Apartment Glut Expands – San Jose!
Apartment Glut Expands – WSJ.com
Meanwhile, the air leaving the market is driving rents down, most sharply in markets that had been chugging along until a year ago, when unemployment accelerated, including Tacoma; San Jose, Calif.; and Orange County, Calif.
Ouch! San Jose getting lumped in with Tacoma and Orange County? Ouch!
At first, I thought this was a mistake, but then I realized it meant one thing: people are starting to abandon renting to become homeowners once again.
Yep.
That makes perfect sense. Haven’t you read all those articles about how the market is starting to pick up? Well… this is further evidence.
More importantly though:
In New York, Jennifer Hyman rented a one-bedroom apartment in July at a monthly rate of $1,950 — down from $2,450 for the previous tenant — when she returned to the city after graduating from Harvard Business School. Her first month’s rent was free — and her landlord painted the apartment, scrubbed the floors and added window coverings.
“The experience was night-and-day different from before,” said Ms. Hyman, who had rented other Manhattan apartments between 2002 and 2007, each time paying a brokers’ fee and feeling pressured to sign a lease the minute she found an apartment. Now, she says, “Renters are the ones with the power.”
Hah. They’re practically giving apartments to keep people from moving from our arch nemesis to the Bay Area. If only the generous landlords there would stop these subsidies, rent prices would probably soar in the Bay Area once again.
Sigh. It’s an ongoing battle, but I know we will win in the end.
(Thanks to the multiple Burbed readers who sent this in.)
October 13th, 2009 at 8:20 am
The majority of economists are predicting a jobless recovery with structurally high unemloyment for years. Rents are still too high compared with even 3-4 years ago when Bay Area unemployment was low. The vacancy glut will continue until rents are dropped to fit demand. Wouldn’t be surprising to see an additional 25% drop in rents in a couple years.
October 13th, 2009 at 8:30 am
By the time the crash is over, my $1200 for a 2-bedroom house in Evergreen may be perfectly normal. I can already get an apartment in Los Gatos for that amount, which would have been unthinkable a year ago.
October 13th, 2009 at 1:35 pm
Happy recession, everyone!
October 13th, 2009 at 1:47 pm
What we’re seeing is 4-5 people in an apartment sharing rent and lots of empty apartments. Lots of empty houses too, want a McMansion? I know of several around here, move on in, get the utils turned on, whoever admits to owning the things would be glad to have responsible squatters looking after the things.
The hunk’a'junk trailer I live in, with toilet conditions not describable in a family forum with possible inspectors reading, is at least rent-free for me. Back in the late 80s I RENTED a trailer I swear came out of the same factory, slightly smaller, in Costa Mesa, different and yet still highly illegal toilet conditions, for $500 a month.
Go, economic progress!
And no, $1200 a month for a place in Evergreen will not be realistic, unless you’re paying with the money you get out of Monopoly sets. Rent will be more like, a box of .22 ammo and a chicken.
October 13th, 2009 at 2:02 pm
I’m not sure how much the rent can drop, but currently my complex is renting out 1bd apts for $1175 versus the $1295 I was paying two years ago, and the $1400 new residents were being asked to pay last year. It is quite possible that the population in this area may go down for a few years while the job market stabilizes. I might consider moving next year, but most likely I’ll stay in the same place if I don’t find a job in NoVA.
October 13th, 2009 at 2:42 pm
UnrealAlex,
In some other post you mentioned that your poor and are enjoying poverty. May I ask, why in the first place your poor ? Is it that you never had a job or never saved while on the job or got caught in this mortgage mess ? Well I mean how so ever I rag on living conditions in CA, I think if you are qualified you can get a job just to pay the bills. You may not live very decent, but still that will better thanliving in trailer. Are you poor by choice ?
October 13th, 2009 at 2:43 pm
your = you’r(you are). Sorry did not proff read.
October 13th, 2009 at 2:44 pm
your = you’r(you are). Sorry did not proof read.
October 13th, 2009 at 2:56 pm
Austindweller,
Since you’re on here, what’s the current housing market situation in Austin? I go to a few relocation forums and they are packed with real estate agents and investors so I don’t trust what they’re saying. What I read shows a slowdown and slide in prices. But then again, I don’t live there (yet). Also- What do you think of Buda and Georgetown? Are there any smaller towns outside Austin that are in a cheaper tax bracket? One last question: I’ve met a few people who say that they like San Antonio, which is just an hour and a half South. Its a hell of a lot cheaper too. Not sure if you have gone there yet.
October 13th, 2009 at 5:49 pm
It’s a pity that WillowGlenner is no longer on this forum.
He would tell us that the rental market is RREEEEDDDD HOTTTT!!!
Apparently, Willow Glenn is no longer part of San Jose. Question is, is Willow Glenn part of the RSJ, or not? I’m guessing he would say it’s part of NRSJ, which means it is a candidate for RBA.
October 13th, 2009 at 6:23 pm
Austin – don’t worry about your spelling, you’re a Texan!
Now, yes of course I chose to be poor, desn’t everyone? I personally made the economy go “clunk” in mid 2007 just so I could see my sales go down by 2/3rds, sorry about that everyone, I wanted to see what it would be like.
Then I chose to lose everything, because after all what are possessions? I even chose to be a member of the couch-surfing homeless because I love my fellow man and wanted to see lots of them up close.
OK end sarcasm here.
I then chose to utterly accidentally discover this place, and move in, was invited, because the owner of this place saw that I’m one of the very small percentage of people who won’t rob someone blind, will improve my surroundings, and basically take care of the place when he’s gone. I can be trusted, which sounds routine but it turns out to be a rare quality.
Now, I make enough to get by in undocumented work and am training in a trade that will be useful. All paid for by my work. Which I won’t tell you. I also won’t tell you the trade. I have one more class after this one. then once that’s done I need to turn my attention to getting a chapter 7 bankruptcy done because my credit is trashed and the IRS is after me (old IRS debt can be discharged in this way) ending that mess, making myself employable, and making sure the IRS and you people don’t get a dime.
The reason for the training first is, I am not a survivalist among survivalists. and the Crash may come any time. 6 months from now I may be very glad I got the training and then it won’t matter that the bankruptcy courts are defunct.
October 13th, 2009 at 6:32 pm
I am “now” a survivalist among survivalists I mean.
OK so, once the training is in, the BK is done, I can take any job, and in these Depression times I am not assuming there will be much in the way of jobs. What’s likely to be available are the Dirty, Demeaning, Dangerous, jobs.
Now, I WAS a fool for not burying mason jars of money and supplies when I had my biz going. I was increasingly pessimistic, but I was nowhere near pessimistic enough. I figured it I just worked harder, I could make things go, and get better. Instead, I should have been preparing for the Apocalypse.
I should have had survivalist supplies stocked away, a paid-off vehicle set up to live in, a few “bug out” locations scoped out and friends set up to huddle up with, and a few fake IDs lined up and in general all the finer things to have done or in posession in a collapsing Empire. Read Dmitry Orlov for more on this.
And the reason I expound on all this instead of telling you to pound sand is, where I was, most of you are now. Waiting for RE to come back up. Assume that if there’s not a job for you here in CA there will be one in NoVa, North Virginia? You are assuming the stores will have food. You are assuming water will be potable even after an earthquake or dirty bomb. You assume a lot!
So learn to play WHAT IF? What if, you can’t ever find a job? There are NO jobs? RE becomes worthless? What if we are in Collapsing USSR 2.0? What if, people? Start planning and prepping NOW.
I build stuff, grow stuff, am learning stuff, am stockpiling stuff, developing a good social network, etc. Poverty is treating me well. How much did YOU accomplish today?
People smart enough to snark away at BA RE deserve a heads-up and that’s why I write.
October 13th, 2009 at 7:18 pm
Bob: If you don’t mind the humidity, Houston is cheaper.
October 13th, 2009 at 7:26 pm
The reason we have a jobless recovery has a lot to do with how the American economy is now structured. Corporations are set up to maximize profits by employing people outside the U.S. border, or by bringing in labor into this country through H1B programs to dilute the labor force here. Look around in your company how many people are Indian. You may think you are actually in India. The supply of workers is now unlimited, because there are unlimited number of people in India and China.
October 13th, 2009 at 7:41 pm
There’s not an unlimited pool of visas, therefore the supply of foreign workers is not unlimited.
October 13th, 2009 at 8:05 pm
#12 Is that you Ted Kaczynski?
If there are no jobs in the US I’m moving back to Canada.
And if they have no jobs I’m going to eat my neighbor.
October 13th, 2009 at 9:04 pm
There’s not an unlimited pool of visas, therefore the supply of foreign workers is not unlimited
Not to mention there is now no need to bring those workers here. Most companies have already set up shop in both China and India and are now growing in those areas while decreasing their presence domestically. Not a pretty prospect moving forward.
October 13th, 2009 at 9:36 pm
There’s more to local business than large software corporations, you know
Working at one of these can give you tunnel vision. Aren’t the majority of local jobs at small businesses that could care less about “setting up shop” abroad?
October 13th, 2009 at 10:20 pm
I’m honored to be confused with Saint Theodore.
You know, once upon a time I thought he was wrong.
October 13th, 2009 at 11:21 pm
or by bringing in labor into this country through H1B programs to dilute the labor force here.
—-
Don’t worry Top Dog, H1B is shrinking and pretty soon you don’t have to work with Indians anymore.
Some stats about H1B:
FY 2004: Approved 131,000
FY 2005: Approved 117,000
FY 2006-2009: Approved 65,000 + 20,000 (each year)
FY 2010: Only 46,700 petitions filed so far.
October 14th, 2009 at 9:12 am
Interesting dialogue here. Anyhow, Unrealalex, I don’t necessarily think the US is going to hell in a hand basket. But I do think the way the US was and people still perceive it is gone. Namely that the middle class is toast. This didn’t happen overnight.
You used to not only have a fairly mediocre yet stable job at the same company for 30 years, but you could also afford your surroundings. At that stage investors and pensioners actually had a heavy sway in their company. Investors could control the inner workings of the company and in that regard companies worked like mini-democracies. As time has passed, more of the power has shifted to the top of the company and as a result, more of the wealth has concentrated to the top as well, meaning that pensioners ( There are very few now) and investors have little to no control. So as a result you get Enrons and AIGs, where very poor decisions were made in the name of top end profits with no regard for consequence.
This has meant the worker has become powerless. If the same work can be done in say- India or China, then so be it. The management is invisible and protected from repercussions. There is little to no moral responsibility. So as a result you get a system where less emphasis is placed on the workforce and more on top end results. This has increasingly been the way business works.
The reality is that if Americans want to have more stable futures then its going to take a drastic change in the way they live. All one has to do is look back prior to WW2. More Americans were in business for themselves. More people took personal financial risk to make a buck. I grew up with a Dad who ran two family businesses- both which were successful- and both which gave him freedoms that most Americans today have lost. We lived in the sticks far from a large work centered city. We could therefor live independent of having to deal with the financial competition that comes with living in a large city.
What I’m getting at is that the US population is crammed on the coasts. Something like 70% of the US population lives in small chunks of the country. As such they compete with each other. In addition they are also highly reliant on the local job market and economy. They count on someone else’s business to facilitate their well being. As a result the system is fragile. Concentrated groups of people means competition for space, housing, food, fuel, jobs, money, and even recreation. That’s why you get cities like NYC, SF, and LA where people will spend more and more to live there because they are addicted to having to rely on a precarious system.
It makes no sense that we all must live crammed together. The internet was supposed to be the dawn of telecommuting. Yet we work in huge office buildings- emailing the person in the cubicle next door- when we could just as easily do so across the country. To me the way we work is counterproductive. That’s why I think we have an opportunity to regain internationally competitive standards, by being the first to utilize the technology we have which would enable the population to be totally mobile. Doing so would re-establish the middle class, encourage ingenuity, and raise the quality of life for the average family.
October 14th, 2009 at 9:18 am
#18 – very, very true DreamT. Too bad a lot of those jobs really suck. But nearly 100% of my co-workers are not only American, they’re even native Californians.
October 14th, 2009 at 9:21 am
Lastly,
The reality is that the US is going to become more like the UK, France, or some other former global economic superpower. The two that will rise to replace us will be China and India.
I was watching the History channel the other day. China just completed the world’s largest dam, making an enormous amount of power. The thing dwarfs ou biggest dam. I also read that China now makes the world’s best selling beer, called “Snow”, which like the previous No.1 beer, Bud lite, is watery tasteless swill. China has several hundred car manufactures.
I could go on and on, but if you look at China, its kind of like what the US used to be. We also used to make the biggest things- like skyscrapers, dams, and breweries. Now we don’t. We also used to make 50% of the world’s goods. Now we make a fraction of that. We used to have the world’s biggest middle class. Now our middle class is going down the toilet while China and India’s is exploding. Buick used to be one of the best selling brands in the US. Now its ones of the best selling brands in China.
China has all the makings of becoming an absolute HUGE globally dominant economy. Most Americans probably don’t even register that since we’ve been “No.1″ forever. But I’ve resigned to seeing the US as perhaps the No.3 or No.4 economy, which is fine I suppose.
October 14th, 2009 at 9:23 am
Every generation thinks it’s the end of the world.
October 14th, 2009 at 10:48 am
2Top Dog:
This year H1b cap was not even maxed out yet. Usually H1b cap gets used completely in one month (April). Last two years there were more than 100K applications against 60K visa cap. USCIS says that they’ve received 46K applications so far. Some people file more than 1 application. Looks like immigrants think more about moving back then coming here.
Canceling work visa program does not solve the problem with unemployment because a) immigrants here are creating jobs too, b) it’s easier to outsource jobs overseas than bringing H1b here. Just for self education sake read bio’s of Federiko Faggin, Linus Torvalds or, say, Vinod Khosla. Yes, there were H1b’s once.
October 14th, 2009 at 11:04 am
sweet love-of-God Bob. If living in California hasn’t turned you off the idea of “mini-democracies” I don’t know what will.
Having been around both investors and pensioners, I cannot think of two groups I would want LESS to have heavy sway in a company.
As you say, China is kicking butt. Must be all those pensioners and investors creating more “mini-democracies”
October 14th, 2009 at 11:06 am
2bob:
US never built biggest dams actually. Volume wise biggest dam was in Canada, 2nd and 3d biggest dams were in Argentina. Tallest dam is in Tajikistan. Doubt you ever heard about that country.
October 14th, 2009 at 11:22 am
Whoah whoah whoah – stop the presses.
China has a dam AND beer?
Well if that isn’t the makings for a powerhouse economy, I don’t know what is!
October 14th, 2009 at 11:32 am
Hoover dam was built in 1936 and at the time was not only the largest dam , but it was also the largest hydroelectric plant in the world. Don’t assume I’m an idiot. I know my history.
Anon, I think you’re missing my point. My examples of China are made as indicators of where China is heading, which is to become the world’s largest economic power. The beer example is a good one. Reason being is that Snow beer is sold primarily in China. Thus domestic consumption in China alone broke the record. Now take that example and apply it to everything else. They will have the largest economy based on domestic consumption alone… which was exactly what the US economy was 50 years ago.
October 14th, 2009 at 2:44 pm
It could depend on what you mean by “biggest” dam. Hoover Dam was tallest for awhile.
http://www.usbr.gov/lc/hooverdam/History/essays/biggest.html
No one called you an idiot, bob. (At least today! ;-P ) Lighten up.
October 14th, 2009 at 2:53 pm
What’s with the pressure on software engineering to deliver?
At least if you work at NBC.
http://www.nbcbayarea.com/news/business/Dow-10000-Thanks-Silicon-Valley-64264312.html
I guess I was wrong in #18 and only large software corporations matter after all.
October 14th, 2009 at 2:55 pm
Hoover was the biggest dam per volume of concrete. So that would tell me that it was the “biggest” for at least some time.Sorry, I’m having a foul day and didn’t mean to be rude earlier.
October 14th, 2009 at 3:57 pm
Re # 31
Wait til those option ARMs and Alt-As begin exploding starting next year. They’ll be saying ‘Thanks Silicon Valley!’ yet again. Although with a twinge of sarcasm.
October 14th, 2009 at 4:38 pm
Just come out and say it, DreamT: DOW SOARS!
October 14th, 2009 at 4:56 pm
Yes… the psychological 10,000 level has been reached. Unemployment at an all-time high? Foreclosures still ramping up? Who cares! Actually, I should be jumping for joy since I have investments in the market which are actively benefiting from this rally. But I fail to see how in the hell any of it is supported. Its like people are just buying ” just because”. That’s the stock market for you. Driven by greed. If that’s the case- keep on buying suckers. I’ll just keep gettin’ richer.
October 14th, 2009 at 5:20 pm
nomadic – I’m not cheering on it… the higher it goes, the more I’m pondering rebalancing my 401k away from stocks
October 14th, 2009 at 5:44 pm
That’s the stock market for you. Driven by greed. If that’s the case- keep on buying suckers. I’ll just keep gettin’ richer.
Pot, meet kettle.
.
DreamT, I didn’t mean to imply there’s anything wrong with cheering it. I’m just sick of bad news all of the time. I’ll take what I can get. Maybe that’s why some people are buying and pushing this up with little encouragement from the fundamentals. I’m not buying right now, other than my usual 401k contributions.
October 14th, 2009 at 6:13 pm
interesting article:
All of this ruminating on markets lurching forward and back is a distraction to a decade of lost innocence. Ten years ago, brokers told us to expect an average gain of 7% annually for our buy-and-hold stock portfolios and steady 5% gains for our real estate investments.
You might still be doing well if you bought your house early in the decade. If you bought between 2004 and 2008, when a wave of mortgages were made, you’re probably lucky to be sitting on break-even or a small loss given the fall in the Case Shiller Composite Indexes.
The stock market hasn’t been much better. If you invested $100 in the S&P 500 at the end of the last decade, you’re happy with Dow 10000 but still hoping for a 34.5% rally before year end — just to break even. You’ll need a staggering 72% rally when adjusting for inflation.
Just about everything has passed the stock market. In 1999, crude oil was $16.44 a barrel compared to $74.80 today Gold was $280. It’s about $1,064 today. On the bright side, the Dow’s 13% decline looks better than the dollar, which has lost 28% of its buying power.
http://online.wsj.com/article/SB125556534569686215.html
and:
The rally that brought us 10000 on Wednesday is full of doubts. By some measures, stocks are tremendously expensive. During the great bull runs of the 2000s, the price-to-earnings ratio of companies in the S&P 500 Index was between 20- to 30-to-1. At the start of October, the ratio was 140-to-1, on an as-reported basis, which includes writeoffs.
Which makes me wonder if an elevated level would be maintained simply because there appears to be an ever-increasing amount of money chasing stocks? How much will the baby boomers cash out after retirement?
October 14th, 2009 at 7:12 pm
austin dweller: Well I mean how so ever I rag on living conditions in CA, I think if you are qualified you can get a job just to pay the bills. You may not live very decent, but still that will better thanliving in trailer.
austin dweller, I don’t think that’s true any more. there are 6.3 people unemployed people in this country for each job opening. Unreal Alex is an early inhabitant of the new reality.
October 14th, 2009 at 10:56 pm
Foreclosures rise 5 percent from summer to fall.
The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months.
October 15th, 2009 at 7:18 am
Which makes me wonder if an elevated level would be maintained simply because there appears to be an ever-increasing amount of money chasing stocks? How much will the baby boomers cash out after retirement?
Very compelling argument Nomadic. It could also be that boomers are now in a precarious situation and are now trying to regain what they lost by heavily investing.
What I think is going on is a combination of a few things. Much of it is basically just relief that we’re not going into a depression. That and after 2 years of fresh lows in housing and the stock market that broke records every day, any news that is even slightly better is viewed as steller. Like today’s job loss numbers which were reported at 514,000. Somehow that’s translated as “good” news. The bottom line is that another half million people lost their jobs and that’s another half million that are now not going to be consuming things or buying houses. But since the numbers are better than they were at their all-time lows, the news is translated as good and thus Wall Street rejoices and buys more and more.
I totally don’t see this rally being at all sustainable. There’s no way you can keep a market like this going up without real economic growth.
The bottom line is that people are easily driven by positive and negative news. I recall back in February or March that NOBODY wanted to buy a house. But now since there’s been a few theoretical stories that home prices ‘might’ be stabilizing, I’m seeing houses sell again, and frankly they’re still at stupendously outrageous prices, so its not like the buyers are getting deals.
October 15th, 2009 at 9:31 am
I totally don’t see this rally being at all sustainable. There’s no way you can keep a market like this going up without real economic growth.
Depends when the “real” growth starts. If we get some traction before a big correction in stock prices, then we might be able to keep climbing within a reasonable range. Frankly, I think that’s what the government is hoping. Turn the sentiment around, then hope the economy delivers something tangible to keep it going.