January 27, 2013

Low mortgage rates, home prices going up: So who loses?

Here’s some news from the Merc (motto: Also available on paper!) that won’t come as a surprise to anyone who studied economics.

Bay Area rents are flattening out, new study says

By Pete Carey, San Jose Mercury News
Posted:   01/21/2013 05:47:55 PM PST; Updated:   01/22/2013 05:25:31 AM PST

The torrid pace of rent increases in the Bay Area is slowing, according to a survey of apartment complexes released Monday.

Average rents in the East Bay, Peninsula and San Francisco were nearly unchanged in the fourth quarter of last year and declined slightly in the South Bay, according to RealFacts, a Novato consulting group that tracks rents in apartment complexes with 50 or more units. That compares with the first half of the year, when some areas saw quarterly increases of 4 percent.

Some renters may be deciding that interest rates and low prices have made the time right to buy a condo, and that may account for some of the leveling off of rents, a RealFacts representative said. Occupancy rates for apartments have flattened out while condo sales were in the double digits in December from a year earlier in Alameda, Contra Costa, Santa Clara and San Mateo counties.

130125-rents-sanjoseThis is supply and demand.  If people are buying houses, then they don’t need apartments.  If people are buying houses, they don’t need to rent them, either.  So who loses in a hot housing market?  The landlord.

Are you noticing rents flattening, or even going down? Are more people moving because they bought something, or do new renters spring up instantly to replace them?  Are your rental properties still generating long lines and people offering to fight each other for the right to write you checks?

Comments (7) -- Posted by: madhaus @ 5:03 am

7 Responses to “Low mortgage rates, home prices going up: So who loses?”

  1. DonnieJ Says:

    Rents are going down in the East Bay.

    February 2012, I was excited to find a 3/2 for $1900. Due to all the press about rent increases this year (3.8%), my landlord tried to increase my rent to $1975.

    I politely (yea right) declined and sent him 5 listings at $1800-$1875 that were 3/2’s in the Fremont area. He relented and kept the rent the same.

  2. Petsmart groomer Says:

    http://www.sfgate.com/realestate/article/Startup-dreams-meet-pop-up-rentals-4226675.php

    Daniel Marienthal, 23, lives in a Twin Peaks mansion with 11 other men, where privacy is so scarce that for a few months he lived in a canvas tepee he had built.

    Josh Furnas, 23, has taken up residence in a converted closet, near the living room, in a Bayview apartment that he shares with an Ecuadoran family of seven.

    Dan Stifler, 24, wakes up – under two faucets – in a Mission District laundry room.

  3. sprezzatura Says:

    The building I live in is currently looking at capping the number of units that can be rented out at any given time. Condo prices here are still well below their peak and quite a few folks are under water, so they’re renting instead of selling.

  4. Real Estater Says:

    Supply and demand is key. The premium peninsula market is immune to such market fluctuations. In the East Bay market, a 3/2 for $1900 is going to land you a smaller shack in an older neighborhood. In that market, the investor would be wise to go for a larger, newer home so that is not in direct competition with apartments. People would have to rent a house if their family cannot fit into an apartment.

  5. SEA Says:

    “The building I live in is currently looking at capping the number of units that can be rented out at any given time.”

    I’m not an attorney, but I’d love to see how that one works. Is it a taking for those who are not included within the limited number of slots? What happens when, after some restriction, an owner cannot sell, but could rent, if there were no rental restriction?

    “Condo prices here are still well below their peak and quite a few folks are under water, so they’re renting instead of selling.”

    When values go down, those looking to sell look to find specific people/things to blame.

    Let me remind you about my friend parking his car on the street.

    You know, he’d been parking his car in the same spot for some time, but once home selling prices started to decline, it was his car that caused all the blight in the neighborhood.

    Rather than blame the other owners, who also would love to sell for higher prices, why not admit the fantasy of “housing prices always go up” was just that, a fantasy.

  6. madhaus Says:

    Supply and demand is key. The premium peninsula market is immune to such market fluctuations.

    Better trolling, please.

  7. PK Says:

    “Supply and demand is key. The premium peninsula market is immune to such market fluctuations.

    Better trolling, please.”

    I’ll take a shot.

    Supply and demand is key in other places, but the Bay Area is truly special. Résumé style rental applications a pictures of children, dreams, and essays should be mandatory from now on, and we should double the rent for people who wake up in a laundry room, like #2 linked (2 sinks? Running water? Premium rent!).

    There is no better place in the world to pay-by-the-month for the ideal example of a ranch. I expect rents to always move up and to the right!


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