Carlsbad Rent

[all]

A guy I know has to find a new rental, after only one year in the current one (the previous owner got foreclosed).
He is looking costal, Del Mar to South Carlsbad and he says the asking prices are 10-15% lower today than 15 months ago. What used to be close to $3K is now available for $2,300 – $2,500 (newer 2K+ sf w/out view or older 1,600+ with view).
Also, the landlords are more open to hosting his three large dogs.

[CA renter]

[quote=temeculaguy]Like AN, I also didn’t realize how low rent is compared to prices there, what would your place sell for CA renter?[/quote]

That’s a really tricky one right now, because the market is very distorted, IMHO. At the very peak (when we were first renting), our house would have sold for around $750K while our rent was originally $2,000 — a clear example of the price/rent disparity.

Right now, there is a model match with possible foundation and drainage problems that has been listed in the mid-500s for quite a long time. OTOH, another model match **with additional bedroom, bathroom, pool, and expanded kitchen** in good shape just closed for over $800K! This last one really blew our minds because nothing around here has sold in the $800K range in a long, long time.

There are also other models that are fairly similar in size that have sold in the high $500K to high $600K range. If our house were listed today, it would probably sell very easily for $600K-$650K, and might even fetch in the low $700K range if a delusional buyer happend upon it — and there are more and more of these “delusional buyers” in the market these days.

“sdr” is right about rents going up since we moved here in 2004. We saw a really huge leap in rents in 2005/2006, right as the smart money was getting out at the top, and bubble-sitting, IMHO. Rents have come down somewhat in the past year, and the rental market is softer, but a smart LL can easily rent out a house here within a week if he/she prices it right. On the open market, ours would probably rent within a month at $2,400, currently. Maybe $2,500 with some luck, but I think the turnover is greater the higher the rent goes.

I should also add that we pay our rent in six-month increments and have put a few thousand into the house over the years (our choice). We are good to the LLs, and they are good to us. Technically, one might say we are paying more than $2,100 if one takes that into consideration. It seems we are one of the few fortunate ones, as we have a few friends who’ve had bad experiences with LLs being foreclosed on, among other problems.

In summary (Lord, I write too much!), with current potential rent at around $2,400, and prices at $650,000-ish, the price/rent ratio is still out of whack, but much better than it originally was at the peak.

[CA renter]

[quote=temeculaguy]Like AN, I also didn’t realize how low rent is compared to prices there, what would your place sell for CA renter?[/quote]

That’s a really tricky one right now, because the market is very distorted, IMHO. At the very peak (when we were first renting), our house would have sold for around $750K while our rent was originally $2,000 — a clear example of the price/rent disparity.

Right now, there is a model match with possible foundation and drainage problems that has been listed in the mid-500s for quite a long time. OTOH, another model match **with additional bedroom, bathroom, pool, and expanded kitchen** in good shape just closed for over $800K! This last one really blew our minds because nothing around here has sold in the $800K range in a long, long time.

There are also other models that are fairly similar in size that have sold in the high $500K to high $600K range. If our house were listed today, it would probably sell very easily for $600K-$650K, and might even fetch in the low $700K range if a delusional buyer happend upon it — and there are more and more of these “delusional buyers” in the market these days.

“sdr” is right about rents going up since we moved here in 2004. We saw a really huge leap in rents in 2005/2006, right as the smart money was getting out at the top, and bubble-sitting, IMHO. Rents have come down somewhat in the past year, and the rental market is softer, but a smart LL can easily rent out a house here within a week if he/she prices it right. On the open market, ours would probably rent within a month at $2,400, currently. Maybe $2,500 with some luck, but I think the turnover is greater the higher the rent goes.

I should also add that we pay our rent in six-month increments and have put a few thousand into the house over the years (our choice). We are good to the LLs, and they are good to us. Technically, one might say we are paying more than $2,100 if one takes that into consideration. It seems we are one of the few fortunate ones, as we have a few friends who’ve had bad experiences with LLs being foreclosed on, among other problems.

In summary (Lord, I write too much!), with current potential rent at around $2,400, and prices at $650,000-ish, the price/rent ratio is still out of whack, but much better than it originally was at the peak.

[CA renter]

[quote=temeculaguy]Like AN, I also didn’t realize how low rent is compared to prices there, what would your place sell for CA renter?[/quote]

That’s a really tricky one right now, because the market is very distorted, IMHO. At the very peak (when we were first renting), our house would have sold for around $750K while our rent was originally $2,000 — a clear example of the price/rent disparity.

Right now, there is a model match with possible foundation and drainage problems that has been listed in the mid-500s for quite a long time. OTOH, another model match **with additional bedroom, bathroom, pool, and expanded kitchen** in good shape just closed for over $800K! This last one really blew our minds because nothing around here has sold in the $800K range in a long, long time.

There are also other models that are fairly similar in size that have sold in the high $500K to high $600K range. If our house were listed today, it would probably sell very easily for $600K-$650K, and might even fetch in the low $700K range if a delusional buyer happend upon it — and there are more and more of these “delusional buyers” in the market these days.

“sdr” is right about rents going up since we moved here in 2004. We saw a really huge leap in rents in 2005/2006, right as the smart money was getting out at the top, and bubble-sitting, IMHO. Rents have come down somewhat in the past year, and the rental market is softer, but a smart LL can easily rent out a house here within a week if he/she prices it right. On the open market, ours would probably rent within a month at $2,400, currently. Maybe $2,500 with some luck, but I think the turnover is greater the higher the rent goes.

I should also add that we pay our rent in six-month increments and have put a few thousand into the house over the years (our choice). We are good to the LLs, and they are good to us. Technically, one might say we are paying more than $2,100 if one takes that into consideration. It seems we are one of the few fortunate ones, as we have a few friends who’ve had bad experiences with LLs being foreclosed on, among other problems.

In summary (Lord, I write too much!), with current potential rent at around $2,400, and prices at $650,000-ish, the price/rent ratio is still out of whack, but much better than it originally was at the peak.

[CA renter]

[quote=temeculaguy]Like AN, I also didn’t realize how low rent is compared to prices there, what would your place sell for CA renter?[/quote]

That’s a really tricky one right now, because the market is very distorted, IMHO. At the very peak (when we were first renting), our house would have sold for around $750K while our rent was originally $2,000 — a clear example of the price/rent disparity.

Right now, there is a model match with possible foundation and drainage problems that has been listed in the mid-500s for quite a long time. OTOH, another model match **with additional bedroom, bathroom, pool, and expanded kitchen** in good shape just closed for over $800K! This last one really blew our minds because nothing around here has sold in the $800K range in a long, long time.

There are also other models that are fairly similar in size that have sold in the high $500K to high $600K range. If our house were listed today, it would probably sell very easily for $600K-$650K, and might even fetch in the low $700K range if a delusional buyer happend upon it — and there are more and more of these “delusional buyers” in the market these days.

“sdr” is right about rents going up since we moved here in 2004. We saw a really huge leap in rents in 2005/2006, right as the smart money was getting out at the top, and bubble-sitting, IMHO. Rents have come down somewhat in the past year, and the rental market is softer, but a smart LL can easily rent out a house here within a week if he/she prices it right. On the open market, ours would probably rent within a month at $2,400, currently. Maybe $2,500 with some luck, but I think the turnover is greater the higher the rent goes.

I should also add that we pay our rent in six-month increments and have put a few thousand into the house over the years (our choice). We are good to the LLs, and they are good to us. Technically, one might say we are paying more than $2,100 if one takes that into consideration. It seems we are one of the few fortunate ones, as we have a few friends who’ve had bad experiences with LLs being foreclosed on, among other problems.

In summary (Lord, I write too much!), with current potential rent at around $2,400, and prices at $650,000-ish, the price/rent ratio is still out of whack, but much better than it originally was at the peak.

[CA renter]

[quote=temeculaguy]Like AN, I also didn’t realize how low rent is compared to prices there, what would your place sell for CA renter?[/quote]

That’s a really tricky one right now, because the market is very distorted, IMHO. At the very peak (when we were first renting), our house would have sold for around $750K while our rent was originally $2,000 — a clear example of the price/rent disparity.

Right now, there is a model match with possible foundation and drainage problems that has been listed in the mid-500s for quite a long time. OTOH, another model match **with additional bedroom, bathroom, pool, and expanded kitchen** in good shape just closed for over $800K! This last one really blew our minds because nothing around here has sold in the $800K range in a long, long time.

There are also other models that are fairly similar in size that have sold in the high $500K to high $600K range. If our house were listed today, it would probably sell very easily for $600K-$650K, and might even fetch in the low $700K range if a delusional buyer happend upon it — and there are more and more of these “delusional buyers” in the market these days.

“sdr” is right about rents going up since we moved here in 2004. We saw a really huge leap in rents in 2005/2006, right as the smart money was getting out at the top, and bubble-sitting, IMHO. Rents have come down somewhat in the past year, and the rental market is softer, but a smart LL can easily rent out a house here within a week if he/she prices it right. On the open market, ours would probably rent within a month at $2,400, currently. Maybe $2,500 with some luck, but I think the turnover is greater the higher the rent goes.

I should also add that we pay our rent in six-month increments and have put a few thousand into the house over the years (our choice). We are good to the LLs, and they are good to us. Technically, one might say we are paying more than $2,100 if one takes that into consideration. It seems we are one of the few fortunate ones, as we have a few friends who’ve had bad experiences with LLs being foreclosed on, among other problems.

In summary (Lord, I write too much!), with current potential rent at around $2,400, and prices at $650,000-ish, the price/rent ratio is still out of whack, but much better than it originally was at the peak.

[sdrealtor]

TG,
CAR numbers seem very reasonable for market rent at 2400 and market value at 600 to 650K.

As for historical numbers, here’s one that I know. In 1997, I bought my first townhouse in Encinitas. It wasnt the bottom but was right when prices had started increasing. I paid $190K (a year earlier it would have gone for about $175K at bottom). Market rent was about $1300 back then (and had probably gone up at $100 in previous year also). That would put the multiplier around 150X but you also need to factor in $200 in HOA fees. If you back those out of the rent to make comparable to a SFR you are up to around 170X.

Hope that helps. Still trying to clear off the fog from last nites wine tasting event…..

[sdrealtor]

TG,
CAR numbers seem very reasonable for market rent at 2400 and market value at 600 to 650K.

As for historical numbers, here’s one that I know. In 1997, I bought my first townhouse in Encinitas. It wasnt the bottom but was right when prices had started increasing. I paid $190K (a year earlier it would have gone for about $175K at bottom). Market rent was about $1300 back then (and had probably gone up at $100 in previous year also). That would put the multiplier around 150X but you also need to factor in $200 in HOA fees. If you back those out of the rent to make comparable to a SFR you are up to around 170X.

Hope that helps. Still trying to clear off the fog from last nites wine tasting event…..

[sdrealtor]

TG,
CAR numbers seem very reasonable for market rent at 2400 and market value at 600 to 650K.

As for historical numbers, here’s one that I know. In 1997, I bought my first townhouse in Encinitas. It wasnt the bottom but was right when prices had started increasing. I paid $190K (a year earlier it would have gone for about $175K at bottom). Market rent was about $1300 back then (and had probably gone up at $100 in previous year also). That would put the multiplier around 150X but you also need to factor in $200 in HOA fees. If you back those out of the rent to make comparable to a SFR you are up to around 170X.

Hope that helps. Still trying to clear off the fog from last nites wine tasting event…..

[sdrealtor]

TG,
CAR numbers seem very reasonable for market rent at 2400 and market value at 600 to 650K.

As for historical numbers, here’s one that I know. In 1997, I bought my first townhouse in Encinitas. It wasnt the bottom but was right when prices had started increasing. I paid $190K (a year earlier it would have gone for about $175K at bottom). Market rent was about $1300 back then (and had probably gone up at $100 in previous year also). That would put the multiplier around 150X but you also need to factor in $200 in HOA fees. If you back those out of the rent to make comparable to a SFR you are up to around 170X.

Hope that helps. Still trying to clear off the fog from last nites wine tasting event…..

[sdrealtor]

TG,
CAR numbers seem very reasonable for market rent at 2400 and market value at 600 to 650K.

As for historical numbers, here’s one that I know. In 1997, I bought my first townhouse in Encinitas. It wasnt the bottom but was right when prices had started increasing. I paid $190K (a year earlier it would have gone for about $175K at bottom). Market rent was about $1300 back then (and had probably gone up at $100 in previous year also). That would put the multiplier around 150X but you also need to factor in $200 in HOA fees. If you back those out of the rent to make comparable to a SFR you are up to around 170X.

Hope that helps. Still trying to clear off the fog from last nites wine tasting event…..

[temeculaguy]

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.

[temeculaguy]

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.

[temeculaguy]

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.

[temeculaguy]

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.

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