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Rents are plunging in the most expensive U.S. markets

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Re: Rents are plunging in the most expensive U.S. markets

#81

Post by refurb »

denim_chicken wrote: post #64
refurb wrote: post #7

A friend used to rent out a spare room in SF on a regular basis. Two years ago, he could get $1850 for a single room with it's own bath room, furnished. We're talking 6-10 replies from a Craiglist post within 24 hours. Stopped renting it out about a year ago. He just posted it again. Zero takers at $1850. Finally got someone for $1600 (-13% decrease in rent) after a month. A dramatic change. The rental market in SF i…

Yet $1600 is still absurdly high for such a simple living space.

It is. Keep in mind this was more shorter term (3-4 months) rental of a fully furnished room.

If it was a long-term lease of just an empty room it would be closer to $1300.

Re: Rents are plunging in the most expensive U.S. markets

#82

Post by repsilat »

soVeryTired wrote: post #34
spikels wrote: post #14

Earlier quoted context omitted.

I agree that laws passed to deal with high housing costs are often counterproductive in the long run. The classic example is rent control. Can you explain your theory that low rates drive high rent inflation? Seems like it would be the opposite for several reasons: low rates are associated with low inflation, low rates make it much cheaper to build and operate apartment buildings, etc.

There's no doubt in my mind that low rates are driving up house prices, but the link to rental prices is a bit more tenuous to me. My gut feeling is that the post-crisis recovery started in the big cities, so people flocked to them, which drove up rental prices. But if anyone's seen some decent analysis that says otherwise, I'd love to see it.

There's no doubt in my mind that low rates are driving up house prices, but the link to rental prices is a bit more tenuous to me.

Yeah, the link to house prices is clear: low rates means you can afford a larger mortgage, so prices get bid up. The link to rents is less direct: low rates are effected by loose monetary policy -- by central banks pumping money into the market. This means more inflation (not quite the same thing as "rents getting more expensive" of course.)

In theory, anyway. Inflation has actually been very low even with historically loose monetary policy, so folks have been flummoxed (but generally positive about it, because they think it has let them encourage job growth and economic expansion more than they otherwise would have been able to.)

Re: Rents are plunging in the most expensive U.S. markets

#83

Post by fennecfoxen »

pmoriarty wrote: post #13

Have there been any experiments in legislating ceilings for housing prices? If so, what has been the effect?

> Have there been any experiments in legislating ceilings for housing prices? If so, what has been the effect?

As Assar Lindbeck put it, "next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying cities." For instance, in 1970s when the Bronx was burning, a major contributing factor was New York City rent control. In some neighborhoods of the Bronx and in Harlem, fully a third of the housing stock was literally abandoned by its owners: it was easier to just walk away and let the building rot than to take any action to repair it and continue to collect rent-controlled rents.

Even notoriously planned-economy San Francisco has backpedalled from the price-ceiling approach, favoring instead a mandatory "right to lease at the same inflation-adjusted price forever" in all its housing contracts.

Re: Rents are plunging in the most expensive U.S. markets

#84

Post by BWStearns »

MrFoof wrote: post #25
mmcclellan wrote: post #18

Where in Boston could someone possibly find a two bedroom for $2600? Shenanigans

So here's the results[1] from Zillow for a 2BR for $2500 or less in an actual Boston zipcode. These aren't all the results, as it limits the results to 500. If you're not looking for a managed, new luxury apartment, it's tremendously easy to find. Moreover, if you go on Craigslist, you'll find far, far more. Zillow listings are almost always represented by a realtor, broker or property management company so it's only…

They're mostly in Brighton and way deep Dorchester. The commonwealth ave one is as ridiculous as the same price being advertised for a real 2br in a doorman building in Chelsea. This is akin to measuring salaries by the high end of glass door. Sure. Someone may have gotten that price, or it could be a lie, but you won't.

Re: Rents are plunging in the most expensive U.S. markets

#85

Post by sitkack »

czep wrote: post #60

Strange concluding sentence about the prospect of an influx of Chinese investors to rekindle rising rents. Is there evidence that such a trend is likely in the near future? I have seen reports that a lot of money is expatriated from China into real estate because it's easy to launder that way. In general is it expected to increase so much that it would have a noticeable impact on rents in the major markets?

Vancouver.

Re: Rents are plunging in the most expensive U.S. markets

#86

Post by Spooky23 »

zazen wrote: post #17

I know nothing about the San Francisco housing market apart from what I've heard in discussions here on HN. The received wisdom here seemed to be that powerful NIMBY lobbies in SF were preventing needed development and causing the sky-high rent. But this article is talking about an "historic construction boom". Did something change regarding development in SF? Or was the NIMBY effect always a bit over-stated? Anyone…

HN will make this a SFO story because it's HN.

The reality is, rental housing is a canary and shifts quickly based on market conditions. The market is flooded nationwide, and if you look closely at newer projects, the better banks have slowed down investment.

Re: Rents are plunging in the most expensive U.S. markets

#87

Post by rahrahrah »

james1071 wrote: post #74
rahrahrah wrote: post #51

Earlier quoted context omitted.

So build up. Here in London people don't build up, for some reason (I mean other than office spaces, obviously). I think it's this nefarious british mentality that old is good. So you never demolish any 2 story buildings, you just build more outwards. Then you complain that the prices are insane.

The main problem is the greenbelt.

See, there we go again. Why is the problem the greenbelt? Between central London and the greenbelt there's a mind-blowing extension of small houses in every direction. There is A LOT that could be built before getting to the greenbelt. The greenbelt is only a problem if you want to continue building small houses.

Re: Rents are plunging in the most expensive U.S. markets

#88

Post by s_q_b »

denim_chicken wrote: post #64
refurb wrote: post #7

A friend used to rent out a spare room in SF on a regular basis. Two years ago, he could get $1850 for a single room with it's own bath room, furnished. We're talking 6-10 replies from a Craiglist post within 24 hours. Stopped renting it out about a year ago. He just posted it again. Zero takers at $1850. Finally got someone for $1600 (-13% decrease in rent) after a month. A dramatic change. The rental market in SF i…

Yet $1600 is still absurdly high for such a simple living space.

That's about the cost of a studio in DC.

Re: Rents are plunging in the most expensive U.S. markets

#89

Post by superuser2 »

didibus wrote: post #59
spikels wrote: post #47

Earlier quoted context omitted.

There are two kinds of real estate "prices": rental rates and property sales prices. Ceilings on property sales prices are very rare. Probably the most common example is resale price caps on government sponsored housing for lower income buyers. Price ceilings on rent are more common but still rare. This is commonly known as rent control. Like all price caps the result is shortages in varying degrees depending on how…

Hum, interesting. I think of rent control differently, but maybe the way you describe it is what is normally meant. When I hear rent control, I hear controlled increase in rent over time for existing rental units. You make sure all rental units are profitable, but you protect existing tenants from being able to afford their rent to not being able to in a year, simply because a neighborhood has increased in desirabili…

You protect existing tenants from new tenants. Existing units leave the equation for people moving or coming of age, who face much higher prices than they would if they were allowed to compete with existing residents.

Re: Rents are plunging in the most expensive U.S. markets

#90

Post by cwp »

didibus wrote: post #58
spikels wrote: post #14

Earlier quoted context omitted.

I agree that laws passed to deal with high housing costs are often counterproductive in the long run. The classic example is rent control. Can you explain your theory that low rates drive high rent inflation? Seems like it would be the opposite for several reasons: low rates are associated with low inflation, low rates make it much cheaper to build and operate apartment buildings, etc.

Counter productive in what ways? Rent control works great for Montreal and has for years. That city is very affordable to live in, because of it.

Montreal is affordable, but I don't think you can attribute that entirely to rent control. Forty years ago it was the premier city in Canada, but it's had a serious decline since then. Perhaps not an absolute decline in population, but certainly slower growth than the rest of the country, and way less money than it used to have.
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