patrick.net

dublin hillz says

I don't believe that buy vs rent ratios analysis are necessarily wrong and I am a homeowner. The problem occurs when these ratios are analyzed in a static manner and don't take rent increases into account. You can't simply do buy vs rent and analyze it in year 1 only as that prevents you from properly analyzing lifetime housing costs for apples to apples properties.

I have rented in the SFBA for over 15 years now and only once was presented a rent increase by a landlord. It was in the end of 1999 during the dot com days. I got the letter in the morning on my way out the door, and that evening presented him with a letter saying we were leaving. We rented a cheaper place down the road and watched the house sit idle for 6 months while the dot com crash happened. I'd say if the landlord learned his lesson and didn't repeat his mistake then his losses are probably finally recouped by now. ;)

Good luck to all slimy landlords. May the buck be your driving force in life.

donjumpsuit says

Rent increases?

I have lived in the Bay Area since 2000. There has been no substantial rent increases. By moving from city to city, neighborhood to neighborhood, I can pay $1500 for a 3bd/2bath or $4500.

If my landlord increases rent by $100, I move to a place that is affordable. If there are no places that are affordable, I find a roommate, or become a roommate, perhaps family or friends (I'd never do that, but 50% of everyone else find this a more preferable situation). I think the rent expectation in the bay area has always been $500-750 per room.

So your argument is that there have been no substantial rent increases because you are able to lower the quality of your rentals so as to maintain the same rent you were previously paying?

We rented for over a decade. From late 2000-all the way to around 2008-2009 rents were fairly low and stable. At least for us rent never increased. We paid $1,600 to rent a 4 bedroom house. But- had we decided to move, that same house would have been $2,500-$3,000 a month. I think that's what got the ball rolling on buying because as of now the mortgage is about the same as we were paying in rent. So it made financial sense. Back in 2003-2007- no way in hell. Rents were dirt-cheap and home prices were sky-high.

CDon says

Coupled with the fact that her rent has gone up +20%, she is absolutely livid for ever having believed that waiting on rental parity would be in her best interest.

The same thing happened to me last summer, my rent went from $2100 to $2300 (10% increase). So I got on the housing maps and found a condo being rented out in a much nice area closer to my work and it has a garage (something my apartment didn't have). Oh and the price tag is $1800 a month (new place also includes trash pick). When I gave my notice the apartment manager offered to keep my rent at $2100 but it was to late because the new place is way nicer.

Moving cost me about $100 bucks for a uhaul +gas.

Rents only went up on people that don't know how to negotiate or don't realize their options.

I think its entirely possible to pay too much in rent too. I have known my fair share of people who paid as much as 50% more than we ever paid. As in some of the small cramped apartments in SF cost a LOT More than the house we rented. That and people who rent on the Peninsula also tend to pay a crapload more in rent.

Money is money. If you spend too much on rent, its not really that different than paying too much on real estate.

RentingForHalfTheCost says

If someone jacked up my rent by 20% I would just move. Easy solution. People make such a big deal out of moving, like it is the end of the world. It takes about a weekend of work. Cost about a 1/2 month rent and is a great time to clean up your crap.

Clearly you don't have kids, if you think moving is not a big deal

Bigsby says

So your argument is that there have been no substantial rent increases because you are able to lower the quality of your rentals so as to maintain the same rent you were previously paying?

I have never had to do this in the SFBA, but knowing I have that option is comforting. Renting=flexibility.

JFP says

RentingForHalfTheCost says

If someone jacked up my rent by 20% I would just move. Easy solution. People make such a big deal out of moving, like it is the end of the world. It takes about a weekend of work. Cost about a 1/2 month rent and is a great time to clean up your crap.

Clearly you don't have kids, if you think moving is not a big deal

Actually, I do. Not school age yet though so I'm sure that makes it harder.

RentingForHalfTheCost says

Bigsby says

So your argument is that there have been no substantial rent increases because you are able to lower the quality of your rentals so as to maintain the same rent you were previously paying?

I have never had to do this in the SFBA, but knowing I have that option is comforting. Renting=flexibility.

And an entire life time of renting=?

RentingForHalfTheCost says

JFP says

RentingForHalfTheCost says

If someone jacked up my rent by 20% I would just move. Easy solution. People make such a big deal out of moving, like it is the end of the world. It takes about a weekend of work. Cost about a 1/2 month rent and is a great time to clean up your crap.

Clearly you don't have kids, if you think moving is not a big deal

Actually, I do. Not school age yet though so I'm sure that makes it harder.

Yes, once they are in school and have friends it becomes a big deal.

Why SF Bay Area? Does anyone see anything like a new dot.com happening here? NO!

Do the recent spur of hiring entry level people at some tech companies make up for the layoffs of seasoned employees years ago? NO!

Semi and software are being done overseas so what's left here in Silocon Valley? Dreams of glory days long past!

Bigsby says

RentingForHalfTheCost says

Bigsby says

So your argument is that there have been no substantial rent increases because you are able to lower the quality of your rentals so as to maintain the same rent you were previously paying?

I have never had to do this in the SFBA, but knowing I have that option is comforting. Renting=flexibility.

And an entire life time of renting=?

Don't have a problem with that. My goal is to retire or cut back work as soon as possible. If renting give me that 5 years earlier then I'll rent and enjoy it. I don't get the pull to own a sugar shack. I'm sure others get benefits, but for me I don't see it. I actually feel that I would give up parts of my life to be an owner. So, not only would it have to at some point reach rent to owner cost parity, it would have to beat it. i.e. cheaper to own. Until that day, I'll enjoy my choice to rent. I actually love it. People that have visited my rentals have talked about how much they love the place. Most of them own a crappier place and pay more for it. To each his own...

donjumpsuit says

In the end, I would buy, if I could find an appropriately priced "Deal" on a house that needs significant work. However, we all know that this is a "buisness" now, so that's impossilbe.

Finding a home I could invest sweat equity in, and improve it's desirability to the next owner would be a wonderful perk of owning a home.

Right now I can rent for less than I would pay in Property tax, HOA, and mortgage interest (minus the deduction), and maintenance.

This is only possible because every home in the bay area that exists in a desirable neighborhood, or within 2 hours of my employment is beyond this number, yet I can find hundreds of rentals that fit under this number. And the number of rentals is only going to increase.

Bingo! You win the free case of coke and lifetime supply of chiclets for being so bright.

mszlazak says

Why SF Bay Area? Does anyone see anything like a new dot.com happening here? NO!

Do the recent spur of hiring entry level people at some tech companies make up for the layoffs of seasoned employees years ago? NO!

Semi and software are being done overseas so what's left here in Silocon Valley? Dreams of glory days long past!

Still many $200K+ salaries kicking around here for doing little of nothing IMHO. Many times it is the companies burning through their VC funds, so time will tell how long they will last.

donjumpsuit says

Bigsby says

So your argument is that there have been no substantial rent increases because you are able to lower the quality of your rentals so as to maintain the same rent you were previously paying?

Quality is arbitrary. I have seen mansions for $3000, and slumbuckets for $2450.

The confirmation that housing quality is arbitrary is found in the amount of "fixers" that are going for market rate right now.

It's pretty obvious that rental prices in the area are going up. That you can move to a cheaper place isn't an argument against that.

RentingForHalfTheCost says

Don't have a problem with that. My goal is to retire or cut back work as soon as possible. If renting give me that 5 years earlier then I'll rent and enjoy it. I don't get the pull to own a sugar shack. I'm sure others get benefits, but for me I don't see it. I actually feel that I would give up parts of my life to be an owner. So, not only would it have to at some point reach rent to owner cost parity, it would have to beat it. i.e. cheaper to own. Until that day, I'll enjoy my choice to rent. I actually love it. People that have visited my rentals have talked about how much they love the place. Most of them own a crappier place and pay more for it. To each his own...

Your argument only has any resonance to people because you live in an expensive area. I have rented my entire life because I am an expat (I finally bought a house in Monterey as a bolt hole and a good decision it was too).
Every single one of my friends who bought a house in the UK in the 90s has made out like gangbusters and the same still appears true for many in the US during that period. I missed that opportunity just as you did not buying 15-20 years ago if you are of that age. To have spent your entire time renting during that period means that you have missed a major opportunity. It wouldn't have greatly impacted on your ability to invest and it would have given you a house that would have soared in value. Those are the facts. It is less clear going forward, but the decision of a single man is not the same as one with a family. And your personal stories of half price rent and 16% returns aren't the realities for the vast majority of people in the US or the UK.

Bigsby says

I missed that opportunity just as you did not buying 15-20 years ago if you are of that age.

I didn't miss anything. I own 4 houses (owned 6 before and just sold 2 recently). I have benefited greatly from the free money flow. My only beef with housing is the SFBA. If I lived in about 99% of the rest of the U.S. then I would most likely buy. However, here you are just downright lying to yourself if you think buying is cheaper than renting. Renting is a steal! I have rented for 15 years here and each month I beat the pants out of owners in the long run. My life has been a thousand times better than if I had bought at any point. I have traveled the world, taken sabbaticals, paid for relatives education expenses, paid off relatives debt, benefited from when everyone sold like idiots in the stock market crashes, purchases the latest new electric cars, had amazing family trips, etc. None of the above would have been close to possible if I owned a million dollar sugar shack in the bay area. I would have been cash poor while making over 200K in income. Just dumb.

Bigsby says

donjumpsuit says

Bigsby says

So your argument is that there have been no substantial rent increases because you are able to lower the quality of your rentals so as to maintain the same rent you were previously paying?

Quality is arbitrary. I have seen mansions for $3000, and slumbuckets for $2450.

The confirmation that housing quality is arbitrary is found in the amount of "fixers" that are going for market rate right now.

It's pretty obvious that rental prices in the area are going up. That you can move to a cheaper place isn't an argument against that.

Lies! Rents are definitely dropping in the bay area. Anyone saying different is most likely an owner in denial.

RentingForHalfTheCost says

Lies! Rents are definitely dropping in the bay area. Anyone saying different is most likely an owner in denial.

And that claim is based on what?

RentingForHalfTheCost says

Renting is a steal! I have rented for 15 years here and each month I beat the pants out of owners in the long run. My life has been a thousand times better than if I had bought at any point. I have traveled the world, taken sabbaticals, paid for relatives education expenses, paid off relatives debt, benefited from when everyone sold like idiots in the stock market crashes, purchases the latest new electric cars, had amazing family trips, etc. None of the above would have been close to possible if I owned a million dollar sugar shack in the bay area. I would have been cash poor while making over 200K in income. Just dumb.

And why would you have been unable to do any of that if you'd bought in the area 15 years ago, for example? One doesn't preclude the other. A home in old Palo Alto in 97 vs one now...

robertoaribas says

RentingForHalfTheCost says

I have rented for 15 years here and each month I beat the pants out of owners in the long run.

If you had bought 15 years ago, the price difference from then to today makes your assertion that renting has worked out better completely ridiculous.

My parents bought a house for $600k in 1997 that now has an estimated value of $1.6M. I don't know anyone anywhere in this part of the SFBA who would claim they have not enjoyed significant increases in their home valuations over the past 15 years no matter HOW close they are to a toxic plume:

http://www.mercurynews.com/science/ci_22454526/ten-years-after-toxic-plume-morgan-hill-and

http://www.sfgate.com/bayarea/article/The-valley-s-toxic-history-IBM-trial-is-latest-2826844.php

http://www.paloaltoonline.com/news/show_story.php?id=18496

Liquefaction zones? Huh? What do you mean the earth isn't stable here?!

http://quake.abag.ca.gov/liquefaction/

http://quake.abag.ca.gov/liquefaction/Bigsby says

RentingForHalfTheCost says

Lies! Rents are definitely dropping in the bay area. Anyone saying different is most likely an owner in denial.

And that claim is based on what?

I would also like to see some data as my lease is up for renewal next month.

robertoaribas says

RentingForHalfTheCost says

I have rented for 15 years here and each month I beat the pants out of owners in the long run.

If you had bought 15 years ago, the price difference from then to today makes your assertion that renting has worked out better completely ridiculous.

Ridiculous is all the statements that pack of SFBA owners make here each and every day. Renting is the way to go in SFBA, always has been. Owners are the ones sitting in the back concert seats because their tax bill has drained them. ;)

New Renter says

http://quake.abag.ca.gov/liquefaction/Bigsby says

RentingForHalfTheCost says

Lies! Rents are definitely dropping in the bay area. Anyone saying different is most likely an owner in denial.

And that claim is based on what?

I would also like to see some data as my lease is up for renewal next month.

Dude, just go to a few of the rental sites and see the inventory growing daily. There are a ton of investors hurting for decent renters. Now, if your credits is sucky and you have no referrals, then that is a different issue. However, if you are a known good renter, then the world is at your beckoning in the SFBA. Your printing your own money so to say. Owners can only sit and watch as you get richer faster than them. ;)

http://mapliv.com/

Go to any SFBA city and see the map get swarmed with cheap rentals. Good luck.

robertoaribas says

RentingForHalfTheCost says

I have rented for 15 years here and each month I beat the pants out of owners in the long run.

If you had bought 15 years ago, the price difference from then to today makes your assertion that renting has worked out better completely ridiculous.

I did buy. I have bought over 10 houses over that 15 year period. Still own 4 and am planning to sell them in the spring of this year. The beauty of living in a high income area and paying next to nothing for housing, is you can buy outside the area without having to sell your first born.

Renting in the SFBA rules! Buying is a gamble at the least. Good luck if you pick that path. I wouldn't

RentingForHalfTheCost says

robertoaribas says

RentingForHalfTheCost says

I have rented for 15 years here and each month I beat the pants out of owners in the long run.

If you had bought 15 years ago, the price difference from then to today makes your assertion that renting has worked out better completely ridiculous.

Ridiculous is all the statements that pack of SFBA owners make here each and every day. Renting is the way to go in SFBA, always has been. Owners are the ones sitting in the back concert seats because their tax bill has drained them. ;)

Your current 800k Pleasanton properties were 300-350k 15 years ago. That tax bill wouldn't drain too many.

RentingForHalfTheCost says

I did buy. I have bought over 10 houses over that 15 year period. Still own 4 and am planning to sell them in the spring of this year. The beauty of living in a high income area and paying next to nothing for housing, is you can buy outside the area without having to sell your first born.

Renting in the SFBA rules! Buying is a gamble at the least. Good luck if you pick that path. I wouldn't

What do you pay in rent?

Bigsby says

RentingForHalfTheCost says

Lies! Rents are definitely dropping in the bay area. Anyone saying different is most likely an owner in denial.

And that claim is based on what?

Huh? You made the claim. State your cartoon data. Please don't quote anything NAR related. I just ate my breakfast.

RentingForHalfTheCost says

Huh? You made the claim. State your cartoon data. Please don't quote anything NAR related. I just ate my breakfast.

I'm simply going on the comments people post up on here. I don't live there and you're the only person who claims discount prices in the BA. Why don't you post up your data as you claimed rents were falling?

And a quick google throws up plenty of results highlighting large rent increases...

robertoaribas says

Virtually any home you could have bought 15 years ago will have double or more value today.

"Value"
For the house buyer that actually lives in their house, that increase in "value" does not mean squat in the real world. If they really like where they are and want to die there (and plenty of people exist like this), the only way to capture that value is to sell, move and downsize. From a fixed living cost standpoint, I agree that after 15 years most people would have paid more in rent, unless they got super lucky and their landlord kept rents at 1998 levels, or they are either single or manage to cram a whole family into 1-2BR apartments.

Not everyone is a RE "investor" that plans to milk the HELOC cash cow and use it to buy even more leveraged property so that they can try to geometrically increase their landlording empire.

Bigsby says

RentingForHalfTheCost says

Huh? You made the claim. State your cartoon data. Please don't quote anything NAR related. I just ate my breakfast.

I'm simply going on the comments people post up on here. I don't live there and you're the only person who claims discount prices in the BA. Why don't you post up your data as you claimed rents were falling?

And a quick google throws up plenty of results highlighting large rent increases...

You were the first to make a claim. You said rents are increasing! Why don't you take your own "throw it out there" advice and back that up? Silly talk you have.

RentingForHalfTheCost says

You were the first to make a claim. You said rents are increasing! Why don't you take your own "throw it out there" advice and back that up? Silly talk you have.

You're bluffing. Any related google search throws up a multitude of articles stating there have been substantial rises in rents, so what's your evidence to counter that?

robertoaribas says

Renting may very well be the best choice today. However, claiming renting continuously over the past 15 years was better exemplifies very poor math skills. Virtually any home you could have bought 15 years ago will have double or more value today. You could have refied the interest rate down to 3.5%... and taxes would have been fixed from your purchase price.

Could have also refi'd and sucked out equity to buy a new car, new boat, spend above your means. Many did. Many still do.

Believe me, I have benefited much better renting that owning. Even if I bought 15 years ago. Remember, I own and the growth because I bought in more reasonable areas at the time has been better than here. Double? Try triple. SFBA real estate is just a pig farm.

John Bailo says

Based on the stagnation (and possible large downsides) in the stock market, I don't see how any real estate prices can "surge". Where is the money coming from? In the past, a lot of it came not only from skakey loans, but also from giant nest eggs built up with dual income 401k accounts. Where is that today? I'm not seeing it.

It is in NAR cooking the books again as always. They are still thinking it is 2003, or hoping it is. Talk to owners trying to sell and you get the real story. Normally, it has a few sketching realtor notes in there as well. ;)

Bigsby says

RentingForHalfTheCost says

You were the first to make a claim. You said rents are increasing! Why don't you take your own "throw it out there" advice and back that up? Silly talk you have.

You're bluffing. Any related google search throws up a multitude of articles stating there have been substantial rises in rents, so what's your evidence to counter that?

Still no evidence from you. Nice.

RentingForHalfTheCost says

Could have also refi'd and sucked out equity to buy a new car, new boat, spend above your means. Many did. Many still do.

Believe me, I have benefited much better renting that owning. Even if I bought 15 years ago. Remember, I own and the growth because I bought in more reasonable areas at the time has been better than here. Double? Try triple. SFBA real estate is just a pig farm.

Where did you buy, and what do you pay in rent?

RentingForHalfTheCost says

Still no evidence from you. Nice.

Are you saying I'm lying? Type in 'bay area rent increases' and tell me what comes up in your browser. Like I said, you are bluffing to cover yourself.

Bigsby says

RentingForHalfTheCost says

Still no evidence from you. Nice.

Are you saying I'm lying? Type in 'bay area rent increases' and tell me what comes up in your browser. Like I said, you are bluffing to cover yourself.

I said that from the beginning. Didn't you see the "Lies!" at the beginning of my reply? Weird.

New rentals in Mountain View/Sunnyvale area just in the last 3 days under $3000/mth. Over 100! Just wait for spring! This whole place will be for rent. Owners are now investors. This is going to be funny to watch crumble.

RentingForHalfTheCost says

Bigsby says

RentingForHalfTheCost says

Still no evidence from you. Nice.

Are you saying I'm lying? Type in 'bay area rent increases' and tell me what comes up in your browser. Like I said, you are bluffing to cover yourself.

I said that from the beginning. Didn't you see the "Lies!" at the beginning of my reply? Weird.

Then demonstrate I'm lying. What was the percentage decline in rents for the bay area for the last year?