Comments on Good News For Renters?

I doubt it'll be much of a bust around here. A short, small downturn perhaps, but prices will continue to climb (at a more sane rate).

That's the beauty of real estate. The world's population keeps getting bigger and bigger, and we all need a place on Earth to stick to.

Good news for folks like me who will soon be on the market for the first time, too. Woo-hoo! I'm going to buy your "investments" for peanuts, flipper scum!

The developer of that architectural gem at Madison and Broadway, the Silver Cloud hotel, has a major project in the works at Broadway E. and E. John/10th E. and E. John.

Actually I think that would be bad news for renters. The sinking housing market is giving potential buyers cold feet and increasing demand for rental units. This tends to drive up rents. The housing boom has been great for renters (provided your building wasn't converted to condos) - its been a renters market with decreasing or stable rents, lots of options to choose from, etc. This seems to be changing now, at least in Minneapolis. The fact that we've lost a lot of affordable rentals to condo conversion will make things even harder as demand increases once again for rentals.

The many people of little means who'll be selling/defaulting on their various fanciful mortgage products as the interest rates increase will be renting, too.

I think the implication is that renters would buy if the market was more affordable, in which case Dan would be right.

Start saving for that down payment. If the market does tank it'll be a good time to jump in.

This talked about big houses, not so much condos in the city. Unless I missed something in my speed read. Does it apply to Capitol Hill, or just the suburbs?

Tiz, I was just reading an article about this (although, it is about a month old now). It said that home prices in the exurbs are falling the fastest because no one wants to live there, much of the boom in the exurbs was caused by speculation. They compared this to houses near city centers and the city houses had only dropped a few percent (versus 25-30% for the exurbs).

That was my read too: McMansions in the exurbs are suffering mightily, while well located properties are, at worst, treading water.

Makes sense: location is still the single most important factor with real estate, and will remain so.

it applies to the nation, not Seattle- King County. houses here still going for 400 plus and 300 in parts of the south end and are still climbing, not as crazy as before, but certainly not going down. 1 bedroom condos are hitting the 250 mark. as far as homes and high end condos, most people have to make at least 80 grand to buy one of those puppies, and i'm guessing most of us dont fit that tax bracket. i was lucky, i bought my house for 130( before the so called boom) and is now worth 340. its insane. when housing became an investment thats when it all went to hell. there is not going to be an LA style bust or a Detroit style bust, unless of course Boeing, Starbucks, Amazon leave along with a couple of big east side companies. than you will get the crash tsm is hoping for. it will eventually happen, but is not gonna happen here for a while. so make sure u pay your rent today before your 5 day grace period ( if u have one) is up and your landlord hits u for another 25 bucks late charge.

In the 22 months I have lived in my present apartment, my rent has gone up twice ($875-$915-$945) and am sure it will go up again in the next month or two. I don't see how this news helps me.

Besides, as long as property taxes keep going up, rents will go up.

unfortunately renters also need jobs.

seattlebubble.blogspot.com

Seattle is no different from the rest of the country and don't let anyone tell you otherwise. This has been shaping up for quite some time and it will be quite painful for many people.

I love the idea that the regions that have seen the highest inflation in the housing market, like Seattle, will be the ones that go untouched in the crash.

If a real bust is in fact in the works, then those "McMansions" you sneer at are the tip of the iceberg, kiddies, and it isn't going to be the Midwest that melts next.

And yes, everyone will be hurting in a bust. That's why they call them "busts." They do shrink the gap between the rich and the poor a bit, but that's only because the poor, in terms of financial assets, have so little lose. All those high-risk mortgages you've been reading about? Guess who's paying them.

I do wish this pernicious notion that economic collapse benefits the poor would dry up and blow away. It didn't happen during stagflation. It didn't happen in the Reagan recession. It didn't happen in the Dot-Com bust. It's not going to happen in the real estate "correction."

elswinger is right. I think any potential for cheaper rent is offset by the increases in property taxes. I thought you people wanted affordable housing, why do you keep voting for property tax?!

In the twenty years I've lived here I've seen the housing market "crash" about four times. It's the nature of the beast.

Although I do think we've way overbuilt condos. But we way overbuilt office space at one time too....And hotels....

Real estate is a very emotional issue for most people. Sometimes they'll dick around with their banker for hours over some $7 monthly account fee, but they'll walk into a $500,000 house, look around for 15 minutes and say "I'll take it."

Most of the major mutual fund companies have analyses proving that growth stocks yielded twice the return of real estate (8% vs. 3-4%) over the last 50 years, but people are in denial about that because real estate is something that they can touch and understand.

Also, we need to realize that the "housing boom" has largely been confined to large cities and vacation/resort destinations. There was no "housing boom" price inflation in small town America. In the small town I grew up in for example, a house costs about the same as it did 15 years ago.

mpls, it would seem like that would be the case, but at least over here on the east coast that hasn't been my experience. As the real estate market has boomed, rental prices have gone up ridiculously, up over 200% in some neighborhoods. As more and more people purchase property, space in more marginal neighborhoods is take up, rents increase in measure and those of us who can't pay $2000 for a studio get pushed farther out, increasing rents in even more marginalized spaces. Part of this is that areas that are hot spots of buying get pegged as desirable, bougie places, even when they're not (Spanish Harlem anyone?) and rents rise with the perception. Also, buying a brownstone, condo or even apartment often diminishes the supply of rental units, thus creating even more of an increase and many were unused investment properties. Hopefully, if the market starts to drop, people will go back to paying three million dollars for a two bedroom in the West Village and not Bensonhurst, allowing prices all around to cool off a bit. I, personally, could use the break.

robotslave @ 14:

seattle has experience MUCH LESS escalation than other areas where the bust is being felt - Vegas, the South.
20%/year vs. 40%.

Of course the exurbs will bust first. Speculation in the exurbs is based on a fantasy of people living in homes that are way too big for what they actually need and commuting a distance that's untenable.

...growth stocks yielded twice the return of real estate (8% vs. 3-4%) over the last 50 years

True, but you can't live in a mutual fund. Did those investment companies calculate the benefit of putting money otherwise wasted on rent into home equity?

Good question keshmeshi. The other thing this comparison doesn't seem to provide for is the enormous tax benefits given to home buyers.

All interest and property tax is deductible. And write offs if you have a home office. So alhough you're earning at a lower rate, your purchase is being subsidized.

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