Will rent prices drop too??

[HLS]

I think that using downtown SD condos as an example of anything is a poor choice.

There is a very thin market of people who would want to live in a multi story urban building with limited parking.
It’s a hassle with dogs, and kids, and schools.

I don’t see rental prices for suburban houses falling that much. The support of rental prices is what will determine the real value of a house. (The value doesn’t determine the rental market)

People can afford current market rents with $50K-$80K+ gross income, it’s mortgage payments that they cannot afford.

Many people who had $3000+ monthly mortgage payments are happy to pay $2000+ for a rental and not have to worry about maintenance and insurance.

This isn’t the 90’s downturn when people lost jobs and then lost houses. Most people that are losing houses still have jobs, and they need a place to live.

Decent rentals in the $1600-$3000 monthly rent range are very affordable to many.
McMansions were never designed to be sensible rentals.
Foolish people tried to make them that.

In my younger days, the good rentals were called “bread and butter” units, usually never more than a 2 or 3 bedroom homes in average neighborhoods.
Having HOA’s and condo assn fees for a rental was not a popular choice.

People didn’t talk about buying SFR’s in high end neighborhoods as investments in those days. The concept of being a landlord has changed with the times, and many people are just out of touch with reality.

[Bloat]

CL, rent.com, the newspaper, etc, they are all asking, but they are also indicative. If the market is bad then the “wishing” rent amounts will be down as a whole.

I like CL because you can do a quick keyword search (shadowridge) and note the number of listings and then calc a quick average to get a snapshot of the market. Go a little lower or offer a promo to reduce your vacancy.

[Bloat]

CL, rent.com, the newspaper, etc, they are all asking, but they are also indicative. If the market is bad then the “wishing” rent amounts will be down as a whole.

I like CL because you can do a quick keyword search (shadowridge) and note the number of listings and then calc a quick average to get a snapshot of the market. Go a little lower or offer a promo to reduce your vacancy.

[Bloat]

CL, rent.com, the newspaper, etc, they are all asking, but they are also indicative. If the market is bad then the “wishing” rent amounts will be down as a whole.

I like CL because you can do a quick keyword search (shadowridge) and note the number of listings and then calc a quick average to get a snapshot of the market. Go a little lower or offer a promo to reduce your vacancy.

[Bloat]

CL, rent.com, the newspaper, etc, they are all asking, but they are also indicative. If the market is bad then the “wishing” rent amounts will be down as a whole.

I like CL because you can do a quick keyword search (shadowridge) and note the number of listings and then calc a quick average to get a snapshot of the market. Go a little lower or offer a promo to reduce your vacancy.

[Bloat]

CL, rent.com, the newspaper, etc, they are all asking, but they are also indicative. If the market is bad then the “wishing” rent amounts will be down as a whole.

I like CL because you can do a quick keyword search (shadowridge) and note the number of listings and then calc a quick average to get a snapshot of the market. Go a little lower or offer a promo to reduce your vacancy.

[ltokuda]

It is possible for rental prices to go down if there’s an oversupply of rentals in your area. This could happen if there’s a recession, jobs are lost, and people start moving away. I don’t think rental prices are going to get cut in half, though.

My brother lives near San Jose. After the dot com bust, his rent actually went down. I think it dropped from about $1800 to $1400.

Regarding walking away from your house: that might be a good option. CalculatedRisk had some discussion about that. More and more, it looks like people are taking that option:

http://calculatedrisk.blogspot.com/2008/01/financial-times-walking-away-becoming.html

CR gives a very detailed explaination of the situation here:

http://calculatedrisk.blogspot.com/2008/01/options-theory-and-mortgage-pricing.html

Instead of walking away from your house and renting, there is another option. Let’s say prices drop 40% and you are heavily under water. You could opt to buy a second house just like your first house, but for 40% less. Then, you can move into the second house and stop making payments on your first house. You’ll lose your first house and your credit will ruined for a while. But it won’t matter that much because you already bought the new house while your credit was good. CR talks about that here:

http://calculatedrisk.blogspot.com/2008/01/more-on-homeowners-walking-away.html

I can’t say whether you “should” walk away or not. My personal opinion is that you should look at the legal ramifications fisrt. If that’s okay, then consider the financial ramifications (both present and future). If it still makes a lot of sense, then do it. Ultimately, you have to look out for yourself and your family.

[ltokuda]

It is possible for rental prices to go down if there’s an oversupply of rentals in your area. This could happen if there’s a recession, jobs are lost, and people start moving away. I don’t think rental prices are going to get cut in half, though.

My brother lives near San Jose. After the dot com bust, his rent actually went down. I think it dropped from about $1800 to $1400.

Regarding walking away from your house: that might be a good option. CalculatedRisk had some discussion about that. More and more, it looks like people are taking that option:

http://calculatedrisk.blogspot.com/2008/01/financial-times-walking-away-becoming.html

CR gives a very detailed explaination of the situation here:

http://calculatedrisk.blogspot.com/2008/01/options-theory-and-mortgage-pricing.html

Instead of walking away from your house and renting, there is another option. Let’s say prices drop 40% and you are heavily under water. You could opt to buy a second house just like your first house, but for 40% less. Then, you can move into the second house and stop making payments on your first house. You’ll lose your first house and your credit will ruined for a while. But it won’t matter that much because you already bought the new house while your credit was good. CR talks about that here:

http://calculatedrisk.blogspot.com/2008/01/more-on-homeowners-walking-away.html

I can’t say whether you “should” walk away or not. My personal opinion is that you should look at the legal ramifications fisrt. If that’s okay, then consider the financial ramifications (both present and future). If it still makes a lot of sense, then do it. Ultimately, you have to look out for yourself and your family.

[ltokuda]

It is possible for rental prices to go down if there’s an oversupply of rentals in your area. This could happen if there’s a recession, jobs are lost, and people start moving away. I don’t think rental prices are going to get cut in half, though.

My brother lives near San Jose. After the dot com bust, his rent actually went down. I think it dropped from about $1800 to $1400.

Regarding walking away from your house: that might be a good option. CalculatedRisk had some discussion about that. More and more, it looks like people are taking that option:

http://calculatedrisk.blogspot.com/2008/01/financial-times-walking-away-becoming.html

CR gives a very detailed explaination of the situation here:

http://calculatedrisk.blogspot.com/2008/01/options-theory-and-mortgage-pricing.html

Instead of walking away from your house and renting, there is another option. Let’s say prices drop 40% and you are heavily under water. You could opt to buy a second house just like your first house, but for 40% less. Then, you can move into the second house and stop making payments on your first house. You’ll lose your first house and your credit will ruined for a while. But it won’t matter that much because you already bought the new house while your credit was good. CR talks about that here:

http://calculatedrisk.blogspot.com/2008/01/more-on-homeowners-walking-away.html

I can’t say whether you “should” walk away or not. My personal opinion is that you should look at the legal ramifications fisrt. If that’s okay, then consider the financial ramifications (both present and future). If it still makes a lot of sense, then do it. Ultimately, you have to look out for yourself and your family.

[ltokuda]

It is possible for rental prices to go down if there’s an oversupply of rentals in your area. This could happen if there’s a recession, jobs are lost, and people start moving away. I don’t think rental prices are going to get cut in half, though.

My brother lives near San Jose. After the dot com bust, his rent actually went down. I think it dropped from about $1800 to $1400.

Regarding walking away from your house: that might be a good option. CalculatedRisk had some discussion about that. More and more, it looks like people are taking that option:

http://calculatedrisk.blogspot.com/2008/01/financial-times-walking-away-becoming.html

CR gives a very detailed explaination of the situation here:

http://calculatedrisk.blogspot.com/2008/01/options-theory-and-mortgage-pricing.html

Instead of walking away from your house and renting, there is another option. Let’s say prices drop 40% and you are heavily under water. You could opt to buy a second house just like your first house, but for 40% less. Then, you can move into the second house and stop making payments on your first house. You’ll lose your first house and your credit will ruined for a while. But it won’t matter that much because you already bought the new house while your credit was good. CR talks about that here:

http://calculatedrisk.blogspot.com/2008/01/more-on-homeowners-walking-away.html

I can’t say whether you “should” walk away or not. My personal opinion is that you should look at the legal ramifications fisrt. If that’s okay, then consider the financial ramifications (both present and future). If it still makes a lot of sense, then do it. Ultimately, you have to look out for yourself and your family.

[ltokuda]

It is possible for rental prices to go down if there’s an oversupply of rentals in your area. This could happen if there’s a recession, jobs are lost, and people start moving away. I don’t think rental prices are going to get cut in half, though.

My brother lives near San Jose. After the dot com bust, his rent actually went down. I think it dropped from about $1800 to $1400.

Regarding walking away from your house: that might be a good option. CalculatedRisk had some discussion about that. More and more, it looks like people are taking that option:

http://calculatedrisk.blogspot.com/2008/01/financial-times-walking-away-becoming.html

CR gives a very detailed explaination of the situation here:

http://calculatedrisk.blogspot.com/2008/01/options-theory-and-mortgage-pricing.html

Instead of walking away from your house and renting, there is another option. Let’s say prices drop 40% and you are heavily under water. You could opt to buy a second house just like your first house, but for 40% less. Then, you can move into the second house and stop making payments on your first house. You’ll lose your first house and your credit will ruined for a while. But it won’t matter that much because you already bought the new house while your credit was good. CR talks about that here:

http://calculatedrisk.blogspot.com/2008/01/more-on-homeowners-walking-away.html

I can’t say whether you “should” walk away or not. My personal opinion is that you should look at the legal ramifications fisrt. If that’s okay, then consider the financial ramifications (both present and future). If it still makes a lot of sense, then do it. Ultimately, you have to look out for yourself and your family.

[Bloat]

HLS,

Exactly right on the “bread and butter”, 2 & 3 bedrooms rentals. I’ve had one in Riverside for 20 years, but I know an agent who bought basic fixers and now has almost 30 and doesn’t need to work. He rents to sec 8’s and brags about his low vacancy and how his people can rehab anything for $2-3k.

The math favors the basic units. You can rent a $200k sfr for $1200, but you might get only $1800 for a $400k sfr and you are more likely to have hoa and expensive repairs, etc. McMansions would be the worst rental investment.

[Bloat]

HLS,

Exactly right on the “bread and butter”, 2 & 3 bedrooms rentals. I’ve had one in Riverside for 20 years, but I know an agent who bought basic fixers and now has almost 30 and doesn’t need to work. He rents to sec 8’s and brags about his low vacancy and how his people can rehab anything for $2-3k.

The math favors the basic units. You can rent a $200k sfr for $1200, but you might get only $1800 for a $400k sfr and you are more likely to have hoa and expensive repairs, etc. McMansions would be the worst rental investment.

[Bloat]

HLS,

Exactly right on the “bread and butter”, 2 & 3 bedrooms rentals. I’ve had one in Riverside for 20 years, but I know an agent who bought basic fixers and now has almost 30 and doesn’t need to work. He rents to sec 8’s and brags about his low vacancy and how his people can rehab anything for $2-3k.

The math favors the basic units. You can rent a $200k sfr for $1200, but you might get only $1800 for a $400k sfr and you are more likely to have hoa and expensive repairs, etc. McMansions would be the worst rental investment.

[Bloat]

HLS,

Exactly right on the “bread and butter”, 2 & 3 bedrooms rentals. I’ve had one in Riverside for 20 years, but I know an agent who bought basic fixers and now has almost 30 and doesn’t need to work. He rents to sec 8’s and brags about his low vacancy and how his people can rehab anything for $2-3k.

The math favors the basic units. You can rent a $200k sfr for $1200, but you might get only $1800 for a $400k sfr and you are more likely to have hoa and expensive repairs, etc. McMansions would be the worst rental investment.

[Author]

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