up durability is amazing. For examplle, all of the paint on the lower panels has exceptionally thick orange peel -- but it's on purpose. It is there to prevent stone chips and keep the truck looking good for years to come. There are impressive little details like that everywhere on the truck. When she first got it I thought about getting one myself, I was that impressed.

The thing is, though, the truck has no comfort featuers whatsoever. The ride is much, much harsher than the Blazer it replaced. My Jeep has solid front and rear axles and is not known for its plush ride. However, it is about ten times more "luxurious" than the Tacoma. Those comfort featuers really make a difference.

I wouldn't mind having a Tacoma if I used it for running errands, and it is obviously an excellent work truck if the standard configurations suit you, but I sure wouldn't want to commute in one every day. Sometimes it is worth paying more for a little extra luxury. Would I pay 7-8 times as much in order to get the S550? No, no way. But I'd pay more, sometimes it is worth a little extra.