August 10, 2006

‘Landlords Are Doing Renters A Favor Right Now’

USA Today looks at the rent versus buy decision. “In some of the nation’s priciest real estate markets, the financial reasons for renting instead of buying are the strongest they’ve been in 25 years. So how out of whack is it now? The national median mortgage payment is $1,687 a month, nearly twice the median rent payment of $868 a month. The financial gap is even larger in cities where home prices recently rose to sky-scraping heights, such as New York, San Francisco, Los Angeles and Washington.”

“Micki Seibel and Jan Leger told their friends they were going to sell their home in the heart of San Francisco and rent an apartment. Though Seibel and Leger love their home, which they bought in 2002 for about $1 million, it’s been draining them of $5,600 a month for their mortgage and taxes, when they could be renting a place just as nice in the same neighborhood for about $3,400.”

“‘We can put that savings in the bank and make it work for us and take away the risk of the unknown future of the real estate market,’ Seibel notes. ‘For what we’re paying for our mortgage and property taxes, we could be renting a mansion in Pacific Heights,’ he said.”

“Add rising interest rates, and it’s easy to see why many would-be home buyers are sitting on the sidelines and why even some homeowners are cashing out. By renting, they gain the flexibility of a lease and freedom from home repairs. They can also invest more money in other assets that could appreciate faster than real estate over the next couple of years.”

“‘For someone debating whether to rent or buy in a market that’s experienced recent and substantial house-price run-up, it may be better to delay the home purchase and see what the market looks like a year or two down the road,’ says Stuart Gabriel, at the University of Southern California.”

“A homeowner in Orange County, Calif., for example, would have to stay in his or her home for a decade before breaking even on out-of-pocket costs compared with renting, according to Marcus & Millichap.”

“‘Real estate is probably the best investment any young person can make,’ says Yadiris Ferreira, who bought a condo last month in Pembroke Pines, Fla. Still, her mortgage, including homeowner association fees, totals $1,800 a month, more than half the money she takes home as a high school math teacher. ‘It’s crazy,’ Ferreira concedes. But, she explains, ‘If I didn’t buy something soon, it was going to get to the point that I couldn’t afford anything.’”

“Lots of other people thought the same way during the boom years. But now home sales are falling, and in some cities, prices have started dropping, too. In June, condo prices fell 2% nationwide, and single-family home prices dipped in several markets, including San Diego, Boston and Washington.”

The Times Standard in California. “According to the Humboldt Association of Realtors’ latest affordability index, home prices dropped in every community except McKinleyville. In May the median home price in Humboldt County was $319,500, with around 11 percent of Humboldt County residents able to afford a home. June’s median price was $307,500, representing a one-month price drop of $12,000.”

“Local economist Erick Eschker said that he still expects a ‘large downturn in local real estate’ in terms of prices and number of homes sold. One indicator he looks heavily to is the housing price-to-rent ratios. Currently, rent prices in the county aren’t capable of covering property owner mortgages, he said, and owners are banking on the ability to make up for the loss in appreciation.”

“Eschker expects that appreciation to come a lot slower or even fall off in coming months, which would even out the rent-to-purchase ratio. ‘Landlords are doing renters a favor right now in comparison to the cost of buying a home,’ he said.”




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148 Comments »

Comment by ex_ca_in_boise
2006-08-10 09:42:03

I’m renting at about 50 cents on the dollar in Boise. This is based on what the owner actually paid for the place in 2005.

Comment by Brandon
2006-08-10 10:05:37

I’m renting for about 75 cents on the dollar out in Meridian, ID. It’s a smaller place (about 135k) new, so the price break is not as large. As in most markets, the more expensive the home, the bigger the break on rent.

But are landlords really doing us a favor? It’s not like rents are a bargain out of the kindness of their hearts.

Comment by Ben Jones
2006-08-10 10:11:40

In Arizona, so many rent houses are empty that the renters are the ones doing a favor.

 
Comment by jim A
2006-08-10 10:37:05

I agree, the person that landlords are doing a favor for is the person that they overpayed to buy the place.

Comment by jim A
2006-08-10 11:05:53

Even more, the very IDEA that they’re “doing a favor” for rentors implies that they somehow DESERVE to be rewarded for overpaying.

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Comment by Robert Cote
2006-08-10 11:11:44

landlords are doing a favor for… the person that they overpayed to buy the place.

And you have no idea how eternally grateful I am. I was sweating bullets last spring. If the deal didn’t close I might be stuck. I got out for 273 times rent. I pretty much expect to buy back three of these at 100 times rent in a few years. Again, as an ex-landlord, I thank all current landlords for their generosity. Best part, when I decide to reinvest rents will have nowhere to go but up as population pressures and aging stock respectively increase demand and reduce supply.

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Comment by nnvmtgbrkr
2006-08-10 11:17:53

It’s not like landlords wouldn’t charge more if they could, and that’s the point. The rental market is still realistic, the housing market isn’t. There are some landlords in my area that are trying to charge above the going rents to try to cover some of their monthly bleeding, but their rentals just sit, thus compounding the bleeding.

Comment by Catherine
2006-08-10 12:44:00

Right. The article misuses semantics.
It’s more like… “renters in charge”.

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Comment by john
2006-08-10 11:14:43

I find it funny the teacher rushed to buy out of fear of being priced out of the market. I would never do that at these lofty levels, and she teaches math. My rent in mesa has gone up a whole $10 in 4 years. Much cheaper for me to rent than to buy, plus my money in the bank is earning more interest now than in the past 6 years. covers 1/2 my rent! I also noticed the condo conversions in scottsdale are just sitting empty..or selling very slowly at 200,000.they have been selling on the market for a year now. maybe they will be forced to revert to rentals, some are not even finished converting. why would i buy a condo( really it is an upgraded apartment) when i would pay double the costs! plus, if you have noise problems..a renter can move.

 
Comment by nnvmtgbrkr
2006-08-10 11:23:14

Here in NNV, most rents at 50 cents on the dollar.

 
 
Comment by nnvmtgbrkr
2006-08-10 09:42:39

Are we just now covering the housing price-to-rent ratios in the media? Jeez! Like Ben said in his interview, this is what many of us noticed clearly years ago as an eye-opener to trouble ahead.

Comment by santacruzsux
2006-08-10 09:52:42

No kidding. It saddens me more and more how incredibly sheep-like our citizenry is. Anyone read The Unconscious Civilization by John Saul? It’s a good read for anyone interested.

Comment by KirkH
2006-08-10 11:40:04

On the other hand, those of us who understand fundamentals, economics, etc. are much better able to build wealth. The so called sheep are doomed to a lifetime of living paycheck to paycheck without knowing why.

The only group I’m really mad at is the media. These blogs are popular because the media blew it on early coverage of the risks. Maybe people lost sight of risk because the Fed has artificially created stability, creating massive bubbles as a consequence, rendering the intuition of the common folk useless.

 
Comment by Jim A.
2006-08-10 16:38:33

Are you kidding? Coté here was complaining that http://angrybear.blogspot.com/ was on the far left. If he read any John Saul his head would explode.

 
 
 
Comment by Backstage
2006-08-10 09:43:29

I’m renting at less than 50% of purchase in the SF Bay Area. It’s not too late to n=make the switch. But it will be harder and less lucrative than a year ago.

Comment by Yooklid
2006-08-10 10:04:57

I’m probably at 33%.

Comment by lalaland
2006-08-10 10:58:12

My Bay Area rental, 40%

 
Comment by Jim D
2006-08-10 11:29:17

Rent - $1250. Price of comparable (3br/2ba) condo: $650k (maybe - hard to say, but no lower than $550k).

Really, who’s buying these things? Don’t they even have rudimentary math skills?

Comment by krazy_canuck
2006-08-10 12:47:17

I’m paying $1500 for 1/2 of a 6BR house in Solana beach that is 1 block to the ocean. The Owners live in the other half. It’s appraised value is something like 1.4M… Glad I’m the renter and not the owner !!

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Comment by SLO Bear
2006-08-10 13:59:56

I’m paying $2200 for a $950K in SLO County, CA: 30%!

 
Comment by Jackie Childs
2006-08-10 14:22:51

I’m paying $1500 for 1/2 of a 6BR house in Solana beach that is 1 block to the ocean. The Owners live in the other half. It’s appraised value is something like 1.4M… Glad I’m the renter and not the owner !!

Dude, you are stealing that place. Let me know if they move out, I’ll be your room mate. LOL

 
 
Comment by SVRenter
2006-08-10 12:50:36

My first post here. We bought our home in 1994 in San Jose when it made sense to make the mortgage payments since the payments would trump the rent for a comparable house those days (Silicon Valley was expensive even then!). The biggest hurdle for owning a house was to come up with the 20% down payment. We had been looking to move into a better school district for the last 5 years or so but the house prices kept only going up. After doing some math, we sold our house in April’06 and moved into a rental house in a good school district. Our rental house is lot bigger and in a better neighborhood with excellent public schools. I am paying 3350 per month but zillow computes the house value to be 1.6M (that makes the rent to price ratio over 700!). Proceeds from the sale of my house is collecting interest and paying for over half of the rent and since I put my kids in public school, I am also saving on private school costs. I am planning on staying put for a few years and jump in to buy when this craziness is over. I got multiple offers on my house and the most revealing thing about those offers was that all of them were “Interest Only” or “Option ARMs” with zero, 5 or 10% down and needing help with closing costs. It is amzaing to see so many people out there willing to commit financial suicide to just own(?) a home! They should all be reading this blog to educate themselves.

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Comment by dreaming 08
2006-08-10 13:38:01

We rent in Playa Del Rey (in Los Angeles by LAX) for $1,550. A similar size condo would be 550K and the houses across the street from us are 1.5 M+

Plus, renting is awesome! When I had a plumbing problem last week, just called the landlord and she had it taken care of the next morning…no worries or extra $$ spent by me (a great break after 6 years of owning!). I don’t spend my weekends weeding or repairing things, just spending time with my family :)

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Comment by Sunsetbeachguy
2006-08-10 20:23:30

I am at 29% less than 1/2 mi to the beach.

 
 
Comment by Chris in La Jolla
2006-08-10 12:22:55

Rent: $2000
Comps in last 90 days: $1.5M, $1.3M ,$1.7M

I figure I’m around 20% of mortgage payment.

 
Comment by AnonyRuss
2006-08-10 13:14:56

The rent on the house that I rent outside of Phoenix was about 50% less than the cost of buying the same model at peak 2005 prices. But based on the few houses actually selling around my area now, it is probably 40 to 45% now.

 
Comment by Bill in Phoenix
2006-08-10 21:03:03

I don’t know my %, but I share an apartment and work 60 hours a week (contract engineer). $471 per month for the rent in Phoenix and a token $25 per month rent with a roommate on the beach in Cal. Total: $496 per month rent. Income? high 6 figures. Paying even a $2000 mortgage is a laugh in today’s market. I’m socking away $$$$$. Net worth well above 1/2 a million.

Comment by CA renter
2006-08-11 00:38:00

South Carlsbad (San Diego). Nice home in nice neighborhood, 4/2.5 over 2,000 sf. Rent is $2,100/mo. House would have sold for about $720,000+ at peak price. No way “buying” makes sense.

 
 
 
Comment by zipost
2006-08-10 09:50:53

OT,

Where’s that link from someone who compiled a list of the houses that FBs had either taken a loss or is listing for sale less than the purchased price? I need to show it to a friend who thinks that RE only goes up.

Comment by Davis_ renter
2006-08-10 10:08:32

If you are thinking of the one for the Sacramento area, this is it:
http://flippersintrouble.blogspot.com/

There is also one for the San Diego area but I don’t have the URL.
I’ve also done a few random “investigations” just using CL, Zip realty, and Zillow (for the purchase price) and found lots of people selling under water.

Comment by zipost
2006-08-10 10:21:56

Thanx a bunch! That was the site I was looking for.

 
Comment by WArenter
2006-08-10 11:51:16

Davis renter - good site reference.

Comment by Davis_ renter
2006-08-10 15:06:33

Thanks he’s a regular on the Sacramento Landing Blog like myself.

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Comment by Tbone
2006-08-10 09:54:55

“‘Real estate is probably the best investment any young person can make,’ says Yadiris Ferreira, who bought a condo last month in Pembroke Pines, Fla. Still, her mortgage, including homeowner association fees, totals $1,800 a month, more than half the money she takes home as a high school math teacher. ‘It’s crazy,’ Ferreira concedes. But, she explains, ‘If I didn’t buy something soon, it was going to get to the point that I couldn’t afford anything.’”

If the above statement is representative of math teachers in this country, then we are headed for a world of hurt….

Comment by climber
2006-08-10 10:37:14

Like any investment, price matters. I’ve found out the hard way, that if you overpay it’s much harder to make any profit. High transaction costs only compound the matter. Real esate is a lot more like rare coins than most other investments. It’s not liquid, no two are the same, and the transaction costs suck. Most “profits” are really just dollar devaluation and not actual investment return.

Comment by Andy
2006-08-10 11:31:22

Exactly. Say I were to stay in my house for 20 years. Bought 10 years ago for 93K. I would have paid about $160k for the house including interest. And 10 years from now, it MAY be worth 170k lets say (5 years from now it’ll be worth 120k). So basically I would have exactly how much I paid for the house. But then we didn’t even factor in the taxes or that 160k truly invested probably would have grown a lot more. Basically that 160k total payments had zero growth. I just got dollar for dollar out of it, and in the end, the dollars are inflated anyway, so in all actuality, owning a house is really not a whole lot better than renting except you have more say over what you can do with your house.

Comment by Adam
2006-08-10 11:47:45

You are forgetting something very important. You can ‘leverage’ your house and is why it is a good investment when bought at correct levels. If I buy a 200K house with 20K down then 5% appreciation equals 50% ROI. Assuming you are close to break-even (obviously not the case now but if you bought at good levels you should be ‘close’ to break even when you rent out).

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Comment by Bad Chile
2006-08-10 16:18:14

Likewise, if you buy a 200k house with 20k down, then 10% negative appreciation (to use a Realtor term - and ignoring the transaction costs), over the course of a year means you’ve lost…roughly 100% of your investment.

 
Comment by Anton
2006-08-10 20:09:02

I don’t get this argument of “leverage” being unique to RE and therefore “good”. You can get all the leverage you can shake a stick at in the options market but it doesn’t make it fail-safe.

 
2006-08-11 02:45:15

Those are both good points.

I think there are alot of factors to consider when deciding on whether to buy or rent.

Also, if a person bought and can not recoup their Mort Insu HOA dues, maintenance costs, etc, then that negative cash flow adds more loss to the leveraged downpayment investment.

 
 
 
 
Comment by Walker
2006-08-10 11:10:57

If the above statement is representative of math teachers in this country, then we are headed for a world of hurt….

As someone who has taught many future math teachers at the college level, I can tell you that we are far past that point. Your average education major hates/barely understands math, but they go into because it is one area that is always hiring.

Comment by loonofficer
2006-08-10 11:32:21

So why don’t they become realtors? (Or loon officers for that matter?)

 
Comment by JFord
2006-08-10 13:18:47

Walker, got a good laugh from your response. Sad but true.

I majored in math at a smaller private liberal arts college. My faculty advisor was a great teacher as well as a wonderful mathematician. And I got to know him very well.

In a moment of weakness (or truthfulness more likely), he mentioned the advanced math for teacher courses offered by the college with the comment one day “I refuse to teach that GD watered down crap”. That was many years ago and I’m sure the situation is worse today.

Comment by Jim A.
2006-08-10 16:47:22

Well just for sake of argument, how much math does a teacher need to know to teach trigonometry, which is more math than most H.S. Graduates get. There’s no reason to require Abstract algebra with Galois theory (required to get a math major where I went to college) for people who are aren’t going to teach anything beyond the quadratic equation. And most school boards aren’t intrested in paying enough to hire somebody who could get an real math degree.

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Comment by We Rent!
2006-08-10 17:03:19

I agree wholeheartedly with your comments. Math teachers are sorely overqualified for the particulars of the job. Anyone who can do the type of problems I put below can certainly make more cash elsewhere (subsequent post). This would be the reason people need to stop dogging math and science teachers. They choose to do this for a reason other than money. English teachers? Shucks, go ahead.

Disclaimer- Of course, I do teach math. However, I also have a degree in Psychology - probably MUCH more important to teaching than any math skills. Sad, but true. You would certainly not hear me say such comments toward a Japanese classroom, wherein you have students raised by better - yes, I said BETTER - families (who live in smaller houses… coincidence?).

 
Comment by robin
2006-08-10 19:40:48

I have an MBA, went through Geometry
(both kinds), Algebra 1 and 2, trigonometry, and calculus.

I do think Geometry and Algebra help pattern the brain. Trig is useless! The calculus seems great and a smart shortcut if you remember how to use it.

Pretty much wasted time.

 
Comment by We Rent!
2006-08-10 21:19:21

Trig is useless? What, because you cannot fathom what it has meant for society (both good and bad)? Trig is a building block for most of the technoglogy you use today, and it’s great for killing people at range.

I agree, though, that most of the upper-level courses are not necessary for many of the fields which require them.

 
Comment by robin
2006-08-10 22:02:38

It’s been useless for me, but I’m sure it’s valuable in Engineering. I never wanted to be an Engineer! - :)

 
 
 
Comment by We Rent!
2006-08-10 16:42:02

In California, you must pass the Math CSET to become a single subject math teacher. I reckon about 1/10 of 1% of the folks posting here could pass it.

I ‘ve been at this for the past week or so, but we need to remember that intelligence and wisdom are two VERY different things. I know a few “intelligent” math teachers who bought two houses in the past couple of years (aside from the ones they live in!). I bet people around here could identify similar stupidheads in other fields. :mrgreen:

Comment by We Rent!
2006-08-10 16:52:36

Here is a sample of what you must be able to do:

1. Area A is defined as the area between a circle and an inscribed square. Area B is defined as the overlapping area of four congruent semi-circles with each side of the square as a diameter of the semi-circle. Show that Area A is equal to Area B.

2. For what value of k does the limit, as x approaches k, of (sinx+sinxcos(sq)x)/(sinxcosx) equal -2? (no calculators on this section)

3. For what values of x does the infinite series 1-(x-2)+(x-2)(sq)-(x-2)(cube)+… converge?

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Comment by JFord
2006-08-10 17:34:15

I don’t know We Rent!, I went thru the 1st 5 actuarial exams (for an ASA), you ought to take a look at those if you want to talk about mathematical difficulty.

In any event I wasn’t knocking teachers (I surely wouldn’t want that job) but rather the level of math required in the schools, even then it was pretty low. It does amaze me that the math level today is no higher than 30 years ago when I was in school. I’d bet other countries have made some kind of advances in the past 30 years, yet the US seems to be stuck in a time warp academically.

But, anyway … what can you expect when some states replace science with classes in superstition.

 
Comment by We Rent!
2006-08-10 21:14:10

Sorry, I was actually replying to “Walker.”

He seemed to be missing something. In CA, at least, future single subject junior high and high school teachers are not “education majors.” Nor do the ones who “hate/barely understand math” even think of teaching it.

 
Comment by CA renter
2006-08-11 00:50:02

Go get ‘em, We Rent! ;)

 
Comment by ajh
2006-08-11 06:26:20

It’s been 30 years . . . mutter into beard . . .

1. Ummmmm, the inscribed square obviously has sides of length r x sqrt2, where r is the radius of the original circle. So the total area of the 4 smaller half circles equals the area of the original circle, and no point within the square can be inside more than 2 of the smaller half circles (although the centre point touches all 4).

Therefore the overlapping area inside the square must be the same as the area in the original circle outside the square.

2. cos(k) = -1, therefore k=180 degrees

3. abs(x-2) Not rigorous proofs :D)

 
Comment by ajh
2006-08-11 06:34:13

This software doesn’t like ‘less than’ signs.

For question 3, abs(x-2) has to be less than 1, so x lies between 1 and 3 if we confine x to the reals. x=1 diverges. I don’t remember how x=3 is treated, but I will guess it is considered to converge.

If we allow x to be complex I think we get a Mandlebrot set.

 
Comment by ajh
2006-08-11 06:48:28

On third thoughts (and this is a pure guess :)), maybe the aforementioned “Mandlebrot set” might be the interior and circumference of the unit circle centered on (2,0) with the single point (1,0) excluded.

 
 
 
 
Comment by Andy
2006-08-10 11:23:27

:0

 
 
Comment by David
2006-08-10 09:55:31

““‘Real estate is probably the best investment any young person can make,’ says Yadiris Ferreira, who bought a condo last month in Pembroke Pines, Fla. Still, her mortgage, including homeowner association fees, totals $1,800 a month, more than half the money she takes home as a high school math teacher. ‘It’s crazy,’ Ferreira concedes. But, she explains, ‘If I didn’t buy something soon, it was going to get to the point that I couldn’t afford anything.’”

She is a high school MATH teacher? YIKES!

David
http://bubblemeter.blogspot.com

Comment by waaahoo
2006-08-10 09:58:32

Still, her mortgage, including homeowner association fees, totals $1,800 a month, more than half the money she takes home as a high school MATH TEACHER. ‘It’s crazy,’ Ferreira concedes. But, she explains, ‘If I didn’t buy something soon, it was going to get to the point that I couldn’t afford anything.’”

Another reason I home school.

 
Comment by Rob
2006-08-10 10:00:03

you beat me to it. This Yadiris chick is educating the next generation of fb’s.

 
Comment by santacruzsux
2006-08-10 10:01:10

When it states that more than half of her take home pay is used on her mortgage, what do you think the actual percentage is? Are high school math teachers in Florida making over $60,000/year gross?

Comment by destinsm
Comment by Jim Lippard
2006-08-11 06:57:54

That’s not counting the various supplements or any summer employment.

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Comment by Sean W.
2006-08-10 10:02:05

She must be the greatest of the greater fools. Man is she going to feel stupid in 30 years when she realizes she wasted her life to have an overpriced condo. I bet it will take 22 years just for her condo to be worth more than it is now.

Comment by Premature Curmudgeon
2006-08-10 10:10:29

The joy of being largely oblivous is that the exuberance of success is 100%, but the disappointment of failure is somewhat less, as it is watered down by the haze of confusion and the bouyed by the gleeful anticipation of the next opportunity to get a free lunch (whether in dieting, finances, relationships–you name it). Fantasyland is fantasyland.

Comment by Premature Curmudgeon
2006-08-10 10:11:36

Excuse typos.

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Comment by nick the wizard
2006-08-10 10:25:40

curmudgeon:
i enjoyed your lyrical depiction. right on.

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Comment by manhattanite
2006-08-10 10:39:57

and the black art of advertising, i.e. tv, is the tit that constantly nourishes and reinforces our mass hypnosis. there’s a great series of free video downloads on the net that chronicle the symbolism and archetypes that so effectively have reduced the masses to moldable mush.

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Comment by manhattanite
2006-08-10 10:47:16
 
 
 
Comment by Andy
2006-08-10 11:45:47

That’s really sad isn’t it. I work with a Sex in the City type girlie girl that bought a rundown piece of shit ‘townhouse’ (aka rowhome) in Philly in an ‘up and coming’ area of the city (aint they all, yuppies think everything is the next big thing). She paid $160k for this shitbox. 6 years ago they were $60k tops. This Sex and the City type is going to spend the next 20 years aging and paying for this piece of crap when I suspect what the plan was was to whore it up in the city and find a guy and then retire and have a kid. Yeah, ok, what guy is going to want to get involved with that?

Comment by Jim A.
2006-08-10 16:49:59

Frankly if she’s hot enough, plenty.

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Comment by say what
2006-08-10 14:04:09

She’ll be lucky if that condo will still be standing in 22 years. We are talking Florida, houses are built the same way as are strip malls,-not to last.

 
 
Comment by BigDaddy63
2006-08-10 10:44:43

My thoughts exactly… MORE than 50% of her NET income for housing? And we know that she didn’t get a (cough cough) neg am or int. only loan, right? I am sure she put down 20% and has a fixed 6% mortgage,..LOL

Notice they left OUT utlities, upkeep, homeowner, wind, and flood insurance,taxes( unless it is escrowed and included in mortgage payment).

If you want to see the details of the transaction and laugh for yourself:
http://www.bcpa.net/Includes/Inc_RecInfo.cfm
http://205.166.161.12/oncorev2/ShowDetails.aspx?CFN=106313276

Assessed value as of 2006 is $149,600.. Purchase price $259,000.

How does someone making about $40,000 gross qualify for a $259,000 condo?

BTW… PP is a hole. Not exactly living the high life. Owning a condo in South Florida is like having an STD. You have it for LIFE.

Interesting that when you go to this link for the revenue collection it shows the account delinquent..

http://bcegov.co.broward.fl.us/revenue/detail.asp?AccountID=A11013-16-00210

Comment by BigDaddy63
2006-08-10 10:51:41

BTW, renting at $100/ sq ft. About 40% the cost of owning with 0% of the problems.

 
Comment by David
2006-08-10 12:22:25

great foreclosure candidate!

 
 
 
Comment by destinsm
2006-08-10 09:55:53

Is anybody really seeing a tightening in the rental market? In my market there seems to be more and more rentals coming online everyday…

All those “investment” properties people thought they were going to flip won’t sell, and many try the rental route… Of course they list well above what market price is, and they don’t get rented…

I think the USAToday article was great… but they could have touched on the fact that rental rates are where they are at because that is the market and that is what people can afford… You cannot just go raise rents because you overpaid for a house… The market will dictate what your rental rate is, not what you bought it for…

Comment by eastcoaster
2006-08-10 10:05:05

I completely agree. However, I see people doubling up in order to pay the rent so many times landlords do get what they’re asking (around here at least). As a single income household, I can’t compete with these split-the-overpriced-rent folk so I can’t rent the kind of place I’d prefer (a condo/townhouse vs. apartment complex). And I can’t get a roomate because I have a child.

I shouldn’t say “can’t” rent them, because I could financially. But I’d have nothing left over to save and that’s not appealing to me.

Comment by LaLawyer
2006-08-10 11:20:46

But, that takes multiple families out of the rental stream, so that pushes prices down.

 
Comment by Hail the chimp
2006-08-10 12:44:24

I’m in exactly the same boat in San Diego. I can’t compete w/ 4 incomes under 1 roof.

 
 
Comment by Ben Jones
2006-08-10 10:13:54

‘You cannot just go raise rents because you overpaid for a house… The market will dictate what your rental rate is, not what you bought it for’

Right, and that’s largely a function of local wages, etc. As many have said, you can’t get an interest only loan to pay the rent.

Comment by nnvmtgbrkr
2006-08-10 11:28:34

“As many have said, you can’t get an interest only loan to pay the rent.”……….yet……

 
 
Comment by Brandon
2006-08-10 10:14:17

The newspaper in Boise recently reported a flight to rentals as people are priced out of buying a house. The home I am renting was on the rental market for about 4 months before we leased it. A good portion of the homes in our sub (less than a year old) are rentals owned by investors. While shopping for rentals back in May, I noticed a lot of the available homes were new construction and never lived in.

 
Comment by Davis_ renter
2006-08-10 10:19:12

I’m located in a small “progressive” university town just outside of Sacramento. My landlord practically begged me to stay. Rental prices here are actually dropping slightly and vacany rates are up which is unheard of in Aug in this city.

Home sales and prices are also dropping. People who work in the Bay Area bought here because the schools were good and the crime low. We also used to experince a large spring season as parents purchased condos and houses for their student children but even that isn’t happening anymore. The cost of the least expensive condos here have gone from 295k to 230k in just a year with very very few sales.

Comment by Premature Curmudgeon
2006-08-10 11:09:38

Hmmm. What progressive town near Sacramento could Davis__renter possibly live in???

If my wild-ass guess is correct, I lived there once myself for a summer (I was in Sacto for three years). An excellent town notwithstanding the summer heat endemic to the Great Central Valley. My wife holds a grudge, though, for being ticketed for driving 30 miles per hour in a 25 zone TWICE in one summer. (Living in a community where people actually participate in civic activities [farmers market], care about quality of life, and enforce rules in a straight-up manner takes some getting used to.)

Is Murder Burger still around?

Comment by Mo Money
2006-08-10 11:19:51

Yes, but the PC police made them rename it to REDRUM burger

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Comment by ocjohn
2006-08-10 13:15:20

And the bike cops do write you up for moving violations on a bike. At least they did when I went to school there. I liked Murder Burger too.

 
 
Comment by Davis_ renter
2006-08-10 15:05:28

I can top that! I was pulled over for not wearing a seat belt as I was pulling out of my drive way. I live 2 houses from a stop sign and that’s where I used to reach down and strap up >; )

The cops here are awful but then so are the ones in Rocklin, Auburn, any small town for that matter. I used to live in dowtown Sac (16th & Q) and the police were great. No one sweated the little stuff but if you heard shots or someone was selling drugs nearby, they were all over it. I really miss that place .

Murder burger is still around but they made them change the name and now In and Out burger has drive through right around the street - very starbucks-like of them.

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Comment by ChrisFox
2006-08-10 10:32:29

Here is some data that shows rental houses in Arizona are increasing by the month.
Fox EconoViews
http://econoviews.spaces.live.com/

 
Comment by SLO_renter
2006-08-10 11:06:01

I love the selective reporting in these articles. Rents in Seattle have indeed been increasing over the past couple of years, but this comes after several years of declining rents that reflected the hard economic times after the dotcom crash and the Boening cutbacks.

Comment by Ken
2006-08-10 14:41:50

In the first hill area, rents have gone up 400 a month for a 2b/2b and now parking isnt free. $75 a month per car. So my old place rents for 550 more a month than when i lived there. All becuase 4 apartments have gone condos. Way to overpriced condos. Can’t wait till they crash. Feel sorry for SU students that now cant rent near school.

 
 
Comment by Tim LeFort
2006-08-10 11:16:48

I agree as to the rents can increase because landlords overpaid. I was renting a home up to last August when the landlord pull out 100% of his equity and instantly raise my rent from 1450 to 2000 a month. I asked him flat out why the increase and he said to cover his “new” mortgage. I said no thanks and gave my 30 day notice. He was shocked I would not absorb his increase costs. After I moved it sat empty and he finally got another renter 3 months later at 1500 a month. Now 8 months later it is for rent again. Silly landlord. I told him it was a mistake to raise my rent. I have since found a better place on 5 acres that my family loves. The current place is “apprised” at 800k and I pay 1700 rent. I am more than happy to have someone else pay the 4k a month while I enjoy the place…

Comment by Jim A.
2006-08-10 16:56:17

But in this case the rent DIDN’T go up. Well, $50 but so what. Your ex-landlord has paid $4350 (3 month sitting empty) to learn that the rental market doesn’t care what he paid.

 
 
Comment by WArenter
2006-08-10 11:44:31

Our LL did not raise rent this year and we live in a very nice area. I looked up what the LL paid for this house in 1990 and if you take that purchase price with 20% downpayment at todays interest rate for a 30 year fixed, and todays actual taxes per the assessor web site, the rent I pay is a few bucks less than PITI from the original 1990 purchase! But it gets better, that does not include the nice addition the LL did to the place in 1998, which increased the SF by 50%.

Comment by SLO_renter
2006-08-10 12:22:28

We are renting our current place for 12% more than my husband was paying for a similar place when he moved out here 9 years ago.

 
 
 
Comment by nick the wizard
2006-08-10 10:01:39

the price reduction message has sinked into sellers.
i was checking in the local orange county california market and there are just so many price reductions of at least 10%.
but i am just going to wait another 12 months.

Comment by Sean W.
2006-08-10 10:03:53

I think you will probably need to wait another 24 months or more for this market to shake out.

 
Comment by jjinla
2006-08-10 10:31:40

The price reduction message has NOT sunk into sellers in LA’s South Bay, however….
http://matrix.gsbrmls.net/Matrix/Public/DisplayAutoEmail.aspx?ID=6385829-15545199-95

Do these fools really think that a ONE PERCENT reduction after 50 days is going to move this P-O-S? I almost feel like calling the realtor and telling her I want to buy it just to screw with her. She wastes my time sending out absolutely pointless changed listings, I should waste hers.

 
Comment by Media Outsider
2006-08-10 11:57:27

I don’t know that it’s sunk in yet, but today, for the first time, I found a $100k reduction in the “lower” end of the HB market (from $730k to $630k—in about $20k increments). A couple of listings have broken the $600k floor (which is heartening), but most listings at the bottom are pooling around the $600k mark. I think that’s the psychological sticking point here.

Comment by jjinla
2006-08-10 12:28:07

I assume that HB does not stand for Hermosa Beach if most of the listings are in the $600K range?

 
 
 
Comment by JoeFromPittsburgh
2006-08-10 10:04:20

‘Landlords are doing renters a favor right now in comparison to the cost of buying a home,’ he said.

Heh. Thanks landlords!

 
Comment by Mort
2006-08-10 10:11:16

‘Landlords are doing renters a favor right now in comparison to the cost of buying a home,’ he said.

Yeah, whatever. Wages will not support higher rents, and they know it. Landlords who bought properties at decent prices and can cover their overhead know darn well they are making headway. Property is the ultimate hedge against inflation. The problem with the speculators is that they cannot manage the negative cash flow over the short-term. They paid too much, can’t unload for a short-term profit, and now they are stuck. Foreclosure, destroyed credit, and loss of assets at the worst possible time. It is my feeling that everyone should try to hold some property in their portfolio, but that doesn’t mean your financial eyes should get too far ahead of your a$$et$. They will lose out because they were in a short term speculative frenzy instead of having a long-term investment strategy. Too bad for them. Boo hoo.

Comment by Ken Berry
2006-08-10 10:28:22

I’m making a killing on my San Francisco property ($2560 a month). My four Az homes now ave. $1050 with an ave. mortgage of $640.

After expenses I pocket a good $900 from the AZ homes and $1300 in San Francisco .

I know a lot of people were in for the quick bucke but with the right properties you can generate a very nice income.

I’m 38 and plan to semi-retired within the next 5-7 years.

Comment by Mort
2006-08-10 10:49:37

Good for you! :D

 
Comment by invest3
2006-08-10 11:10:13

With that kind of equity built up you’d probably do better selling, taking the profits and investing in 5.5% CDs.

 
Comment by Premature Curmudgeon
2006-08-10 11:19:10

Yes. Glad to hear of your success and good fortune. Maybe you can run for office somewhere and be one of the few pols not bought off by developers and whoring themselves for measly campaign contributions. Just a suggestion. I do strongly believe that we will have to weed out all of the face-jocks and vanity-laden morons who are running our government if we (at least in southern California) are to avoid becoming a nightmarish banana-republic of glad-handing liers fleecing the masses and mortgaging our future.

Wow, it doesn’t take much to unleash a self-important soap-boxer does it? (An extra cup of coffee.)

I’ll probably be working until I kick the bucket (hopefully not soon), but I muse from time to time about what I would do if the looming spectre of 30 years of mortgage payments (not yet, but someday) weren’t clouding all of my career decisions.

 
Comment by Mo Money
2006-08-10 11:24:09

But when did you buy ? Most everything bought within the past few years barely cash flows and thats IF the buyer put substantial money down.

 
 
 
Comment by upperupperwestsideguy
2006-08-10 10:14:32

The rental market in Manhattan is now down to under 1% vacancy rate. In some neighborhoods, .25% vacancy.

Not surprising though. I live off Riverside Drive in the low hundreds. My building’s a rental and the sister building actually on Riverside is a co-op. My rent for a lovely one-bedroom is a little under $2K. I saw an ad last year for the identical apartment in the co-op next door. Price? $650K, with building required 25% downpayment (over $160K) and $1,100 a month maintenance fees. I don’t know what the whole monthly nut would be, but it’s obviously a heck of a lot more than what I’m paying.

Comment by manhattanite
2006-08-10 10:45:43

i’m just a few blocks away, on rsd near 101. been on every side of the uws r.e. market over 30 years — from renter, rent striker, fighting condemnation. now an owner, for the past 25 years, with plenty of scars to show for it. great hood, though!

Comment by upperupperwestsideguy
2006-08-10 11:07:54

Actually I’m on 102nd St. Best and by far the most beautiful neighborhood in the city, although the giant 35+ floor apts being built across Broadway from one another will add to the congestion.

Comment by manhattanite
2006-08-10 11:17:18

with the 7 setbacks, the east tower is barely noticeable. i’m crossing my fingers the west tower will be equally unobtrusive.

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Comment by Steve
2006-08-10 10:18:33

not sure if you guys saw the New York TImes housing article today… but they found a great picture of some realty signs. For those who don’t have a login to the NYT web page: http://www.housejockey.com/blog/2006/08/looking-for-house.html

 
Comment by JohnVosilla
2006-08-10 10:26:12

‘I think the USAToday article was great… but they could have touched on the fact that rental rates are where they are at because that is the market and that is what people can afford… You cannot just go raise rents because you overpaid for a house… The market will dictate what your rental rate is, not what you bought it for… ‘

Rents are up quite dramatically at the lower and middle end in many land constrained fast growing markets like LA, NYC and SoFLa. At the higher end and in overbuilt one trick pony overbuilt areas it is going down. In Florida I see some markets where there is a flood of new homes for rent at bargain prices and then I see apartments for the working class in the cities where rents have gone up 40-50% but that doesn’t even keep up with the added costs of RE taxes, maintenance and insurance. This bubble and upcoming bust hurts folks on so many levels.

 
Comment by Former Idahoan
2006-08-10 10:33:13

I think that rents are going up temporarily due to condo conversions taking away some of the rental market (changing the mix of housing stock). I believe the total housing stock is far into surplus territory with the bubble building of the past 5 years. There are a LOT of vacant SFH’s that will be occupied one way or another. Apartment rents may be higher for a while but SFH’s are very cheap compared with the cost of buying.

 
Comment by HonestAppraiser
2006-08-10 10:34:51

I just sold my condo in boston that I was renting for $1,200 per month. X 12 = $14,400 - condo fee($3,972) - RE Taxs $2,500 = net $7,928 with 0 vac loss. S.P. $250,000 - $50,000 (price in 92)= profit before cap gains =$200,000 which I parked in 30 day CD @ 5% kick of $825 with no expenses or tenant headache. It is actually making me more money know then when I was renting it out.

Comment by Jim A.
2006-08-10 17:00:09

This points and the several posts before point out the difficulty of renting now. Most of the smart landlords have sold out because the money for it was SO good. Renting from an idiot flipper who bought the place can be a PITA.

 
 
Comment by Former Idahoan
2006-08-10 10:39:11

And what about the condo glut of units coming online in many cities? Those will be occupied one way or another. Supply and demand…..

Comment by Curtis G.
2006-08-10 12:15:01

Like the newly gentrified downtown Long Beach, CA…

Comment by gonetoaz
2006-08-10 14:55:28

I know a couple who live in the Aqua Towers (?) Just bought this year. It is a 1/1 on the 1st floor and they are barely scraping by to afford that. OMG I don’t think they will ever make their money back.

 
 
 
Comment by bayareaguy
2006-08-10 10:42:45

I’m renting in the SF peninsula at 32% of what the monthly payment plus taxes would be on the home. That’s not even counting insurance or home repairs.

 
Comment by JohnVosilla
2006-08-10 10:47:27

‘And what about the condo glut of units coming online in many cities? Those will be occupied one way or another.’

Yes. But for now many are too high end for the income levels of local folks needing rentals. The monthly carrying costs in many cases are way too much to feasibly turn them into rentals. Debt cleansing, much lower cost basis in the near future are a must along with stagflation, decline in purchasing power of your dollar and rising rents to resolve that situation. I see instances where now the HOA dues, RE taxes, insurance, reserves and vacancy/credit loss barely cover market rent. A mania for the ages no different from the eyeball matrix to value dotbombs in 1999. A similar ending for equity holders.

 
Comment by JohnVosilla
2006-08-10 10:47:28

‘And what about the condo glut of units coming online in many cities? Those will be occupied one way or another.’

Yes. But for now many are too high end for the income levels of local folks needing rentals. The monthly carrying costs in many cases are way too much to feasibly turn them into rentals. Debt cleansing, much lower cost basis in the near future are a must along with stagflation, decline in purchasing power of your dollar and rising rents to resolve that situation. I see instances where now the HOA dues, RE taxes, insurance, reserves and vacancy/credit loss barely cover market rent. A mania for the ages no different from the eyeball measure used to value dotbombs in 1999. A similar ending for equity holders.

 
Comment by Larry
2006-08-10 11:03:12

“when they could be renting a place just as nice in the same neighborhood for about $3,400.”

In SF you can get even better deals less then 2000/mo. Right down to $1700 thats only 20K /yr … My GF lives up in the city. She has a car but has no need. Safeway is next block over near the Financial District. The rest is a mild walk to job and shopping. Not bad…

 
Comment by Larry
2006-08-10 11:06:47

“I’m renting at less than 50% of purchase in the SF Bay Area.”
“I’m probably at 33%.”
“My Bay Area rental, 40%”

The RE bulls are in Pain.
BIG PAIN!

 
Comment by Larry
2006-08-10 11:27:29

“Home sales and prices are also dropping. People who work in the Bay Area bought here because the schools were good and the crime low.”

That maybe all good and fine.. but our well paid tech jobs are moving elsewhere. Primary reason is high cost of employees. Business owners and CEOs of mid- to large-companies are unable to pay high salaries due to global competition and shrinking margins.

This is why high tech is having layoffs today. It all boils down to the economy and jobs that will be around for years to come.

Comment by Davis_ renter
2006-08-10 15:27:47

Bingo! Some people moved here thinking they could telecommute but the jobs are leaving. The people that do still try to commute are having issues with the cost of gas and the quality of life.

The only major employer in this town is UCD. The wages here don’t support the housing costs. UC has a huge economic nightmare coming as the boomers retire and the younger talent won’t come here because the cost of living. Hell even NIH is looking for more young researchers and not many are stepping up to the plate because the money just isn’t worth it.

In the meantime, I’m seeing research depts growing by leaps and bounds in places like Nashville TN, Durham NC etc. They are attracting all that young talent with good salaries that make sense in their local economies. How is the UC system or even CA as a whole going to compete with that?

/quietly departs her soapbox >; )

 
 
Comment by don
2006-08-10 11:30:07

Rent 1/2 the price of owning? Doesn’t tell you the difference in what you get. When we lived in Phoenix and owned a house we paid the same for owning that we ended up paying in rent when we sold waiting to move to Austin. We went from a 2800 sq ft home, 3 car garage with pool and nice neighborhood to a 1300 sq ft condo with 1 car garage and it actually cost us $100 a month more not even considering the tax loss from owning. If you can afford $1600 a month to buy a nice 3 or bedroom house why would you pay $800 a month for a 1 bedroom apartment and a carport? I can’t imagine anyone with a family wanting to live in an apartment. We don’t have kids and I can’t see us living in anything less than a 2 bedroom and we value our privacy. We’ve lived in apartments and for short term they are fine but for long term?

In Austin I may have considered renting until we got to know the area but rents are high here. My mortgage for my 3400 sq ft home in an upscale neighborhood 9 miles from downtown is less than if we rented, especially if we rented something that had 3400 sq ft. We could rent in a dump neighborhood and 1000 sq foot house for around $900-1000 or a more upscale home, say 2,500 sq foot in a better neighborhood for $1800-2500 a month which is way more than our mortgage.

I thought of moving home to California, which I left in 1975 to be closer to my family but wouldn’t want to pay three to four times the cost of our current home to buy but even to rent is obcene. I’m not paying $2-3000 a month to rent a dump. I can see why so many Californians buy even at $600,000 for a dump with interest only loans as that is usually more affordable than rent (though the risks are too high for me). I looked at a job in Monterey (where I as born) and it would pay me $40,000 a year more than I would make in Texas but I couldn’t find a descent house to rent, let alone to own, for less than $3,000 a month. Add to that the ridiculous 10% income tax and all the other high costs of living there and why would anyone?

There are areas in Austin that rent is cheap if you want to live in Manor, Plugerville, Roundrock, Georgetown or older ghetto neighborhoods, but then in those areas you can own for the same price or less. Those areas have homes for $80-120,000 that rent for $800-1000 a month and I’m sure that isn’t enough of a savings to rent vs own unless you only plan to live there very short term. Get into the more desired areas and you pay through the nose. Some places get as high as $1.75 a sq ft to rent! For most upper end properties $1 and for lower end maybe as low as $.70, but in general it seems $.90-1.00 is average here to live where your life isn’t in danger.

Comment by SlashChick
2006-08-10 12:18:33

Depends on the market. Here in San Jose, there are many SFH for rent — pretty much the same type of house you’d get by buying. I rent a 3BR duplex and I don’t plan to move until I can afford to buy something…which could be quite a while.

 
Comment by cents on dollar
2006-08-10 12:57:53

Dude, I am renting in LA a house a guy paid 1-M dollars for just a month ago (just moved in). My rent is 3150. He is out >4K per month just in property tax and mortgate. Good apples-to-apples comparison.

PS, the guy who owned it before him bought last august for 1.14-M and plowed a ton of money into upgrades. And lost it already.

 
 
Comment by Antoine
2006-08-10 11:36:02

I’m renting in Toronto, nice place downtown, next to financial district, paying 45% less than owning the joint, assuming everything is normal; like standard mortgage, downpayment, fees etc etc. Only fools buy in this market. Can’t wait to the correction, we’re 1yr behind the US, but the “adjustment” will come here as well.

Comment by Rob
2006-08-10 12:20:05

What is rent like in Downtown Toronto these days?

 
 
Comment by memphis
2006-08-10 11:44:22

85 cents on the dollar. (Just mortgage, the % would be better if I factored in property taxes, insurance, etc.) BOO! HISS!

(No, s’okay. I console myself with the knowledge of how little our rent would buy elsewhere.)

And here’s more culture shock for some of you: for homes half the size of ours, it’s often more like $1.25 on the dollar outside the Memphis School System. Like the Idaho poster up at the top of the comments here, I notice that the bigger breaks are for the bigger homes, but only if they’re older. Newer stuff sells, or sits with a rental sign next to the “for sale” sign, with the FB whose been transferred to wherever “having” to get $2500 or $3500 a month in an area that will support rents of $1500 to maaaybe $2K. FBers here don’t even try to eat the “gap” (rent vs. mortgage) loss for awhile, there’s no history of homes appreciating thousands each month, and lots of history of multiple years of the market being flat.

And no, I still don’t kid myself that this would be a safe time to buy, even here.

 
Comment by climber
2006-08-10 12:12:54

Northern Colorado rents have stabilized. So much of the recent building was SFH and “luxury” condo rather than muliti family that rentals are starting to fill up again. We actually need more apartment complexes instead what we’ve been getting. We also haven’t had the huge overbuilding that other areas have seen, so there’s no glut of empty investment property driving down rents. Let me reiterate, the number of structures here is not excessive, but the SIZE of them is. Basically what it means is a lack of selection for people of average means, both rentals and for purchase.

As I’ve mentioned before, in Colorado the bubble has not been manifesting as lofty property prices (per square foot anyhow), but rather in toxic mortgages and houses that are larger than people can afford. In other words, in my part of the country the problem isn’t so much the cost of the house, but rather the amount of debt people are acquiring with respect to their housing choices.

For me, it’s no better to rent than to buy given current prices. Renting is expensive and there are few properties for rent that would accomodate a family of 4 with a dog. The only way renting would pay of f where I’m at is if prices fell at least 25% in a year or two, which is possible, maybe even likely, but I’m not willing to bet moving expenses and a crappy living arrangment on it.

What the USA Today crowd totally misses out on is the concept of time value of money and inflation adjusted returns. Until folks can understand those concepts they have no business talking about investment. Without a goal and a way to measure progress towards the goal they’re just tossing their money around and hoping it lands in a favorable spot.

 
Comment by Catherine
2006-08-10 12:53:01

Our “landload” is our business. We sold our insanely overvalued home last year, and moved into a semi-finished “loft” area above our manufacturing business…was previously for storage…I’ve spent the last year fixing it up and it’s really terrific. I figure I spent about $12,000 making it livable…and it’s got that whole industrial feel that some urban types pay dearly for.
The business pays for utilities, etc. We go to work in our pajamas.
Employees are on their toes, since the boss lives right above them.
I’m plowing the savings into bonds, CD’s, cash, etc. I don’t care when this markets bottoms out…I may or may not get another house. This is a cool home. Some people think it’s weird, but all I do is ask them what their mortgage is.

Comment by Jim A.
2006-08-10 17:06:06

Could make for interesting taxes. If the business is providing you with housing you’re supposed to pay income taxes on the value. The big exceptions are the military and ministers for whom housing (or housing allowances) aren’t taxable as income. You’re probably still ahead, but don’t get blindsided.

Comment by Catherine
2006-08-11 08:22:41

Got it covered, but thanks!
We’re waaaaay ahead, and believe me, we don’t have blinders on…we are so conservative and careful right now, we’re unpopular!

 
 
Comment by Sunsetbeachguy
2006-08-10 20:31:47

What part of Prescott are you in?

Short of downtown or out by the airport, I can’t think of any 2 story business units.

I left the Biscuit in 1995, went to Prescott College.

 
 
Comment by J R
2006-08-10 13:50:16

I pay about 50% to rent my place. One would have to be a fool to buy in the present market when equivalent accomidation is available at the curent discount.

 
Comment by Anthony
2006-08-10 14:05:48

Living in the Eureka area, people still seem quite bullish on RE. A 2000 square foot new home for sale in McKinleyville (AKA “Oklahoma by the Sea”) sold within 2 weeks of hitting the market in the neighborhood I rent in. The house is pretty shoddy construction and is right across the street from a mobile home. I wouldn’t be surprised if the new residents (that is, if it is not rented out) have new pickups bearing license plate holders saying “Santa Rosa.”

At work, a couple of people were discussing this article in the paper today. An individual who bought recently stated “They’ll go back up–RE never goes down for long…”

 
Comment by Anthony
2006-08-10 14:06:37

BTW, the above mentioned house in McKinleyville was $475K. Across from a mobile home.

 
Comment by Salinasron
2006-08-10 16:01:26

Gee Don let’s see here, Austin or Monterey? Dah, no brainer. You can rent something new for $1600 (3bd,2bath in the area)but only 1300 sq.ft. What are you doing with all the other sq.ft? You chose to turn down a $40,000 year increase in income based on your numbers but did you figure in that you’d have no air conditioning costs in Monterey.Quality of life far superior in Monterey. Texas has high, high property taxes. And does that $40,000 a year increase in salary apply to your future retirement income? I think you like that MacMansion owner ‘feeling’. Good luck heating and cooling and furnishing it in the coming years as its value decreases.

 
Comment by susan
2006-08-10 16:09:14

It’s not just the Bay Area. We are renting a very nice home in Lafayette, CO just outside Boulder, CO for half of what our mortgage would be if we bought it. The home is for sale but the owners are upside down and cannot take a lower offer. There are 4 homes for sale just on our small street! We just renewed our 6 month lease for another 6 months. It makes no sense to own right now.

 
Comment by Anthony
2006-08-10 16:31:48

But Monterey is falling in price too. Those $hitboxes in Seaside overrun by illegals in 2002 were selling for $290K…and that was too much. Why do the deserve to now be $600K?

I have a former co-worker who just laid out $750K for a “midcentury” 1200 square foot house in Carmel Valley and isn’t the least bit concerned about housing prices falling. Because, Monterey is not Visalia. Homes always go up on the Monterey Peninsula!

 
Comment by midi
2006-08-10 16:50:37

Im renting a luxury 2br/2ba townhome in Tucson AZ for $885 since 2001. Original rent was $865 so only gone up $20! The owner offered to sell it to me for $150K in 2004 but i turned it down thinking it was overpriced (built in ‘99 for $90K). Zillow now lists it for $219K, did I make a mistake? I think i did as properties near the UA (3miles to the West) seem to be selling for really high prices. Plus I could’ve re-fied to help pay off my credit card bills.(was laid off in two years ago from Gateway and have been running a struggling tech-support business) Lately I’ve been kicking myself for not buying! Please help w any advice, lease is up in Oct and dont want to move!

Comment by Catherine
2006-08-11 08:20:56

NO…you didn’t make a mistake, Tucson is going to correct, BIG TIME. I’ll bet he’ll be begging you to buy it below 150K in a few months. Given what your financial situation seems to be, you’d be wise to conserve cash, keep renting, concentrate on your new business, and quit kicking yourself! You’re in a very safe place by renting right now. It will really be bad in AZ in very short order.
Good luck! (And, please pay off your credit card bills as fast as possible!)

 
 
Comment by DINOC
2006-08-10 18:11:30

Homes hit south O.C. rental market
A wave of typical owner-occupied residences recently hit the south county rental market, according to July stats from online apartment lister WestsideRentals.com …
http://blogs.ocregister.com/lansner/

 
Comment by ChrisO
2006-08-10 19:25:04

Here in the DC area, rent increases have varied wildly depending on the location. Some of the areas that have been spruced up in DC and the inner burbs and turned into “Young Professional havens” have increased considerably, but at least there’s some value being added to justify it. Out in the burbs, though, I haven’t noticed any dramatic increase in rents. My wife and I were renting a townhouse in Woodbridge, Va. for about $1200 in 2001, and you could rent a TH in that same development today for less than $1500. Which is pretty much the same amount in adjusted dollars or only just slightly more. This was an older TH development, so I’m not sure that sales prices skyrocketed as many others have done here, but I’ll bet you couldn’t get into one there for less than $300k. Which would add up to considerably more than $1.5k per month in PITI, I’m guessing.

 
Comment by GetStucco
2006-08-10 22:31:24

The rent-own equation looks much worse for owners when prices are falling. You need to subtract the discount from current prices to 50% off in five years from whatever rent you paid to get the comparison right in bubble-land. I am guessing that number will turn out to be a large negative — rent will have more-than paid for itself relative to the cost of owning…

 
Comment by GetStucco
2006-08-10 22:32:54

Now that the USA Today has caught on, can we assume the bubble is common knowledge :-)

 
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