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Asking rents in San Francisco continue to slip, but…

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Re: Asking rents in San Francisco continue to slip, but…

#71

Post by SadCanadian »

smnrchrds wrote: post #59
tenpies wrote: post #6

Earlier quoted context omitted.

Depends on geography. For example, in Canada, housing is up 30% YoY. Trudeau's Federal government recently said that even a 10% correction in housing would be unacceptable. In practice, Canadian housing isn't housing - it's a 30% (or better) government bond that you get to live in or rent out. That's a 30% return guaranteed by a sovereign state that will gladly destroy everything else in the country to prop up housin…

> Trudeau's Federal government recently said that even a 10% correction in housing would be unacceptable. Could you please provide a source? I cannot find anything on the web. > it's a 30% (or better) government bond This cannot possibly be true. First of all, 2020 was a special year for asset prices, not just in Canada and not just for real estate, but for all assets all around the world. Second of all, even if the…

It was not the federal government that explicitly said this (emphasis explicitly) but rather an MP for Vaughn in Ontario. His name is Adam Vaughan and he said this two weeks or so ago. https://betterdwelling.com/canada-says-property-bubble-not-g...

Yes, BetterDwelling is a permabear but Vaughan's comments are legitimate. He said it in an interview with TVO.

On another note, the 30% number seems ridiculous. And, yet, do not be surprised if Canadians seriously believe this. Remember, people have been screaming bubble for a decade, and there has been no such pop yet. Of course, I think this is unsustainable. At 6-12% growth rate you're looking at like low to mid 8 figure values...for the average home. At 15-30% you're looking at hundreds of millions of dollars over 30 years. Ridiculous, isn't it?

Interesting discussion on the Financial Times comments section about young people feeling insecure also highlights this property inflation. Basically, the AngloSphere has decided to inflate assets and forget about industrious activity. In the long run, you just end up with a hollow, low productivity and low social mobility country.

Is this acceptable? Well, Canadians aren't voting against it. Of course, this is because they think they are getting richer. In reality, the country is just heavily indebted and consuming tomorrow's income today. I am keeping most of my savings down south with the Americans and their equity market. If the BoC can keep the bonanza going, so can the Americans.

Re: Asking rents in San Francisco continue to slip, but…

#72

Post by lostmsu »

ska wrote: post #56
thanhhaimai wrote: post #31

Earlier quoted context omitted.

I'm paying $2500/month mortgage for a home valued at $1.1m. For the extra $500/month, I get: mortgage interest tax deduction, a house after 30 years, the freedom to modify my home the way I like, the security of knowing I'm not at the mercy of the landlord. Personally, I think for the extra $500/month, buying is a better choice than renting; at least for me.

> Personally, I think for the extra $500/month, buying is a better choice than renting; at least for me. Let's do the math. Nobody is getting a 1.1million mortgage for 3k/mo, so let's pick something conservative but more realistic. According to zillow, for a 3k/mo payment you can get a 520k loan with a 20% (130k) downpayment, 30 years with an average 3%. You'll be lucky to keep it to 3% for the next 30 years but we'l…

You forgot to include tax on your investment, which in California I hear might be around 30% at the top income bracket.

Re: Asking rents in San Francisco continue to slip, but…

#73

Post by rconti »

hn_throwaway_99 wrote: post #38
thanhhaimai wrote: post #31

Earlier quoted context omitted.

I'm paying $2500/month mortgage for a home valued at $1.1m. For the extra $500/month, I get: mortgage interest tax deduction, a house after 30 years, the freedom to modify my home the way I like, the security of knowing I'm not at the mercy of the landlord. Personally, I think for the extra $500/month, buying is a better choice than renting; at least for me.

I'm assuming your property taxes are not $0?? I don't know where you live but in Texas property taxes on a $1.1 million home are about $2,300 a month

It's 1-1.1% in most places in CA, and can grow by a max of 2% per year. The parent who deceptively advertised a much lower mortgage payment than would make sense given the current value, is probably paying around $10k/yr.

Re: Asking rents in San Francisco continue to slip, but…

#74

Post by xzel »

cheriot wrote: post #17
riazrizvi wrote: post #2

The systemic problem is that investors are buying up residential property inventory, because there is a massive amount of near 0% cash available to a thin slice of the population. So even though there are as many people as there were roughly a year ago, there are far fewer homes. Hence purchase prices are rocketing up and rental prices are drifting down. There is no strong political will to solve this problem, becaus…

> The systemic problem is that investors are buying up residential property inventory Are you assuming that it's somehow sensible to buy property and leave it empty? Owner vs rental doesn't change the number of homes available.

Depends why you’re buying the property. If you need to clean it, for example get it out of a country or if you got it from questionable means, property is a great place to park it. Look at all the empty store fronts in NYC before the pandemic. Keep your rent artificially high so it maintains the value and your only cost is property taxes.

Re: Asking rents in San Francisco continue to slip, but…

#75

Post by flukus »

barry-cotter wrote: post #37
rodgerd wrote: post #32

Earlier quoted context omitted.

> The systemic problem is that investors are buying up residential property inventory, because there is a massive amount of near 0% cash available to a thin slice of the population. This is absolutely a global problem: New Zealand, Australia, parts of Canada, the UK, are all having the same issues.

Japan doesn’t have this problem because they build housing sufficient to meet demand. Deciding not to build enough housing to meet demand so property owners make money: It’s the Anglo way.

Japan had this problem 30 years ago and had banks giving out multi-generational loans: https://money.cnn.com/magazines/fortune/fortune_archive/1990...

Re: Asking rents in San Francisco continue to slip, but…

#76

Post by jcims »

smnrchrds wrote: post #61
jcims wrote: post #21

Earlier quoted context omitted.

I live about four hours due south of you and loved visiting Toronto as a kid. I had seen similar commentary recently about the real-estate market and thought folks were exaggerating. From what I could see, they weren't. Just now I was going to make a joke about the long game being in Nunavut but checked my work first and, uhh, nope. That's some crazy shit. $600k for a (nice) 5br on a half acre in the tundra? No thank…

Unlike in the south, high property prices in the territories are due to the cost of shipping building materials, not the price of land.

It seems the pandemic has flattened that out. Construction material prices here in the midwest are up 100-150%.

Re: Asking rents in San Francisco continue to slip, but…

#77

Post by pessimizer »

rossdavidh wrote: post #27
hackeraccount wrote: post #10

That relationship - when purchase prices go up rents go down and vice versa has always seemed odd to me. When you think about it, it makes sense but you'd think most people wouldn't have the flexibility to move between renting and owning.

Mostly I agree with you but you might, if owning, choose to rent out your existing place and move somewhere cheaper? Also, here in Austin, TX I know people who rent, who own properties that they rent out to others. It seems odd to me.

You rent places in order to live in them. Owning property is always investment (if you're rational, and real estate middlemen will encourage you not to be.) Owning your own place, if not for the massive state subsidy, is basically renting from yourself for the price you would have paid someone else + maintenance.

Austin is a great example of a place where you may have bought a house in a really cool neighborhood, which 20 years later is in the middle of a shit yuppie neighborhood. You can rent that house to the shit yuppie who will be happiest there (and is loaded and willing to pay a premium) and rent in a cool neighborhood, especially if rents are low. You might not have to work at all.

Re: Asking rents in San Francisco continue to slip, but…

#78

Post by dcolkitt »

nostrademons wrote: post #53
csomar wrote: post #44

Earlier quoted context omitted.

Assuming the inflation rates are accurate (low inflation), these guys are getting into a risky proposition with a 1.5% discount (property tax still have to be paid out). I would not call it "free" money. These guys might not be as smart or lucky as they seem to be.

It's a bet on the inflation rates not being accurate, or at least not staying at "low inflation" levels. Personally I would take their side of the bet. I think that inflation rates are going to be extremely high over the next decade, exceeding the 1970s and potentially flirting with hyperinflation, and that folks who are betting on status-quo inflation are about to get screwed the same way folks who didn't see global…

I’m not saying that hyperinflation can’t happen. But if you really believe in that hypothesis, you’d do much better to buy deep OTM call options on TIPs and gold instead of real estate.

Re: Asking rents in San Francisco continue to slip, but…

#79

Post by hardtke »

I'd be really curious to know how San Francisco rental prices are diverging between newer (not rent controlled) buildings and older (rent controlled) buildings. There is historically not as much turnover in the rent controlled buildings, and people pay a premium price at the time of move in because they get protection from rent increases. I would guess that rent controlled unit prices did not slip that much because people realize that San Francisco will be a great place to live at some point in the future. These rental surveys are heavily biased towards larger, newer apartment buildings.

Re: Asking rents in San Francisco continue to slip, but…

#80

Post by brobinson »

CoastalCoder wrote: post #40
hn_throwaway_99 wrote: post #38

Earlier quoted context omitted.

I'm assuming your property taxes are not $0?? I don't know where you live but in Texas property taxes on a $1.1 million home are about $2,300 a month

In the U.S. at least, property taxes are normally treated as part of the mortgage payment. They're not technically part of the mortgage payment, but they're a line-item in your monthly payment to the lender.

Escrow for property tax is (usually) _optional_ on a mortgage. I don't have escrow on mine because I heard horror stories from coworkers about payments getting screwed up when the mortgage was resold.
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