I question if this is only due to excessive construction, since new construction in many places is a drop in the bucket vs total housing units. What’s going on? Did annual rent increases that landlords became used to simply overshoot people’s ability to pay? More expensive health insurance squeezing budgets?
Considering that cap rates are already 3-4% in many places (i.e. buying with a loan gives you tax advantages but no real profit), article is correct that lenders should be cautious. Is rental property the next bubble to deflate?
I’m also seeing something interesting in San Diego. The # of units in the low-end range (say sub $300k) is staying steady, but low. Whereas the number of units total is decreasing significantly through the fall season. Does that mean that the market for rental condos has essentially stagnated in the past half year, whereas the market for homeowners to buy homes is still on fire?
I don’t think this study only covers downtown areas. At the very least, “suburban” parts of the city of SD are included, if not places like Encinitas and Carlsbad.
While that maybe true I think it is mostly the large corporate apartment complex’s that are being counted.
This is where I think pricing will be a little softer going forward.
There are a lot less of those outside the major cities.
Just too hard to qualify for the corporate apartment complex’s, why not just buy a place a little further out.
the whole housing ponzi scheme has been going on since 2000, for the last 16 years… I hope it all implodes spectacularly so that ordinary people can buy without taking serious financial risks.
The article is just click bait and dishonest talking about a plunge. Only thing really going down is bay area and NYC, and only after years of nosebleed increases.
The data tables are interesting though. The last 5 years San Diego has had below average rent growth and now is a pretty good deal. We are cheaper than Miami Chicago and Seattle and about the same as some places like New Orleans, Portland, Denver and Minneapolis.
Over time I bet some back office tech work moves here from the bay area. Talented people are willing to live here and it is just an hour flight with 25 flights a day between SAN and the bay area airports. I do day only trips up there about 15 times a year, go up at 7am go home at 7pm.
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