U-T: No Letup In Rental Rates

[powayseller]

SFH rents are up 16% over last year. Full U-T story

Now I am glad I signed a 2 year lease with my landlord in June.

Right before I signed my lease, I started a thread, asking whether I should sign the lease. Many of us on this forum gave factors for and against rising rents. Now we have the answer: despite people moving out of SD, rents are rising.

The most interesting story I heard in weeks was yesterday’s post by masayako, about the Open House for a rental, where 20 people were waiting to bid for it. So now the rental market is hot.

Rents are rising because rents and housing prices move inversely. Let’s remember this for the next real estate boom.

Rising rents will keep raising the CPI, which is the figure the Fed uses to decide whether to keep raising interest rates.

[sdduuuude]

“Rents are rising because rents and housing prices move inversely.”

!?!?!?!

[hs]

If rent continues to go up, that is bad for us. People won’t want to rent because they are too expensive and they will continue to buy houses. Then the housing price will never go down.
Can this continue? If there are too many houses on the market can not be sold, the owners may rent them out. If that is the case, rent shouldn’t go up.

Could this be the game the RE association are playing now in order to get people to buy?

[jabrwoki]

I can site my recent experience to the contrary. While asking prices of rents seems to have gone up there are still many good deals to be found specially in condos in the UTC/Carmel valley area. I recently was forced to move as the condo I was living in (Valentia ,UTC) is upgraded the apartment in anticipation of putting it on the market. Well seems like they are rather late to the UTC condo-conversion party as all the sales have stagnated and they have indefinitely postponed their plans for selling it. Carmel Valley/Torrey Hills which seems to be the toast of the town as regarding schooling districts etc still havs many vacancies to fill and periodically offer reasonably good deals. I recently moved there for less than $1700 for 2-bedroom apartment with a garage. The average rents vary from 1700-2000 in this area (for apartments less than 5 years old). In the meantime the clowns in Torrey Villas are trying to sell their 2-bedroom units for high 500s and above. Good luck to the new homeowners there !!

[(former)FormerSanDiegan]

If rents hold up …

The decline in home prices would inded be muted a bit.
So, instead of dropping 25-35% perhaps the decline is muted to 10-20%.

However, a 16% increase in rent for SFR seems a bit high !
Since there is no additional data in the article I suspect that this is a statistical glitch or perhaps a noisy one-month number. Better to look over longer-temr averages.
Either way, rents for all units (incl. apartments) are increasing slightly faster than overall inflation. If the 16% holds up, and continues to go up at 4-5% per year it would decrease the amount of $ that home prices would have to fall to come back into equilibrium (assuming that somehow wages catch up !).

[EJ]

I think rents will rise initially and then level off as the unoccupied homes are either rented or sold. They even mention in the article that there is a lot of inventory poised to come to the rental market. This seems to be mostly condos, SFR’s may stay at a higher rent longer. I doubt rents will drop significantly at any point. There may be a high demand in SFR’s right now due to people selling homes to cash out of the market. Just my $0.02

[an]

Unless you’re planning to move to a new rental unit, I don’t think it’ll affect you that much even if you’re on a 1 yr lease rather than 2 yrs. I think that most smart landlord knows that good tenants are hard to find, and when they got one, they would rather either keep rents the same or bump it just a little. They don’t want to upset you and force you to leave. If you leave, they almost have 1 month of no rent. If you’re talking about $2k/month rent, that’s almost like losing $200/month in rent. Also, they’ll be risking getting a not so good tenant. So, I’m not too worried. Also, if you look at it, rent of SFR is still much cheaper $/sq-ft compare to apartments. But rents are based solely on income, so rent can only rise so much before they top out, or our income will rise along with it.

My personal experience is that yes, I’ve been to open house for rental that have 5-6 couples chasing after it. I end up getting a 1600+sq-ft townhouse that’s 5 minute from work for both me and my wife at around $1.3/sq-ft in Sorrento Valley. Other units around me rent for around $1.35-$1.4/sq-ft and mine was listed for $1.5/sq-ft. So, good deal can still be had if you bargain and have the credit score, cash to back up your bargain.

[powayseller]

Why does a landlord have an Open House for a rental property? How does this work?

Rents cannot exceed income, so there is a ceiling to how high it can go. Eventually, it will come down, as more people leave San Diego and foreclosures and job losses reduce people’s ability to pay these high rents.

Apartment rentals will come down when condo conversion go back on the market, and the 30% vacant listings cannot be sold and are rented instead.

But in the short term, there is more demand for rentals than for housing. Someone posted the other day that he saw 20 other people at a rental open house. So the SFR rental market is tight, and that causes prices to rise.

All this is my opinion.

[Carlsbadliving]

A lot of times if a property management company gets a lot of calls on one home they will set up a time on the weekend for everyone interested to come by. It saves them time so they don’t have to drive out to the house and show it 20 separate times.

[no_such_reality]

3-4% oh no.

I read the article and saw a renting glut coming up.

First it points out that rent growth is basically 3-4%

Then it points out that all the condo conversions and condos coming on the market are likely to go rental since they can’t be sold.

Also, pay attention to the charts, they show rent “asking” price. Not the actual rent.

[no_such_reality]

[ybc]

The 15% or so rental increase in SFH could just be a mix shift towards more higher end SFH being offered as rentals. I was surprised by how many $3000+ SFH houses there are on the market; but won’t be surprised if former owners with good profit from selling their houses are now willing to pay up a little so that they don’t compromise their lifesytle. Ultimately, rental price has to be supported by income.

[Author]

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