Rent are rising

[recordsclerk]

Larger complexes are also charging water and sewer which is not included in rent. These are ad ons that were free in the not to distant past. They are also requiring renters insurance. Most renters would pass on renters insurance if given the choice.

[utcsox]

[quote=livinincali]

This is based on mostly large complexes in the San Diego City area. It contain some central east counties like La Mesa, Santee, etc. Rents have been increasing but in the last 6-12 months vacancy rates have been increasing as well and 1 bd room and studio rental rates are starting to lag 2 and 3 bedroom rental rate increases. While rents will probably still go up, there’s a case to be made that they are close to topping out.[/quote]

I think it’s all depend on the vacancy rate. If the vacancy rate still hover below 5%, rent can still going up at a faster pace than normal market. Jobs growth is a blistering pace in San Diego right now and there are very limited number of new housing units coming to the market. I expect the rent continue to go up at a faster pace than normal in the near future.

[utcsox]

bump..

http://www.sandiegouniontribune.com/news/2015/aug/15/real-estate-housing-corelogic-zillow-midyear/

$1,575: The average rent in San Diego County in March, up 9 percent from the $1,445 average in 2014, according to Marketpointe Realty Advisors.

43.7: Percent of monthly income San Diego County renters can expect to pay on rent, above the historic 33.9 percent, according to Zillow.

But you know the rent of a 1-bedroom of a unnamed apartment complex in Mira Mesa has really not gone up by much ….

[poorgradstudent]

Well, this does help explain part of the support for rising home prices.

[urbanrealtor]

[quote=poorgradstudent]Well, this does help explain part of the support for rising home prices.[/quote]
Sort of.
It better explains why low interest rates and innovative lending (not always a good thing– think NINJA loans) start to make sense.
Low payment and low cash down mean purchase can be almost as cheap as current rent prices.
Also, and I think more importantly, it explains that current prices are back-stopped to a certain extent.

If prices in condos drop even 10% they become cheaper than renting.

Barring a broad rent fade (and we are not currently at risk of a deflationary rent spiral) those currently high prices are effectively fixed.

There are some nuances and changes but that is the short version.

[livinincali]

[quote=urbanrealtor]
Low payment and low cash down mean purchase can be almost as cheap as current rent prices.
Also, and I think more importantly, it explains that current prices are back-stopped to a certain extent.

If prices in condos drop even 10% they become cheaper than renting.

Barring a broad rent fade (and we are not currently at risk of a deflationary rent spiral) those currently high prices are effectively fixed.

There are some nuances and changes but that is the short version.[/quote]

Well as long as mortgage rates stay constant. The monthly payment for 200K at 4.0% is less than the monthly payment for 180K at 5.0%. Granted it’s close and once you factor in the additional property tax it’s probably a wash. The point is that the market is really being backstopped by the low interest rates. Interest rates may remain low for awhile so maybe’s there’s nothing to worry about but 5’s or 6’s on mortgage rates would have a huge negative impact on housing prices.

[The-Shoveler]

[quote=livinincali] Interest rates may remain low for awhile so maybe’s there’s nothing to worry about but 5’s or 6’s on mortgage rates would have a huge negative impact on housing prices.[/quote]

Its a catch 22,

A huge negative impact on housing prices.

Has a huge negative impact on the economy.

[poorgradstudent]

[quote=urbanrealtor][quote=poorgradstudent]Well, this does help explain part of the support for rising home prices.[/quote]
Sort of.
It better explains why low interest rates and innovative lending (not always a good thing– think NINJA loans) start to make sense.
Low payment and low cash down mean purchase can be almost as cheap as current rent prices.
Also, and I think more importantly, it explains that current prices are back-stopped to a certain extent.

If prices in condos drop even 10% they become cheaper than renting.

Barring a broad rent fade (and we are not currently at risk of a deflationary rent spiral) those currently high prices are effectively fixed.

There are some nuances and changes but that is the short version.[/quote]

Oh yeah, rent prices factored into our decision to buy last year. The mortgage on our 3/2 SFH is pretty comparable to what we’d have to pay to rent a simliar property. Barring a 10% correction in the next year or so, so far the decision seems to have mostly paid off.

[skerzz]

I’m hoping for 5%+ annual rent increases for the foreseeable future! I’d love to be in a position to use the cash flow from my SFR rental to cover 100% of my primary residence carrying costs so I can have no net housing costs (mortgage, insurance, taxes, etc.). It’s going to take approximately 15 years of 5% annual rent increases to make that happen, so perhaps I’ll need to look at getting into another rental property to speed this up. Anyone have statistics on the annual rents for SFR properties in SD county over the past 20+ years? I’m thinking 5% is much too aggressive for modeling purposes and 2-3% might be more reasonable.

[FlyerInHi]

It’s a good time to be in the apartment business. The nicer apartments complexes are able to raise rents and they are multiplying.

I like these type of apartments being built. This complex here is right on el cajon blvd with storefronts. This company owns/managers lots of complexes around the country.

http://www.carmelapartments.com/blvd63

[livinincali]

[quote=skerzz]I’m hoping for 5%+ annual rent increases for the foreseeable future! I’d love to be in a position to use the cash flow from my SFR rental to cover 100% of my primary residence carrying costs so I can have no net housing costs (mortgage, insurance, taxes, etc.). It’s going to take approximately 15 years of 5% annual rent increases to make that happen, so perhaps I’ll need to look at getting into another rental property to speed this up. Anyone have statistics on the annual rents for SFR properties in SD county over the past 20+ years? I’m thinking 5% is much too aggressive for modeling purposes and 2-3% might be more reasonable.[/quote]

In 2000 average asking rent in San Diego city was about $900/mo. Now it’s almost $1600/mo. In 2010 it was about $1250/mo. So it’s really gone up quite a bit in the last 5 years. From 2000 to 2010 you had about 3% annual increases. From 2000 to 2014 you had close to 4% annual increases.

For rents over the long term you aren’t going to get much more than nominal wage inflation. I suppose if you get big minimum wage increase and it successfully rises all boats instead of having negative unintended consequences then maybe you could expect 5% for awhile.

[joec]

[quote=FlyerInHi]It’s a good time to be in the apartment business. The nicer apartments complexes are able to raise rents and they are multiplying.

I like these type of apartments being built. This complex here is right on el cajon blvd with storefronts. This company owns/managers lots of complexes around the country.

http://www.carmelapartments.com/blvd63%5B/quote%5D

Maybe good for the hipster professional who wants a little action at night as well…

I don’t know when I knew about this from seeing these articles, but it seems that “El Cajon Blvd” is still the prostitution hotspot for San Diego…

2009 Article:
http://www.voiceofsandiego.org/public-safety/why-el-cajon-blvd-is-a-prostitution-hotspot/

2014 Article:
http://www.sandiego6.com/news/local/249945671.html
(major bust).

Pretty pathetic that a “Luxury” apartment is probably over 3k/month for 1000 sqft while I sit in an econobox over 3000 sqft at a lower monthly with tax benefits. Not to mention you need to have 3 other roommates so you don’t feel it’s that expensive.

I honestly feel like how I did it in the past if I had to still rent (and was 20 years younger), I’d tried to live in the cheapest crappiest shit hole instead of “wasting” my money on rent and NEVER have any savings. No wonder rentals use even more of a persons % of income on rent vs. mortgagers.

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