patrick.net

FortWayne says

It's why I looked on internet and found patrick.net, because I had a gut feeling something was very wrong with just about everything.

And there you have it: why PatNet gets over-run by trolls. When Forthood gets frightened because he sees black people on TV, and gay couples getting married, he flees reality and pours his bitter bile into the intertubes via PatNet.

He doesn't have any evidence for his "gut feeling," in fact he doesn't really believe in evidence based decision-making. He goes to his church and hears about Apocalypse and Armageddon, and prays and chants his putrid bigotry, and if anything ever goes wrong anywhere, he takes it as validation.

SFace says

So rents are absolutely not slowing down. It's still accelerating in the 6.5% to 7% range. There is no chance in this green earth rent will crash in 2015.

You didn't keep reading:

Michael J. Salinsky - RBC Capital Markets, LLC, Research Division: What were renewals that were actually signed during the quarter?

Sean J. Breslin - Executive Vice President of Investments & Asset Management:
Mike, it's Sean. In terms of the rent change during the quarter, 3.6% was the blended. It's 4.8% on renewals and 2.2% on move-ins, if that was the highlight you're looking for.

Timothy J. Naughton - Chairman, Chief Executive Officer, President and Member of Investment & Finance Committee: Mike, if I can just add something to what Sean was saying. I mean, what Sean said was accurate with 2.2% on move-ins for the quarter. But the one chart that showed same-unit rent numbers going up through the course of the year, that is almost all coming from increases in new move-in rents, which I think is important when you're talking about health of markets. In fact, June and July are more in the 2.8% to -- and 3.3% range, so well above what the average was in Q2 and well above the 1% to 1.5% range that we saw at the beginning of the year. Renewals have actually been relatively flat -- healthy, but flat during the course of the year.

Other than that, no surprise that June and July are higher than beginning of the year. The few weeks around July 4th are when a huge number of people move.

CDon says

I get that. As an investment, housing isn't very attractive right now - I can respect your viewpoint there.

Now as to the people who someday just want to buy a house and get on with life, what do you recommend? I ask because when you say things like:

"My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike."

Its pretty reasonable to assume that (in your judgment) no one should purchase a house now (even if its "just a place to live and not an investment")- correct?

No, I think we have a misunderstanding. Because I never recommend timing the market. I'm just advising to avoid stocks that rely on growth in RE profit margins.

If you can swing a house and be comfortable without selling your first born to the bank, that's what the calculator on patrick.net is for. I'd advise to have a safety net too. Renting is to save money, some people save a lot doing so. It's what we did, we saved for many years renting before we bought with cash. Not a penny paid in interest to the banking cartel.

I have a friend who lives in a rent controlled apartment, pays ~$800/month. That's less than most peoples property taxes these days. Financially it makes no sense for him to buy, so he isn't moving. But can't say it makes his wife happy.

Today's data up 15.6% this is a good thing and existing home inventory present good value compared to new homes.

Watch out for this trend because new home sales wasn't supposed to be this soft because it's main drivers are upper middle class and the rich. It's not that cash driven compared to EHS

FortWayne says

No, I think we have a misunderstanding. Because I never recommend timing the market. I'm just advising to avoid stocks that rely on growth in RE profit margins.

That's fine. Just understand it sounds quite a bit different than your opening statement:

"My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike."

FortWayne says

If you can swing a house and be comfortable without selling your first born to the bank, that's what the calculator on patrick.net is for. I'd advise to have a safety net too.

OK, but that's a different issue isn't it. Per my hypo above, say I could easily swing the 500K house with the safety net and all the trimmings. Yet, why would I pay 500K now if I could wait a year for your "crash" and buy for 400K?

Or are you now saying that home prices and rents wont "crash" and its just stocks only?

sbh says

Bellingham Bill says

Problem is a people only get the government they deserve, if they're lucky!

Capitalism isn't any better: you get what you pay for, if you're lucky.

That's not Capitalism, by definition

Bellingham Bill says

just a 'race to the bottom', yes.

There is no bottom, not since 1930s. America figured out a way to fix the economy so it never again fails.

Step 1: Lull everyone to sleep with income equality from 1940 to 1960s.
Step 2: While everyone is in a sleepy stupor, start transfering wealth back to the top.
Step 3: When people start waking up to reality, let them dabble in stock market (1990s), real estate (2000s), facebook (2010s), and pretend that they are getting wealthy on quick trades of stocks that produce absolutely nothing. The dumb ones play on facebook all day, the others trade its stock. Neither party is creating value...just being lulled...back...to...sleep.......

CDon says

OK, but that's a different issue isn't it. Per my hypo above, say I could easily swing the 500K house with the safety net and all the trimmings. Yet, why would I pay 500K now if I could wait a year for your "crash" and buy for 400K?

Or are you now saying that home prices and rents wont "crash" and its just stocks only?

Best advice I ever got when it comes to stocks is "never try to time the market". That advice applies to everything. Unless you know something we all don't, don't time it. Just do what makes financial sense to you.

I think prices in our area will be retreating, I've seen a house for over a year now on the market that peaked at asking price of 700k, now is 580 and is not selling. At low to mid 500's it'll probably finally sell. So market definitely overheated for a while. And rents are next, because a families out here can't swing 3k a month.

I see a price correction coming and some already in place, and hence am advising against investing into RE stocks. I'm in no way advising for or against buying a house for your family. I don't know your finances or your neighborhood. I only see what happens out here.

Probably to Fort Wayne's horror, I am his neighbor.

I am not comfortable purchasing now in this area.

Kudos for posting your viewpoint.

Forbes magazine has been predicting about '2015' for years now.

Yes, I missed the boat in 2011.

FortWayne says

Best advice I ever got when it comes to stocks is "never try to time the market".

Yet, just a few hours before, you said:

FortWayne says

My prediction folks is that prices will come down in late 2015 or otherwise crash. I'm talking about rents and houses alike.

...

My recommendation is to stay away from RE stocks and temporarily move into safer alternatives.

Temporarily, as in after late 2015 right? How is this anything other than trying to time the market?

CDon says

Temporarily, as in after late 2015 right? How is this anything other than trying to time the market?

That's not the same thing.

New Renter says

That's the least of what you (generic you) get when you start jacking rents beyond affordability.

To be fair, rent is driven by the market. A responsible market participant *SHOULD* raise rent if conditions allow.

Market conditions can change though.

Peter P says

A responsible market participant *SHOULD* raise rent if conditions allow.

Well that depends too. If market conditions allow packing 50 questionable people into hot bunking in a 2000 sqft 4/2 is that really a good idea? If the renters blow up the place with a meth lab will insurance cover it? The deposit certainly wont!

New Renter says

Well that depends too. If market conditions allow packing 50 questionable people into hot bunking in a 2000 sqft 4/2 is that really a good idea?

I'm sure some zoning code has been violated.

Meth lab? Or are they just Baking Bread?

New Renter says

4) 3 cars on a 2 car lawn

hahah, a 2 car lawn...nice...

New Renter says

2) An abundance of converted garages - again, no thought to aesthetics.

I have these in my neighborhood with the door still on (but fused shut?)!!!

Peter P says

New Renter says

That's the least of what you (generic you) get when you start jacking rents beyond affordability.

To be fair, rent is driven by the market.

But to also be fair, one could argue that rent is driven by the real estate market. One cannot charge significantly more or less than local housing without creating significant distortions on either side that are not corrected. The reason rent is higher today than in 1980 is not because of inflation on the sticker price of a house (that price is WAY beyond inflation). It is because of inflation on the monthly payment on a mortgage, which is similar today on a relatively much more expensive piece of property since interest rates are so damn low. Throw in some investors, rich fuckers from Google, and some Chindians, and you have some local markets even more inflated than the US as a whole.

Rent is not driven by what someone will pay for rent. There is simply not enough supply for that, at least not in locally expensive areas. Rent is helping significantly by what idiots will pay for mortgages (or promise to pay...

JH says

But to also be fair, one could argue that rent is driven by the real estate market.

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

Peter P says

JH says

But to also be fair, one could argue that rent is driven by the real estate market.

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

And when tech crashes? What then?

Or do you believe "tech" can never crash?

New Renter says

Or do you believe "tech" can never crash?

Of course the tech bubble will burst. :-)

It is a Silly Valley after all.

Peter P says

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

This is true for cities one luxury bus ride from Google, Apple, etc. But it is not the driving force behind the boom farther away like San Jose. Many Bay Area prices, like those in SJ, are exactly the same as SoCal. There is no tech bubble down here. Outside of the fortress, I think my argument still holds

FortWayne says

CDon says

Temporarily, as in after late 2015 right? How is this anything other than trying to time the market?

That's not the same thing.

Care to elaborate? On the one hand you say "never try to time the market" yet on the other you say - stay away from real estate stocks until late 2015 when they likely crash.

Seems to me this is the epitome of trying to time the market. If not, please elaborate. What in your mind would be an example of trying to time the market?

New Renter says

1) Garage mushrooms- my term for slap dash second stories added above garages that were clearly done on the cheap (and who knows about permits)

2) An abundance of converted garages - again, no thought to aesthetics.

3) 4 cars on a 2 car driveway

4) 3 cars on a 2 car lawn

5) cars parked bumper to bumper on both sides of the street as far as the eye can see.

You should report that to the city, specifically county assessor. If my neighbors started doing that, I'd report them instantly. I don't want to live in a place next door to someone running a slum.

Permits for construction are public record, so if it's done without permits just report them to the county assessor office. They'll come, inspect, and fine them. Not to mention update their property taxes to appropriate amount if it passes. If it doesn't pass inspection, it'll be torn down. County assessor doesn't mess around with this stuff, they fine and fine heavily.

Too many cars in the driveway? Well, there are rules to how many tenants a house can have. If they have more, report them to the county as well. Sheriff will take care of that problem really fast. There are very strict rules, residential communities are not allowed to have tenants in garages.

I'll probably make a separate thread later about dealing with slum lords in the neighborhood.

CDon says

Seems to me this is the epitome of trying to time the market.

"Timing the market" is a term. Just google it or wikipedia it. Playing Cinderella is trying to time the market.

FortWayne says

CDon says

Seems to me this is the epitome of trying to time the market.

"Timing the market" is a term. Just google it or wikipedia it. Playing Cinderella is trying to time the market.

I think I understand precisely what the term means. I am asking you how on the one hand you can say "never try to time the market" yet on the other you say - stay away from real estate stocks until late 2015 when they likely crash?

In sum, I am asking you (not wikipedia, not google, but you) if this is not an example of "timing the market" please explain to me what is?

CDon says

I am asking you how on the one hand you can say "never try to time the market" yet on the other you say - stay away from real estate stocks until late 2015 when they likely crash?

Timing the market depends on how much you are putting in and when you plan to pull out.

If you are investing $1k in stocks every couple months to build a retirement, then who cares where the market is. If you are trying to get rich quick by day trading, timing is everything.

On the other hand, if you are dropping $500k - $1M on a house, timing is EVERYTHING. Lots of fools took out ARMs in 2006 and lost $100,000s in a matter of months. If you take out a loan for $1M to invest in stocks, you sure as hell better time that baby right!!!! It's all about how much you are putting in and whether you can afford a short term loss.

@fortwayne

No one can enter your house without a warrant , even the country inspectors/accessors and to get a warrant you need a credible evidence that some criminal activity is behind the closed doors . 4th amendment

FortWayne says

When it costs $3,000 for a family to rent, something has to give. Very few folks out here make that kind of money to pay, hence it won't last.

something is wrong with this statement.
Rents only go up "because" people are able to afford it. how can rents even go high if people cannot afford it ?
you have your cause and effect reversed.
its simple demand and supply. why don't you rephrase it as : rents are high and people " i know" are not able to afford it.there are others who can afford it.

Rents only go down when the source of income goes down for people who are able to currently afford it.

instead of worrying about why the rents are so high...you should look at how people are able to afford it. you can get to the right answer that way.

FortWayne says

there are rules to how many tenants a house can have

Blame the Commies and Libbbz!

FortWayne says

ost folks out here are holding to their rent controlled place for dear life, because if they are to lose it, they simply can't afford to stay here.

So what you are saying is that people are going to be displaced, not that rents are going to fall. If someone holds a rent controlled apartment that they can afford, but the market rate is substantially higher, then someone can afford to pay higher rent - just not them. It's not very pleasant for the person with the rent controlled housing, but it's reality.

swebb says

So what you are saying is that people are going to be displaced, not that rents are going to fall. If someone holds a rent controlled apartment that they can afford, but the market rate is substantially higher, then someone can afford to pay higher rent - just not them. It's not very pleasant for the person with the rent controlled housing, but it's reality.

What I'm saying is that once existing renters leave, they aren't going to find new customers to take the place for the asking price. They'll have to reduce in order to move inventory.

Kind of like that house on our block that's been for sale for over a year and dropping price on a monthly basis.

It's already happening, it's just not showing up on the charts since all the economic charts are post fact.

JH says

Peter P says

In the Bay Area it is more driven by a sudden surge in demand caused by the new tech bubble.

Unlike the last housing bubble, higher rent is feeding back into the housing prices. It is a rather complex reflexive relationship.

This is true for cities one luxury bus ride from Google, Apple, etc. But it is not the driving force behind the boom farther away like San Jose. Many Bay Area prices, like those in SJ, are exactly the same as SoCal. There is no tech bubble down here. Outside of the fortress, I think my argument still holds

Google has bus service to San Jose.

Apple is in Cupertino, right next to San Jose.

eclipxe says

Apple is in Cupertino, right next to San Jose.

I didn't realize they were so close. So SJ with a tech bubble is similar in price to LA without a tech bubble. Interesting.

JH says

eclipxe says

Apple is in Cupertino, right next to San Jose.

I didn't realize they were so close. So SJ with a tech bubble is similar in price to LA without a tech bubble. Interesting.

SJ/Bay Area is more expensive than LA/OC. I just made the move and have been looking at both markets for the last few years.

JH says

eclipxe says

Apple is in Cupertino, right next to San Jose.

I didn't realize they were so close. So SJ with a tech bubble is similar in price to LA without a tech bubble. Interesting.

San Jose's median price is around 700K-720K. Los Angeles median is 540's

but LA has a shitload of people, something like 20M and they all can't live near the beaches or can't have the best school districts. If you want those, you'll have to compete like a madman for them. those will not change and will get worse.

SFace says

San Jose's median price is around 700K-720K. Los Angeles median is 540's

670 vs 555, but ok. Still not $1.5 M as Cupertino.

SFace says

he reality is renters are begging to stay. My tenants are asking for a lease renewal four months before it is due.

Did that past few years until we realized our landlords don't give a shit about us since we are in a cash cow they have owned for 30 years and they are just using our rent money to invest in SFBA properties. Our lease "expires" Friday. They can't afford to lose us :-)

eclipxe says

JH says

eclipxe says

Apple is in Cupertino, right next to San Jose.

I didn't realize they were so close. So SJ with a tech bubble is similar in price to LA without a tech bubble. Interesting.

SJ/Bay Area is more expensive than LA/OC. I just made the move and have been looking at both markets for the last few years.

Whatevs. It's all what you want. I saw plenty in SJ cheaper than where I live in OC. Median might be higher by 100k but there is quite a range (in both locales)

Price with appreciate less than 5% or stagnate due to higher rates. We're at the limits of affordability in many areas. Rent might continues to inch up due to lack of supply in good or above average areas with good schools. Beyond 2015, it could get ugly. But I don't see 2008 type crash since it was due to all those exotic loans. We don't have that any more.

Even during 2008/2009 rent in good/okay areas many times decline very little to staying flat. We're talking Cali here not Cleveland. Rent will put a floor on RE prices due to low construction rates and low investment return rates. Can't afford rent? How about families/generations sharing or pooling resources. Might be crowded but then this is California and we're packing them like sardines in some places.