patrick.net

Buster says

Rent $3200. Rather steep but manageable and I get it for the convenience and view. Tonight I find out that if we choose to stay, our rent is going up to.....drum roll....$5200/month. No lie.

Keep an eye on it. Just curious if it is really gonna rent for $5200.

Buster says

Fort Wayne, no I don't and that's my point. Our apartment tower admittedly is in a decent neighborhood, but the actual building or apartment is nothing grand in the least. Hell, it still has an 80s kitchen! Yes, they just upgraded the hallways, but I don't live in a hallway....

Move the hell out of there man. Because this LL is just trying to rip you off.

Why the F are we exempting landlords from fair property taxes? Prop 13 is truly insane.

What's needed is just the opposite: a Prop 13 for tenants. Germany has laws like that: where once you're renting, you have a certain security in your rental. The landlord can raise the rent only so much each year, and must offer you a lease renewal.

Germany is doing just fine with laws that protect renters.

The landlord can raise the rent only so much each year, and must offer you a lease renewal.

The problem with rent control is the oddities that happen when the market rent and the actual rent diverge significantly. Supply tends to lock up I think.

Just this morning I read Steve Wozniak's account of his Apple days -- in 1980 he was paying $150/mo for the Park Holiday apartments near the airport.

Today the market rent is $1100. Inflation calculator says $150 should be $400 today.

It's a wonderful world.

mdovell says

just a question but what do you think the chances are of consolidation of major home builders? (Lennar, D.R Horton etc)

I know less than nothing about their business.

Bellingham Bill says

The problem with rent control is the oddities that happen when the market rent and the actual rent diverge significantly. Supply tends to lock up I think.

Tenants should have some security against unreasonable rent increases though, no? Would a land value tax help renters?

If anyone is going to be for Prop 13, they must also necessarily be for that same protection for renters, or they're not being consistent. Tax control and rent control are very similar.

Hey, SF does actually does have rent control. So how can this guy's landlord raise his rent so much?

I can't exactly put my finger on it but in some ways it feels like there is definitely some "bubbleicious" activity going on in the bay area. Especially in the city and the Peninsula. At the moment the high rents and so on seem to be contained in those areas. I'd say 60% of the people I work with live in those two places and it sounds like rent has been going up a lot lately. What's scary is that I was here at the tail-end of the dot-com and back then high rents had spilled over into the east bay and other areas. I hope we're not about to see that again.

Believe it or not we received a rent increase this week. Luckily we have great landlords and after 8 years this is our first raise and it was drum roll.... $75. They love us and we could probably stay forever and as of now we pay very reasonable rent: $1,775 for a 4 bedroom house with a sizable yard.

That said... I am sort starting to actually think about buying a house. I only say this because I'd say that for the last 3-4 months there has been a number of seemingly nicer houses that have come up for sale in our neighborhood- houses that just a few years ago could reliably be counted on to cost at least $500k. Several have been 350k-450k. Still pricey. But we've been saving for years and could knock out most of the cost of a house like that and have a small mortgage. Then again I'm not sure if I want to stay here and if we wanted to we could buy outright just about anywhere else and almost semi-retire before we're 40. Arg. decisions.

The legal limit to annual rent increase for the same tenant in San Franciso seems to be very small, since it's tied to inflation:

http://www.sftu.org/rentcontrol.html

So that large rent increase should be illegal. What am I missing?

FortWayne says

rent at $5200 a month, are you living next door to Donald Trump? That's more than most families make pretax.

More hype if anything... such high rents on wide scale wont last.

So that large rent increase should be illegal. What am I missing?

On a commercial side, many rents are limited to rate of inflation, which is so stated in the contract. So large rents are cap'd.

Bellingham Bill says

Just this morning I read Steve Wozniak's account of his Apple days -- in 1980 he was paying $150/mo for the Park Holiday apartments near the airport.

Today the market rent is $1100. Inflation calculator says $150 should be $400 today.

You forgot to consider what the rent/income ratio then and now.

So that large rent increase should be illegal. What am I missing?

It's an exempt building.

having said that, I was looking at Archstone (Fox plaza and St Francis website) today and it seems rents are up at least 10%-15% accross the board vs last year. A two bedroom is now starting at 4,200 now vs 3,600 about a year ago.

You don't think I know who Reich is? He's all over the place.
The OWS people will make no political influence because they represent the same anger everyone has towards bankers. The other feelings of fear, angst, resentment, envy are pointless emotions.

The Tea Party people also were annoyed that TARP was used to bail out Goldman's bad bets, Timmie made them whole on their bad AIG bet, 100Cents on the dollar. Merkel by comparison just said the banks get 50Cents on their bad Greek bond investments. Tea Party people were also pissed that TARP was misued by Obama to bail out the United Auto Workers union, stealing from and screwing the bondholders and giving the UAW equity they didn't deserve.

Your post was incredulous about a rent increase. Why? San Francisco is still the most scenic, most liveable city in the USA. Manhattan is exciting but the place is stressful unless you are a zillionaire, and no city has the climate to compare with San Francisco.

clambo says

Your post was incredulous about a rent increase. Why? San Francisco is still the most scenic, most liveable city in the USA. Manhattan is exciting but the place is stressful unless you are a zillionaire, and no city has the climate to compare with San Francisco.

Others would argue against that claim. I live in the Bay Area and personally try and avoid SF because it is:

1: Overpriced
2: sort of grubby and dirty
3: traffic is awful
4 overrun with tourists

Also- I have friends who live in NYC and they wouldn't dare ever leave because they think the place is just the absolute most amazing place on earth and you know they don't think that for the weather.

SFace says

So that large rent increase should be illegal. What am I missing?

It's an exempt building.

How did that building get to be exempt? Kind of defeats the whole rent-control thing.

SFace says

So that large rent increase should be illegal. What am I missing?

It's an exempt building.

How did that building get to be exempt? Kind of defeats the whole rent-control thing.

I believe units built after 1989 or 1986 or some designated year are not covered by rent control. Also Single family homes are not covered and i think in some cases converted condos.

In my opinion, living in a downtown apartment tower is nuts. You could get a pretty good size place in some nice neighborhoods for $3200 and for over $5000 you could rent a fab place in very nice neighborhoods.

I grew up in NYC and it's fun. But, you must have a ton of money to live well in Manhattan.
NYC has about 4 weeks of weather per year that is as nice as San Francisco for 8 months per year.
Manhattan is cool, the rest of NYC can be scary, some just slightly nicer than the area inhabited by the "prawns" in Discrict 9.

clambo says

and no city has the climate to compare with San Francisco.

I'll take San Diego, thank you.

Kudos on the move and decision to buy. You're paying 3.2 grand for rent and aren't sweating that, then you should be fine with your purchase.
What will your mortgage be, less or equal to what you were paying I hope.

Which brings me to another question, you can afford 3200 a month, and you're all up in arms and participating in the OWS movement?

I just don't get this OWS movement?

OWS should consist of pissed of Wal-Mart greeters, and Fry Cooks, not Brokers, day traders, engineers and software developers living posh ruffing it in the park in the day, then driving home in their Beamer and parking in their lighted security garage.

Using a 30yr mortgage @ 4.25%

The $3,200 rent is the same as a payment on a $650k mortgage
The $5,200 rent is the same as a payment on a $1,050k mortgage

I think this helps explain why buying is not as crazy as it seems in SF, when the only other option is to rent at these prices.

Jimbo in SF says

I think this helps explain why buying is not as crazy as it seems in SF, when the only other option is to rent at these prices.

I would argue that living in SF in general is crazy at those prices.

The GOP says

Which brings me to another question, you can afford 3200 a month, and you're all up in arms and participating in the OWS movement?

Why is it surprising in this day and age to care about problems that harm other people more than they harm you? That being said - those of us who can afford more are getting less and less for our work. It takes upper-middle incomes to afford a middle class life. It's about the 99% not 90%.

StoutFiles says

I would argue that living in SF in general is crazy at those prices.

I don't disagree with you, but there is a constant turnover of new people to any city and SF especially with the Tech industry nearby.
The new arrivals are forced to pay today's higher rent prices, while long term renters are cushioned by rent control.

"you can afford 3200 a month, and you're all up in arms and participating in the OWS movement?"

That $3200/mo is just one more way those getting something for nothing -- parasitically living off of others' hard work -- have their taps in the system.

Another area of rent-seeking is in health care -- per-capita health care is $8000, twice what the "socialized" countries pay.

http://www.kff.org/insurance/snapshot/OECD042111.cfm

So a family of 4 is getting price-gouged by around $16,000 a year right there.

But hey, what's the problem if you can afford it, right?

That's an idiotic way to think -- it makes you miss the fact that capitalism is eating itself now.

It does that, periodically.

http://progressandpoverty.org/

Bellingham Bill says

Per-capita health care is $8000, twice what the "socialized" countries pay.

Stop paying it! You(America Collectively) are only encouraging the behavior of our Bizzaro world Capitalist based health care system when you sign that line, or take a job because they tell you are getting "Benefits" yet you're paying a Luxury Car payment with insurance every month for that "Benifit" it makes no damn since at all. Considering before Clinton tried to "Fix" healthcare THEN, when an employee talked about insurance from his work place, they always said...
"and Free Medical".

Just saw a piece on the news last night, where people in dire need of cancer drugs, can't get them because drug companies have stopped making them. Not because they weren't needed, but due to the profit margin is greater on creating and pursuing new pattens on totally unrelated drugs.

http://miami.cbslocal.com/latest-videos/?autoStart=true&topVideoCatNo=default&clipId=6393991

Meanwhile these drugs were considered the only available option for what they treated. So now there's not only a shortage or deficit, but a greater demand than ever. Generic drug makers are now going to make this drug and sell it for 1000% more than the original company. Remember Trout's rant on generic drug and patent shenanigans?
Due to all of the mergers fewer companies actually manufacture pharmaceuticals. That means even for these thousands of generic companies, it's one of these few pharmaceuticals companies that create their product at the end of the day.
They choose what they make and when. They create the profits, and you make it happen by enabling these greedy Insurance companies to screw the old, sick and infirm, and charge the Healthy out the Ass to pay for it.

It's Monetized to the max, I don't see how any Insurance scheme based health care system can work in this country.
In fact, we should outlaw Employer Health insurance, where an employee has to pay one dime of it.

What deal you have with your practitioner is your business.

We need education and health in this country. We should have Federal medical schools, and federal doctors in a federal health care system.

We're all far better off saving our money under the mattress and buying a liver on the African black market, than participating in this insanity. It would be a hell of a lot cheaper too.

Buster says

So what are your thoughts? More rent increases? More social unrest due to what I describe above? I am just a little freaked out at the moment I guess. I do well financially and can only feel compassion for those who make far less. Not even sure how folks are making it. I know, I know, some will say that they are renting someplace an hour or two from the city for 400/month and they don't know what I am talking about....Love to hear what you are all seeing/hearing/and experiencing out there....thanks.

Two words: Oak Land.

For $1500/mo you can basically have your pick of one and two bedroom apartments in the best neighborhoods. You could rent a place five minutes walk from Rockridge BART.

Jimbo in SF says

Using a 30yr mortgage @ 4.25%

The $3,200 rent is the same as a payment on a $650k mortgage

The $5,200 rent is the same as a payment on a $1,050k mortgage

I think this helps explain why buying is not as crazy as it seems in SF, when the only other option is to rent at these prices.

gotta factor in the 20% down payment

Jon137 says

For $1500/mo you can basically have your pick of one and two bedroom apartments in the best neighborhoods. You could rent a place five minutes walk from Rockridge BART.

b-b-b-but that would mean that they would have to ( gasp) move to the east bay! ( scary music)

rowemoore says

gotta factor in the 20% down payment

No doubt, but if you can afford $3k-$5k in monthly rent, I would assume you have a higher than average income and probably have significant savings.

Tenants should have some security against unreasonable rent increases though, no? Would a land value tax help renters?

If anyone is going to be for Prop 13, they must also necessarily be for that same protection for renters, or they're not being consistent. Tax control and rent control are very similar.

Hey, SF does actually does have rent control. So how can this guy's landlord raise his rent so much?

Oakland has rent control. The amount rents can go up is determined annually.

I think it has the effect of letting rents rise with inflation and economic conditions but not erratically, which can force people to move and unsettle their lives/jobs. I think that should be the only purpose of rent control. NOT this BS about "once you move in you have a right to live here forever."

SF and NYC are examples of broken rent control. It encourages people to never move, which in turn creates a supply shortage, which in turn drives prices up for newcomers. Basically, new renters are subsidizing the old renters.

For example, my brother took a job as a caretaker for a woman who lived on the upper west side, about a block from Central Park. It was a shabby, worn 4-bdrm apartment, probably 2000 sqft. She had been renting it since the late 70s. Her rent?

$470/month. If it went back on the market it would go for 6k/month. I don't know about you, but that just sounds like a mafia hit waiting to happen!

She couldn't sublet, but she could let my bro live there rent free in exchange for helping out with her kid. She herself was a semi-failed therapist probably making $40k per year, yet she's living a block away from Yoko Ono.

That's what rent control does there. You could make twice what that woman does and she would still be living better than you for the sole reason she just sat her fat ass down in one place long enough.

Jon137 says

Basically, new renters are subsidizing the old renters.

well, no. Aggressive rent-control ordnances just give the same price protection to leasehold tenants that fee simple tenants enjoy.

You could make twice what that woman does and she would still be living better than you for the sole reason she just sat her fat ass down in one place long enough.

All owners have this same fat ass then.

Funny thing is I checked the place I was renting in LA in 90025 in 1991.

The rent was $700 then and if I had stayed it'd be $1300/mo now thanks to rent control.

Market rate is $1600 or so I guess.

Jon137 says

Her rent?

$470/month. If it went back on the market it would go for 6k/month.

OK, that's definitely broken. But OTOH, giving landlords the power of unlimited rent increases is a broken system too. Very disruptive to renters' lives.

What would happen under a Georgist system? Georgism means that the portion of rent due to mere land ownership is taxed at 100%, but the rent due to capital improvements is taxed at 0%.

I suppose if the market value of the thread author's place is really $5,200/month, then the land value tax would be most of that, but the tenant would not get a break. The rent would really be that high, and the tenant would have to pay it. The landlord would also not be terribly thrilled, because his profits from non-productive rent-seeking would be gone.

What is so seriously wrong with a person charging as much as they want for the use of something they own and are responsible for?

Laws that impose rent prices are the moral equivalent of bailing out landlords and banks in the even that market value falls below their holding costs.

For folks who don't want to get ripped off there's something called a lease agreement. If either party doesn't like the terms, then they are free to negotiate or walk on the deal.

"What is so seriously wrong with a person charging as much as they want for the use of something they own and are responsible for?"

"To prove a legal title to land one must trace it back to the man who stole it" -- Lloyd George.

Landlords did not labor to create or otherwise cause to create the site value of their property, yet they profit from this site value.

This is a central wealth suck from workers to parasites in the current system.

"Laws that impose rent prices are the moral equivalent of bailing out landlords and banks in the even that market value falls below their holding costs."

No they're not. You're just talking out of your ass your book here.

"For folks who don't want to get ripped off there's something called a lease agreement. If either party doesn't like the terms, then they are free to negotiate or walk on the deal."

Walk where? LOL. As Churchill said over 100 years ago, land is the mother of all monopolies.

http://geolib.com/essays/sullivan.dan/royallib.html

for more on the moral failing of our current arrangement.

I think rent control is a decidedly mixed bag. While it can protect lower income working class tenants it can have unintended consequences. One of the things rent control does is to not give landlords any incentives to keep their properties in good condition. Yes the tenant can complain and even go to court and win in court but only regarding health and sanitation type issues. I know a woman, not rich but comfortable who has lived in a very inexpensive rent controlled apartment in SF for maybe 20 years. Her landlords do the bare minimum. For example if tiles in the bathroom need fixed they go in with any old tile and "slap" it on. Her bathroom looks ridiculous. There is no consideration given her other than the basics. You cant really blame the landlords as they are not making much money off her and she won't move so why make it comfortable for her. It is also, from what I have heard really difficult to evict a tenant in SF even with cause.

"What's needed is just the opposite: a Prop 13 for tenants. Germany has laws like that: where once you're renting, you have a certain security in your rental. The landlord can raise the rent only so much each year, and must offer you a lease renewal."

We already have such a system in place in New York City called rent control. The wind up is that the rent control system increases rent on non rent controlled apartments and limiting rent increases discourages landlords from making improvements to the rental units. The result are tons of buildings with hundreds upon hundreds of building code violations. And the city or the tenants can't get these violations fixed since the slumlords lawyer up and drag out the process.

Rent control in NYC dates back to what...world war two? You figure they would have got rid of it by now.

The other scary part is how many sub apartments get rigged up.

I heard supposedly Cindy Lauper was only paying $850 a month for rent (it was actually in a textbook about rent control!). I'd imagine that rent control is to NYC what prop 13 is to CA..a 3rd rail.

Illegal apartments are pretty nasty and can be deadly. Here's a bit from where I am.
http://www.boston.com/news/local/massachusetts/articles/2011/10/25/landlord_jailed_after_deadly_quincy_apartment_fire/

170 of them found in a three year span
http://www.patriotledger.com/news/cops_and_courts/x759739127/Nearly-170-illegal-apartments-found-in-Quincy-since-2006

They will never get rid of rent control. The politicans support it 100%. It buys them votes.

tapu I was aware of San Diego, but it's not really a city which San Francisco or NYC both are.

Jimbo in SF says

I don't disagree with you, but there is a constant turnover of new people to any city and SF especially with the Tech industry nearby.

With higher rents comes moving jobs elsewhere... Employers dont just sit there and dole our bigger paychecks...nothing sits in bubble forever.