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Rent: the reason the economy is so bad
- Thread starter PseudoKirby
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PseudoKirby
Banned
I am even talking about the surrounding metro area, its all expensive.
when you realize you are spending 50 to 90 percent on rent alone its not right.
I am asking, the only reason a certain house is expensive is because the current owner or landlord bought it for that much, and he bought it for that much because the previous bought it for so much and so on, but where does it stop? are we only paying this amount because of our predecessors?
teruterubozu
Member
Rent is a commodity like anything else. They are competing and pricing against the neighbors, just like any business. Theoretically, it's your choice to rent or not to rent, or live near S.F. Unfortunately, it's about a roof over one's head, but it is still a commodity that is priced by the seller - through logical or illogical math.
Most people did back when the home prices were around $30k.
Yep, I lost bidding wars to Chinese investors these past few months. They went 50-100k over asking. In another recent case a crappy place went 400k+ over asking by Chinese.
http://fmlistings.tumblr.com/
Randolph Freelander
Member
No. It's that expensive because that's what you're willing to pay for it. And by you, I mean John Q. Public.
This supply and demand thing isn't necessarily registering with you, I don't believe, so take a moment.
It sucks. I had a condo in the north end of Toronto I sold in 2004. I should have kept it, but I got sick of living in the city and wanted a house so I moved away.
I made decent money on the condo but I'd have doubled my money had I held on.
I can only hope the market crashes super hard and I can pick through a bunch of bargains.
teruterubozu
Member
It's also that expensive because if you can't afford it, then the landlords don't want you living there.
PseudoKirby
Banned
whole supply and demand is usually the case in most markets, things also depreciate, which it seems a house never does, it all comes down to the value of the materials provided.
housing is the only market where people can buy and then fix up the item to sell it, everything else, specially cars do not allow this
its very hard to buy a functioning car, put in personalization or upgrades and expect a profit in selling it.
but the factor in everything in this argument, no matter the label you want to put on it, is the prices are high because of greed.
toxicgonzo
Taxes?! Isn't this the line for Metallica?
Rent control is not the answer.
If rent is too high, it's the "invisible hand of the market" saying there's a lot of people who want to live there but not enough housing units to satisfy it. Therefore, higher rent.
But, in this down economy, I've seen rent go down at least where I'm from. Interest rates are so low people are buying houses and apts managers are scared.
Heck, my apt. complex gave me a choice between a 9-month or a 12-month lease. Typically, shorter leases have higher rent. But the economy is so messed up, the rent for a 9-month lease was exactly the same as a 12-month lease.
If rent is too high, it's the "invisible hand of the market" saying there's a lot of people who want to live there but not enough housing units to satisfy it. Therefore, higher rent.
But, in this down economy, I've seen rent go down at least where I'm from. Interest rates are so low people are buying houses and apts managers are scared.
Heck, my apt. complex gave me a choice between a 9-month or a 12-month lease. Typically, shorter leases have higher rent. But the economy is so messed up, the rent for a 9-month lease was exactly the same as a 12-month lease.
teruterubozu
Member
They have come down, in many areas of the US. Just not in the SF area.
You've described the concept of value added. It's a concept applicable to any industry.
It's hard, yes. But people do fix up classic cars and sell them at a profit.
That's not how prices are determined. The amount they paid for the property is irrelevant.
Prices are dependant on what people are willing to pay now, not what prices were paid historically.
PseudoKirby
Banned
that they have, but in 80% of the united states you can barely afford living in a house if you make minimum wage or don't work full time.
there is a reason why its called minimum wage.
outunderthestars
Banned
I cannot find any citation for this. The most I can find is 50% in 1990, when a home cost around $10,000.
People who make minimum wage need multiple roommates.
teruterubozu
Member
Well, your specific problem is that you want to live in an area where EVERYONE wants to live, thus the landlords have an endless supply of renters and have no reason to lower the cost. Supply and demand in its purest form.
Why don't you want to buy land in a shitty, inconvenient area?
PseudoKirby
Banned
I no longer can afford rent in the bay area and my family and I are trying to live in the central valley, where there is short supply of IT jobs, what I do most..
toxicgonzo
Taxes?! Isn't this the line for Metallica?
teruterubozu
Member
I hear ya man! My wife and I left Cali in 2005, now we can't afford to ever come back!
Ken Masters
Banned
I'm from NYC, an apartment from NYC should not cost the same as an apartment of the same size in Ohio
Supply and demand, you don't want to pay the high rent? Who cares? Someone else moving in NYC will gladly pay it
Devolution
Member
Yes but it's not like salaries are increasing at the same rate as rent, utilities and standard of living, that's the real problem.
Like the hat?
Banned
what about the price of the land itself
people want to live in a specific area, so they pay a premium for it
people want to live in a specific area, so they pay a premium for it
blindrocket
Member
And unfortunately around here, after the tornado went through and wiped out a lot of the houses and apartments, the rent went up even higher. :\
There are a lot less dwellings of course, but FEMA put up a TON of trailers all over town for the displaced people.
And I don't know how accurate this is, but I remember reading something about how in Mexico most people actually own their homes. Very little home mortgage, at least not anywhere near US standards. Of course, that might be a shack or something, but they are definitely living within their means.
There are a lot less dwellings of course, but FEMA put up a TON of trailers all over town for the displaced people.
And I don't know how accurate this is, but I remember reading something about how in Mexico most people actually own their homes. Very little home mortgage, at least not anywhere near US standards. Of course, that might be a shack or something, but they are definitely living within their means.
Manmademan
Member
This is actually the real problem.
Over the last decade and a half or so, wages have been flat to down, while everything else (rent, gas, food, education prices) has been trending steadily upward, as prices tend to do.
unless of course you're in the 1%...
outunderthestars
Banned
This is quite true. Luckily my career (park ranger) keeps me in more remote areas, where land and housing prices are low.
I have no idea how people in the SF area make it.
That is an awesome link, but was looking for something about the the down payment percentage in various decades.
Ken Masters
Banned
Doesn't matter, supply and demand
If they can charge more then they should (business wise this is the common rational)
ITT people don't know how real estate works.
@OP - absolutely some land has more value over other land. Supply and demand, there is only a certain amount of land located near desirable locations, and there are more people that want to leave near said desirable locations.
And your comparison of physical value is never the same as the sale value? What world are you living in?
Also a good landlord is going to put something in the rental contract that says the renter is responsible for items less than $500 and the landlord is responsible for anything about that, so ya you could end up paying for shit if it breaks.
@OP - absolutely some land has more value over other land. Supply and demand, there is only a certain amount of land located near desirable locations, and there are more people that want to leave near said desirable locations.
And your comparison of physical value is never the same as the sale value? What world are you living in?
Then your doing something wrong. Rent should be about 1 percent of the value of your home. If you are in a higher priced home, its going to be much harder to rent.
Also a good landlord is going to put something in the rental contract that says the renter is responsible for items less than $500 and the landlord is responsible for anything about that, so ya you could end up paying for shit if it breaks.
I'd be more upset about all the bullshit taxes y'all have to pay. My gf's mom pays 20k a year alone on property taxes in upstate new york, fucking bullshit. And they wonder why people are leaving the state.
This this this. Rent is like the worst thing you can do, unless you're very short term, or your employer is paying it outright.
But you're from Toronto, aren't you?
http://www.realtor.ca/propertyDetails.aspx?propertyId=11675469&PidKey=-1954351580
1.7 million for that shit. My wife and I were seriously considering buying this year in the city but at this point it just isn't worth it. We'll gladly pay $2000 / month for a nice but small place in a good part of the city while saving and waiting to see what happens with this stupid market.
huh?
buy a tent. heres one http://www.altrec.com/the-north-face/2-meter-dome-4-season-tent
outunderthestars
Banned
Holy crap. That size and style of home, on 2-3 acres of land, can be had for about $60,000 - $75,000 in my neck of the woods.
And my neck of the woods is within a stones throw of the Blue Ridge Parkway and several ski resorts.
(loves the mountains)
K
kittens
Unconfirmed Member
Rent is just one of many exploitative, broken aspects of capitalism. It isn't THE problem by any means, but it's definitely terrible.
SlipperySlope
Banned
I live with my dad and I still pay 1K a month in rent.
Um... yeah.
Um... yeah.
Wow, I looked up my area and saw what you could get with the same price. 9 bedrooms and 8 baths with a guest house.
No
People buy houses and condos to rent them. They would not be able to do this if renting was cheaper then buying.
Inflammable Slinky
Member
Perhaps renting is cheaper than getting a loan to buy a house, but buying a house outright is cheaper?
I know people who have rental properties. They're well off, but there's no way in hell they had enough scratch to buy properties outright. They used the equity in the house they live in to put a down payment on the rental properties.
The rental income covers: Property Tax, Maintenance, and the Mortgage.
My bad, thought you were in the city. If think I associate anybody posting in a Canadian related thread to be from Toronto...centre of the universe and all that.
People investing in a single rental property, at least in an expensive market, are looking to partially cover the cost of their mortgage while hoping the property appreciates in value. Or they are in it for the loooooong haul.
Rent for any given apartment is mostly the same so long as you qualify. Purchasing a property varies greatly depending on your creditworthiness, amount you can put down, realtor etc. Variable pricing leads to some people being able to buy for cheaper than they can rent whereas others are on the other side of the equation.
so do you live in Sunrise?
Break even on expenses with the appreciation being the profit I'll buy. Taking a loss? No way.
Why would the developer sell it to the buyer if it were more profitable to rent it out?
The two main reason rent is so high in NYC is because of Rent Control and Property tax.
I know a lot of people that own apartment buildings i NYC (Including all boroughs).
1. Rent control - About half of their building have Rent Control or Rent Stabilization. Rent Control is insane. People could be paying less than 20 percent of market rate. Rent Stabilization is a little more reasonable. Those people are paying 50-75 percent of market rate. There a lot more with Rent Stabilization than Rent Control but when you even them out about half of the Tenants are paying 50 percent of market rate. Who do you think have to pay extra to even it out? Its gotten to the point where people were paying tenants 20 thousand dollars to move out.
2. Property Taxes are increasing like crazy. Its actually cheaper that I rent than buy a home. The property tax of a home plus additions in utilities and other expenses would dwarf my rent.
Add 1 and 2 and you got why rent is so high. The ones the landlord can legally get to pay are paying for it all.
I know a lot of people that own apartment buildings i NYC (Including all boroughs).
1. Rent control - About half of their building have Rent Control or Rent Stabilization. Rent Control is insane. People could be paying less than 20 percent of market rate. Rent Stabilization is a little more reasonable. Those people are paying 50-75 percent of market rate. There a lot more with Rent Stabilization than Rent Control but when you even them out about half of the Tenants are paying 50 percent of market rate. Who do you think have to pay extra to even it out? Its gotten to the point where people were paying tenants 20 thousand dollars to move out.
2. Property Taxes are increasing like crazy. Its actually cheaper that I rent than buy a home. The property tax of a home plus additions in utilities and other expenses would dwarf my rent.
Add 1 and 2 and you got why rent is so high. The ones the landlord can legally get to pay are paying for it all.
They don't want to be in the property management business?
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