Thanks CAR, the reason I was asking was at some point you have to figure out the investor support level, they aren’t tied to certain area, they don’t factor the commute so much since they only make the trip occasionally and not during peak traffic time. Large, expensive, large lot sfr’s with terrible rent multipliers will not bring the investors out of the woodwork (there are knuckleheads everywhere, so there will always be some) but they won’t become a large competing force.
Unfortunately we don’t know the pre bubble rent multiplier of the last down cycle, so we can’t compare it but it sounds like you have a sweet deal and something very sustainable, no wonder you don’t want to buy, I wouldn’t either. My market caught fire once renting became more expensive than buying, that was my sign, but it had happened during the last downturn which ended up being the bottom so I waited for that as the indication, if you can figure out what the lowest rent multipler was in your area’s last downturn, then you can figure out about where the bottom will be. That was my methodology, not sure if it is a transferable theory. My market overshot it’s 1996 numbers, but in these volatile times, overshooting was expected, your market wasn’t as volatile to the upside so logic says it wont be as volatile to the downside. There is also an interest rate consideration when looking at historical figures, monthly payment trumps actual sales price, so it get complicated.
You may also want to track the historical multiplier for traditional rental housing, like small places or condos, there’s more data and the numbers are more pure, higher end rentals are not as good for statistical purposes.
650k at 5% is $3500 P&I, rent parity would be reached at 475k, so that is as good as it will get IMO, that’s when the historical info comes in, my guess is that it will swing that number up if rent parity wasn’t reached during the last cycle.
In summary, I feel terrible for you, it’s as if your parents have set your curfew at 9pm while all your friends have a midnight curfew, you can’t get new parents, you can’t change their minds and all your friends are out having fun. With the recent activity and lack of inventory, it’s like you just had a birthday, expected your curfew to be extended to a more tolerable, yet not ideal 10pm and they dropped it to 8pm.
