‘Move In! Please, Move In!’
A television station in Hawaii reports it’s a renters market. “It’s been awhile since renters in Hawaii had anything to look forward to. High prices and strong demand had people scrambling for less-than-perfect places. But property owners say that’s changing in renters’ favor.”
“There’s been a definite change recently in the overall rental market. Fewer renters are knocking on the door, and landlords are having to try harder make a deal. Rentals used to be snapped up in a day or two. ‘I thought you put an ad in the paper and then that’s it, you’re done,’ said landlord Helen Rapoza. ‘You know, you do one ad and everybody lines up at your door and you’re done. OK, it’s not quite like that.’”
“Rapoza has been trying to rent a spacious 1-bedroom with a view near Punchbowl for weeks. Last year landlords had dozens of applicants with the first ad, not this year.”
“‘I think we entered the rental market right at the time that things started changing,’ Rapoza said. ‘I think basic economics, supply and demand. Supply and demand affects everything, so that has to be part of it.’”
“The number of rental listings in classified ads or popular online web sites is up between 30 and 40 percent. That puts some power back in renters’ hands.”
“‘I think there’s more negotiating than there used to be,’ Rapoza said. ‘Before it was, ‘This is our rent. This is what you get, period.’”
“Deals of one kind or another are popping up to lure applicants, from lower security deposits to newer appliances. ‘I’ve heard it to include utilities, and I’ve heard pets, pets is a big on,’ she said. Pets are OK here at Helen’s place… small ones, please.”
“‘We want to be good landlords and we just want to be able to help somebody out,’ she said. ‘We do want to cover our bills, that would be nice.’”
“That means $1,800 dollars here. ‘If it works, great, if it doesn’t work, well you know, you’ll see it on the market. We’ll sell it,’ she said. ‘Life is just an adventure, and you move on… or move in. Move in! Please, move in!’”
‘If it works, great, if it doesn’t work, well you know, you’ll see it on the market. We’ll sell it,’ she said’
A stuck flipper?
She’s truly a great thinker isn’t she? Only every flipper/investor and owner occupier using a short term arm has the same idea. Only a small percent of them will get thru the doorway before the suction of their passing slams the real estate door of elevated prices shut. ‘Life is just an adventure, and you move on…’ Being cash flow negative on a depreciating home is not the kind of adventure I would like to participate in.
I just got off the phone with the Fat lady, She said she will sing to show the dumb ass flippers its over,
Shit! You got me with that one!!
I’m looking forward to her Housing Bubble Farewell national tour.
For nhz’s sake, we’ll hope she extends it internationally.
Great attitude. I love Hawaii!
renting will get cheaper in overbuilt markets- it is different this time
why not squat in mcMansions- pay a low rent and utilities
and have inflatable furniture……….
Like the “inflatable furniture” idea. Our “core stuff” is in storage (75 Ft2) and as we move from rental to rental our motto is “if we can’t move it ourselves then we don’t buy it”.
Gypsy mode…the care-free, no taxes, no repairs, no mowing, no depreciating weight around your neck, free to move anywhere lifestyle. I sleep well.
Yep, I know what you speak of.
I had to pass on buying a very cool bar-b-que.
http://www.kamado.com/
Because the size that would work for me is 800 pounds and I don’t want/can’t be moving that thing around until the bubble pops.
One more market distortion provided via the bubble.
I’ve been renting ever since 1996 and don’t miss being a slave to the bank. I love the apartment lifestyle. I don’t like doing maintenance and I have the ability to leave for another apartment complex in the same corporation very fast without breaking the lease. It’s like month to month. The apartment is always deluxe. If I don’t like my neighbors and see a trend of trashy people moving in, I move to a better complex the corporation has. In contrast, a colleague of mine bought a house with his girlfriend. My young colleague would get to work early and get to bed early. Next door neighbor punk had one of those motorized scooters and would ride it up and down the street well past 10pm and the parents of the delinquent did nothing about it. My poor colleague and his girlfriend were stuck in their house and it’s value to them was tens of thousands of dollars less because of the bad neighborhood.
IT is different this time - the last bubble pop was in different years and different geos of the country
oil patch- cape cod- boston - then NY
this time its from march 2005 to july 2005 for peak in the WHOLE USA !
actually cap cod started down in fall 05
SanDiego, Sacramento,Phoenix….were the cities I thought were going to be ground zero. It seems apparent now that Fla. the whole state ,will experience DejaVu again like the the 20’s. Skyrocketing prices on swampland, out-a-state ,and overseas investors+hurricanes+rising Ins. = Diasater…………
Don’t read too much into Hawaii. An economy of military personell and tourism isn’t going to respond to the same factors as the mainland. Start the troops back home and whoosh, baby boom, local spending, household formation, etc.
“Start the troops back home”………….if only, is all I can say Robert.
This is the forever war for oil in the mideast. How this is going to effect housing, I have no idea except wars are very, very expensive(& also kill people) which means printing more $US which means higher interest rates.
OK, I do know, the “forever resource war” is bad for housing.
Perpetual War is a pretty scary condition.
Perpetual small scale wars is what Mathew Simmons, Energy Investment Banker has forecasted in the peak oil discussion.
He ain’t no hippy or lefty, he is hardcore roughneck from the oil patch.
Perpetual war?! The last time I was exposed to that neat idea was in reference to the last stages of the Roman empire. Considering what happened to the Roman empire, maybe it’s not such a great idea.
the roman empire is still here with us. its seat is in the vatican. but it is in no way the as the empire we know of.
What worked post WWII for the U.S. is not going to work post Iraqi-II. Not with manufacturing, IT, R & D jobs off-shored, huge trade deficits, inflation generated by sky-rocketing oil and commodities, etc…..
You think any of the local jar-heads and swabs can afford to live off base? Not in San Diego. The Navy is talking about building a couple of apartment skyscapers at 32nd St. to provide affordable housing. Hawaii is even worse. Maybe once this correction seriously impacts the bottom line of rents and mortgages will that change. Our troops are not paid jack sadly.
The Galveston real estate mania is official:
http://louminatti.blogspot.com/2006/05/galveston-real-estate-mania-throttles.html
“The number of rental listings in classified ads or popular online web sites is up between 30 and 40 percent. That puts some power back in renters’ hands.”
There has been debate here and elsewhere about how rents are going to be affected by the real estate implosion. We’ve got two competing effects: (1) increasing numbers of people who are currently “homeowners” but who won’t be in the near future (increased demand for rentals); (2) increasing rental supply from the gross overbuilding.
The above quote is a good indicator that supply is increasing faster than demand, at least so far. Then again, the same mentality that is keeping people from cutting their listing prices will also prevent them from slicing rental rates, too. We’ll see how long they can hold out.
I think you are exactly right. Both in the Boston metro area where I rent and the Portland ME area where I own, landlords are beginning to see the effects of this market when they put an ad to rent one of their units and they don’t get much of a bite or the credit checks - if done at all- show applicants with a greater potential financial risk for the landlord (with the ‘good credit’ applicants being very picky and rightfully negotiating down the rents. It seems 90% of the landlords don’t have a clue why it is happening.
I love the fact that crappy landlords are now finding they are having a harder time renting their units. They’ve deserved this pay back for a long time for believing (and until recently getting) there are plenty of tenants who will want their leaking, slanted floor, mice, squirrel and other co-tenant inhabitants, wind tunnel, boiler breaking apartment.
Uh, NO!!
It has been tough to find decent tenants for about 3 years now. It’s only going to get worse. All the tenants I found were either 1) Waiting for their house to be finished, or 2) Deadbeats. I did my first unlawful detainer in 2004. I have spared little expense since in keeping things as nice as possible.
Employment is also a key. As people lose their homes, and have no savings, demand for rental units will rise, if there are jobs available. If no work, they will not qualify for even a rental, they won’t be able to pay for a rental, they will leave town to where the jobs are. Hawaii was never a great job creation state, so “trouble in paradise”
“We’ll see how long they can hold out.”
H_HRenter, I think the tide has abruptly changed to the renter’s favor. When I was looking for rentals last September, rental agents dictated everything from what time to show the property to how much application fees to charge (some as high as $30). Rental agents really took advantage of the situation. But last week when I called several properties, I was surprised that many of them answered the phone. Usually, you just leave your name and number and they call you back. In addition, one agent wanted to lower his price from 1000 to around 800 for a small studio as long as I sign for a longer contract. I said no thank you. They used to rent these condos for around 550 to 600 in 2004. Still way over price just like the lady in the KHON2 news (BTW I watched the news). They used to rent those condos for under 1000 in 2004 and she wants 1800 just because it has a new carpet and countertops. Good luck if she can rent it or sell it.
Interesting comment Mr. NH_renter.
I would guess that as the bubble matures that the imbalance could favor renters first, because there are many flippers needing to rent and few FBs in BK needing new housing. After a general bailout of former mortgage holders, the number of both renters and of rental properties will go up, but the ratio of renters to properties will shift more toward a balance. This could mean that now is the time to get the rental you want, not later.
The countervailing tendency, however, could be the stickiness of rents. Inexperienced landlords may price their units too high, and hold out for several months. In the long term this will self correct, but few of us can wait on the curb with wife and kids for the necessary interval.
I understand both forces but I think the glut of units is just too much this time around for rents to rise. Furthermore the people holding the glut houses can’t afford to hold out for too long. Look at the dimwit holding 14 homes in Florida. She’s already resorted to renting to stem the blood flow. That’s 14 units that will drag the comp rents down around her. Then she will be bleeding neg cash for the length of the lease. Next year she will find her self in a lower rent environment and have to concede more to keep her tenants.
If they haven’t trashed the place and left already.
It’s gonnna get messy.
Rents are more flexible than housing!
I’ve said it over and over again that people will move in together.
The numbers of renters is not “those currently renting” plus “those foreclosed on”. It is that MINUS those that move in together or move in with a current homeowner.
Two bedrooms with one occupant become two bedrooms with two occupants. The spare bedroom in the back starts being eyed for much needed cashflow. For Rent signs start popping up everywhere. It’s already happened here in my part of San Diego. We are littered with rental places in North Park… houses.
PLUS all the natural population growth who cannot meet new ownership rules. Plus the additional tens of millions of illegals. Plus the increased enforcement of codes as desperate neighbors adopt a siege mentality. There’s gonna be a lot of people looking to rent and there aren’t going to be two sticks nailed together for years to come.
Except the affordability improves during corrections, and all the ‘relic’ supply of homes from the bubble is not going anywhere. Rents went down during the last RE downturn.
The thing is the pace of building exceeds natural population growth during the boom, and that of course overhangs after the boom.
Except for the ones that prudent bears build.
Lumber is already coming down and commmercial cost guides are being revised downwards as we speak due to the bubble slowly unwinding.
There are plenty of open lots in 92648 that I will be happy to build on with desperate GC’s and their subs competing in a tough contracting environment.
In the long term this will self correct, but few of us can wait on the curb with wife and kids for the necessary interval.
Just keep yourself mobile. You can certainly wait in an overpriced rental for even a year. You’ll still pay far less than owning and can either negotiate in a year or find an even better spot.
supply and demand might be affecting the market ? ya think…nah.
Landlords, not only have to worry about finding tenants, they also have to worry more about keeping tenants.
I’ve lived in a couple of places where the rental market shifted from being very tight to one where vacancy rates shot up. When that happens, landlords have to do a lot more than just keep their rents down because tenants can up and leave and find nicer and cheaper places to rent.
I can remember one summer where almost all my renter friends moved because they could get nicer apartments in better parts of town because landords wouldn’t bring rents down when prices were dropping. Decreasing somebody’s rent and keeping a unit rented will always be more sensible than letting it go unrented for several months (or longer) in a changing market.
Jim - your observation is a classic. Whether it is renting or whatever…your CURRENT customer is you best customer. The costs involved in getting a new customer or renter are far outweighed by dropping rent$$$ if that is the trend.
Those landlords deserve what they get - fools!!!
“fools!” — sounds like Mr. T from the 80s. Ah good times.
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I am proud i helped encourage my ex-girlfriend to sell her Hawaii lease condo in 2005. That is good timing for her. Her friend bought a large house in the Dallas / Ft. Worth area in early 2005 at a good bargain. I think she will be able to flip it before that market caves. I give it a couple of years for that. Californians are bidding up prices all over texas. I haven’t talked with my ex-g/f since December but hope she kept money in CDs. I was trying to encourage her to buy gold in 2005 but she did not do it - her downfall.
The problem is so many bubbles are occurring. The cure is to raise interest rates quite high. I would think the Fed funds rate up to 8% would help stop a commodities bubble. But only at 8% or higher. The only bubble after that will be long bonds and notes only when their rates go up over the T-bill rates. I’m looking forward to that. I’m not fully into precious metals because they too, will take a dive. But I have done very well in metals since buying them earnestly in 2005.