patrick.net

hooch_raider says

I’ve owned and managed a small handful of rental properties for over 25 years....

Hmm! You are a property manager for 25+ years. That explains why your join date is 12/07/2009. :)

Seaside writes: "So, what’s happening at least here in northern VA at this moment is that, SFH and townhome rent is going down, apartment rent is going up. The management in my rathole raised rent too. It is like $100 more than a year ago. Oh, yeah? You think its not fair? You get the hell out of here now in this freezing winter, find yourself cheaper rathole. That’s basically what they are doing and I love their attitude."

Pkennedy writes: "Well taking $200-$300 less, if a tenant stays 2-3 years, that adds up. Waiting for $1400 vs $1100 can be quite beneficial.
There are always people out there who don’t look around enough and pay the extra."

That's the free market for you! Pkennedy, let's run the numbers: If the tenant stays for 2 years at $200 more, that's $4800 bucks. It's a game of chicken and not a very profitable one. I've seen such places sit on the market for 3 months or so and if the landlord caves in, that's a loss of $3.5K. If they get their demand, it's a gain of $4800 BUT THEY STILL lose $3.5K so the net gain is only a $1K AND THAT IS IF THEY WIN!

In answer to seaside (and indirect to Pkennedy) We know people who pay about $200 more for us for places that are nothing special or partically good. Some people are just not good consumers OR they have bad credit ratings. We have stellar references so we've been able to haggle down $200 a month BUT the landlord knows 100% that we pay our rent on time, maintain the place meticulously, and don't cause any trouble with the neighbors or association. Yes, it is possible for a landlord to have the attitude "don't like it? Go to the street!" BUT what kind of tenants will that get them? I know of situations where landlords did get that $1400 a month for a 2 bedroom apartment BUT the tenants secretly moved in _5_ people total!!!

Townhouses have been overpriced for some time and now I'm beginning to see them come down to the point of just a $100 a month over apartments as rentals and gradually not much more to buy. I wonder if SFH's will be the next to start sliding down to the bottom...

@junkmail: I think you've indirectly nailed down the problem. LL's simply don't know what to charge. Some haven't had to change a tenant in years, now they're just doing the same thing they did years ago. Some think they've just lost a tenant, good time to adjust the rent up. Others know there is a glut and drop it. I think it's mostly a bunch of unknows, and the rents are coming down, especially in higher turn over areas, like apartments, who are constantly in tune with the market.

@seaside: If a LL can get a person to pay extra for rent now, by the time summer rolls around, those people will be used to the higher rents. It's a game of chicken. If I was you, I would look at moving now. Even though it sucks, if you hire 2 locals to help you, you'll be done in 6 hours. I've gotten moving down to an art form, because I'm in the BA and jobs move around enough and I hate commutes. If you rent a truck way bigger than what you need, you don't need to pack it at all, or mess around outside. You just haul things in the back and drop them. There is no reason to play moving tetris. Also, pack up all the little things and move them in the week prior to your move. 1 trip a day in a 4 door car will chew through all your loose stuff pretty quickly. People are always surprised how much can fit in a car when it's packed tightly and loosely. You'll get the benefit that you're one of few renters out there, and all these dark apartments will be way easier to bargain with.

@nomograph: If you've never dropped rents, you're probably charging too little. Just like on ebay, if you win every auction, you're bidding too much.

@polishknight: $1000 is a decent chunk of money. Look at most businesses, a good store makes 10% profits. That $1000 might not represent much in terms of the whole investment, but it does represent a huge chunk of profit and/or losses they could be incurring. For many it's worth it. That is how many of these large apartment complexes work. They charge extra and if the place is dark for awhile, so be it. They would rather get the higher rent than fill it. In the end it works out for them. NOTE: If I was a LL right now, I would take whatever and worry about it next year. I wouldn't risk having it empty for 3-6 months this year. I've only had one LL call up my references, the rest just said yes to me after running a credit report. Even when my credit report was empty when I was younger, literally empty. I think most LL's can tell pretty quickly if you're going to mess around or not.

I thought I'd put in my two cents about the rental debate in the Bay Area as someone who has been actively looking for the right place over the past 4 months.

Hubby and I live in El Cerrito and are looking for another SFH in EC, Kensington, Albany, or the Richmond View. We have stellar (800+) credit scores, savings, and hubby makes six figures. I'm expecting our first child.

I took us 6 months to find the place we're living in now (SFH, EC) and we're moving because we need another bedroom for the baby -- and because of a nasty mold/mildew problem in our bedroom. Folks, we live on a REALLY busy residential street and when we applied for this house (2008) there were 15 other applicants. This is not a luxurious house by any means.

Rents have not come down in our area -- if anything, they feel stagnant or slightly higher. This may be because of the demand of the area (close to BART, AC Transit, UC Berk., etc...). We have seen some sh** holes called "homes" in our search. And they've all been over $1900 mo. for 2 bedroom/1 bath. We're farily insistent on our new rental having central heat (a luxury around here), electrical panels that aren't circa 1920, and dual pane windows due to allergies. Good freakin' luck. Its amazing how people live and how LL refuse to maintain properties....thus, the many months it takes to find something decent.

When we do find something we like, we usually wind up getting the place (haven't once or twice). But, I wonder, what happens to all those people who are loosing their houses, have poor credit, or poor employment history. They're obviously not living around here because of the demand of people like us looking for housing close to San Francisco....and trust me, there are alot of us. I've been to open houses for rentals and I think there are quite a few people actively renting as a financial planning strategy. We've never applied for a rental in this area without there being a waiting list or crazed open house filled with tons of thirtysomethings.

We have an application in right now for a place in EC, 3 bedrooms, 1.5 baths, basic, clean house with dual pane windows, central heat, hardwood floors...rent is $2100/month. The LL is still conducting appointments (we arrived on the heels of a family who had an appt. and looked rather stressed) -- she's told us that we're on the top of the list so far but she has to sort through the other applicants (around 10 or so). I think rental markets have pockets and can be insulated. We've been waiting for rents to drop but they haven't yet (in 3 years of waiting). Perhaps this year? One can only hope!

I think it really depends where the rentals were. Rent is probably below the 2000 peaks in many places. I remember seeing apartments for 2-3K, which are 1400-2000 now. Housing is probably higher, but rental apartments is probably quite a bit lower now. 2000 was a bad year to be renting in the bay area. Ugh!

I think some rentals are holding up because there aren't many rentals in a certain area. Every person in my office got a rental reduction in SF over the last year, and the ones that moved where able to push down prices even more by just asking.

I moved within redwood city to capture a lower rent. I had been at my last place for only a year, but decided the drop in rent was well worth it, especially since smaller places were opening up, which is what me and my wife wanted and which ultimately pushed our rent down 40%. While looking around, we went to many apartment complexes and they claimed rents had dropped 20% or so. Perhaps a lie? Not really, because my wife actually remembered the prices from the previous year when we had looked at a couple of these places back then, and they were actually 20% less.

Hubby and I live in El Cerrito and are looking for another SFH in EC, Kensington, Albany, or the Richmond View. We have stellar (800+) credit scores, savings, and hubby makes six figures. I’m expecting our first child.
lisyb, Hang in there. We a friends in a similar situation (East Bay, but South) and they ended up biting the bullet (as 3+bedrooms could be had for ~$400k where they're at). I've noticed that in my burg Poor Dad landlords (aka. cash flow negative) have been handing back their multi-units to bank, and they've recently begun hitting the market as REOs. This will increase the downward pricing pressure on the rental markets. Have you thought about hunkering down in a place like this, while you wait for SFHs to be priced right?
http://redoak.idxre.com/idx/detail.cfm?cid=1&bid=2&pid=40446755

Yes, in the South Bay, rents are definitely lower now than they were in 2000. That was the height of the dot com bubble. People were paying $2k for a 1bd apartment down here - it was absurd.

I have been leasing in Danville and rents have dropped approximately 20 % over the past 3 years. I have searched and researched the rental markets and the prices continue to drop.

The going rate for leases in Danville, San Ramon,Windemere, Dublin, Alamo are somewhere near $1.00 per square foot and less on larger homes.

Negotiate, negotiate, and negotiate. The biggest lie of the Decade in Northern California is over!

The high end neighborhoos in Danville, Alamo, San Ramon, Windermere, will mirror Tracy and Moutain House. The wave of foreclosure is moving West from the Central Valley and these areas will be hit hard.

Beware of anyone telling you different, Rememebr it is lies that created this mess and effected millions of homeowners nationwide.

I recently renewed my lease in prime santa clara (close to El camino real). I got it for 20% less than what I was paying.
Couple of my other friends also got the same deal in other apartments.

As a whole rents dropped. One of my other friend used to pay 1400, now it is reduced to 1250.

Folks

Personal experience, I used to rent a tiny townhome apt for $2500 in 2008. Had to move out in late dec 08 for a job in a diffrent city. Now we just came back and I just signed a lease for a similar sized SFH for $2000. This is around the Garden Gate Elem school in Cupertino. I think the key is in being patient and negotiating. I had been searching for the past 6-8 weeks. And I did try to survey some places that I had initially seen, they are still available. I think there is a lot of inventory, and its just the land lords are still not seeing the reality.

Houses in the East Bay cost so much to rent, I'm thinking of buying. Crazy move?

Nomograph

Can you let us know, in what areas do you have your properties?

nani says

I recently renewed my lease in prime santa clara (close to El camino real). I got it for 20% less than what I was paying.

I didn't even know there was a prime Santa Clara. I guess I live in prime Santa Clara too!

wish i was lucky says

Also remember that Unions were strong in the 70’s and 80’s and part of the 90’s.
Now the Unions are in the process of being busted, the Companies are managing to go bankrupt or merge and somehow not owe the Retirements that were promised.
The future is not promising - unlike the future after the last recessions. There is no way we can have the worst housing bust in history and come out smelling like a rose. The worst just hasn’t happened yet - of this I am sure.

Well said. This is exactly my concern and what motivates my thinking, actions, and comments. While I absolutely apprecaite what posters like Nomograph have to say about the past, if we refuse to turn our heads away from the past and look toward the future, we will never see the train coming. We may not be able to predict the future, but refusing to look at the present and how it may affect the future is same as saying, "Housing will NEVER EVER go down!" Well, we know how false that often stated phrase is. Why are so many people refusing to "hope for the best but plan for the worst"? Nomo and others...gut check yourselves. From one concerned citizen to another...watch out for the locomotive. To all my fellow renters, muscle up and start NEGOTIATING with landlords!! (goes for sellers too if you are trying to buy).

kpinna says

Houses in the East Bay cost so much to rent, I’m thinking of buying. Crazy move?

Not crazy in Antioch, Pittsburgh, and parts of Oakland. You gave me a great chance to shill for my Bargain Finder service (see header of this page). I'm tracking most of the rents and for-sale prices in the Bay Area, and there are definitely places where it makes sense to buy. They're not the nicest places, but they do have some good deals compared to renting.

I just looked up the large complex in San Jose where I rented in 1984: the 2 BR 2 BA unit I rented in 1984 for $750 is now listed for $1425. I reckon that's a CAGR in the rent of about 2.5%. Don't blame rental control for that low rate because I think rent control in SJ allows up to 7% annual increase.

wish i was lucky says

Also remember that Unions were strong in the 70’s and 80’s and part of the 90’s.
Now the Unions are in the process of being busted, the Companies are managing to go bankrupt or merge and somehow not owe the Retirements that were promised.

The unions died in the mid 80s. Not much left when we entered into 1990. Many Unions wanted defined benefit retirement plans which caused companies to go bankrupt to begin with. Had they taken a defined contribution retirement plan you would have avoided bankruptcies. Anyway, no company holds the retirement benefits, they are held by the retirement plan administrator, a third party.

wish i was lucky says

What about the companies where the retirement was in the stocks.

The union style Defined Benefit pensions were 10%, while majority were defined contribution plans like the 401K. Like anyone else I have a plan which I control .. i can transfer from any category, cash, equity funds, or bond funds anytime without any black out restrictions. The adminstrator like Schwab or Fidelity, do no business with buying their clients stock nor is there a 'Retirement Board'.

What you saw with Enron story was a small minority. And I mean a really small small minority exaggerated by the media. Did you see other well known companies have that kind of pratice?

sybrib says

I just looked up the large complex in San Jose where I rented in 1984: the 2 BR 2 BA unit I rented in 1984 for $750 is now listed for $1425

Based on Inflation calc: What cost $750 in 1984 would cost $1534.85 in 2008.

So it took rent some 24 years to double! I will consider the $100 difference due to current economy.

wish i was lucky says

What it looks like to me is that we are all going to be on our own. Pay your own way.

So much for working our asses off and playing by the rules that existed at the time.
Put a big pot of money anywhere and someone will figure out how to make it disappear.

This is prettty much true. Relying on company retirement package w/o knowing what's up with that is plain simple careless.

Government retirement plan equivalent with 401K is thrift saving. That's not that fantasic, but still good plan with few catches attached. Public organizations like metro bus have real fantastic plan with hefty retirement package. If you're self employeed or working for small company, you're on your own. Knowing that, you must save some portion of your income for your own retirement. Only problem is most americans are good at spending, suck at saving. Sometimes I wonder how we live if there's no social securities. It is like there's no english if F words are not there. :)

wish you were lucky:

The Bay Area had a huge inflow of capital from all over the USA and all over the world for decades, going back to the SF-Sac area being hub of the Gold Rush, then the transcon railroad made SF port thrive for trade between Asia, up-and down the Pac Coast of the western hemisphere with the rest of the USA, then high-value added agriculture with the processing of some of those products that were sold all over the USA; "tech" industry had an early start before even HP, that attracted capital.

The Bay was a strategic port, for decades before and after WWII tens of thousands of active military ringed the Bay, all paid for with capital collected (and borrowed from) US taxpayers all over the USA. In the 1970's I grew up with kids of active duty and civilian employees at all these FORMER military installations: Mare Island (yes, a long commute from SJ), Oakland Army depot, Alameda NAS, Moffet (a huge facility), Hunter's Point Naval shipyard, SF Presidio and Ford Ord Army bases. In the 1970's there were bases in Marin (Hamilton AFB) and at Treasure Island. All gone. Their payrolls active duty and civilian, all gone.

Lotsa those military retired here, their pensions often double-dip pensions paid for with money collected from taxpayers all over the USA. After the war the gov't doubled down on military and aerospace spending here (and elsewhere); gov't contractors like Lockheed and Ford Aerospace fueled the region with money from all over the USA (many retirees from the military wound up getting fat pensions from those contractors too). GE nuclear had armies of engineers and technicians designing and servicing power plants that were installed all over the world at the site that's now a Target shopping center. And then of course Ford Motor over in Fremont, where the first Ford Mustangs were built, and the GM plant, produced vehicles that were sold all over North America, more inflow of capital to the region.

The labor pool that fueled the early days of Moore's Law (when it was being realized by economies of scale instead of financial gimmickery) was not just from a handful of elites from Berkeley and Stanford; a lot of the workaday manpower was from former defense workers. Moore's Law brought in "Moore Capital", so did the dot.com.

Right now there are HQ of multinationals here; as we all know they are mostly shell entities where the small amount of the companies' money that's distributed to HQ employees are cycled into the local economy; but that's it. The huge amounts spent on capital and wages are spent elsewhere. There is a smaller pool of capital coming in from immigrant children of rich families overseas, but it is concentrated in an area they refer to as Their Fortress, it is not near enough to hold up the rents outside of their Enclave. There are also some Enclaves of Hip and Cool Beautiful People in SF and Berkeley mostly DINKs (straights and gays both) with lotsa discretionary income; again not enough to prop up the region.

Many of those everyday workaday folks you refer to commuted from faraway places like San Joaquin, San Benito, Solano counties and Salinas, Watsonville. A knife-edge existence, everything with the adjustable mortgage, the car payment, the childcare, the gasoline price, the car maintenance, and the available overtime had to dovetail perfectly to make it work. Maybe as the rents come down here, those folks will come back to rent in the region instead of polluting the air and crowding the highways on their long commutes.

Playing Chicken

pkennedy says: "@polishknight: $1000 is a decent chunk of money. Look at most businesses, a good store makes 10% profits. That $1000 might not represent much in terms of the whole investment, but it does represent a huge chunk of profit and/or losses they could be incurring."

Your example refers to businesses that operate in volume and make a certain percentage ON AVERAGE. This profit margin is assuming that the LL wins the game of chicken. Big difference. It's like comparing a gambler who hopes to win a grand to a casino that wins it every day... In addition, the longer a property is on the rental market, just like the retail market, renters know they can haggle for bargains.

In addition, you have to factor in the costs and time of presenting a property for sale. The underwater woman I referred to (AquaLandLady) is spending every Saturday (even now, just checked) coming in and waiting for people to wander through her property including lookee-loos like me.

My wife and I had a discussion about life/price balances and compromises. We got a place that's about $200 below market BUT about $150 from a base price. Doing the math, $150 times 2 years is a cool $3600 we could spend on vacations but during that time we enjoy a much larger, nicer place than the bottom. On the other hand, we save $4800 compared to others who just bought "retail."

Some of the other issues I see in the rental market is LL's overvaluating certain features. For example: Granite countertops and new appliances in older condo complexes away from the hustle and bustle. That particular luxury market will just pay the higher price, or more even, to live closer to the action but the person looking in the area are not that kind of renter. Would you pay an extra $3K over the course of a lease simply to get stainless steel and granite?

My overly dramatic point was not that people wont and arent lowering their standards of living. We should do this... But only so much money can be saved on food, clothes, and housing... They cant keep going up without wage increases.... Or people will revolt. And its pretty easy to revolt on mass against high housing costs... Especially if landlords profits are increasing... Then their is room to not pay higher housing/rent costs.

Another point....My iphones and ipods keep getting better and faster and cheaper EVERY year... But my housing gets older, crappier and more expensive each year... Why should i pad the pocket of a landlord because they invested in a dated rental bldg.... At some point people will
wise up and refuse to pay more unless their incomes and jobs increase.

ha rmm221, that's a funny sentiment. Along the same lines, when I miss a bus by only a few seconds its completely unfair because I have to wait the longest time to get the next one.

Markets are only perfect when the flow of information to every one participating is perfect. And of course that never happens. Unfortunately not everyone has access to the same information and not everyone is capable of appreciating the information when its relevant, or at the very least weights it differently.

EDIT:
But I should also add - I agree with your sentiment!

Boycotting a bunch of rich people by living in tents doesn’t make a lot of sense to me.
RVs were somewhat common during the heyday of the dotcoms. And don't forget about yurts...

wish i was lucky says

I don’t see that many people who actually want to spend more than $1200 for rent.

Depends on where in the country. . . . $1200 gets you a shoebox in a high-crime neighborhood in LA. We've paid $1900 for the last 5 years--that's moving from NYC to LA--and we still are always short of dishwasher/central heat and air/parking, etc. Yeah, things you can live without, but when you are an upper level professional in a specific field, it gets old compromising on where you unwind every night after a day of hell in Le Office.

We got picky and spent 6 months to find a place with all the fixins for $2000. I still can't buy a house in a comp neigborhood for less than $4500/mo and usurious interest payments.

I'd much rather drink my nighty-night scotch under the banyan of my 15' beamed ceilings in a Spanish-Mediterranean rental--well worth $2000/mo plus my monthly savings contribution.

Well this thread has gone around inflation, unions, and social disorder. All I can say bottom line is that when I rent a SFH in the east bay, I can pay for something that I could not own with my current financial status. $2000 per month for a 1600 sq ft house and 10000sq ft of fruit trees and grass would cost at least 3500 per month based on my financial ability for a small downpayment. This is where those "evil" "greedy" landlords come in. LandDaddy buys a nice house in 1974 for $30,000 , pays it off over the years and finally rents it to me for $2000 in 2009. Is that greedy ? No. It is based on what the market bears plain and simple. One could say it is greedy since the landlord paid off his mortgage or never had one in the first place but the landlords ( not desperate underwater types ) actually must do their due diligence to find the market rate no matter what. At least the good ones do. And of course, negotiation is always a possibility but trying to tell a landlord that a 1600 sq ft SFH with a huge yard is worth only what I think it is worth will get anyone nowhere. The fact is we NEED to live where we live and work. That is the value of having a roof over your head.

You can't argue with the market ! We can & will build more housing, ( bare land is abundant - see google earth or chevrolet or ) How many Californians does it take to install a light bulb ? ......................... 4 ........................... 1 to climb the ladder and 3 to fill out the environmental impact report. Can't build ? SHOP the competition and / or move out of the area ( like so many other jobless techies ).

As stated in this line, For 25 years my personal rent has been increasing, argued all the way. Ready to argue last year but received a 10 % reduction with a simple comparison and have since found other comps. units for significantly less.

The description of value is " What the market will bare" NO jobs-NO rent

@PolishKnight
LLs are in a business. They sell a product that has a very slow turn over rate, where as retail has a higher turn over rate, measured often in weeks instead of years. The concept is the same. If they hold out for a better buyer, they're going to do pretty well. The ones who don't do well, go under and are out of the game. The ones who do well, buy another property or keep doing the same thing. If someone doesn't rent for 6+ months, they're probably in trouble. However, if it takes 6 months and they end up getting some person in there who stays 8 years with a 30% premium, they're set. If they're in a position in which they can handle "paying" $200/month and going cash flow negative, maybe that is worth it to them. However, it's up to the individual. Anyone who goes too far negative, will eventually end up out of business. So aiming for a decent profit margin and keeping the place empty likely works for many people. It might be painful for a couple of months, but if they can pull it off, they're set. It's how a lot of businesses work even. Just wait for someone who isn't going to shop around, and sell to them. I'm betting a *LOT* of people believe that what is advertised is the best price they will get *and* has had a lot of market research done and is fair.

As far as me paying granite counter tops? No, probably not for myself, but if there is crap 60' counter tops I'm not going to go for it either. I've read a few books on valuing rental units, and there are always lists. Dishwasher? +20 Disposal? +7 Parking +20, Undercover parking +30, Garage +50, Storage +15, etc. People who like the stuff, and have the money will spend it. What is $100 to live in a nice looking place, vs your cell bill? Or not eating out once a month? To many, it doesn't seem like a lot. I bet if you asked someone how much will they pay in rent for the next year for that granite counter, they won't know. If you asked them how much it cost to install, they wouldn't know.

People who are paying $5000 for a purse have to understand they're buying a $5 limited edition purse. That will probably be copied and be on the street corner for $5 shortly. Not buying $5000 purses? How about $300? Have you ever watched a woman shop for clothing? They'll spend an absolute fortune on things. There are lots of them out there -- if there weren't, we wouldn't have so many boutiques and high end shopping centers.

There are people who will just look at the end product and say "I'll take it!" and there are those who will scrutinize things and say "That product on the street corner for $5 is good enough".

As far as those who say our standard of living has gone down. I've had this conversation with others, and my father always chimes in with

You guys have forgotten what cars where like, how often they broke down. Who had a car that could go 100K without anything going wrong?
Did you guys forget about going to a hospital? How long procedures where?
Do you remember our fuzzy tv's? How small they were, how crappy they were?
Dealing with vhs tapes?
......

Go into a dollar store and compare all the crap in there, with what it cost to buy in 1980, before stores like wal mart had become really successful at importing. Wages might be stagnant, but what you're buying with them isn't. It's gotten a lot better, and in most cases a lot cheaper.

marko says

LandDaddy buys a nice house in 1974 for $30,000 , pays it off over the years and finally rents it to me for $2000 in 2009. Is that greedy ? No.

It's getting something for nothing. LandDaddy did not exert any action to create this $2000/mo in value to you, other than maintaining the house in a livable state, something that costs maybe $100/mo.

This is parasitical economics and is a wealth transfer from productive people to unproductive people, on the scale of welfare transfer payments X10.

But land is considered capital so it is called investment properties or, euphistically, "income property". Income properties are why real estate is so expensive and why 30-40% of our income is piddled away on nothing but ground rent, something that nobody created but plenty of people profit from.

All I can say bottom line is that when I rent a SFH in the east bay, I can pay for something that I could not own with my current financial status. $2000 per month for a 1600 sq ft house and 10000sq ft of fruit trees and grass would cost at least 3500 per month based on my financial ability for a small downpayment.

This is because we have front-loaded the perpetual benefits of land ownership into the purchase price. Borrow $700K from the bank now to live rent-free in 2040. Given the way wage inflation works, you'll be able to pay the $600/mo property tax with a couple hours a week greeting at Walmart.

If owner-occupied single family homes were taxed at 5% for the first thirty years, then held in abeyance until the property title was transfered, everyone could afford a home. (I'd tax non-owner occupied at 10% of site value just to discourage the practice on general principle, to encourage wanna-be landlords to build up and not just assemble their real estate empire from existing stock).

pkennedy says

You guys have forgotten what cars where like, how often they broke down. Who had a car that could go 100K without anything going wrong?
Did you guys forget about going to a hospital? How long procedures where?
Do you remember our fuzzy tv’s? How small they were, how crappy they were?
Dealing with vhs tapes?

Sure Cars have more bells and whistle and longer warranties.. (10years for Hyundai for example). But your paying for it in general inflation.. Higher vehicle taxes, Smog checks every 2 years, Astronomical gas price increases... It's probably not much cheaper than your father paid.

I believe everyone pays MORE than their fair share of the tab hospital improvements. Premiums are always on the rise and if you don't have healthcare... hello Bankruptcy.

Fuzzy T.Vs and dealing with VHS tapes? haha.. It's hard to really say that equates to a lower standard of living.... People have new FIXED tech expenses than ever in history. Cell phone bills are bigger than landlines... Monthly high-speed internet bills didn't exist back in your father's day... 100+ channel cable bills come with a much bigger pricetag...

I'm not saying we are anywhere close to approaching what my grandparents went thru with them all fighting over the big porkchop at the dinner table... Or my grandmother going without so her kids could eat.

But try applying for a job today without an email address and $40 a month internet fee... you'll get nowhere fast. There are additional expenses everywhere in our society that really add up fast.

Additional expenses, does not mean our standard has gone down. We might not be making the same, but our quality has gone up most definitely. How much would it have cost for a 52inch LCD tv in 1980, or the same quality? It didn't exist. It's a luxury item that is easily affordable today and wasn't even offered back then.

Cars last longer, they don't break down as often. They might be more expensive, but what someone paid for a car in 1980 isn't what they could expect today. Even a luxury car of the 1980's couldn't compete with a half decent car today.

Did you not live here in the bay area in the 70's? I remember people saying they remembered how brown the skies were back then, before smog pollution rules came into effect. Can you imagine what standard of living we would be in today without those? If not, try visiting a country with 0 smog rules, with a massive population.

Wages might not be sky rocketing for those people in manufacturing, but with fall of communism all over the world, we unleashed a massive population of blue collar workers into the work force. Look at Germany, east vs west. When the wall came down, the biggest complaint was the massive INFLUX of blue collar workers competing for the same jobs. Wages tumbled. If you've sat back on your laurels and haven't invested in your eduction and what not, don't expect to keep the same wages. While our world gets more complex, the simpler jobs aren't going to be paying the same anymore. Having a union push massive wages onto a company isn't going to work either. I remember watching tv probably 2 years ago when one of the car manufactures in CA wanted to raise the workers health care costs. They went out striking, and low and behold out came the fact that assembly workers were taking home a 120K year package with all their benefits. That isn't blue collar wages. Those must go down at some point. However, even with decreases, the standard of living for most is going up.

When people say the rich are getting richer, many just think that means the ceos, what they don't realize is that this means white collar jobs, and most desk jobs. Those wages have been going up, since there isn't a glut of people competing for them. Coders, developers, etc aren't making minimum wage. They're way above that. Just look at the salary calculators, they're WAY above the national average.

pkennedy says

As far as those who say our standard of living has gone down. I’ve had this conversation with others, and my father always chimes in with
You guys have forgotten what cars where like, how often they broke down. Who had a car that could go 100K without anything going wrong?

Did you guys forget about going to a hospital? How long procedures where?

Do you remember our fuzzy tv’s? How small they were, how crappy they were?

Dealing with vhs tapes?

……
Go into a dollar store and compare all the crap in there, with what it cost to buy in 1980, before stores like wal mart had become really successful at importing. Wages might be stagnant, but what you’re buying with them isn’t. It’s gotten a lot better, and in most cases a lot cheaper.

Sorry all, I havent figured out how to quote so I guess I 'll have to break it down play by play

Marko said :
Troy says

marko says

LandDaddy buys a nice house in 1974 for $30,000 , pays it off over the years and finally rents it to me for $2000 in 2009. Is that greedy ? No.

Troy said :

It’s getting something for nothing. LandDaddy did not exert any action to create this $2000/mo in value to you, other than maintaining the house in a livable state, something that costs maybe $100/mo.

Marko Said:

We could say this about any type of investment where you park money and get a return just by holding and doing nothing. Gold, Oil, Stocks, etc. I know a few people who tripled their money in a matter of days just because they could spell "INTERNET" and they actually have no clue how it all works. Basically I agree with you but my point was that the rent price must be tied to the market and that is what sets the price for rentals. It is not some kind of conspiracy that we could go protest - we just dont rent if the price is too high.

Troy Said:
This is parasitical economics and is a wealth transfer from productive people to unproductive people, on the scale of welfare transfer payments X10.

Marko said:

Same is true about paying taxes to the government, or paying hundreds of thousands of dollars of interest to a bank. A renter does not need to ask where the money goes.

Troy said:

But land is considered capital so it is called investment properties or, euphistically, “income property”. Income properties are why real estate is so expensive and why 30-40% of our income is piddled away on nothing but ground rent, something that nobody created but plenty of people profit from.

Marko said:

All I can say bottom line is that when I rent a SFH in the east bay, I can pay for something that I could not own with my current financial status. $2000 per month for a 1600 sq ft house and 10000sq ft of fruit trees and grass would cost at least 3500 per month based on my financial ability for a small downpayment.

Troy said:

This is because we have front-loaded the perpetual benefits of land ownership into the purchase price. Borrow $700K from the bank now to live rent-free in 2040. Given the way wage inflation works, you’ll be able to pay the $600/mo property tax with a couple hours a week greeting at Walmart.
If owner-occupied single family homes were taxed at 5% for the first thirty years, then held in abeyance until the property title was transfered, everyone could afford a home. (I’d tax non-owner occupied at 10% of site value just to discourage the practice on general principle, to encourage wanna-be landlords to build up and not just assemble their real estate empire from existing stock).

Marko said:

Taxing at 5% !!!!! Wow, that would really help here in California but then everyone who bought a home would all be asking "Where is our money going ? what is it used for ?" I definately trust the landlord with my money much more than the California government. Instead of getting out of debt, they would probably use it on more goofy programs. With my landlord, I already know my money is for the roof , a water heater, a house call from Roto-Rooter, etc. If I dont get that taken care of by the one I pay, then I move.

6 months ago, I extended my lease with a $100 (per month) rent-reduction.
so yes, rents are sliding.

I talk to a few recent grads. None of them are able to find a job and they are sharing a 2BR house with 5 people!

I also heard a lot of foreign workers (H1) are returning home.

REnts are controlled by the 'job market'. Any one remember the go-go years of 1999/2000. Rents were insane! Now the jobs are hard to come by and rents have to come down.

In my complex of 40 units, 10 are empty - that is a 25% vacant rate mind you. And it is a nice complex.

stocksjustgoup says

I’m stubborn. In 2007 I needed to have my own house for my own family. Bigger the better. Now that I’ve been b*tch slapped into reality, I’ll go 9 to a house with my in-laws so-as not to promulgate this insanity.

I've got 3 households under the same roof. My chronic-refugee sister is now saving towards a down payment for an apartment building and my parents aren't worried about money for the 1st time in about 300 years.

Rents are down in 2009 and will continue to decline in 2010 and 2011 just like property values.

Please beware of the deciet being posted that values and rents are stable or going up. In most areas, This is a lie.

If you believe that check out:

www.cyberhomes.com
www.marketwatch.com
www.forbes.com
www.patrick.net

Beware of anyone who makes a profit by getting you to believe their lie. These are the same dishonest realtors, property managers, loan officers who significantly contributed to the grossly over-inflated prices in 2006 and now the housing crisis of 2009, 2010, and into 2011.

Prices will continue to drop. The housing crisis was the biggest lie of the Decade, please do not buy it again.

Fool me once shame on you. Fool me twice shame on me.

Don’t be a fool, rentals and property values are dropping at approximately 20 % per year since 2006.

There is a huge hidden inventory, thosands of distreesed and underwater homes throughout California.

Proceed with caution and calculate future declines in your offer prices and leases.

The research is there and cited in the web-sites.

www.cyberhomes.com
www.forbes.com
www.marketwatch.com
www.patrick.com

Done by experts. The facts speak for themselves. Court house records and real testimonals by victims of the fraud who have lost their equity, life savings, and house will tell you the same. I also speak from personal experience.

If you need further confirmation, open your eyes.

The grossly over inflated housing values of 2006 are over. Get over it and except the fact it was a scam of EPIC proportions and many unsuspecting people hvae been seriously wronged and financially injured by it. Those involved should be held civilly and criminally liable.