patrick.net

MA,

Loved the "Breathtaking? Yes. Quick sale, not a chance"!

This was a glaring example of flippers gone mad but even the less prolific Vegas "listings" were revealing. They just don't get it! What I've found frustrating is that these people have zero skin in the game (nothing down) and wouldn't live in LV on a bet. They're completely underwater and are wasting everyone's time! Why are we even having to deal with these punks? I'll bet the lenders would love to have them all the way out of the picture as well. Flippers have gone from being experts in properties to being experts on default, carefully calculating their dwindling options on the inevitable path to foreclosure.

Why are we tolerating this? These aren't someone's home. These aren't some poor family's only residence. Why should foreclosure regs. apply here? These are "margin" positions that have no chance in hell of being covered. I say blow 'em out!

Now, if you’d turned up the Tower…that would be the time to run away, bravely run away….

I agree... think house of cards. ;)

MA,

It's almost at a point where I feel embarrassed for them. When you have a situation like that how much longer can one conceal the obvious?

11 out of 17? Lock boxes on most? For crissakes it's got all the makings of a high rent slum! (No offense) but as the "owners" slide on down to the I/O Blues how many will have the resources to keep these "shells" up?

Notice how many listings on C/L boast "Never lived in"! Doesn't really matter what town you rifle through seems most were built between 2003 and 2005 and many have never had anyone actually spend the night. Or the interior photos of the living room have a big screen, coffee table and two overstuffed chairs. Like some flipper let his college age nephew hang out there on weekends?

Let 'em keep building!

MA,

Sounds terrific. I look forward to plentiful and cheap vacation rentals in 2010, when I can afford them.

I know the Bay area and vacinity has the high tech jobs and higher incomes. If you took the state as a whole and looked at statewide median income to housing cost we are still fucked.

Like Harm said if you are barely in the 30 -40k range you'll never be in step with the cost of living. I found it harder and harder each year thankfully I had some money from my divorce settlement put away. I watched things double and triple for six years. I finally decided to split for awhile. Things will either get addressed and dealt with or in the next ten years there will be a big exodus.

Nobody wants to work thier ass off for decades nd still have nothing to show for it.

granted that is just for apartments, but when you look at residency rates, it becomes more clear that things for renters are going to get worse before they get any better.

Wow. I must rush to buy so that I can start paying $4000 PITI before my rent skyrockets from $2000 to $2500!

Nobody wants to work thier ass off for decades nd still have nothing to show for it.

Exactly. It may be better to be lazy and get into a brand-new section-8 McMansion? :)

BayBear, what I love about that article is its fear mongering, who was the data source for that article again? Oh, wait a moment, the realtwhore crowd. A little tid bit from the article, rents in SF are still lower than in 2001. Funny that.

Buy now, RENTS ARE GOING THRU THE ROOF. I love the total and complete lack of logic. Say you are a swaggering home"owner", you have good tenants who pay say 2k a month for your $hitbox (or is that the banks $hitbox), and you are amongst the current crop of debtlovers, that is, and I know this is a stretch, you property is cash flow positive. Ok, so what are you going to do, kick the current tenants out and bump the rent to 3K? Nope, ain't going to happen, ok how about a nice fat 10% increase to 2200/month. Thats all fine and dandy, but the place will stay vacant for at least a month, by by 2K, and you will likely have to do some sort of renovation when the prior tenants leave. You are looking at a minimum of 6 months before you see a dime more money. Plus what if the new tenants crap on the carpet and are dirty hippies?

Nice attempt of the chewbacca defense though.

Ok, lets run the scenario of the McDebtor, you are underwater on your payment, by say 2-4K a month as the spread of rent to mortgage in the BA is at least that. So you kick the tenant out and what double the rent? Good luck with that one. Ahh the dream of the 5 million dollar apple stand, no not the stand, the fruit, "how much for an apple", 5 milllllion dollars, "how many do you expect to sell at that price", I only need to sell one.

Again, nice usuage of the chewbacca defense. "folks, mortgage costs are >>> than rents, it just doesn't make sense, and if don't be making some sense, you gots to be be raising them rents".

MA,

Sometimes I wonder if the very things that made Bend "unique" will be the very the very same to send it into a tail spin?

It's by no means commutable to Portland (or anywhere else for that matter). This made for great "resort" appeal but when it comes right down to it what will CA's or Portlanders let go of first if push comes to shove? Yeah, uh huh, it's bye-bye to the spacious and well appointed 2nd home in Bend! No question. This is where the area's "attributes" become "millstones".

BayBear,

BA rents from the article you linked:

San Francisco $1,947
+8.8%
97.4% (occupancy)

San Jose, Calif. $1,487
11.6%
98.2% (occupancy)

First, the article doesn't mention if this is median, mean, all units, a certain BR size, etc. Given that caveat, less than $2K rent vs. a comparable PITI payment of $3-4K (less mtg deduction)? That's a 50% to 100% increase in current rents to make the rent vs. buy equation favorable towards buying. This horse has been beaten dead back to oblivion, but that doesn't even include gains from investing the difference.

Surfer-X, is the blog party on Sunday 9/3? There is a chance that I may be in the area.

easy on the messanger.

I was joking. :)

Surfer-X, is the blog party on Sunday 9/3? There is a chance that I may be in the area.

Peter P, that's the plan.

Peter P, that’s the plan.

Will it be in the Goleta/Sanata Barbara area?

SF Woman - thank you for posting that tidbit from NPR. Very interesting.

As for empirical data, just check CL and try to find a decent place to rent under $2350 in the East Bay

Dude, you are smelling an awful lot like a troll. I just did the C/L search on the east bay, >2 bedrooms 3

Peter P.

$anta Barbara, Eastside off of Milpas

MA,

Good on-site intel! Thanks.

I was rummaging through listings in the Salem area and it was strange to notice SO MANY high end properties joining the inventory. I had no idea there were that many 800K-1.2 mil props. in the state!

"On the river", "Mountain views", "Ocean views" etc. In truth some of them actually represent some of the better "values". Major acreage w/major sq. footage. But they'll come down. At the prices they're being listed at you just know FB (or f'd builder) KNOWS it will sell in no time! (Evidently these guys haven't been following their own market) and it shows.

BayBear Says:

easy on the messanger.

All in good nature. Take a look at the *asking* rental price chart here on patrick.net. After the increasing trend for all BR sizes over the early summer, it's interesting to note that 3BR prices are stable to slightly decreasing. I wonder how much of this is related to a "glut" of SFH's being put on the rental market by FB's who can't sell? I would imagine these units command a higher asking price than units in some soulless apt complex on El Camino somewhere (apologies to anyone who lives in one of those). With more supply-side competition, you'd expect an eventual easing of asking prices. Is this the trend we're seeing? The optimistic side of me thinks this is true. On the other hand, we're all just talking out of our a$$es anyway.

whoops post got cut off,

>2 bedrooms, EAST BAY, 3

Also, higher rent is an indication that demand for housing has finally shifted away from ownership. We are marching towards the tipping point.

dammit!

greater than 2 bedrooms, EAST BAY less than 2350 has over 3696 listings.

greater than 3 bd. EAST BAY, less than 2200 has over 1700 listings.

Again, very nice usage of the chewbacca defense. I say buy now otherwise you are likely to be priced out forever. From my personal experience, my friends and the CL data, rents are not skyrocketing, but hey it's your credit rating and with you belief of skyrocketing rents, which are soon to catch up with the PITI payment, I say go for it. Just stop bother us with the fear mongering attempts as the data doesn't hold water. Rents aren't skyrocketing, dispite what the realtwhores tell you. Hmm, a quick question for the Patrick.net brain trust, do realtwhores get paid if nothing sells?

Surfer X,

A friend who's step daughter will be attending the Art Institute of Portland (in the ultra trendy "Pearl District") tried the same stuff with me. The Oregonian is lousy with studios for as little as $275.00 a month! BUT, he and the Mrs. (true boom believers if ever there were) did the math and decided to buy a 600 sq. ft. concrete bunker for 375K!

(logic?) Well there isn't any but their excuse was that she'll need a place to stay anyway and at the rate these babies are appreciating just think what it'll be worth when she graduates! Why it will practically PAY for her entire education!

Uh, a little late to the dance.

ARM rates are still going up....

http://www.hsh.com/natmo2006.html

And the Fed resumes the tough talk....

http://tinyurl.com/le5pz

You can't scare this renter, but I'd be terrified to be an ARM owner.

Even if rental prices are going up, what's an extra $200/month in increased rent compared to squandering my life's savings? If they get too bad, I'll leave.

X-Man,

Don't be too hard on Baybear, I too have been seeing first-hand evidence of low vacancy rates, high demand and rising rents in my area (SGV / L.A.). It's no illusion --the supply is much tighter than normal, while demand is up.

The wife and I are moving into a new place in October and got picked out of a dozen applicants --several of whom were there the day we did the open house. We were picked primarily due to excellent credit rating & superb references from our old landlord (12+ years). I guess sometimes a good credit rating CAN help after all --especially when you're a JBR.

Now whether or not this is permanent or short-term phenomenon is another story. My guess is the latter. CA is on track for a housing bubble-triggered recession starting no later than summer of next year. Check out the excellent research and charts over at Calculated Risk, The Big Picture & Piggington if you'd like some hard data. There's no "if" about it --the housing ATM is shutting down, and the only question is WHEN we go into full blown recession and mass layoffs.

Once we're in recession, landlords will have only fond memories of the days of 97%+ occupancy rates, when they could demand 10% rent hikes, renters with AAA credit and probably get both.

Hmmm Senor HARM, I guess from my vantage point in asspack $anta Barbara, the rents are already so high that any further increase just isn't likely to happen.

To me ready reports from the good folks in the realtwhore section spouting off meaningless stats about rents increases is just more hyperbole to ignore.

I'm tired of the fear mongering.

I’m tired of the fear mongering.

Me too, however, having been "out there" and seen what our hard-earned JBR money gets us (not much), I believe the high-occupancy statistics are true. Even so, I agree that quotes like this one are complete horseshit:

"Rent giveaways are still quite widespread there. But at some point, property owners are going to realize that rents are way, way below the appropriate levels," Willett says.

Uh huh.... rents here (at 50%+ net take-home pay for most wage earners) are not HIGH ENOUGH, while house prices are are "just right".

FUD

What would a psychic say to a FB?

Psychic does reading, gets scared look on face, gives money back to FB and says I've never done this before but you will need this money a lot more than me.

“Rent giveaways are still quite widespread there. But at some point, property owners are going to realize that rents are way, way below the appropriate levels,” Willett says.

That's the part that got me too. Hmm, I pay 6K per month but I only get 2K per month in rent, I can't flip it. Now Mr. SuperSaavySpecuvestors gets to thinking, "I know, I'll raise the rent from 2 to 6.5K a month"

Sure you will. Don't see it happening. Housing in $B is agrubly the most expensive anywhere, yet I am not seeing the explosion of rents. The "owners" have a cap to what the can charge, and I believe it's called the market. People are already a$$packed too much, a 2x rent increase? Then it's time to move.

And HARM I only pay 42% of my take home on rent. ahahahahhahahahahha,.

But hey, that still leaves 58% unaccounted for. Shit, see, rents are skyrocketing, I can afford to pay another 58%.

But hey, that still leaves 58% unaccounted for. Shit, see, rents are skyrocketing, I can afford to pay another 58%.

How many FBs spend more than 200% of their take-home pay on PITI?

only pay 42% of my take home on rent

Perhaps you could evict the pets (non-paying tenants) and sublet that "bonus room" in the back to an H1-B worker? That's putting your rental to work for you. :-)

Perhaps you could evict the pets (non-paying tenants) and sublet that “bonus room” in the back to an H1-B worker? That’s putting your rental to work for you.

Dude, I am so ahead of the curve, we have an Indian family living there right now! I charged them $2500/month, and get this, NO BATHROOM! It's ok with the exception of the constant curry smell.

We should not be too hard on the mortgage/real-estate industry. They should not be blamed. They simply supply what is demanded.

The housing bubble should not become a blame game. It is a natural product of human greed and fear. We are merely observers.

"We should not be too hard on the mortgage/real-estate industry. They should not be blamed. They simply supply what is demanded."

Hardly. If mortgage brokers scrutinized borrowers for creditworthiness and fully informed the borrowers of the risks of being upside down or a rising interest environment, then there would be less demand.

If mortgage brokers scrutinized borrowers for creditworthiness and fully informed the borrowers of the risks of being upside down or a rising interest environment, then there would be less demand.

If buyers evaluated the true affordability of housing and did homework about the risks of future price/rate movement, then there would be less supply.

Absolutely… Or write mortgages to people who clearly don’t make enough money to pay them. I am suprised that “No-Doc” mortgages are even marketable to the MBS market. Even realtors refer to them as “Liar Loans” to their clients.

This is just a case of people with more information exploiting those with less information. Is it wrong?

I am not an apologist for anyone.

We should not be too hard on the mortgage/real-estate industry. They should not be blamed. They simply supply what is demanded.

The housing bubble should not become a blame game. It is a natural product of human greed and fear. We are merely observers.

Sorry, Peter P, but I cannot adopt such a fatalistic, laissez-faire attitude to the largest credit/asset bubble of our generation, and probably the largest of multiple generations.

This bubble was no accident. It was ENGINEERED by short-sighted greedy politicians and the special interests who own them lock stock 'n barrel. There was nothing INEVITABLE about it. It could have been prevented --or at least mitigated-- at multiple turning points.

--In 1997, Congress & Pres. Clinton could have said "no" to the 24-month RE capital gains-exemption club.
--They could have kept the exemption restricted only to one's primary/occupied residence and left it as "one-time" in your life only.
--They could have left the 1031 exchange "as is" (difficult to qualify for).
--In 2000, the Fed could have left rates where they were (or at least not slashed them as low as they did for as long as they did).
--The Fed could also have set lender minimum reserve and loan qualifying guidelines to prevent neg-ams and 100% financed I/Os from becoming the new lending paradigm.
--The GSEs could have been fully privatized and de-coupled from taxpayer "implicit bailout guarantee". Or, at the very least, their portfolios could have been greatly reduced/restricted from current mammoth proportions.
--Local government (and idiot voters) could have rejected NIMBY/NURB/SMUG anti-supply measures and tougher immigration policies decades ago. Instead we get rent "control" laws, "just cause we can" developer fees in excess of $100K per housing unit and Prop. 13.