I've just run into this while trying to find an apartment for a friend to move closer to us in the US Pacific Northwest (not a major city). The rents are absolutely insane here, to the point that...
I've just run into this while trying to find an apartment for a friend to move closer to us in the US Pacific Northwest (not a major city). The rents are absolutely insane here, to the point that they're genuinely not competitive with even buying a house in the current market. You can seriously get any number of nice 3- and 4-bedroom houses with garages and property for a meaningfully lower monthly payment than even a mediocre 2-bedroom apartment (I know because that's what we ended up doing). They have to be banking on people not being able to afford a downpayment, because if there were any options nobody in their right mind would get into a rental contract here at the moment.
I think the most mind-blowing thing to me is that I'm a reasonably experienced, salaried programmer and even I wouldn't qualify for a disturbing number of 1-bedroom apartments--even the copy/paste low-rise ones--due to income requirement multipliers being applied to newly inflated rents.
We ran into this about 4-5 years ago in Los Angeles. Our rent went up 33% in a single year (after having gone up about 10-15% 2 years before). At that point it just didn't make sense to rent...
We ran into this about 4-5 years ago in Los Angeles. Our rent went up 33% in a single year (after having gone up about 10-15% 2 years before). At that point it just didn't make sense to rent anymore. I'm now paying about half what my last month's rent was 4 years later. But getting the downpayment would have been unobtainable if I didn't basically just get super lucky on investments and employment.
It seems like there would be an opportunity for real instate investors who buy houses and rent them out? But perhaps there are reasons why they don't want to do that.
It seems like there would be an opportunity for real instate investors who buy houses and rent them out? But perhaps there are reasons why they don't want to do that.
There's actually been very significant investments in buying up rental housing and managing it. Greystar manages 415,000 units in the US, and owns many of them., and they're only the largest.
I live in Florida and my friends' rents have more than doubled in the last decade. You can't afford a place to live for under $1,500 (and that's for a one bedroom apartment). And it's not like...
I live in Florida and my friends' rents have more than doubled in the last decade. You can't afford a place to live for under $1,500 (and that's for a one bedroom apartment). And it's not like this is a major city, either.
You have to wonder what is causing this increase. It doesn’t sound like supply or demand has changed a whole lot. Perhaps some construction was delayed which could be part of it. My feeling is...
You have to wonder what is causing this increase. It doesn’t sound like supply or demand has changed a whole lot. Perhaps some construction was delayed which could be part of it.
My feeling is that this is somewhat of a bubble. People expect prices to go up so they do because of this shared expectation. But that they will go down again once rentals are not being filled.
It’s also possible that things like the eviction bans have caused all landlords to revaluate their risks and bump prices to offset the risk.
Eviction bans also decrease supply, since evictions would ordinarily return some portion of rentals to the market. The fundamental problem is that there's not enough housing in the country,...
Eviction bans also decrease supply, since evictions would ordinarily return some portion of rentals to the market.
The fundamental problem is that there's not enough housing in the country, though—a problem which is largely driven by restrictive zoning which discourages high-density housing construction, which it itself driven by single-family property ownership.
It's a lot more than just that. Many people are treating the housing market as an investment in an attempt to diversify earnings. Foreign investors in some countries do not have to deal with...
It's a lot more than just that. Many people are treating the housing market as an investment in an attempt to diversify earnings. Foreign investors in some countries do not have to deal with restrictions on variable rate mortgages and have more access to funding in places which weren't affected by the '07 crash and subsequent regulation of American banks. In the bay area in particular there are a lot of Asian investors who are getting access to variable rate loans who can acquire large loans with a small amount of income which jack up rates in 5-7 years, with no intent of holding onto the property for more than a few years. When properties often sell within a week or two of going on the market and 5 years of interest typically returning at least 10% profit, an emerging middle class in other countries has an incentive to invest and pump the market and exit before it becomes costly to them. Until prices reach a point at which the market can no longer hold (we had a small peak around 2018 which has mostly recovered by now) on account of wage growth no longer matching, I don't see this changing absent city, county, or state level control via foreign taxes or some other method of evening the playing field.
My understanding is that this kind of problem has happened in quite a few big tech hubs. As the high paying jobs migrate so do the investors, to exploit the potential market as it grows.
I have heard that in places where they did put restrictions on foreign investors buying houses, like Vancouver, BC, it hasn't changed the situation much. Do you know if that's true? I know here in...
I have heard that in places where they did put restrictions on foreign investors buying houses, like Vancouver, BC, it hasn't changed the situation much. Do you know if that's true?
I know here in Los Angeles, most housing sells very quickly, often to buyers with cash over asking price, but I don't know how much of it is foreign investors. It seems like it's mostly builders and flippers. The builders do a "teardown remodel" where they basically tear down everything about the house except the minimum number of walls to make it not count as new construction, then build a bigger house around it (usually right up to the property line, which is illegal, but nobody does anything about it). They flippers usually just replace a few cosmetic things like cabinets and light fixtures and paint, and resell it for an additional few dozen thousand dollars.
I don't know if it's true, but I have heard about measures trying to tax or otherwise de-incentivize foreign investment. Builders and flippers are vaguely common around here as well but they are...
I don't know if it's true, but I have heard about measures trying to tax or otherwise de-incentivize foreign investment.
Builders and flippers are vaguely common around here as well but they are often bargain hunting - they'll help keep a floor on prices but don't put much upward pressure.
I’m wondering how people go about counting empty homes nationwide, and whether it includes places like abandoned houses in Detroit. Maybe there is a better way to understand what sort of housing...
I’m wondering how people go about counting empty homes nationwide, and whether it includes places like abandoned houses in Detroit. Maybe there is a better way to understand what sort of housing is needed?
After weakening early in the pandemic as the economy faltered and young people rode out lockdowns with family, the rental market is now seeing record demand. The number of occupied U.S. rental-apartment units jumped by about half a million in the second quarter, the biggest annual increase in data going back to 1993, according to industry consultant RealPage Inc. Occupancy last month hit a new high of 96.9%.
Rents on newly signed leases surged 17% in July when compared to what the prior tenant paid, reaching the highest level on record, according to RealPage.
[…]
Eviction bans also are playing a role in keeping the market tight, because about 6% of tenants are normally forced to vacate each year. Zandi estimates the country’s shortage of affordable rentals is the worst since at least the post-World War II period.
I've just run into this while trying to find an apartment for a friend to move closer to us in the US Pacific Northwest (not a major city). The rents are absolutely insane here, to the point that they're genuinely not competitive with even buying a house in the current market. You can seriously get any number of nice 3- and 4-bedroom houses with garages and property for a meaningfully lower monthly payment than even a mediocre 2-bedroom apartment (I know because that's what we ended up doing). They have to be banking on people not being able to afford a downpayment, because if there were any options nobody in their right mind would get into a rental contract here at the moment.
I think the most mind-blowing thing to me is that I'm a reasonably experienced, salaried programmer and even I wouldn't qualify for a disturbing number of 1-bedroom apartments--even the copy/paste low-rise ones--due to income requirement multipliers being applied to newly inflated rents.
We ran into this about 4-5 years ago in Los Angeles. Our rent went up 33% in a single year (after having gone up about 10-15% 2 years before). At that point it just didn't make sense to rent anymore. I'm now paying about half what my last month's rent was 4 years later. But getting the downpayment would have been unobtainable if I didn't basically just get super lucky on investments and employment.
Seems like it might be a good idea to nationally regulate rent profit margins.
It seems like there would be an opportunity for real instate investors who buy houses and rent them out? But perhaps there are reasons why they don't want to do that.
There's actually been very significant investments in buying up rental housing and managing it. Greystar manages 415,000 units in the US, and owns many of them., and they're only the largest.
I live in Florida and my friends' rents have more than doubled in the last decade. You can't afford a place to live for under $1,500 (and that's for a one bedroom apartment). And it's not like this is a major city, either.
You have to wonder what is causing this increase. It doesn’t sound like supply or demand has changed a whole lot. Perhaps some construction was delayed which could be part of it.
My feeling is that this is somewhat of a bubble. People expect prices to go up so they do because of this shared expectation. But that they will go down again once rentals are not being filled.
It’s also possible that things like the eviction bans have caused all landlords to revaluate their risks and bump prices to offset the risk.
Eviction bans also decrease supply, since evictions would ordinarily return some portion of rentals to the market.
The fundamental problem is that there's not enough housing in the country, though—a problem which is largely driven by restrictive zoning which discourages high-density housing construction, which it itself driven by single-family property ownership.
It's a lot more than just that. Many people are treating the housing market as an investment in an attempt to diversify earnings. Foreign investors in some countries do not have to deal with restrictions on variable rate mortgages and have more access to funding in places which weren't affected by the '07 crash and subsequent regulation of American banks. In the bay area in particular there are a lot of Asian investors who are getting access to variable rate loans who can acquire large loans with a small amount of income which jack up rates in 5-7 years, with no intent of holding onto the property for more than a few years. When properties often sell within a week or two of going on the market and 5 years of interest typically returning at least 10% profit, an emerging middle class in other countries has an incentive to invest and pump the market and exit before it becomes costly to them. Until prices reach a point at which the market can no longer hold (we had a small peak around 2018 which has mostly recovered by now) on account of wage growth no longer matching, I don't see this changing absent city, county, or state level control via foreign taxes or some other method of evening the playing field.
My understanding is that this kind of problem has happened in quite a few big tech hubs. As the high paying jobs migrate so do the investors, to exploit the potential market as it grows.
I have heard that in places where they did put restrictions on foreign investors buying houses, like Vancouver, BC, it hasn't changed the situation much. Do you know if that's true?
I know here in Los Angeles, most housing sells very quickly, often to buyers with cash over asking price, but I don't know how much of it is foreign investors. It seems like it's mostly builders and flippers. The builders do a "teardown remodel" where they basically tear down everything about the house except the minimum number of walls to make it not count as new construction, then build a bigger house around it (usually right up to the property line, which is illegal, but nobody does anything about it). They flippers usually just replace a few cosmetic things like cabinets and light fixtures and paint, and resell it for an additional few dozen thousand dollars.
I don't know if it's true, but I have heard about measures trying to tax or otherwise de-incentivize foreign investment.
Builders and flippers are vaguely common around here as well but they are often bargain hunting - they'll help keep a floor on prices but don't put much upward pressure.
What sources do you have for this sort of detailed market information?
Entirely anecdotal based on experiences of real estate agents who operate in the area and what occasionally gets reported on in news.
I don't believe there isn't enough housing. There are more empty homes in the US than there are homeless people.
I’m wondering how people go about counting empty homes nationwide, and whether it includes places like abandoned houses in Detroit. Maybe there is a better way to understand what sort of housing is needed?
From the article:
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