Asking rents in San Francisco continue to slip, but… • Hacker News Board

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

#111

Post by midasuni » Tue, Apr 27, 2021, 5:18 AM UTC

ska wrote: post #82

neffy wrote: post #68

Earlier quoted context omitted.

You forgot that the rent is increasing with inflation, but the mortgage is not.

Yes but wages are too , so you keep the delta. And the mortgage payment goes up with interest rates. Which aren’t exactly independent events. It’s not perfect but it’s reasonable. It may free up some other money in the house case , which you could use to make up some of the difference. Or that might get eaten by rates.

US mortgages tend to be fixed. Wages for up, payments on the house stay the same. At 3%, a $1m mortgage would be 2500 interest a month now, and in 2040.

US home maintenance seems high though - roof repairs are a known thing for some reason. In he U.K. I live near an estate of thousands of houses all 50 years old, I can’t ever remember seeing one being repaired.

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

#112

Post by ska » Tue, Apr 27, 2021, 5:31 AM UTC

positr0n wrote: post #106

ska wrote: post #87

Earlier quoted context omitted.

3% was left in favour of the house buying but unlikely because the last dozen years or so are very unusual In real estate, so I used middle of the road numbers. You may lock in 3% for 5 years now but nobody is giving you that for 30 - historical averages are all about double . Very good chance that happens again over that time period but of course we don’t know . Assuming it won’t would be irrational though . Of cour…

Based on the spelling of favour I am assuming you are not from the US. In the US, fixed rate mortgages for between 15-30 years are very much the norm, with 30 year mortgages much more common than 15. You can absolutely get a 30 year loan up to $550k ($820k in California) for well under 3% these days. A 5/1 ARM that changes rates after 5 years is a product you can buy, but it would only be used in niche scenarios. I u…

Fair - I bounce around a fair bit and haven’t looked in the US for about 10 years, mea culpa.

Just goes to show you have to do the non hand wavy version of this for your actual situation ; my broader point stands though.

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

#113

Post by shinazueli » Tue, Apr 27, 2021, 5:40 AM UTC

xenihn wrote: post #101

klipt wrote: post #98

Earlier quoted context omitted.

The point is they could make even more by selling and using the money to buy in places with higher rent/buy ratio. They've made more money from appreciation than from rising rents.

Can you please link me a list of cities with a better buy:rent ratio when comparing 2008-2011 SF to 2021 SF? Assuming you were to buy and rent now, since that's the conversation we're having. I have some friends who would be really interested. I just tried to find some on my own, and I could not.

I don’t think you understood his point. Obviously, those homes have appreciated. His point is that people who own property right now in SF stand to make more money by simply selling their property, and using the proceeds to purchase property in other cities around the country, with better ratios.

Appreciation, by itself, will naturally drive this ratio down because of rent control laws. The value of the home is the denominator in that fraction.

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

#114

Post by 8note » Tue, Apr 27, 2021, 6:23 AM UTC

senkora wrote: post #5

jjtheblunt wrote: post #3

Earlier quoted context omitted.

>Hence purchase prices are rocketing up and rental prices are drifting down. Shouldn't the decrease in homes to purchase increase the demand for rentals?

If second homes are being rented, then the supply of rentals will also increase.

That depends on who's renting them?

If it's a business, they will leave it empty rather than lowering the rent

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

#115

Post by nicbou » Tue, Apr 27, 2021, 6:54 AM UTC

esyir wrote: post #103

chii wrote: post #99

Earlier quoted context omitted.

> build housing sufficient to meet demand they also accept that in dense Tokyo metro areas, the sizes of places are tiny. I dont think the Anglo way works - you cannot have both dense, but big apartments.

Sure you can. The issues with the Anglo way is that they've gone all the way to the other end with flat, wide buildings. Increasing verticality is a simple way to get more density without sacrificing area. At some point, yes, you'll just have to shrink down to get further density, but the low hanging fruit haven't been picked yet.

Building tall requires adequate public transportation and social infrastructure

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

#116

Post by Red_Leaves_Flyy » Tue, Apr 27, 2021, 6:56 AM UTC

riazrizvi wrote: post #60

xenihn wrote: post #41

Earlier quoted context omitted.

Note that "investors" in this case also includes massive pension funds. This isn't the type of entity that most people have in mind, but it's one of the most pervasive in California, especially in San Francisco. I think the average person thinks of individual investors (flippers, rich foreign buyers) when they hear "investors". Some of the buyers belong to this group, but most don't.

Yes the funds are the worst IMO, they do the most damage to the stability of the market and they have the most political power because their $$$’s are concentrated.

Not only is the capital so concentrated, but any threats to these funds are direct threats to the retirement plans, pension funds, and investments of the politicians that serve us as well as their donors/supporters. Firms like balckrock can effectively strong arm Congress into doing whatever black rock damn well pleases because of the economic power they've been allowed to concentrate. Blackrock has $8.68 trillion AUM(2020), the 2019 US GDP was $21.4 trillion. What kind of damage could blackrock, entirely legally, do if they wanted? I'm not saying that BR is extorting anyone, but I'd be thoroughly surprised if BR doesn't have emotionless discussions with powerful people about all the terrible things that will happen if Congress does X or doesn't do Y, which can have the same effect as saying to act in a way or [bad thing] without coming across as Tony Soprano.

https://www.bloomberg.com/quicktake/rent-wall-street-is-my-l...

https://www.theatlantic.com/technology/archive/2019/02/singl...

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

#117

Post by neltnerb » Tue, Apr 27, 2021, 8:00 AM UTC

random314 wrote: post #110

neltnerb wrote: post #70

Earlier quoted context omitted.

This is super deceptive. If you had actually needed to pay $1.1M in principal even at 0% interest over 30 years you'd be paying $2777 a month. Your comment comes across as basically suggesting it is other people's fault for not buying a house when it cost half as much as it does now versus renting a house now. I bet you bought that house fifteen years ago at least right?

You get there by refinancing to extend the loan and lower interest. It's not deceptive at all.

Yeah, I've owned a house for fifteen years. I know how this works. Saying your house is worth $1.1M now and you only have to pay a mortgage of 2500 a month completely ignores that you purchased it at a different price, or at least have put a substantial amount of capital into it so that your mortgage is certainly not covering $1.1M worth of principal.

I'm saying this is deceptive because that is not what people think of when they are comparing renting with buying. You're comparing renting today versus buying over a decade ago and getting lucky about the property value going up and being lucky about being able to afford to get a mortgage in the first place.

It's just not a nice thing to argue. I pay a lower "rent" than my friends who rent. At first I was paying much more than my peers, now I'm paying half as much. But most of them would happily go back in time and do the same versus paying rent now, that's just not possible, not to mention that they're often too young for it to have been financially possible for them to do it when I bought my house.

It is really unreasonable to suggest that someone now magically get themselves into a long term mortgage taken out a decade prior as if that's merely a $500 monthly premium. It's time travel or luck.

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

#118

Post by staticautomatic » Tue, Apr 27, 2021, 9:14 AM UTC

hardtke wrote: post #79

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 p…

I’ve been apartment hunting in the city for a few months and I’m not sure they are diverging at all. Rent controlled units are way down in price but a lot of the inventory is shit that people are moving out of for nicer places in better locations.

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

#119

Post by bsder » Tue, Apr 27, 2021, 9:26 AM UTC

chii wrote: post #97

bsder wrote: post #54

Earlier quoted context omitted.

> Are you assuming that it's somehow sensible to buy property and leave it empty? Yes if it has been financed in certain ways. An empty space is assumed to be rented at the same rate as it was before being empty and that empty rent can normally be tacked onto the end of the financing as it is assumed to be a "temporary" thing. However, if that space gets occupied for less money, the basis of the real estate adjusts a…

whoever that is doing the money lending is taking the hit by assuming the rental income from prior periods during a vacated period. So if they don't care, then why would _I_ care that they don't care?

There is no problem if this is just one person or one business. There's no issue with allowing people some time to find the next renter.

The problem is that when everybody leverages to the hilt and the whole area collapses, the rent prices stay high even when there's no one renting--which is bad for renters. And this continues in a gigantic game of chicken until some of the owners finally run out of cash and go bankrupt and everything collapses simultaneously which also isn't good for the end renter.

It's like the 2008 Wall Street crash. Lots of people knew what was going on. However, everybody knew that they were equally screwed whether they were responsible or not. So, they just rode the train and hoped they could cash out to the next sucker before the disaster.

And then we get the joy of everybody wailing that they need a bailout.

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

#120

Post by imtringued » Tue, Apr 27, 2021, 10:14 AM UTC

random314 wrote: post #110

neltnerb wrote: post #70

Earlier quoted context omitted.

This is super deceptive. If you had actually needed to pay $1.1M in principal even at 0% interest over 30 years you'd be paying $2777 a month. Your comment comes across as basically suggesting it is other people's fault for not buying a house when it cost half as much as it does now versus renting a house now. I bet you bought that house fifteen years ago at least right?

You get there by refinancing to extend the loan and lower interest. It's not deceptive at all.

If you did this today, you have to refinance at a higher interest rate in the future. That's why it's deceptive.