23 ms·

Rents are plunging in the most expensive U.S. markets

• jpetitto 10y ago
  Not LA though!
• tankenmate 10y ago
  Can this please be re-titled as a US study? First blush of the article title made me go "What? Seriously?"; the two markets I look at first are London and Sydney.
  • toomuchtodo 10y ago
    http://www.bloomberg.com/news/articles/2016-11-24/london-property-prices-falling-faster-than-you-think-nama-warns http://www.bloomberg.com/news/articles/2016-11-24/london-pro...
  • dang 10y ago
    Sure.
  • soVeryTired 10y ago
    I've heard similar reports about the London rental market, but then again when it comes to the housing market, the UK press report on every scrap of noisy data they can get their hands on. London has also seen a huge glut of (supposedly) high-end property come online. Builders are struggling to sell, so they're now starting to offer discounts on the new housing stock [1]. If what the article says is true, I would be surprised if the same scenario didn't play out in London. [1] https://www.ft.com/content/f6692d4e-8327-11e6-8897-2359a58ac7a5 https://www.ft.com/content/f6692d4e-8327-11e6-8897-2359a58ac...
    • tankenmate 10y ago
      Except at the lower end of the market rents are still unaffordable and social housing has dropped off precipitously since the 80's. And housing starts for households on less than the median wage in London is at its lowest since WWII. So I guess this is a case of convergence, higher priced housing is dropping and lower priced housing is increasing. This effect will probably become more pronounced if interest rates start to rise.
    • mschuster91 10y ago
      London, I believe, has a big problem with the Brexit because many banks plan on or are already leaving the country. No banksters, no tenants for outrageously expensive properties.
      • jacalata 10y ago
        Hmm, I haven't heard of any banks leaving yet.
        • isostatic 10y ago
          Brexit hasn't happened yet. If it does there's no indication that they won't arrange some passporting arrangement to protect the bankers.
          • Symbiote 10y ago
            There's also no indication that they will, which is the whole problem for a business planning its future.
        • branchless 10y ago
          You need to erase from your memory all the other times all the banks threatened to leave the one country that waves through financial crime.
        • kbenson 10y ago
          Here's some stories.[1][2] Of course, these are about future plans, not actually leaving, so take them however you want. AFAIK,the real concern is not that banks will actually "leave" the UK, but that they will downsize as they move operations to other areas of the EU, which makes complete sense. Some of the laws that allowed free access to EU citizens from the UK will end with brexit, and while UK officials will try to get something similar in place, there are EU officials that feel that a deal that's essentially the same is not in their favor, and that the UK should pay a penalty for leaving. This is the uncertain climate that is causing some banks to hedge their bets and move some operations to the EU. 1: http://uk.reuters.com/article/uk-britain-eu-banks-idUKKCN12M0TZ http://uk.reuters.com/article/uk-britain-eu-banks-idUKKCN12M... 2: https://www.theguardian.com/politics/2016/oct/22/leading-banks-set-to-pull-out-of-brexit-uk https://www.theguardian.com/politics/2016/oct/22/leading-ban...
    • dood 10y ago
      Looks like rents are down a little but not too dramatic: https://homelet.co.uk/homelet-rental-index/london?range=24 https://homelet.co.uk/homelet-rental-index/london?range=24 This isn't too surprising, since I think London rents were seriously testing what the market would bear - plenty of chatter about London becoming completely unaffordable.
  • pyb 10y ago
    My personal anectodal evidence is that the London lettings market is softening as well.
• Analemma_ 10y ago
  Clicked on that list hoping to see good news in Seattle... turns out we're up more than any other city in the top 10. Sigh. There actually is a decent amount of housing construction in progress but it seems like it's not nearly enough.
  • dajohnson89 10y ago
    I had a similar reaction for Washington DC. Maybe when Trump fires all of the government workers, I'll get a chance at living in a decent place. /S/
  • jorblumesea 10y ago
    Also Seattle Resident, has a few things going against it: * Highly constricted physical space, poor public transit and almost continuous traffic problems due to natural bottlenecks. This means people have to live close or else risk a 60 min+ commute one way. * Single family homes drive a lot of property demand here, not just luxury apartments. Those are still expensive and hard to come by, and they are not building much more of that within the city proper. Average home value is hovering around 500k. Apartment building will not offset this very easily. * In general, the city was historically undervalued given the insane density of highly skilled and highly paid jobs. We have some heavy hitters and offices of some large international tech companies but rents remained low for quite awhile. This is just the adjustment. The prices for apartments will level out eventually, but we still have some way to go imo.
    • techsupporter 10y ago
      > poor public transit I disagree. It's not perfect, and it's definitely no Manhattan subway system, but I live car-free in Seattle while working on the other side of the lake and it has been pretty awesome. The trolleybuses are smooth, there are a bunch of regional express routes, and--especially after the prop 1 passage in 2014--the span of service and on-time performance have both increased. If your measure of "quality of public transit" is defined in miles of light rail, yes, Seattle's is poor. But the buses, in my experience (though I don't usually travel during traditional commute hours), are a great companion to the light rail that we do have.
• conanbatt 10y ago
  The past 2 years for me have been about the enormous exposure of how rent has been going up and house affordability has become a real problem world-wide. As legislation started to get promoted in different countries (Vancouver's foreign tax, Berlin's Airbnb ban, Argentina rent-caps) I always thought that the origin of this entire problem is the low rates for lending, and that these laws would only be a hinderance to recovery. This is still early to take for granted, but my suspicion is getting more likely. I feel sympathy for the people that told me that houses are the safest investment, and that renting is always worse than buying.
  • spikels 10y ago
    I agree that laws passed to deal with high housing costs are often counterproductive in the long run. The classic example is rent control. Can you explain your theory that low rates drive high rent inflation? Seems like it would be the opposite for several reasons: low rates are associated with low inflation, low rates make it much cheaper to build and operate apartment buildings, etc.
    • soVeryTired 10y ago
      There's no doubt in my mind that low rates are driving up house prices, but the link to rental prices is a bit more tenuous to me. My gut feeling is that the post-crisis recovery started in the big cities, so people flocked to them, which drove up rental prices. But if anyone's seen some decent analysis that says otherwise, I'd love to see it.
      • repsilat 10y ago
        There's no doubt in my mind that low rates are driving up house prices, but the link to rental prices is a bit more tenuous to me. Yeah, the link to house prices is clear: low rates means you can afford a larger mortgage, so prices get bid up. The link to rents is less direct: low rates are effected by loose monetary policy -- by central banks pumping money into the market. This means more inflation (not quite the same thing as "rents getting more expensive" of course.) In theory, anyway. Inflation has actually been very low even with historically loose monetary policy, so folks have been flummoxed (but generally positive about it, because they think it has let them encourage job growth and economic expansion more than they otherwise would have been able to.)
• alexktz 10y ago
  adblocked. bye!
  • canadathrowm 10y ago
    It is extremely frustrating that they actually show the content, let you read a paragraph or so, THEN won't let you continue without paying in some way. I won't be supporting this website.
    • massysett 10y ago
      You already weren't supporting this website. You want them to produce content and then give it to you for free while using Adblock.
      • kodablah 10y ago
        While I don't agree w/ the parent posts necessarily, sometimes providing discussion around an article has the effect of promoting it which is a way of supporting the website by drawing eyes which do not adblock. Promotion is not always direct to final consumer; popularity plays, especially on news aggregation sites.
  • AWildDHHAppears 10y ago
    And how, exactly, does this contribute to the discussion here?
• refurb 10y ago
  A friend used to rent out a spare room in SF on a regular basis. Two years ago, he could get $1850 for a single room with it's own bath room, furnished. We're talking 6-10 replies from a Craiglist post within 24 hours. Stopped renting it out about a year ago. He just posted it again. Zero takers at $1850. Finally got someone for $1600 (-13% decrease in rent) after a month. A dramatic change. The rental market in SF is definitely turning towards the buyer.
  • jaredsohn 10y ago
    >The rental market in SF is definitely turning towards the buyer. Am I misunderstanding something? If rents are going down (like you suggest in your story) wouldn't that mean that the rental market in SF is turning toward the renter? Edit: Thanks for the clarification. Terminology can be confusing since there can be buyers/sellers for the renting homes market and buyers/sellers for the buying homes market.
    • kohanz 10y ago
      He's classifying the landlord and renter in this transaction as seller and buyer (of the lease), respectively.
    • Normal_gaussian 10y ago
      No, it would be turning toward (as in, in favour of) the buyer. If it was turning toward the seller it would be fast to rent at a higher price (best situation for seller), yet he is describing the opposite, where buyers have plenty of time, choice, and more purchasing power.
    • closeparen 10y ago
      A "buyer's market" is good for people who haven't bought yet but want to. A "seller's market" is good for existing owners who want to sell.
    • deleted 10y ago
      [deleted]
    • 10y ago
• incompatible 10y ago
  Apartments have been the last frontier of expensive mass-produced products. Hopefully this is the end, and not just a temporary blip.
  • twelvechairs 10y ago
    Its the land not the apartment which is expensive. Land, especially in cities, is finite. This makes it different to other mass produced products
    • abecedarius 10y ago
      The supply of apartments on the same land can vary by orders of magnitude according to how intensively the land is used.
    • rahrahrah 10y ago
      So build up. Here in London people don't build up, for some reason (I mean other than office spaces, obviously). I think it's this nefarious british mentality that old is good. So you never demolish any 2 story buildings, you just build more outwards. Then you complain that the prices are insane.
      • james1071 10y ago
        The main problem is the greenbelt.
        • rahrahrah 10y ago
          See, there we go again. Why is the problem the greenbelt? Between central London and the greenbelt there's a mind-blowing extension of small houses in every direction. There is A LOT that could be built before getting to the greenbelt. The greenbelt is only a problem if you want to continue building small houses.
      • vidoc 10y ago
        Reminds me of this excellent documentary I saw on those millionaires who dig down instead of building up in London :P https://www.youtube.com/watch?v=sLJ0zZQb9x0 https://www.youtube.com/watch?v=sLJ0zZQb9x0
• pmoriarty 10y ago
  Have there been any experiments in legislating ceilings for housing prices? If so, what has been the effect?
  • jacalata 10y ago
    Do you mean something besides rent control?
  • rhizome 10y ago
    San Francisco just passed Proposition W, which raised the transfer tax (a tax at sale) on properties over $5MM.
  • jimmywanger 10y ago
    There have been many attempts to legislate ceilings for any number of goods. They're called price controls, and they have never turned out well. Take a look at Venezuela. Any sort of artificial price ceiling leads to black markets and insufficient supply. Same thing in San Francisco.
  • tpeo 10y ago
    Price controls in competitive markets are usually a bad, bad idea. Rent controls, for instance, are famous among economists for managing to both disrupt rent markets while failing to achieve their desired outcome, which is helping poor tenants. The effect of a price ceiling is often just to shrink the supply of any units whose price would be above the price ceiling, while consumer queue themselves. It would be the same as rationing. And since the opportunity cost of time of richer folks is lower, not to mention that they're more likely to be socially connected, they end up displacing poorer consumers.
    • chimeracoder 10y ago
      > And since the opportunity cost of time of richer folks is lower, not to mention that they're more likely to be socially connected, they end up displacing poorer consumers Your conclusion is correct, but this should say "since the opportunity cost of time for richer folks is higher". People who earn more have a higher opportunity cost of time, which means (all things equal) that they will have fewer children and choose residences with lower commute times than those who make less money.
• zazen 10y ago
  I know nothing about the San Francisco housing market apart from what I've heard in discussions here on HN. The received wisdom here seemed to be that powerful NIMBY lobbies in SF were preventing needed development and causing the sky-high rent. But this article is talking about an "historic construction boom". Did something change regarding development in SF? Or was the NIMBY effect always a bit over-stated? Anyone care to speculate?
  • rkayg 10y ago
    The NIMBYs have had a very strong effect in that they significantly delayed the pipeline of development. Ultimately, the demand for housing had to be met, but it required extra years of community meetings and fights with the NIMBYs. Basically, the construction boom would have come sooner.
  • SomeStupidPoint 10y ago
    Speculation that this is the case in SF, but is an effect I've seen: You can get a dip in average rent without (sufficiently) dropping bottom quartile rents, which is what NIMBYism tends to block, by having a lot of nice condos built. The top quartile of rents dips heavily as places jockey for condo buyers, everyone moves in to a nicer place as the wave spreads, but the price at the bottom remains (mostly) the same (even if unit quality goes up), because the oldest buildings get torn down at the end of the wave, rather than genuinely increasing the housing supply (because land to develop on is still hard to come by). So it's possible average rents dipped, but service workers still struggle to afford rent, even if they struggle in a nicer unit. Tl;dr: I expect the building that happened raised low-end apartment quality rather than drop price, even if average rent is down. Because NIMBYism.
    • zazen 10y ago
      This sounds plausible, and it chimes with the article's statement that the new supply is at the high end. Thanks! If people were only blocking certain kinds of development, that would explain why low-end prices stay high even while there's a lot of construction causing the median price to drop.
• mmcclellan 10y ago
  Where in Boston could someone possibly find a two bedroom for $2600? Shenanigans
  • MrFoof 10y ago
    So here's the results[1] from Zillow for a 2BR for $2500 or less in an actual Boston zipcode. These aren't all the results, as it limits the results to 500. If you're not looking for a managed, new luxury apartment, it's tremendously easy to find. Moreover, if you go on Craigslist, you'll find far, far more. Zillow listings are almost always represented by a realtor, broker or property management company so it's only a subset of the market. [1]http://www.zillow.com/homes/for_rent/Boston-MA/house,condo,apartment_duplex,mobile,townhouse_type/44269_rid/2-_beds/0-656706_price/0-2500_mp/42.47197,-70.893574,42.199911,-71.258183_rect/11_zm/ http://www.zillow.com/homes/for_rent/Boston-MA/house,condo,a...
    • BWStearns 10y ago
      They're mostly in Brighton and way deep Dorchester. The commonwealth ave one is as ridiculous as the same price being advertised for a real 2br in a doorman building in Chelsea. This is akin to measuring salaries by the high end of glass door. Sure. Someone may have gotten that price, or it could be a lie, but you won't.
      • meddlepal 10y ago
        Yep, flawed study. The stuff in Brighton, deep Dorchester, Hyde Park and Roxbury should be thrown out since a lot of it is very much not TOD and you'd barely know you were living in Boston.
        • BWStearns 10y ago
          What is TOD btw? I think I agree with you but I'm curious about the term.
          • 10y ago
• DanBlake 10y ago
  Zumper is pretty inaccurate when it comes to SF I have found. The influx of new residents still vastly outpaces new construction + people leaving SF. As such, rents are not going down. The easiest way to verify this is just to ask anyone trying to rent in SF.
  • rhizome 10y ago
    As a possible counterexample, in the past month I have seen street signs in my carpetbagger-friendly neighborhood for rental open-houses and "For Rent" signs on buildings, which I haven't seen since before the recession.
  • terinjokes 10y ago
    I'm currently in the process of packing for a move on the 1st. Rents are definitely going down compared to the last time I moved in 2014, the new place is significantly cheaper than my current apartment. In 2014 when I went to a showing, there were several other groups also there to compete against, this year I was the only one at most showings.
  • cerrelio 10y ago
    I've seen for rent signs up for over a month in some very desirable locations. That's a change from 2 years ago when I was looking for a place. But the rents are still pretty high for new buildings. The developments opening up in SoMa on 8th street from Harrison to Brannan are asking for $3000/$4000/$5000 (studio/1bd/2bd). I wonder if they're getting that considering those are significantly above median. I want a 2bd place soon, so I'm hoping that all the young professionals who came in 5-6 years ago are lowering rents by moving to the suburbs to pump out babies.
  • the_watcher 10y ago
    Rents are going down. I am moving this weekend, and in the 2 months I've been looking a bit, it's very, very obvious. At first, it was just that you no longer had to essentially arrive with 3 months of rent in hand and sign on the spot. Next, there was emphasis on how "this is the only property at X price" (which was false on it's face). When we finally signed, the leasing agent told us "if the price is too high, make an offer." So we came in 10% below list price and asked for a discounted first month of rent. They agreed immediately. Stories like this are common to anyone currently in the process of finding a new apartment.
• Spooky23 10y ago
  Well, duh. The dumb money has been funding way too many apartment projects. Where I live (Albany, NY), they just built thousands of rental units within a 15 mile radius. In one example, they are trying to rent a "luxury" two bedroom for $2500/mo, when you have a much nicer home a few blocks away for $200k+$50k for a fancy kitchen, etc.
• ChuckMcM 10y ago
  The rent concessions are the real leading indicator. As every month of "free rent" in a 1 year lease lowers gross rent by 8% (4% for a 2 year lease, and 2.7% for a 3 year lease) As a strategy it assumes that the rent will come back up after the lease period. When it doesn't the rents actually get lowered to avoid being the highest rent in the list. Also there is an impact on increasing AirBnB regulation both from cities and from landlords. Now there are often very explict callouts in a rental lease that specifically mentions getting money for the use of your apartment from non-family members. That means you're not going to be able to monetize that second bedroom to pare back your housing expense.
  • macNchz 10y ago
    A whole bunch of big new 'luxury' rental buildings have flooded the market in my area of Brooklyn, and the 'free rent' concessions they're offering–especially with a bit of negotiation–are substantial. Some friends of mine recently moved into one (with a few months free rent), and it's shocking how few apartments have been rented despite how long the building has been available. The effects of these buildings coming online have been noticeable in my nearby neighborhood: two apartments in my 6 unit building that otherwise would have been rented in a matter of days sat empty for several months until they lowered the asking rent multiple times, I got an immediate 'yes' to a lowball counter when it came time to re-sign our lease, and the number of nearby 1 bedroom listings under $3k has multiplied dramatically since the last time I was searching for a new apartment.
• morgante 10y ago
  Amazing, supply and demand actually works! Someone should tell all the protestors who opposed construction of new luxury condos because they thought it would somehow increase rents.
  • rahrahrah 10y ago
    Hah I love those people.
  • matt_wulfeck 10y ago
    It's unlikely to slow down San Francisco's unstoppable march towards the most legislated society in America.
    • coolsunglasses 10y ago
      March? They're Kings & Queens atop a pile of the bones of the impoverished, trying to find more skeletons to add to the pile.
      • BipolarElsa 10y ago
        And now they want to abolish the electoral college so the upper crust of SF, LA, NYC, CHI (and more) can dictate what they want from candidates. Soon you'd see candidates touting "Vegan Rights" instead of "Rust Belt jobs"...not a world I want to live in. I'd rather middle America's vote count for more if you ask me.
      • deleted 10y ago
        [deleted]
  • fram 10y ago
    There's nothing saying that increased supply always leads to higher supply in relation to demand, which is what affects price.
    • gragas 10y ago
      So you're arguing that demand increased more than supply in the same period? By your logic, that's the only way that prices could fall while the new housing was built.
• czep 10y ago
  Strange concluding sentence about the prospect of an influx of Chinese investors to rekindle rising rents. Is there evidence that such a trend is likely in the near future? I have seen reports that a lot of money is expatriated from China into real estate because it's easy to launder that way. In general is it expected to increase so much that it would have a noticeable impact on rents in the major markets?
  • sitkack 10y ago
    Vancouver.
  • repsilat 10y ago
    I have seen reports that a lot of money is expatriated from China into real estate because it's easy to launder that way. I don't know about rents, but overseas investment certainly drive up price to own in Auckland NZ and Vancouver, Canada, though the latter may have stopped due to changing tax policies. Auckland is as big as SF. If you're investing in property overseas you want the value to be stable or increasing, though. I don't think these people are value investors who would jump into a market with declining prices because the houses were suddenly underpriced -- quite the opposite, I think some would rush to get out in that case.
  • delias_ 10y ago
    Irvine, CA has this occurring. 2014 numbers reported that 80% of single family homes in the area were bought by Chinese families (random first google hit article on it: http://www.zerohedge.com/news/2015-09-30/80-all-new-home-buyers-irvine-are-chinese http://www.zerohedge.com/news/2015-09-30/80-all-new-home-buy...). A lot of the Irvine Company apartments top-level units are effectively birthing centers on the down low, but nobody really seems to take much issue with it. There is also a significant rich foreign Saudi presence in Irvine and that's definitely more of a culture clash due to the misogynistic nature of mother/son relationships. Super spoiled kids, "slavery" scandals, etc but the money "donated" to Irvine company for things like renovating the spectrum mall is massive. Considering Irvine company owns ~90% of Irvine, I think this foreign interest can't be overlooked in lieu of the more public Chinese impact.
  • 10y ago
• dalbasal 10y ago
  Do we know what policies are genuinely effective at improving housing affordability? This is the one biggest thing the (proverbial?) middle class have been struggling to make gains on over the last generation in a lot of otherwise successful places.
  • cwp 10y ago
    Yeah. Build more housing.
  • deleted 10y ago
    [deleted]
  • the_watcher 10y ago
    Less zoning and less barriers to building new supply.
  • acomjean 10y ago
    Public Transit/road infrastructure helps costs too. If you can get around an area faster you effectively increase the number of units that are available for people working at your location keeping prices a bit lower.
• cwp 10y ago
  Meh. "Plunging" is a strong word for an 8% drop. Even if you buy the "effective rent" argument, 22% isn't much of a plunge. This is a start, limited to a very few neighbourhoods, and merely makes the housing market slightly less insane.
  • llsf 10y ago
    I guess if the YoY before was > +8%, a new YoY -22% is a pretty impressive change, especially it confirms through 2017.
  • skwirl 10y ago
    8% in a year is plunging. Factor in inflation, and 5 years at that rate and real rents drop 41%. That would be a massive decrease in a short period of time and it's hard to imagine it happening - which just supports the notion that 8% in a year is a pretty big drop. You should be celebrating this news and not complaining.
  • gnicholas 10y ago
    Welcome to Business Insider, where a sneeze is a hurricane and a dip is a plunge.
• felizuno 10y ago
  Market corrections in overpriced cities. Seattle still growing, turns out sustainable growth is sustainable.
  • debatem1 10y ago
    Why do you think Seattle's growth in housing costs is sustainable? Certainly the cost increases in single family detached units have been large and rapid. My naive interpretation of that would be that such increases are a) unlikely to continue indefinitely and b) are pushing demand for 2+br apartments to unusually high levels. That's weakly supported by this data, which show a 6.4% increase in 1br prices and 8.2% for larger units. Of course, many other markets have completely taken single family detached off the table, so maybe I'm not making an apples to apples comparison.
    • NotSammyHagar 10y ago
      seattle has more growth counted in the number of construction cranes than any city in the us. prices of standlone houses seem to be increasing, apartment pricing is less clear, but this article seems to know.
      • jorblumesea 10y ago
        A lot of the expensiveness of Seattle is the home prices, not just rent. Those will continue to be expensive for quite awhile. Apartment building will not completely offset the price of the city.
      • debatem1 10y ago
        Not trying to be dense, but possibly succeeding: why does this indicate that Seattle's price growth is sustainable? If Seattle builds too many apartments with those cranes surely the growth in prices will collapse (homes seem to be supply constricted and to some degree a lack of supply has dampened demand, but this might change if condos became very affordable). Alternatively, if Seattle builds out too little then prices will grow unsustainably until they collapse to sustainable levels due to supply restricted demand dampening. So there seem to be two goldilocks zones: one where demand and supply are in harmony, and the other where they're totally out of whack and the combination of effectively liquid real estate and fluctuating value overdampen to produce stable averages with unstable individual outcomes. Which is the claim here?
• csharpminor 10y ago
  I'd be curious to know what the breaking point is for luxury condo developers, i.e. how far do prices need to sink before they're in trouble? As an extension of that, who are the investors that will take the hit? Presumably, the capital put down for the construction of these condos gives landlords and developers a hard floor on the prices they can accept. Is their solvency dependent upon charging luxury rents, or could they get by leasing at more moderate rates?
• xor1 10y ago
  Los Angeles though... :( One of my friends just moved here and is sharing a 5-bedroom home with 25 other people. I thought he was bullshitting me, and I still couldn't believe it when I went over. He's paying $600 a month to share a bedroom with four other guys. He told me it was the best thing he could find on 1-day notice. He pays for rent online, and he has no idea who the actual owner is, nor who is actually receiving the money. I thought that kind of living arrangement only happened with undocumented workers (barring SF and NYC, which I've always considered to be ridiculous), who can't easily exercise tenant rights. Now I really wonder how many of the apartments and homes around me are just completely packed with people who are splitting rooms.
  • beachstartup 10y ago
    many lower-income creative types are flocking to LA from SF and NY.
  • hkmurakami 10y ago
    I've heard of "hacker house" type places in the Bay Area which sound exactly like this. I think the rate was something like $30/day or so. I've also heard of operators of these places who will sign a regular rental contract with a landlord, "convert" the place to such a high density dorm, milk it until the landlord finds out, and when the landlord does, apologize, end the contract, then find another rental to rinse and repeat.
    • idrios 10y ago
      As I'm currently living in a hacker house in San Jose, I'm obligated to say that this is mostly true except that you make it sound shadier than I think it usually is. Mine is a 5 bedroom that fits 15 people (one of the 5 bedrooms is for the guy who runs it + his gf). He himself is renting from a landlord who knows that it's a hacker house and is completely happy with that--the landlord gets paid rent while the host takes care of everything that goes wrong (when all utilities get 5x normal use, things break all the time). The host does all this and makes $27/day from each tenant. The whole setup is through Airbnb, and he's made sure he complies with Airbnb rules as well as San Jose rules for renting out houses. I, too, first rented this place because it was cheap and available on 1 days notice, and while I had planned on moving out to find an apartment, I ended up staying for months because the community is good, the house is well maintained, and the rent really is affordable compared to the cost of most places on Craigslist (which would all be shared houses anyway).
• emodendroket 10y ago
  Surprisingly, everyone sees in this data exactly what they thought before looking at it.
• rch 10y ago
  This looks like a short term dip while the market adsorbs new units. Am I missing something?
  • Decade 10y ago
    No, that seems about right. The “Progressives” (I consider them to be a peculiar West Coast form of conservative) have now made unprofitable subsidized housing an integral part of any large-scale housing project, which means housing can’t be built unless the financiers can expect the market-rate prices to remain sky-high. So, when prices go down, they have to stop building. What would make a difference is additional YIMBY pressure to roll back these harmful restrictions and delays, and allow housing to be affordable to build. http://www.sfyimby.org http://www.sfyimby.org
• ppierald 10y ago
  My anecdotal evidence shows a dramatic shift of my 20-something and 30-something year old co-workers to Oakland from SF due to affordability. Oakland is close, cheaper (though rising), diverse, and close by BART. This is probably putting a good deal of supply back into the SF market, but putting pressures in the East Bay markets (Berkeley, Oakland, Alameda).
• coldcode 10y ago
  Not in Orlando.
• pfarnsworth 10y ago
  The best cure for high prices is high prices. Very few trust that supply vs demand doesn't work, but it absolutely does. Sure there will be temporary spikes in price, but as rents go to ridiculous heights (I think $5000 for a 2 br condo is utterly ridiculous, and that prices is about 5 years old in SOMA), it will abate at some point. As long as there isn't a monopoly, or people aren't manipulating the markets, fair and properly functioning markets will self-correct. Always.
  • ericd 10y ago
    It's very debatable whether the SF property market could be considered a fair and properly functioning market, given the massive impediments to new construction, legislative rent controls, and crazy tax breaks for longtime residents.
    • pfarnsworth 10y ago
      Of course it's properly functioning. There is a ton of demand and a lack of supply. Of course prices are going to rise and that's perfectly okay. But they can't rise ad infinitum. I think we're seeing the limits of how high prices people are willing to spend, and rising interest rates are going to limit that even further. I'm expecting a precipitous plunge in >$2M houses and the sweet spot will be houses in the $750k range after interest rates limited the crazy market.
      • ericd 10y ago
        It's functioning, but I wouldn't say it's functioning properly. Prices have had to rise much farther than they would in a less encumbered regulatory environment, and as a result, it's been very disruptive for a far larger number of people than it had to be. If there was less encumbrance, we would have seen a housing construction boom well before the prices got to the current, rather ridiculous levels. Compare the number of yearly housing starts and pricing in Seattle to see a more functional market, which happens to be absorbing a lot of SF's excess demand. If your bar for a properly functioning market is that prices rising have caused normalizing factors to kick in, then yes, of course that's the case, as always happens in markets that aren't completely messed up.
• mrcactu5 10y ago
  everyone I know in New York City is complain about rent INCREASES and GENTRIFICATION Article: "East Harlem rents are among Manhattan's fastest-rising this fall" http://ny.curbed.com/2016/11/21/13703220/fall-market-report-nyc http://ny.curbed.com/2016/11/21/13703220/fall-market-report-... so I have no idea where business insider is getting it's data from. Also here is a lovely map of the subway stations and the median rents near by. Notice that Bronx hardly exceeds $2000 (compared to the reported NYC median of $3100). http://ny.curbed.com/2016/4/29/11535674/map-nyc-subway-rent-comparison-renthop-analysis http://ny.curbed.com/2016/4/29/11535674/map-nyc-subway-rent-...
  • stale2002 10y ago
    That's because those are low rent areas that are still playing catch up to the extremely high rent central city. The article is most talking about the high rent areas that are now less extremely high.
• rietta 10y ago
  The rents are astounding to me as an Atlanta area resident. My fully loaded mortgage+escrow payment on an entire 3 BR house with a full basement (in which I have an office and wired for Cat6 ethernet) is less than $1100/month. There are tons of tech companies within commuting distance and even more remote work opportunities as a developer. Chances are good that we'll finally have gigabit fiber to the home within a year and current Comcast service is serviceable at 75 MBps.
  • techsupporter 10y ago
    > The rents are astounding to me as an Atlanta area resident. My fully loaded mortgage+escrow payment... I see this a lot of the time when rents for certain areas of the country come up. My friends in Dallas and Austin say the same thing. FWIW, I own a duplex unit inside the city of Seattle, so my views may also be a little skewed. My usual response is, "yes, but then I'd have to live in [other city]." There are a lot of advantages to living where I do, in my opinion; that's why I chose to live there. The weather is a not-insignificant consideration. I don't ever have to look at a weather forecast and see that the expected high is 100F-or-above for the next month. Natural beauty is another. Local culture is yet another. One other point about the cost of housing: you wrote "Atlanta area," so I imagine you're OTP. By comparison, I'm paying $1,600/month to own my 2BR house inside Seattle, and I don't begrudge any cent of it. Mortgages inside Atlanta proper are possibly in the same range. So it's not a question of being astounding or out of the ordinary, just different life choices. > Chances are good that we'll finally have gigabit fiber to the home ...and I have gigabit fiber, too. ;)
    • rietta 10y ago
      I'm in Alpharetta, which is a tech center in its own right by some standards. Housing prices jump $300k across the street from my neighborhood. So yes, prices can go really, really high around these parts.
      • techsupporter 10y ago
        As an aside, I was going to guess either Marietta or Alpharetta but didn't want to assume, so thanks for fulfilling my mental side bet. :)
• 1337chan 10y ago
  Is this trend holding for the whole bay, or just SF? (Looking at possibly taking a job in Mountain View)
• rasengan0 10y ago
  PSA: if you're looking, be on guard https://www.bbb.org/council/news-events/bbb-scam-alerts/2016/03/craigslist-abounds-with-rental-scams/ https://www.bbb.org/council/news-events/bbb-scam-alerts/2016...
• deleted 10y ago
  [deleted]
• partiallypro 10y ago
  Studio "luxury" apartments here in Nashville have long term leases at $1200/mo for a studio. I was not impressed when I did a tour across the city; I asked the occupancy rate at a few places, and was floored when they told me it was only ~25%; these were 1yr+ old developments, which is apparently common place. I've been telling people the city is in a bubble, but no one believes me. Everyone says now is the time to buy, I think they're insane. A lot of people from out of state that had higher real estate values could sell their $400K-$500K home in California and come to Nashville and live like a king. Now they are just poaching people knowing they'll pay up. Our hotel rates are higher than New York City's on average. It's insane, and everything thinks this will last. We'll see. Nashville wasn't mentioned in the article, but I have a very hard time believing the city will sustain its current rent levels, with such low occupancy rates. It's actually cheaper to just buy a condo outright (which I think is still too expensive $300K for a studio,) than to rent.
  • horv 10y ago
    I'm in Nashville as well, and was just talking about this yesterday with people. The past couple of years has seemed to be almost entirely luxury apartment complexes being built, and anecdotally most of the young people I know here can't afford them, or if they can will just buy a house instead.
  • withdavidli 10y ago
    I just went there last week for a conference. Man there's tons of development going on. Road construction, looks like a new building being built every 3-4 blocks. I usually hit all the food joints when I visit a place. Thought all there was going to be was grade A bbq. Was I mistaken, food scene is amazing, would rate near same caliber as SF (and as expensive). Hotel rates are crazy, spoke with some locals and they said it's cause of all the conferences. Averaged ~300 a night (fri-thurs).
  • dionidium 10y ago
    St. Louis, believe it or not, is experiencing a bit of a modest boom in its central corridor. It's certainly more new construction than we've seen in something like 50 years. But, anecdotally, the units are selling quickly, and at rates (and sizes) we've never before seen. Here's a recent example: http://theorioncwe.com/floorplans/ http://theorioncwe.com/floorplans/ For the lazy, they're renting a 683 sq/ft 1 bed/bath for $1812-$1977. I heard some long-time residents literally laugh at those prices. But, they're selling quickly, reportedly. (I don't have a coherent point; I just thought some might find this interesting in relation to your anecdote.)
• itissid 10y ago
  And I thought Jersey City and Hoboken were bad. I pay 1825 in rent for a 2 bedroom that's 30 min from my work. But thats because the landlord has not jacked up the rent since I moved in 2 years ago. A new place as big as mine today will probably rent at 2500, which is still not as bad as many other places like SF.
• pascalxus 10y ago
  SF still has a loooonnng way to "plunge" before the rates resemble anything half way reasonable.
• freyir 10y ago
  A 2 bedroom in my building dropped from $3950 to $3250 over the past few weeks. The landlord can't unload it. And today I got a notice that they're raising my rent. Shortsighted -- they'll have another vacant apartment on their hands soon.
  • onlyrealcuzzo 10y ago
    Ha, I'm in Hollywood, and my complex has been sending out emails offering promotions to recommend friends on a bi-weekly basis for a few months now. Vacancy has got to be around 20%. Meanwhile, there's 6 new luxury complexes with over 1500 units opening or that have opened this year--JUST ON MY BLOCK ALONE [2,3,4,5] (for reference, the entire population of Hollywood is roughly 22k [1]). The new complexes are practically ghost towns, Eastown in particular was offering a free month for ages before finally dropping rents 10%. Sunset Gordon Tower is literally kicking everyone out that moved in, which was only 17% occupied anyway [5]. Meanwhile, my lease is set to expire, and the renewal offer comes with a 10% bump in my rent (as it has for the last two years). The sad part is, I feel like it's working from an economic standpoint. Vacancy was close to zero when I moved in (literally got the only apartment available). Even though it's now got to be around 20%, the rent has risen by over 30%. Pretty sure that means they're making 4% more over the course of 3 years, which given the dismal global economic growth, that yield isn't too shabby. With all the vacancy, you'd think development would be slowing, but it's actually picking up even more. There's 7 new hotels planned for the block [6]. And there's several other residential towers planned for the block [7], 750 new units by 2018 just in one, the Palladium Towers [8]. Keep in mind that this is just one block. Roughly the same thing is happening a mile up Hollywood Blvd at Highland. And to a lesser degree a mile down the street at Western. All of this is great. We desperately need the new units. The mixed-use walkability will be an example to the entire city for how great Los Angeles can be. But where are this many luxury renters suddenly going to appear from? Wishful thinking? [1] https://en.wikipedia.org/wiki/Hollywood https://en.wikipedia.org/wiki/Hollywood - 22k population [2] http://la.curbed.com/2016/7/16/12206104/camden-apartments-hollywood-mixed-use-luxury http://la.curbed.com/2016/7/16/12206104/camden-apartments-ho... - Camden 287 units [3] http://la.curbed.com/2014/3/9/10134626/6201-hollywood-christened-eastown-readies-for-summer-opening http://la.curbed.com/2014/3/9/10134626/6201-hollywood-christ... - Eastown I 535 units [4] http://urbanize.la/post/eastown-apartments-phase-ii-moving-ahead http://urbanize.la/post/eastown-apartments-phase-ii-moving-a... - Eastown II 515 units [5] http://la.curbed.com/2015/9/14/9921562/sunset-gordon-cim-group-eviction http://la.curbed.com/2015/9/14/9921562/sunset-gordon-cim-gro... - Sunset Gordon Tower - 299 units (quite the circus). [6] http://la.curbed.com/maps/hollywood-hotels-map http://la.curbed.com/maps/hollywood-hotels-map - Hollywood Hotels Map [7] http://la.curbed.com/maps/a-guide-to-the-nearfuture-of-the-hollywood-skyline-1 http://la.curbed.com/maps/a-guide-to-the-nearfuture-of-the-h... - Hollywood Future Skyline Map [8] http://la.curbed.com/2016/3/22/11286562/hollywood-palladium-towers-approved http://la.curbed.com/2016/3/22/11286562/hollywood-palladium-... - Hollywood Palladium Tower (planned)
• sytelus 10y ago
  This is quite a news. I just looked at renting page of my formal apartment in Wayback Machine. They had listed 3 bedroom + garage at $2200 in Puget Sound area from January to May. Now its $2100. Not a big decrease but I don't recall I had ever seen a decrease during past 5 year or so. It's actually quite shocking. This probably means that the real estate price cycle theory is right. First house prices goes up so construction boom starts and then supply overfloods the market and suddenly there are no takers which brings rent as well as house prices down. It's closed loop with delays so you get overshoots and undershoots. This can be mark of price fall for next 3-5 years in real estate as well rents.
  • adventured 10y ago
    It's fascinating that it's happening at a time when wage growth across the board is at a eight to nine year high (and plausibly heading even higher so long as unemployment remains where it is). So whatever supply is coming on-line, is entirely cancelling out that wage growth.
• davidf18 10y ago
  Even with the rents decreasing, they are still way to high for most people and adjusted for inflation, far higher than they were 30 years ago. The reason for the high rents are structural -- the use of politics to create artificial shortages in housing by use of zoning density restrictions. This is the deliberate creation of market failures due to "rent seeking" -- use of politics to create artificial scarcity to benefit a special interest group. The artificial scarcity inflates the value of property to landlords such as Donald Trump harming renters. An example, regarding taxi cabs: NYC had a law creating a limit on taxi cabs to 13,000 medallions --needed in order to drive a yellow, hail-able cab. The market value of the taxi medallion was $1.2 million which meant that for drivers who typically lease cabs, a substantial part of their income went towards leasing the cab with medallion. Thus, taxi riders (renters of use of cabs for trips) were paying far more than they should and taxi medallion owners (landlords) were receiving a huge windfall. Then Uber/Lyft came to NYC and the political artificial scarcity of (electronic) hail-able cabs was relieved. The result is that the medallion price went from $1.2 million to < $700,000 and far more drivers were no longer paying high leases to medallion owners and driving for Uber/Lyft instead. Our prices for taking hail-able cabs have decreased and continue to decrease. Everyone gains except the medallion "landlords." This rent-seeking market inefficiency tremendously damages the economy. Fewer housing units are built than they should be in an efficient market. Tenants are paying a far greater proportion of their income for rent instead of goods and services. Simply fixing this law that benefits wealthy landlords can be a substantial stimulus to the economy. Another cause of high rents is the number of illegal immigrants that are allowed to stay in certain cities. This NYTimes article claims there are about 600,000 "undocumented" immigrants in NYC (of a population of 8.5 million)[1]. Almost all undocumented immigrants are in the country illegally and hence the more correct word is illegal. These 600,000 illegal immigrants adds substantial market pressure that otherwise would not be there if the law were enforced and hence the rents are far higher for low-income New Yorker American citizens than they otherwise would be. [1]. "Some 574,000 city residents are undocumented,..." http://www.nytimes.com/2016/11/23/nyregion/economic-tsunami-fearing-donald-trump-immigrants-in-new-york-spend-less.html http://www.nytimes.com/2016/11/23/nyregion/economic-tsunami-...
  • drcross 10y ago
    Can you explain how illegal immigrants are able to rent in the New York market? Surely the landlords will demand identification and references and would refuse someone who is illegal?
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• tgamba 10y ago
  I am glad I had my SF adventure when I did. I lived there from 1996-2001 and paid less than US$900 for a charming Nob Hill bachelor. That same apartment goes for $3k today. Currently I am in Toronto, paying CAD$1400 for a rent controlled one bedroom downtown that I have been in for over a decade. Current market price for same is CAD$1700, but this includes a flood of new condo units more luxurious than mine. Toronto is looking good in comparison to US cities. It has all the amenities of SF, Seattle or Boston, though the IT salaries are not as high. Plus, no Republicans.