patrick.net

3% essentially matches inflation. Why is that news?

Renting should not be tough. Just offer to pay 10% more and you should be able to win the bidding war.

Renting will still be a good deal.

not investment advice

Patrick wrote:

> Lately there has been a rash of articles about
> Bay Area rents going up.

The end is near for the newspaper business as we once knew it. The demoralized staff remaining at the papers that are still around will print almost anything they are sent. Some sharp guy from the CAR is probably sending out article after article that writers can slap a bylaw on and fill space in a paper that is read by a small number of subscribers who can’t use a computer.

> This is odd, because there was a big surge in rents
> in May and June, but not now.

Since I doubt that Patrick is getting actual data on signed leases that is net of concessions I’m wondering where the “big surge” came from... Compaines like RealFacts only survey a handful of rental buildings (I saw one big survey in SF with only 8 buildings) in a city like San Francisco that probably has over100,000 different rental buildings.

When doing apartment loans I look at a lot of apartment rent rolls and the “actual” rents are a lot different than the “asking” rents. On hotel loans the numbers are even more different with the Revenue Per Available Room (RevPar) typically just about 2/3 of the asking rates (aka “Rack Rate”).

Yes. Really. I rent, I don’t like the place I’m moving, I can’t fork out $1800/month rent, and what’s left has a lot of competition, and isn’t very nice. If you think I’m joking, go take a look at Craigslist and see what you can get for $1500, especially with a cat.

What/where are you trying to rent? I heard that the $1500 range is getting crowded though.

I heard 3BR places are also popular as more and more people are becoming bubble sitters.

That’s probably the problem-I want a yard, somewhere in Mission, Noe, Bernal, Duboce, Haight.

Oh. If you have those requirements, it is not going to be easy in the best of times.

julie Says:

> Well, my very recent experience, as a renter
> who’s house was just sold (listed $699K,
> sold $725 in a week) and had to move…
> I rent, I don’t like the place I’m moving,
> I can’t fork out $1800/month rent…

Since julie “can’t fork out $1800/month rent” a the new place I’m guessing she was paying less renting the $725K house (my sister is paying about $2K a month to rent a $1mm + home in San Mateo).

It looks like confused renter should buy since it costs about the same as renting (as long as someone gives him 80% of the cash to buy the home interest free. If he needs to actually to borrow 80% of the money and pay interest buying is 3-4 times more expensive than renting).

I bet confused renter will get board at another open house tomorrow (since unlike last year no none is coming in and making an offer after smelling the cinnamon on the stove) and post a link to another home that went up 50% in 6 months telling us he is confused…

This is my dream rental in SF now:

http://sfbay.craigslist.org/sfc/apa/223084953.html

Is the rent for the entire year?

If that's for the whole year, I'll take it now just for my visits to the BA.

I love the concept of hotel residence with valet parking and turn-down service. I just cannot afford it... yet.

I hate urban living but I love steel-and-concrete high-rise condos. What should I do?

Completely OT. It may have been discussed before.

For some very good statistics - specifically for BA - visit
http://www.sanjoseproperty.com/newsletter.html

Some of you may already be doing that. Ignore the RE spin and go to the next page for statistics. They have 2 completely different groups - SFH and condos.

Here is why I am writing this. Of all the cities, only Cupertino suffered a YOY loss on median and average. Rest of the cities did quite OK. Palo Alto seems to be very skewed. And for Cupertino the MOM decline in median was close to 10% !!

So what's going on ? Wasn't the theory that the core areas will not suffer as much as the fringe areas ? This might be a monthly blip, but is definitely very interesting blip.

Secondly, September (YOY median etc) did not turn out to be worse than August. So as has been mentioned before, some folks seem to have rushed in to catch the falling knife. Good. I want everyone on the fence to jump in and buy. Is that too much to ask for ?

But sales are down sharply and as reported on the site above, 'days of inventory' is up nicely. Forget the seasonal slowdown blah blah. Compare the YOY figures.

But I am surprised that RE shills are not spinning this as "stabilization". At least not as much spin as used to happen just 3-4 months ago.

Now I will go back to my day job.

If we rent another SFH in South Marin next spring, judging by current prices, we'll be paying at least 15% or more than we rented this McMansion for in spring 2005. Maybe this is just happening in this area, or for this range of rentals, but I'm waiting to see the supposed glut of flippers putting stranded flips up for rent. All I'm seeing is long time equity rich owner putting things up for premium rents.

(apolgies for dragging something over from another thread)
HARM said:
Time has a very different value for those in the high 6 & 7-figures club. When you consider the time required to perform or automate those repetitive tasks (esp. for computer illiterates), and someone who works 60-70 hours/week with little free time to spare, it may actually make economic sense for them.

I totally understand and agree with this in principle. You are talking about something where the customer gets value from the service.

My objection to this guy's 'business model' is that he is taking tasks that can easily be automated - and he is deliberately mystifying them so that he can charge more for performing them.

I don't see this as adding value to his customers - it is just too evil.

SP

SP, the guy is putting on a little extra show to make his customers happy. There is nothing wrong with marketing, as long as you are also providing value. If he's charging a premium, perhaps his clients mentally justify that by the personal attention he gives to every job.

@Brand,
Sorry - I don't see the justification as valid. This is analogous to an auto-mechanic conning a poor old lady into changing spark-plugs every time she gets an oil change. That isn't 'value', no matter how you cut it.
SP

Back On Topic,...

The MSM usually gets all worked up about something after it has been noticed (and often already discounted) by everyone else. So they could just be writing about the increase in rents that actually happened earlier in the summer.

I have also noticed that they all seem to move in synchronicity - one cub-reporter breathlessly "breaks" the story, and the rest of them are chirping about it for the next day or two.

(Thanks to that realtor-twit I posted about a few weeks ago, I now have gotten into the habit of saying "main street media". Annoying meme, that.)

SP

@Randy H, Peter P, etc.

Hmmm... perhaps the Bay Area really is "different" in terms of a lack of quality rental stock. Given how much of the peninsula is under rent (price) control, I can certainly understand why. Who would want to build when you have to face a gauntlet of opposing NIMBYists, TODLers, pseudo-environmentalists, plus a mountain of red tape, needless permits & suffocating fees? All for the dubious privilege of building something basically guaranteed to lose money over the long-term, thanks to rent control.

Disgruntled ex-hippies might want to set down the bong & protest signs and consider how well those "affordable housing" social programs are really achieving their stated goal?

Here in L.A., purely based on personal observations (we just moved) I'm seeing rental inventory is pretty tight, demand is steadily high, while asking rents are up maybe 7-8% over last year. I fully expect this trend to continue until/unless the employment situation significantly worsens. Given how dependent of SoCal's economy has been on RE and MEW-driven consumer spending for the last 5 years (not to mention strong yield curve invesion for most of this year), I suspect we could be in recession by next spring. Not a prediction, just a pulled-from-my-ass guesstimate.

@SP,

Point taken. Of course the same charge could be levelled at many SW companies :-) .

My objection to this guy’s ‘business model’ is that he is taking tasks that can easily be automated - and he is deliberately mystifying them so that he can charge more for performing them.

Of course the same charge could be levelled at many SW companies

My ERP vendor does that...

but... so does the medical profession, to some extent -- they love taking BP over and over again, and tapping adults for reflexes as tho they all have motor neurone disease when they just walked into the surgery under their own steam. i've got a friend whose leg never jerks at the patellar reflex, and a doctor told me he has no idea why he even does it. and they like to remain silent while they scribble some notes or a script rather than educating their patients, or, heaven forbid, practising preventative medicine...

apparently, as long as your BP is OK, there is no housing bubble, you are under no emotional stress, your job is great, and life is just perfect. GPs don't offer much holistic service either, just treat presenting disease -- and that's if you're lucky -- assuming they haven't misdiagnosed or are even aware of the presenting syndrome or it's known to medical science...

not to mention demarcations and the jealous guarding of prescribing and diagnosing privileges, etc.

HARM said:
Of course the same charge could be levelled at many SW companies

Many, but not all. ;-) Besides, you can do a lot with open source software these days, so a lot of s/w vendors will be finding their feet held to the fire.

SP

Given how much of the peninsula is under rent (price) control, I can certainly understand why.

Uh... are we talking about the same Peninsula??

HARM

Given how much of the peninsula is under rent (price) control

There is essentially NO rent control anywhere in the entire greater Bay Area outside of SF and Berkeley.

Also, I was at a b-school networking event last night where a lot of discussion about the economy, housing and rents was batted about. All of the folks there who own rental property pretty much said they've raised rents at least 12-15% in the last few months, and expect to push that much minimum through as leases expire.

About half of the fence sitters I talked to are planning on buying in the next few months. There is a definite sentiment shifting on house prices, at least in the market for +$1.5M homes.

Pretty much everyone's company was hiring. It really felt a bit boomish -- which worries me a bit.

**Disclaimer: All the above is purely anecdotal, although I personally place a pretty high value on it. Call me a Troll, but I'm not seeing *any* rents easing, and quite a few rising; mostly as a factor of strong jobs and wage growth in the BA.

Randy H Says:

> If we rent another SFH in South Marin next
> spring, judging by current prices, we’ll be
> paying at least 15% or more than we rented
> this McMansion for in spring 2005.

Remember that there are no REITs renting million dollar homes in South Marin. Most people renting homes have just a single rental. If one person raises the rent on Craig’s List you will often see everyone else raise their asking rent.

People renting homes are in a great position to negotiate. Owners that have a mortgage for more than the rent are usually motivated to get someone in ASAP and will often give a big rent discount if you give them a check that day. Owners like my parents that don’t have any debt and have low taxes are motivated to rent to people who won’t be a pain in the ass who will stay a while and will often give a big rent discount to a normal looking family that seems stable.

I’m not telling Randy H. to “lie”, but if he can put together a renters resume showing good income and assets and then look a long term South Marin landlord in the eye and say “we hate moving and plan to stay here until the kids graduate from Tam High” he will probably get a great deal…

Shawn,

Good on ya' and Happy Friday to all!

We've often said that Craigslist is the "Home of the Desperate (and the Delusional)! Let me get this straight, Julie's home sold for OVER asking and she's still freaking broke? She listed at 699k and got 725k but still has to rent in gang infested areas? Well I'm not going to let Julie ruin MY Friday! So "bidding wars" are still alive and well? Right.........

I'd heard last night that the Escondido city council passed an ordinance to fine LL's that rent to illegals. FAB, can they do this? Can they make this stick? If so how will this change the rental market in that area? They mentioned there are about 35k illegals in Escondido.

SQT,

C/L can have some great rental deals in Portland (but only b/c we are so "wired" and sophisticated). I've never had to resort to using a 15 year long relationship to find a place to rent.

DinOR Says:

> I’d heard last night that the Escondido city council
> passed an ordinance to fine LL’s that rent to illegals.

I read about this on a CA Apartment Association site.

> FAB, can they do this? Can they make this stick?

They “can” pass the law, but the landlords perspective is that the law will have even less impact than the federal law making it “illegal” to come here in the first place (the law will allow some city council members to tell voters that they are “doing something to combat illegal immigration)…

> If so how will this change the rental market in that area?
> They mentioned there are about 35k illegals in Escondido.

My guess is the law may be used to fine one or two slumlords who are renting homes to dozens of illegal’s who “hot bed” (a place where the illegal working the night shift wakes up the illegal who works the day shift so the bed in the rental never get’s cold”)…

Rob,

One of the things that has always made Craigslist a little "suspect" in my mind is that it gives anyone either new to, or thinking about a move to any area a sense that they have their thumb on the pulse of what is going on there! Just click on any point on the globe and Craig will take you there, for free! Because the ads post for free everyone there has a "might as well throw your hat in the ring" mentality! If I can't sell it for X + my wildest dreams, no bigee, didn't cost me a thing. When people PAY for advertising, they need a return on that investment. They need results.

Look at so many of the RE listings there. It's LOL funny.

"We really don't need to sell this place but we got some acreage from our parents so for the right price we'll let this place go".

"Going through a divorce, my loss is your gain"

You get the idea.

FAB,

Thanks, it looked pretty unenforceable. It is a shame though, I was stationed in that area years ago and it seemed like it was a really nice town. I don't know what kind of community you can have when 1 in 4 people are there illegally?

Harm:
I'm banking on your recession theory hope that is the case. I may be coming back next year. This deep south experiment didn't work yea it's quaint and cheap but there is nothing to do and 0 culture. When I left So Cal last January was renting a 2/2 gated decent north upland above foothill for $875 and that was a bargain (I got lucky). Who knows what has happened since.

Man that's me! Tech ignorant user friendly maybe? If it weren't for the easy format templates in Blogger I'd never had gotten my webpage up. I have alot of respect for techno saavy nerds.

Our rent in Mountain View went up 7% in August, but that was the first raise in 3 and a half years. We are only on month to month, so I hope our landlord doesn't get any ideas - if he does, we'll just have to move - in which case he loses any gains he might have made with a rent increase, and he will have the hassle of finding new tenants.

classic:

http://sfbay.craigslist.org/eby/apa/222037457.html

We have "fruit" rats in the roof, which the landlord doesn't seem to care about. As long as they don't come in the house, I won't throw a wobbly, but if they ever do...........

OT - if you buy a piece of land - how much would a contractor charge you to build say a 3bed, 2bath house on it - i.e. tear down the existing property? Mountain View/Los Altos? I have a friend who thinks that this would be a great idea, but I'm thining it's not as cheap as she's thinking it is? Anyone got a rough idea?

OT,

HARM, the quote from previous by Amy Crews Cutts was absolutely golden! Now we're calling people stupid? These are YOUR CLIENTS deary! I guess when you work for a GSE you can get away w/insulting the general public. Well, if "buying" from August 2005-on was such a dim-wit idea why were you people still lending money like it was going out of style?

Gary, Leslie, David...... meet Amy.

Claire,

Good morning btw, I can't imagine being any further out of depth than hazarding an opinion about "tear downs" but w/ certain things in life it simply isn't necessary.

What we really have is a credit fueled "land bubble". When lots alone in OR (that's Oregon for crissakes) are going for 120-200k, we have a land bubble. Most "tear downs" are hardly priced at what the lot alone would sell for (not that it would be a bargain) then there's the cost of disconnecting service, removing said uninhabitable chicken coop, site prep, architect, designer and greasing local palms every step of the way.

FAB, have I left anything out?

So my friend has found a double lot, with two houses built, one owner occupied and the other their rental, asking $1.5m - she's thinking buy it, split the lot (21000ft into two 10,000ft) and build new houses for less than most go for in that area - which is normally $1.2 to 1.4m - it doesn't sound too bad an idea except that I think/hope house prices are falling. Luckily I am not in a position to buy yet, so I can honestly say that we can't go halves or even consider any properties until next year.

Wow, I feel really lucky to be renting a 2br/2ba condo for under $1800 in a nice part of Cupertino. We're in a lease that does not expire until next year. Our landlord never raises the rent - honestly I feel like I'm stealing from the guy. I won't be upset at all if he raises the rent. Rents still seem very "reasonable" compared to the dot com days.

One thing I notice regarding rents - it seems like the apartment complexes are asking a lot compared to private owners. My friend is renting a 1br condo in MV for $1150. I saw an ad for Park Place one bedroom for $2081. WTF? Good luck with that.