Rents in OB/PB went up a lot the last year

[gzz]

The price of the most basic 2/2 is now at least 2200. Was 2000 when I last looked last fall. And unrenovated 3/2 SFH are now basically all at least $3200.

I am not going to raise rents, but feels nice and secure to know it would likely be easy to find new tenants at a higher price if any leave.

AirBnb is supposed to be squeezing the market up, that seems to be the case with a lot fewer listings than I remember.

I think we have a lot of room to keep growing. San Diego is the 8th largest US city but only ranks 12th in rent. We are well under half of SF.

http://www.sandiegouniontribune.com/business/real-estate/sd-fi-san-diego-renters-20170502-story.html

Three large local REITs have 96, 96, and 97% occupancy.

http://www.sandiegouniontribune.com/business/real-estate/sd-fi-rent-growth-reit-san-diego-20170508-story.html

[spdrun]

LA would probably be a better comparison than SF — SF rents aren’t sustainable. Not everyone is an overpaid techbro, and firefighters, students, teachers, nurses, etc need to live somewhere.

And I’m pretty sure SD wouldn’t want them, since it would change the character of the city. The headline is that an average DOCTOR can’t afford 60% of the homes in SF.

[no_such_reality]

IF the fall rent was $2000 and May rent is only $2200, that’s really soft for the beach IMHO.

If you want to live at the beach, you rent in November, if you want to get sheared like a sheep, you look to rent at the beach in May.

[Escoguy]

sp

I agree about students, and perhaps teachers.

I’ve had two nurses as tenants and they’ve been able to afford rents in the $3,500 range.

Firefighters are a category unto themselves, it seems a fair number get a lot of overtime so pay in the 150K range isn’t as unusual as one might think.

In the past 24 months, I’ve had four tenants change out (total of four local rentals), each time rents have gone up by $200-$300 so over a two year period 25% has happened for me in 92127/92078/92027.

I was likely below market but I have to agree that the increases are significant.
I’m almost glad when a tenant gives notice now.

[gzz]

Esco what was the percentage income increase per year? So tenant from 2012 pays $2000 and is replaced by a new one in 2017 who pays $2500 would be 25% over 5 years.

[bewildering]

[quote=gzz]Esco what was the percentage income increase per year? So tenant from 2012 pays $2000 and is replaced by a new one in 2017 who pays $2500 would be 25% over 5 years.[/quote]

4.56%

http://www.investopedia.com/calculator/cagr.aspx

[Escoguy]

The one paying $2000 in 2012 is now at $3250
second at $2600 in 2013 now at $3500
third at $2400 in 2013 now at $3150
fourth at $3200 in 2014 now at $3400

I think you see the picture.

[gzz]

I checked again. It is still hot outside but summer renting season is mostly over. Large share of listings are for Sept move in.

Prices are even higher. Most 1 bedrooms are 1700+. Plenty of 2 bedrooms are flirting with 3k. Like for sale listings, rent listings are low.

I was worried that the 180 unit Dylan complex opening on the old Bernard school site could soften the market, but obviously not. 1 bedrooms there go for 2400 and two bedrooms for 3000. And it isn’t even a reasonable walk to the beach, though the drive is less than 6 minutes without traffic.

Some of this I think is catch-up growth, as beach rents seemed to lag other parts of the market for a while. Even now the premium for OB/PB/Point Loma really isn’t that high.

In Jan 2017 I predicted 2017 would be hot for RE prices but 2018 would be softer. With this rent growth 2018 looks like it could be a 10% price growth year too.

[gzz]

Esco, I appreciate you sharing the rent figures. Rent growth like this really must make investors reluctant to sell.

I ran the numbers for my places with a 2% rent growth assumption and the purchases made sense.

[Escoguy]

gzz

I can’t think of any reason to sell, even if rents flatten out for a few years.

Every year the five properties bring an additional 5-7K in rent. Yes there are some expenses but it comes out fine.

One of mine is probably still $400 below market but the tenant has a son in high school and I’m fine with them staying two more years so he can finish. (long complicated story) but I’ve done well.

In spite of what Greenspan says, rates are low and it looks like they will stay lower for longer. I don’t think the full impact of globalization on non-union manufacturing wages in the US is fully understood in policy circles.

Net effect, the only inflation is in areas like medical services, college.

Anything that can be downloaded or bought in a store/online has minimal inflation so rates can’t go higher.

[FlyerInHi]

[quote=Escoguy]

Anything that can be downloaded or bought in a store/online has minimal inflation so rates can’t go higher.[/quote]

I so agree. Not to mention the overhang in capacity. Everything is being commoditized which is wonderful because standards of living are increasing, if you have fixed housing costs.

Now, if technology could commoditize housing like 3D print houses or build prefab very quickly….

After a decade, I’m still waiting for dollar debasement and hyperinflation that was predicted by the likes of Ron/Rand Paul.

[gzz]

OB rcently got three prefab houses. I think the developers were only about 30 and it was their first project. The lot had been vacant for at least a decade. Now only two vacant lots remain in OB west of Ebers, one right next to it and one on Santa Monica.

It actually looks better in person, the pics make it look dated ultramodern.

http://www.threeonabbott.com/

[bewildering]

[quote=gzz]OB rcently got three prefab houses. I think the developers were only about 30 and it was their first project. The lot had been vacant for at least a decade. Now only two vacant lots remain in OB west of Ebers, one right next to it and one on Santa Monica.

It actually looks better in person, the pics make it look dated ultramodern.

http://www.threeonabbott.com/%5B/quote%5D

I am surprised the steep step ladder to the sleeping area is to code. These houses will definitely not be appealing to people with kids.

[gzz]

Kids love loft beds. I climbed trees a lot more dangerous looking than that when I was 9. Not good for little kids of course.

I don’t think that roof deck is up to code either.

Overall though it looks like a great use of space.

[FlyerInHi]

[quote=gzz]OB rcently got three prefab houses. I think the developers were only about 30 and it was their first project. The lot had been vacant for at least a decade. Now only two vacant lots remain in OB west of Ebers, one right next to it and one on Santa Monica.

It actually looks better in person, the pics make it look dated ultramodern.

http://www.threeonabbott.com/
[/quote]

I love it. We should do more like this, especially as companion units. As an Airbnb, the choice of materials and furnishings could be different or maintenance reasons. Otherwise, it’s awesome.

I’m sure everything is up to code. The ladder is no different than a ladder that you buy at Home Depot and lean against your wall.

[Author]

Posts