Rent Crash: It Never Happened

[NotCranky]

This is just one item that many piggs were bearish on that never materialized. Without singling out anyone, there were some calls for 30-40% decreases in rents.

Were you surprised one way or another? I had my doubts about crashes but wasn’t sure, and went ahead with plans to build my rental in 2008, on a budget that could survive low occupancy and rent drops. Luckily rents held up….for now.

It looks like big crashes are almost positively out of the question.
I do worry about my rural rental more than urban rentals, but so far so good.

[peterb]

The rental market is probably one of the most free markets we have and is thus constantly adjusting based on available money and not debt. Crash, probably not. But I bet these new mortgage rates turn a lot of renters into owners. Which in turn should soften the rental market.

[spdrun]

Rates have been low for the past ~3 years. Availability, underwriting standards, and appraisals are the issue. Fortunately, those will take at least another year or two to change.

[SD Realtor]

Peterb really good post. Except I have not seen any negative effects on the rental market given the lower rates. Honestly I don’t see it happening. I think the key statement you made is that the rental market (at least in San Diego) is free and is not manipulated (directly) and thus has remained robust.

[peterb]

I do not think that rates have been below 4% for the last 3 years. This is creating a rent parity situation and that gets a renters attention.
Trouble is that there’s not a lot to buy out there these days. So it’s starting to look like a scaled down bubble on the rise. And will probably have a very mild effect on the rental market.

[flyer]

A question for the OP.

Just wondered if you built your rentals in San Diego County or elsewhere?

We have quite a few rentals, here and elsewhere, and I was just curious where people are building now?

[NotCranky]

Flyer,
I only built one detached house for rental in Jamul. A single dwelling like that is probably not practical situation in San Diego, unless you own the property already. Also, I drew the plans pulled permits and did most of the work at a time when I was going to be short of work anyway. At the time many piggs were saying rents would crash big time.

I used to think about buying a tear down in normal heights or thereabouts and putting in more units. Maybe just building a second house on large lot with an existing house,like I did for a friend. It could be practical in other parts of the county. That still could be a good idea for some. It’s complicated and decent sites are running out or are not for sale often. Probably have to knock on some doors and find a person who would sell.

Development above those kinds of things is over my head. Obviously, other people build big rental complexes here in San Diego, but I don’t think any piggs do.

[flyer]

Interesting Blogstar, good for you.

We’ve been involved in rentals for many years, and the sudden surge in purchasing income property has been very interesting to watch–that’s why I asked.

Since my wife and I grew up in San Diego, the parents, grandparents and great-grandparents of many of our friends and family actually helped build this County beginning in the early 1900’s–including mega apartment complexes in the 60’s, 70’s and 80’s–but, I agree, with a few exceptions, that is mostly a thing of the past.

[Coronita]

[quote=Blogstar]Flyer,
I only built one detached house for rental in Jamul. A single dwelling like that is probably not practical situation in San Diego, unless you own the property already. Also, I drew the plans pulled permits and did most of the work at a time when I was going to be short of work anyway. At the time many piggs were saying rents would crash big time.

I used to think about buying a tear down in normal heights or thereabouts and putting in more units. Maybe just building a second house on large lot with an existing house,like I did for a friend. It could be practical in other parts of the county. That still could be a good idea for some. It’s complicated and decent sites are running out or are not for sale often. Probably have to knock on some doors and find a person who would sell.

Development above those kinds of things is over my head. Obviously, other people build big rental complexes here in San Diego, but I don’t think any piggs do.[/quote]

Rustico!!! That’s who you are… I was wondering who the heck Blogstar was, because you seemed so familiar….Welcome back! (Well, I guess you never left… Just I was a little slow there!)

[poorgradstudent]

Rents, like a lot of things, tend to be awfully sticky on the way down. I think we’re much more likely to see a few years of flat-to-very-slow increases in rents rather than a crash. There was a huge jump in rent prices in 2011, while this year’s increase seems pretty small. But yeah, I don’t really expect rent prices to collapse unless unemployment starts shooting up again.

I will add that the SFH rental market seems a lot hotter than the condo/apartment market.

[patb]

how many new MFDU’s coming on line, they started a lot a year ago,
that should soften the market when they come on line

[NotCranky]

[quote=flu][quote=Blogstar]Flyer,
I only built one detached house for rental in Jamul. A single dwelling like that is probably not practical situation in San Diego, unless you own the property already. Also, I drew the plans pulled permits and did most of the work at a time when I was going to be short of work anyway. At the time many piggs were saying rents would crash big time.

I used to think about buying a tear down in normal heights or thereabouts and putting in more units. Maybe just building a second house on large lot with an existing house,like I did for a friend. It could be practical in other parts of the county. That still could be a good idea for some. It’s complicated and decent sites are running out or are not for sale often. Probably have to knock on some doors and find a person who would sell.

Development above those kinds of things is over my head. Obviously, other people build big rental complexes here in San Diego, but I don’t think any piggs do.[/quote]

Rustico!!! That’s who you are… I was wondering who the heck Blogstar was, because you seemed so familiar….Welcome back! (Well, I guess you never left… Just I was a little slow there!)[/quote]

:). lol.

[NotCranky]

[quote=patb]how many new MFDU’s coming on line, they started a lot a year ago,
that should soften the market when they come on line[/quote]

Yes how many? I had a good link but lost it(the link). I am sure someone else is up on this?
I don’t think what ever it is there will be a a very large spectrum of housing types or locations involved. Downtown high rises and central county apartments complexes. Seems like that’s what it was.

What about these foreclosure to rentals you can read about how big of a deal is that? Where will there be impacts?

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