I’ve been looking over a number of places to rent, and found that most of them seem to be owned by people who bought them to rent and have never lived in them. It makes me wonder how much of the housing stock out there is in the hands of people like these, who own 2 and 3 and even 10 properties, and rent them out, often to the selfsame people who would rather buy their own if they could only have a chance. Has it always been this way in Southern California or is this a new trend? It seemed to me very scarce back in my home town in the MidWest, where most people owned their own homes and those who rented, lived in apartment complexes.
So when the rest of the market bottoms, will more of these so-called “investors” be jumping in there, with their all-cash offers, punking those of us who want to buy a place to live in, and forcing us to miss our chance and be renters forevermore?
Or will the idea of buy-to-rent-out be thwarted by the current conditions in the rental market? As Calculated Risk points out periodically, vacancy rates have been climbing all over the country, including here, and it is forcing many landlords to lower their rents slightly. Mr. Mortgage or Dr Housing Bubble (I forget which) poo-poo’d the idea of the banks renting their REOs out for this reason, saying the banks would be renting into a renter’s market and creating even more of an oversupply of rental property than there is already. Certainly one by-product of the sucky economy and high unemployment is that people (such as myself) will be moving in with roomates and sharing rent, thus opening up more vacant spaces in the rental market.
Also due to the sucky economy, some 9% of the Mexican immigrants in SD County have left— out of 300+ thousand total, this represents a decrease of about 1% of the county’s total population. I think these workers were pretty robust at propping up rental rates, too. As a friend of mine from Poway once commented, “landlords love them, because they’re quiet and pay their rent” and with 10 or 12 to a house, each sees a rental hit of only a couple hundred dollars a month. When 10 people can team up this way to rent a house for $2400 or $2600 a month, this puts upward pressure on rents. But now their jobs are drying up, and apparently some are leaving in search of greener pastures, or just home.
This week I looked at a condo for which an ad has been posted on the mailboxes of the complex for weeks, asking $1540/month rent. Seeing the ad being there so long, just for grins I called the owner up and offered $1400/month. To my surprise, they showed interest in going as low as $1450. When I looked the unit up on Zillow, I found that they had bought it in 2003 for $270,000– meaning with HOA and taxes, they need that $1540 to break even with rent-equivalent and at $1450, would be slightly “underwater”. (Not necessarily in actual-cash-flow terms, that would depend on whatever down payment they used.) Similarly, one of the apartment complexes in the area has been offering rent specials as low as $1350/month on Craigslist (the manager was rather rude to me, though, so I don’t plan to give them my business). This also implies to me some weakness in the rental market right now.
So what do you think? Will flippers come out later on and battle with those of us who are just trying to buy a place to live in, or will the market fundamentals discourage them?
I’m not sure if it’s a bug with having a “summary” split out or what, but I see this post is showing up twice in the “Active Forum Topics”… such was not my intention.
I’m not sure if it’s a bug with having a “summary” split out or what, but I see this post is showing up twice in the “Active Forum Topics”… such was not my intention.
I’m not sure if it’s a bug with having a “summary” split out or what, but I see this post is showing up twice in the “Active Forum Topics”… such was not my intention.
I’m not sure if it’s a bug with having a “summary” split out or what, but I see this post is showing up twice in the “Active Forum Topics”… such was not my intention.
I’m not sure if it’s a bug with having a “summary” split out or what, but I see this post is showing up twice in the “Active Forum Topics”… such was not my intention.
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