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San Francisco, Silicon Valley rents plunge amid downturn

sfchronicle.com

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Re: San Francisco, Silicon Valley rents plunge amid downturn

#191

Post by paulcnichols »

claudeganon wrote: post #188
julianeon wrote: post #183

Earlier quoted context omitted.

It seems to work alright to me. We'll see where this takes us, but obviously if the population is dropping by 20% a year, keeping the theoretical option to charge a rent of 4k when the actual value is 2k won't matter. Also, I'd like to add that landlords are incentivized to charge high rents anyway. Even without rent control there's not going to be $800 rents in San Francisco anytime soon, sorry. This is just a holdi…

I think we could go through weird waves of vacant, financialization before rents crash though. People parking cash in real estate that’s risky elsewhere.

Very insightful. Parking money in Bay Area real estate still seems like a good idea.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#192

Post by treis »

newhotelowner wrote: post #187
treis wrote: post #126

Earlier quoted context omitted.

It's a year. If things are still bad then it's likely to be extended longer. Especially if the Dems win the election in the fall.

SBA backed mortgage payment forgiveness is only for 6 months. Which program offers 1 years of mortgage payment forgiveness?

The CARES act.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#193

Post by jedberg »

sjg007 wrote: post #184
jedberg wrote: post #133

Earlier quoted context omitted.

Rent control has a lot of unintended consequences. It is supposed to be a short term band-aid for bad zoning policies, but the zoning policies actually have to be fixed if you want to remove the band-aid.

I imagine there will be lawsuits on effective rent vs published rent. Imagine paying an official rent of $2400 but you get an extra month free for every rent payment. Your effective rent is then $1200. These types of teasers aren't within the spirit of the law. In fact, maybe they are already prohibited in the statute.

The law specifically excludes discounts in fact:

" In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded. "

Civil code section 1947.12.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#194

Post by jedberg »

pmiller2 wrote: post #190
jedberg wrote: post #73

This article seems to be based on only a few transactions, as not a lot of people are actually moving right now. I manage a couple of properties in the Bay Area, so I keep a close eye on these things. What I'm seeing is not a drop in rents, but an increase in $0 deposits and many weeks of free rent upon move in (sometimes 6+ weeks). Landlords are very reluctant to lower rents, because with the statewide rent control…

People not moving is literally the problem. This is part of a broader negative demand shock in the economy at large. Where exactly do you expect people without jobs, or with significantly reduced income to move to ?

> Where exactly do you expect people without jobs, or with significantly reduced income to move to?

I mean I personally hope that the government steps in and helps them stay where they are, but that will also keep rents artificially high and would be a transfer of wealth from the treasury to landlords. So pros and cons.

Realistically what seems to be happening is people are moving to lower cost areas within California or outside the state, or moving in with family.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#195

Post by usaar333 »

01100011 wrote: post #174

I'm curious how much this is driven by foreign students, specifically Chinese, staying home. On social media I've noticed the meme that China is peaceful and stable vs the USA which is currently still fighting the virus and plagued by massive unrest. I think the lack of interns, tech layoffs, and WFH may be a larger part of it, I'm just wondering if there is any data out there on how it breaks down by category.

I would think that international students from China is not only a minimal amount of the population, but also that very few have even left. (thanks to China's "five one" airline policy making it very difficult to go back to China)

Re: San Francisco, Silicon Valley rents plunge amid downturn

#196

Post by acdha »

anthonybullard wrote: post #151
mrcorona wrote: post #105

Earlier quoted context omitted.

Really looking forward to overleveraged airbnbers, the kinds juggling 10 mortgages and causing housing shortages, to get blackswanned.

I wonder why people renting their cars on Turo(or buying cars to do so) aren't causing car shortages? Oh yeah, because there aren't the artificial constraints on supply there is on housing. Let's focus on the problem and not wish ill on those trying to provide a useful service to others.

It’s a service which even if being operated in compliance with local laws has a negative cost to the rest of the neighborhood through higher issues with noise, trash, parking, etc. There are reasons why hotels aren’t spread randomly around cities.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#197

Post by conanbatt »

jedberg wrote: post #133
vmchale wrote: post #123

Earlier quoted context omitted.

> Landlords are very reluctant to lower rents, because with the statewide rent control that limits increases to 5% a year, we're incentivized to keep the rents high and give months of free rent, just so our base rate doesn't drop. God what a short-sighted policy. Not that I expect rent control to go well but that's nuts.

Rent control has a lot of unintended consequences. It is supposed to be a short term band-aid for bad zoning policies, but the zoning policies actually have to be fixed if you want to remove the band-aid.

I'm willing to bet you more than a beer that a large share of people under rent-control are high earners.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#198

Post by godzillabrennus »

paulcnichols wrote: post #191
claudeganon wrote: post #188

Earlier quoted context omitted.

I think we could go through weird waves of vacant, financialization before rents crash though. People parking cash in real estate that’s risky elsewhere.

Very insightful. Parking money in Bay Area real estate still seems like a good idea.

Assets in general are a good idea when a currency is being devalued.

Midwest real estate I’ve acquired offers cash flow you can’t find on the coasts but no hope of appreciation. To each their own.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#199

Post by sjg007 »

jedberg wrote: post #193
sjg007 wrote: post #184

Earlier quoted context omitted.

I imagine there will be lawsuits on effective rent vs published rent. Imagine paying an official rent of $2400 but you get an extra month free for every rent payment. Your effective rent is then $1200. These types of teasers aren't within the spirit of the law. In fact, maybe they are already prohibited in the statute.

The law specifically excludes discounts in fact: " In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded. " Civil code section 1947.12.

Seems like a loophole ripe for abuse.

Re: San Francisco, Silicon Valley rents plunge amid downturn

#200

Post by t3rabytes »

jedberg wrote: post #148
t3rabytes wrote: post #143

Earlier quoted context omitted.

> Normally to leave a lease you need to give notice, usually 30 days. But there is one time you don't have to do that -- when the lease ends. This isn't guaranteed. In my case (renter in North Carolina), even at the end of my lease I have to give a 60 day notice prior to the lease-end or else my lease switches to month-to-month automatically.

Check your lease, but at least on my leases, it says that it only goes month to month if you pay the rent and the landlord accepts. If you don't pay the rent, the lease just ends. It's certainly a nice courtesy to let them know if you're leaving, but at least in California, it isn't required by law.

> This Lease Contract will automatically renew month-to-month unless either party gives at least 60 days written notice of termination or intent to move-out as required by paragraph 35 (Move-Out Notice).

Mine is pretty clear that it's an automatic rollover, but fair -- every state (and lease!) is different.

> If you don't pay the rent, the lease just ends.

Oof, sounds like a nice way to end up with a bad mark against you nonetheless.

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