Red HOTTTTT Market!!

[The-Shoveler]

Nor_LA-Temcu-SD-Guy

I think if you are willing to drive I think there are a lot of places to rent (cheap) , I see signs all the time on the local roads in Temcula Valley area, (If you can’t sell , I guess rent for what you can). Can’t see anyone not being negative on the mortgage this way though.

[4plexowner]

I believe that the downtown condo market has to be considered when predicting where rents are headed.

Given the existing glut of downtown condos already and the fact that more condos are being built, I expect we will have thousands of rental condos downtown before the market bottoms.

This overhang of rental condos will depress the rental market throughout San Diego.

~

My real estate agent deals mostly with view properties and has rented some of them over the years.

It always blew me away when she talked about renting these places for $4000+/month.

When I asked her what type of person rents at those prices she said that they mostly fall into these categories:
1. lots of cashflow but credit so horrible that they couldn’t buy anything or couldn’t get an acceptable mortgage
2. involved in a divorce or lawsuit where it didn’t make sense to acquire new assets
3. only in San Diego for a limitted time

Based on her experience, I don’t believe there are many people who are willing to rent for $4000+/month – ie, there IS a cap on rents in San Diego.

[powayseller]

The Poway rental market is HOT too. My friend rented her house out twice since early summer. A couple cruised our neighborhood writing down the realtors numbers from For Sale signs, hoping that a seller would rent to them. A house in good condition, well priced, will go fast. If the house sucks, or its overpriced, it will just sit…

[(former)FormerSanDiegan]

powayseller

A nice gauge of the current Poway market would be to compare the current price and rent rates. Can you make an educated guess at where both stand in Poway ?

[FutureSDguy]

Hi, CBL. (And thanks to everyone so far for replying to my question–this is turning out to be a good read.)

I lived in the Seattle area up to 2004 (sold a townhouse just as the market there was starting to taking off), and then moved across the state to Pullman for graduate school (bought a decent cookie cutter house under market value). California would be a big jump for us in 2007, but Seattle just didn’t excite us anymore (I’m actually an Idaho native.) We’re trying to do our California move with our eyes wide open. And if and when we get settled, we look forward to the friendly culture that hear about!

As for the Seattle market, you probably know as much as I do based on surfing the web. It is softening up, thankfully. Everyone who works hard and saves up a little money should deserve a house.

Why Carlbad. I’ve been “drifting” in several areas, but I won’t know for sure until I secure employment in the software industry and have a feel for the area (hence my curiousity about the rental situation). I had originally been focusing on Escondido, but then realized that the prices are not so bad in the Oceanside/Carlsbad area and it would potentially place me closer to work. This is not only better for commute, but it would also help socially as I would be able to entertain coworkers at home.

Brian

[powayseller]

Based on my rent vs. current value, we needed a 55% reduction in my neighborhood. We dropped some, and now need a 45% reduction in home prices to get to 10x annual rent.

You can rent a 1800 sq ft house for $2200, a 2200 sq ft house for $2500, a 1600 sq ft townhouse for $1800. Every unit here is rented out – no vacancies.

[Raybyrnes]

Would the fact that ther are no rentals available suggest that there iw an inefficient rental market and that sellers are underpricing ther home rental values? This might suggest that long term rental propeties are at the beginning of price appreciation. If rental units begin to go up we begin to see some equilibrium when compared to long to valuation in ownership.Any feelings on this. Would it shock anyone to see renets going up. I ahve rented for over 4 rears and have not seen a rent increase. If they charged me 300$ more per month I owuld still be comfortable with the price.

[Raybyrnes]

Would the fact that ther are no rentals available suggest that there iw an inefficient rental market and that sellers are underpricing ther home rental values? This might suggest that long term rental propeties are at the beginning of price appreciation. If rental units begin to go up we begin to see some equilibrium when compared to long to valuation in ownership.Any feelings on this. Would it shock anyone to see renets going up. I ahve rented for over 4 rears and have not seen a rent increase. If they charged me 300$ more per month I would still be comfortable with the price.

[sdcellar]

There are plenty of rentals available. The ones that are priced right move fast. It’s a market like anything else and seems reasonable right now. I’m not too worried about rents going up much any time soon.

Follow craigslist for a week and I think you’ll agree.

[bubba99]

IMO rental prices must go up. With demand for housing staying relatively constant, and the “purchase” market in a downturn, rental markets will see increased demand.

Rents have stayed low for years inspite of rapid appreciation of the underlying property. As more people flow to the rental market it is almost a given that prices will increase. It may be that the easy credit of the last five years has artificially kept the rental market demand down as buyers moved to their new homes instead of rentals.

When the rental market equalizes from the shocks of the easy credit era, we may see the real economic value of housing. If we start with the rentals at equilibrium, and work backward, the underlying economic value is a simple calcualtion based on the cost of money.

If you are in a rental now, it might be a good idea to lock in a lease price or cap on increases before the market does equalize.

[powayseller]

bubba99, my prediction is with you on the short term. However, as unemployment increases next year and people continue moving out of San Diego, rental prices will decrease a little bit. Housing prices will fall to meet 8 – 10x annual rents.

[FutureSDguy]

It’s clear that rentals should go up due to increased demand from those who can’t or won’t buy houses at today’s prices. But supply is also a factor, but I don’t see a glut of rentals happening.

I’m concerned that low income housing is also going to go up due to the upward vacuum effect (higher priced rentals go higher, leaving a price gap that lower priced rentals will then fill). The people who work in the service industry play a very important part of an economy, and they just may be priced out. New York City has a great subway system to help transport people from outlying areas, but can the San Diego area deal with the lack of housing for these people?

Brian

[sdrealtor]

Just got back from an open house and had an interesting conversation with an owner of several rentals. He said he has no problem renting anything out except a property by the back gate of pendleton. He also said if we ever got out of Iraq rents would go up at least 10% when all the marines came back into town. he has owned and rented proeprties out in Coastal North county for about 25 years.

[anxvariety]

I dont hear a colleague say how hot the rental market is. Over 20 calls in one day is astounding!

Caution.. sort of unrelated…..

A few months back I placed an ad on Craigslist for ‘free alcohol’ with a story of a wife who was trying to get rid of all the alcohol in the house while her husband was out on business… I placed my friends phone number in the ad – it was my attempt at a practical joke / wake up call for the alcoholism path he is headed down… Maybe it was deceptive, but whatever..

My friend called me about 30 minutes after I placed the ad and said his phone had not stopped ringing for the last bunch of minutes.. Since he was out drinking with his buddies, he told me not to remove the posting, as they were having fun talking to all the people who were calling…

He called me some 5 or 6 hours later and reported that 300+ people had called him and his phone was ringing constantly… Since this guy is sort of an exagerrator, I would guess that 150 calls would probably be more accurate… but still alot!!

So 15 calls for a place to rent VS. 150+ calls in about 6 hours for free alcohol.. maybe 15 calls on a rental is a low number? Probably more like, location doesn’t matter for alcohol, just as long as it’s going down your throat!

[SD Realtor]

I have used Craigslist when advertising my rentals and have always had very strong responses. I recommend it to all of my clients and friends looking to rent properties.

SD Realtor

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