patrick.net

I was wondering how they calculate this figure. So if someone or a family owns a two houses (regular home + a vacation home), one is considered vacant?

Also the homes are not necessarily distributed evenly thought the US. Many are in places where it undesirable or the is little in the job market.

marcus says

IT’s hard to reconcile this with an article the other day that rents are ready to start going up.

I agree. Rents are not going to go up unless salaries go up. You cannot borrow to pay rent, so the rent you can pay is strictly limited, unlike a mortgage.

Doesn't matter what the landlords want or need. No increase in salary means no increase in rent.

Rent is a function of supply and demand. In many markets supply is greater than demand so rent does down. Hence new home and multi-family construction is down which means that eventually rental supply will be less than demand because population growth in the USA is occurring.

>>What about all the properties being rented out because they can’t be sold? That is ‘new’ supply.

I agree, but eventually many of these rental properties will be sold to owners who will live in them. I currently reside in a house I rented out for 20 years and when I sell it next year it will very likely be sold to somebody who will live in it.

When the cost to own equals or is lower than renting, I suspect that the demand for rental properties goes down. There are a lot of variables that goes into the buy or rent choice.

Nomograph says

Not really.
According to the article, most of the empty, non-vacation homes are in AZ, NV, and FL. Think far-flung desert and swamp tracts where nobody wants to live.
In other words, these vacancies don’t affect the market in places where people actually live.

All purchased for investment and vacation homes secured with primary residence in California. Think back to 2004-2006 and Equity Locusts from CA entering these states.

I live in the greater Boston area and my rent's gone up, annualized, ~1% for 5 years, my heating is included. It's obvious that the costs of fuel and maintenance hasn't been flat all this time so it's clear that my management company hasn't been doing too great for the past few years. The superintendent is around, 50% less, but still, any emergency needs to be addressed immediately or a tenant can go to the local housing authority, file a complaint, and then they'll never be able to evict anyone.

Thus, there's little upward pressure on rents, while at the same time, many starting homes in my town, still begin at $500K, condos, a bit less at ~$400K but still, that ownership to rental difference is still 2:1.

"If they do have a 401(k), it’s usually offset by a loan against it with almost no equity"

This, I don't understand. I mean it's basically treating a 401K retirement vehicle as a day trading/margin account instead of a tax-deferred retirement eggs nest.

Unfortunately for the bears, vacant houses are not going to have much impact on home prices. First, as bayview pointed out above, vacant houses include vacation houses. Second, many, as in TONS, of vacant houses are in such horrible shape they must be torn down. No munciplaity will ever issue them a Certificate of Occupnacy (COO) and no bank would give a mortage to by them. And third, many vacant houses are in places nobody wants to live (ie: Detroit).

Los Angeles Renter says

I’m selling all my stocks and parking my 401K into a money market account

Josh--did you see this? He's putting his 401K in a money market acct. Not a mutual fund.

In Massachusetts, the governor and his team are doing everything they can to prevent foreclosures from spilling onto the market. There's a low supply of buyers/sellers and thus, an illusion of price stability.

The problem is that the good paying jobs are leaving MA in mass. Just recently, Fidelity's axed another 1.1K jobs, along with the 2-4K they've re-located during the prior decade. There are very few exceptions to this phenomena, as companies are finding that they can in-shore their USA operations to low cost cities like Dallas TX or Raleigh NC w/o hurting their businesses.

Likewise, even though defense spending in MA has gone up by 300%, since 2001, when order sets complete, the next set of contracts find their way to Raytheon's facilities in CO, TX, or VA, instead of here. All and all, every industry has a strategy of leaving these high cost of living locales for cheaper ones. Really, if you want to put your roots down, in a growth area, look to buy a home in let's say Houston, than in the Boston-DC corridor or SoCal & Silicon Vally/SF Bay areas.

>The problem is that the good paying jobs are leaving MA in mass.

And not just in Massachusetts either...

">The problem is that the good paying jobs are leaving MA in mass.

And not just in Massachusetts either…"

I know, it's a sad state of affairs.

Here's a personal question to a lot of folks in SF & Silicon Valley ... why are you living there?

I mean really, if you didn't grow up there and thus, have all of your friends/family there, what's the attraction? I mean I understand it's a temperate weather w/ a lot of sunshine but c'mon, real estate costs are like New York City, traffic congestion is intense, and really, the people there aren't really all that friendly or genuine either.

I've made numerous trips out there and I'll admit, I was with friends and colleagues, so it was fun being a tourist and all but it doesn't seem to be a place where one can live in, long term. Many of my friends, who tried out SF/SV, eventually moved back to the east coast because of the cost of living differential and the fact that although east coasters were not overtly friendly, when one actually made a friend, that person was kinda reliable.

Come on Fantastic--put this guy in his place. How dare he suggest that someone might move out of the Bay Area because he didn't like it there. Blasphemy.

"I fixed my living cost in 2001, then refinanced and lowered it even more. Once you fixed the living cost. eveything else is actually no more expensive than living "

Ok, now that's a strategy!

I guess the problem is that New Englanders, on the whole, don't change & thus, probably look at the housing costs in the Bay area and decide to go back home. Realize, the costs of housing between let's say central MA or southern NH vs greater Boston, is exuberant. And many can live in the outliers and commute into Boston.

“Here’s a personal question to a lot of folks in SF & Silicon Valley … why are you living there?”

MONEY.

tatupu70 says

Los Angeles Renter says

I’m selling all my stocks and parking my 401K into a money market account

Josh–did you see this? He’s putting his 401K in a money market acct. Not a mutual fund.

Uhhh yeah Tatupu - and what's the going rate for money markets right now?

joshuatrio says

tatupu70 says

Los Angeles Renter says

I’m selling all my stocks and parking my 401K into a money market account

Josh–did you see this? He’s putting his 401K in a money market acct. Not a mutual fund.

Uhhh yeah Tatupu - and what’s the going rate for money markets right now?

I'd have to check. But that's beside the point. Do you understand that a 401K can be invested in a variety of places now, and not just mutual funds?

tatupu70 says

I’d have to check. But that’s beside the point. Do you understand that a 401K can be invested in a variety of places now, and not just mutual funds?

Enjoy:

http://patrick.net/?p=530634#comment-696463

joshuatrio says

tatupu70 says

I’d have to check. But that’s beside the point. Do you understand that a 401K can be invested in a variety of places now, and not just mutual funds?

Enjoy:
http://patrick.net/?p=530634#comment-696463

Thanks. That was the point of my post. I'm hoping you get it now...

Mr.Fantastic is locked out of the forum for now. Too many personal insults.

Hey--don't do it on my part. Although it'd be better if they were at least funny..

He just kept directly insulting users, even when I asked him to stop several times. It's overdue.

But if he says he'll stop that, I'll re-enable his account.

tatupu70 says

That was the point of my post.

You just fail to acknowledge others :-)

Mr.Fantastic says

tatupu doesn’t even know the going rate for money market accounts these days,

Some people blindy put money into investment vehicles and/or follow the masses. If your rate of return is negligible, you may as well put your cash in a savings account..

Hmmmphhh, so much for attorney-client privilege.

These kinda disclosures of persons’ personal data are uglier than Kimberley Bell’s testimony.

I don't think it's personal data if there's no name attached to it.

And I agree that their spending seems a little unusual. $150 per month ($1800 per year!) on clothes? $10k per year on food? And how big is their rental home that it costs $1200/yr to insure their possessions?

And of course an insane amount of money goes down the automobile drain. $4800 per year just to own an automobile, plus (assuming that "transportation" means gasoline) $3000 to move the car from one place to another: nearly $8k, or one-sixth of their annual gross pay, just on their car! How about moving to the city and reducing that number to zero?

It makes the $1200/yr they spend on recreation look pathetic. All that money spent on other stuff and so little to spend enjoying yourself!

Michinaga says

And of course an insane amount of money goes down the automobile drain. $4800 per year just to own an automobile, plus (assuming that “transportation” means gasoline) $3000 to move the car from one place to another: nearly $8k, or one-sixth of their annual gross pay, just on their car! How about moving to the city and reducing that number to zero?

It's disingenuous to suggest that not having a car reduces transportation expenses to "zero" - how much does daily mass transit cost for a family of four + all the special cases where you require a taxi or rental car? And I expect they'd pay a good deal more for comparable housing in "the city" vs., presumably, whatever suburb they live in that requires a car. For example if I moved from Mt. View to San Francisco I could indeed get rid of my car, never engage in any work or leisure activity not reachable by Muni and BART, and pay $500-$700/month more in rent for a roughly comparable place.

Michinaga says

Hmmmphhh, so much for attorney-client privilege.
These kinda disclosures of persons’ personal data are uglier than Kimberley Bell’s testimony.
I don’t think it’s personal data if there’s no name attached to it.
And I agree that their spending seems a little unusual. $150 per month ($1800 per year!) on clothes? $10k per year on food? And how big is their rental home that it costs $1200/yr to insure their possessions?

Yeah, I have a problem with a supposed advisor releasing even annonymous personal data. In this case it is harmless, as we don't even know the name of the bankruptcy firm. But, think about this with a RE agent. They have loose lips among their peers. Don't give any personal information that you don't want repeated. You have NO expectation of confidentiality if you don't have a buyer broker agreement. You can't enforce the confidentiality clause even if you do have a BBA. How would you know what kind of lunchtime chatter was exchanged?

$1800/yr on clothes does not sound as crazy high to me as it does to you. I assume this is a family or their food costs would be lower. That clothes budget includes shoes, coats and underwear, not just the shirts, jeans, dresses etc. worn to work or school. How far does $1800 go when a coat is $100+ and a bra is $35. I live in the midwest. We have to own multiple coats for different weather, casiual and dressy occassions, plus snow boots. Granted I don't buy a new coat every year for every season. I alternate. Kids need all new winter outwear every year because they outgrow them. Easy $100/child.

Why are you assuming insurance is for their rental home? I have insurance for car, life, health, disability, home. I used to have an umbrella liability policy as well. If these folks are only paying $100/month for all insurance, they are missing some coverage.