Asking rents in San Francisco continue to slip, but…
socketsite.com
Asking rents in San Francisco continue to slip, but…
1–10 of 131 posts
Re: Asking rents in San Francisco continue to slip, but…
#2The 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, because there are almost the same number of non-homeowner voters as there are homeowner voters. It’s painful for one side because they (we) are being priced out of the property market, and great for the other side who is making a fortune.
Only of interest rates jumped up, or legislation was made to financially penalize capital gains on second and third homes or on residential property funds will home prices return to normal.
Re: Asking rents in San Francisco continue to slip, but…
#3The 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…
>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?
Re: Asking rents in San Francisco continue to slip, but…
#4The 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…
Is it better to buy a home for investment than it is to buy stocks?
Re: Asking rents in San Francisco continue to slip, but…
#5The 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…
>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.
Re: Asking rents in San Francisco continue to slip, but…
#6The 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…
Is it better to buy a home for investment than it is to buy stocks?
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 housing. There is no investment like it anywhere else in the world, which is why Canada is seeing the largest real estate bubble in the world.
The best part? You can sell your principle residence completely tax free. Not a penny in tax paid from capital appreciation.
Re: Asking rents in San Francisco continue to slip, but…
#7The 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…
Is it better to buy a home for investment than it is to buy stocks?
The primary feature of the real estate market is that the prices change so slowly that margin calls take years to happen. People are trading houses on 400%-2000% (4x-20x) leverage. Whereas with the stock market and other asset classes, you can't generally get that much leverage, and when you do the risk of getting margin called is perpetual and instant.
So although housing prices don't necessarily increase faster than the S&P500, and that there are many local variables in play, the same 7% increase YoY can really be a 140% increase YoY, while you are also renting out the home for more cashflow.
Liquidity of the housing market has vastly improved over the last 5 years, mostly due to new kinds of lenders and underwriters in the market, with the current year being even more liquid than ever.
The downsides of real estate haven't gone away. Like maintenance and physical presence needed, which is difficult for an individual as the portfolio expands. The physical presence demand - or the need to make it economical for there to be someone else maintaining the property - means that it is difficult to come up with the downpayment for real estate in areas you would actually like to live in, but are fully capable of renting in. So the barriers of entry stay where they are.
Re: Asking rents in San Francisco continue to slip, but…
#8The 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…
It's less of a problem because you can opt out of buying a home by renting. This is what happened back in the 00s and I know a lot of people that rented to opt out of the purchase market. Speaking personally, I rented a 3 bedroom home in Los Gatos for $2k/month, which was "valued" at around $1 million.
The difference this time is its on top of huge increases in home prices and rents. So I think you wouldn't see that large of a correction after this particular run-up, because before it both rent and purchase prices were already extremely high.
Ultimately I see it as only a minor problem on top of the huge problem of the basic affordability of shelter.
Re: Asking rents in San Francisco continue to slip, but…
#9The 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…
Is it better to buy a home for investment than it is to buy stocks?
nobody can confidently say one way or the other. both could crash. at least with the stocks you probably aren’t doing it on margin so you won’t lose the principle and can wait it out. with the house you can lose all the payments and the house if you can’t cover the mortgage.
Re: Asking rents in San Francisco continue to slip, but…
#10That 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.