Will rents create a price floor despite the mini rental bubble?

[sdduuuude]

Look at the very last line of this web page.

It says “In God we Trust. Everyone Else Bring Data.”

Please show me some sort of historical chart that shows we are in a rent bubble.

[bjensen]

I’ve been around awhile and am well aware of the web page motto. Here is a quick analysis.

Yr —- Inf. —- FMR 2 Bed – % Increase
2000 – 3.38% FMR $891 N/A
2001 – 2.83% FMR $1046 17.39%
2002 – 1.59% FMR $1097 4.88%
2003 – 2.27% FMR $1155 5.28%
2004 – 2.68% FMR $1220 5.62%
2005 – 3.39% FMR $1317 7.95%
2006 – 3.24% FMR $1392 5.69%
2007 – 2.85% FMR $1485 6.68%
2008 – ? % FMR $1595 7.40%

In the first I include federal inflation stats, HUD fair market for 2 bedroom apartments, and the increase YOY in the fair market.

As you can see, the percent increase in what is considered “fair market” climbed by a significant amount over reported inflation.

Perhaps more shocking is to compare this to household median incomes. I couldn’t find reliable data for anything past 2005, but that covers most of the bubble years so I think it demonstrates my point.

Median Household Income
2000 — $58,820
2005 — $65,823

Household Income 5 Year Increase 2000-2005 = 11%

Actual Rental Increase
2000 $891
2005 $1317
% Increase – 47%

Rental Increases if They Tracked Inflation
2000 $891
2005 $1044.69
% Increase – 17%

In summation, if government data can be trusted, rental costs increased at more than double the rate of household incomes in Orange County from 2000-2005.

It seems to me that in a rational market even rentals should be tied to local incomes. All I can gather is there are two options I see. 1. Rental prices were a bargain in 2000 and they are normal today. 2.Rents were fairly valued in 2000 and are overpriced today. Any other possibilities?

I don’t really trust the government to accurately report inflation. That’s why I shared the income to rental cost info as well.

What do you think? Am I crazy? I don’t profess to be an expert. I am a student who has come to be educated by the Piggs. Please help enlighten me. I ask this question to formulate my own strategy to eventually buy at the market bottom. I’m just looking to formulate a strategy to hopefully buy as close to the bottom as I can get.

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/rent/index.cfm

http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=CA

http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

[bjensen]

I’ve been around awhile and am well aware of the web page motto. Here is a quick analysis.

Yr —- Inf. —- FMR 2 Bed – % Increase
2000 – 3.38% FMR $891 N/A
2001 – 2.83% FMR $1046 17.39%
2002 – 1.59% FMR $1097 4.88%
2003 – 2.27% FMR $1155 5.28%
2004 – 2.68% FMR $1220 5.62%
2005 – 3.39% FMR $1317 7.95%
2006 – 3.24% FMR $1392 5.69%
2007 – 2.85% FMR $1485 6.68%
2008 – ? % FMR $1595 7.40%

In the first I include federal inflation stats, HUD fair market for 2 bedroom apartments, and the increase YOY in the fair market.

As you can see, the percent increase in what is considered “fair market” climbed by a significant amount over reported inflation.

Perhaps more shocking is to compare this to household median incomes. I couldn’t find reliable data for anything past 2005, but that covers most of the bubble years so I think it demonstrates my point.

Median Household Income
2000 — $58,820
2005 — $65,823

Household Income 5 Year Increase 2000-2005 = 11%

Actual Rental Increase
2000 $891
2005 $1317
% Increase – 47%

Rental Increases if They Tracked Inflation
2000 $891
2005 $1044.69
% Increase – 17%

In summation, if government data can be trusted, rental costs increased at more than double the rate of household incomes in Orange County from 2000-2005.

It seems to me that in a rational market even rentals should be tied to local incomes. All I can gather is there are two options I see. 1. Rental prices were a bargain in 2000 and they are normal today. 2.Rents were fairly valued in 2000 and are overpriced today. Any other possibilities?

I don’t really trust the government to accurately report inflation. That’s why I shared the income to rental cost info as well.

What do you think? Am I crazy? I don’t profess to be an expert. I am a student who has come to be educated by the Piggs. Please help enlighten me. I ask this question to formulate my own strategy to eventually buy at the market bottom. I’m just looking to formulate a strategy to hopefully buy as close to the bottom as I can get.

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/rent/index.cfm

http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=CA

http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

[bjensen]

I’ve been around awhile and am well aware of the web page motto. Here is a quick analysis.

Yr —- Inf. —- FMR 2 Bed – % Increase
2000 – 3.38% FMR $891 N/A
2001 – 2.83% FMR $1046 17.39%
2002 – 1.59% FMR $1097 4.88%
2003 – 2.27% FMR $1155 5.28%
2004 – 2.68% FMR $1220 5.62%
2005 – 3.39% FMR $1317 7.95%
2006 – 3.24% FMR $1392 5.69%
2007 – 2.85% FMR $1485 6.68%
2008 – ? % FMR $1595 7.40%

In the first I include federal inflation stats, HUD fair market for 2 bedroom apartments, and the increase YOY in the fair market.

As you can see, the percent increase in what is considered “fair market” climbed by a significant amount over reported inflation.

Perhaps more shocking is to compare this to household median incomes. I couldn’t find reliable data for anything past 2005, but that covers most of the bubble years so I think it demonstrates my point.

Median Household Income
2000 — $58,820
2005 — $65,823

Household Income 5 Year Increase 2000-2005 = 11%

Actual Rental Increase
2000 $891
2005 $1317
% Increase – 47%

Rental Increases if They Tracked Inflation
2000 $891
2005 $1044.69
% Increase – 17%

In summation, if government data can be trusted, rental costs increased at more than double the rate of household incomes in Orange County from 2000-2005.

It seems to me that in a rational market even rentals should be tied to local incomes. All I can gather is there are two options I see. 1. Rental prices were a bargain in 2000 and they are normal today. 2.Rents were fairly valued in 2000 and are overpriced today. Any other possibilities?

I don’t really trust the government to accurately report inflation. That’s why I shared the income to rental cost info as well.

What do you think? Am I crazy? I don’t profess to be an expert. I am a student who has come to be educated by the Piggs. Please help enlighten me. I ask this question to formulate my own strategy to eventually buy at the market bottom. I’m just looking to formulate a strategy to hopefully buy as close to the bottom as I can get.

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/rent/index.cfm

http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=CA

http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

[bjensen]

I’ve been around awhile and am well aware of the web page motto. Here is a quick analysis.

Yr —- Inf. —- FMR 2 Bed – % Increase
2000 – 3.38% FMR $891 N/A
2001 – 2.83% FMR $1046 17.39%
2002 – 1.59% FMR $1097 4.88%
2003 – 2.27% FMR $1155 5.28%
2004 – 2.68% FMR $1220 5.62%
2005 – 3.39% FMR $1317 7.95%
2006 – 3.24% FMR $1392 5.69%
2007 – 2.85% FMR $1485 6.68%
2008 – ? % FMR $1595 7.40%

In the first I include federal inflation stats, HUD fair market for 2 bedroom apartments, and the increase YOY in the fair market.

As you can see, the percent increase in what is considered “fair market” climbed by a significant amount over reported inflation.

Perhaps more shocking is to compare this to household median incomes. I couldn’t find reliable data for anything past 2005, but that covers most of the bubble years so I think it demonstrates my point.

Median Household Income
2000 — $58,820
2005 — $65,823

Household Income 5 Year Increase 2000-2005 = 11%

Actual Rental Increase
2000 $891
2005 $1317
% Increase – 47%

Rental Increases if They Tracked Inflation
2000 $891
2005 $1044.69
% Increase – 17%

In summation, if government data can be trusted, rental costs increased at more than double the rate of household incomes in Orange County from 2000-2005.

It seems to me that in a rational market even rentals should be tied to local incomes. All I can gather is there are two options I see. 1. Rental prices were a bargain in 2000 and they are normal today. 2.Rents were fairly valued in 2000 and are overpriced today. Any other possibilities?

I don’t really trust the government to accurately report inflation. That’s why I shared the income to rental cost info as well.

What do you think? Am I crazy? I don’t profess to be an expert. I am a student who has come to be educated by the Piggs. Please help enlighten me. I ask this question to formulate my own strategy to eventually buy at the market bottom. I’m just looking to formulate a strategy to hopefully buy as close to the bottom as I can get.

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/rent/index.cfm

http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=CA

http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

[bjensen]

I’ve been around awhile and am well aware of the web page motto. Here is a quick analysis.

Yr —- Inf. —- FMR 2 Bed – % Increase
2000 – 3.38% FMR $891 N/A
2001 – 2.83% FMR $1046 17.39%
2002 – 1.59% FMR $1097 4.88%
2003 – 2.27% FMR $1155 5.28%
2004 – 2.68% FMR $1220 5.62%
2005 – 3.39% FMR $1317 7.95%
2006 – 3.24% FMR $1392 5.69%
2007 – 2.85% FMR $1485 6.68%
2008 – ? % FMR $1595 7.40%

In the first I include federal inflation stats, HUD fair market for 2 bedroom apartments, and the increase YOY in the fair market.

As you can see, the percent increase in what is considered “fair market” climbed by a significant amount over reported inflation.

Perhaps more shocking is to compare this to household median incomes. I couldn’t find reliable data for anything past 2005, but that covers most of the bubble years so I think it demonstrates my point.

Median Household Income
2000 — $58,820
2005 — $65,823

Household Income 5 Year Increase 2000-2005 = 11%

Actual Rental Increase
2000 $891
2005 $1317
% Increase – 47%

Rental Increases if They Tracked Inflation
2000 $891
2005 $1044.69
% Increase – 17%

In summation, if government data can be trusted, rental costs increased at more than double the rate of household incomes in Orange County from 2000-2005.

It seems to me that in a rational market even rentals should be tied to local incomes. All I can gather is there are two options I see. 1. Rental prices were a bargain in 2000 and they are normal today. 2.Rents were fairly valued in 2000 and are overpriced today. Any other possibilities?

I don’t really trust the government to accurately report inflation. That’s why I shared the income to rental cost info as well.

What do you think? Am I crazy? I don’t profess to be an expert. I am a student who has come to be educated by the Piggs. Please help enlighten me. I ask this question to formulate my own strategy to eventually buy at the market bottom. I’m just looking to formulate a strategy to hopefully buy as close to the bottom as I can get.

http://www.hud.gov/offices/cpd/affordablehousing/programs/home/limits/rent/index.cfm

http://www.ers.usda.gov/data/unemployment/RDList2.asp?ST=CA

http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

[Bugs]

BobS,

Sorry, but the only people who are putting out quotable rental studies is the apartment owners association. I’m telling you what I’m seeing on the ground. You get to choose who you believe.

[Bugs]

BobS,

Sorry, but the only people who are putting out quotable rental studies is the apartment owners association. I’m telling you what I’m seeing on the ground. You get to choose who you believe.

[Bugs]

BobS,

Sorry, but the only people who are putting out quotable rental studies is the apartment owners association. I’m telling you what I’m seeing on the ground. You get to choose who you believe.

[Bugs]

BobS,

Sorry, but the only people who are putting out quotable rental studies is the apartment owners association. I’m telling you what I’m seeing on the ground. You get to choose who you believe.

[Bugs]

BobS,

Sorry, but the only people who are putting out quotable rental studies is the apartment owners association. I’m telling you what I’m seeing on the ground. You get to choose who you believe.

[Anonymous]

As a renter in San Diego going on 9 years, I can tell you that I have personally experienced rents increasing. We try to keep our rent under $2,000 a month, but it is getting increasingly harder for us to do. We are priced out of the areas we once could afford and keep moving farther North in order to keep our budget.

We’ve been in San Elijo now for a year, and our landlord is going into foreclosure, so we have to move yet AGAIN. Listings on Craigslist for this area have doubled since last year, yet the identical condo across the street from us is asking for $400 more than what we pay now, a 22% increase.

More supply, plus higher prices? Or is Craigslist not a good indicator? It has occurred to me that some of these listings may also be distressed properties, which makes it even more treacherous for unsuspecting renters.

We are lucky (in a way!) that we couldn’t afford to buy during the bubble, we dodged that bullet, however, it doesn’t mean renters necessarily have it easy either.

Just my experience.

[Anonymous]

As a renter in San Diego going on 9 years, I can tell you that I have personally experienced rents increasing. We try to keep our rent under $2,000 a month, but it is getting increasingly harder for us to do. We are priced out of the areas we once could afford and keep moving farther North in order to keep our budget.

We’ve been in San Elijo now for a year, and our landlord is going into foreclosure, so we have to move yet AGAIN. Listings on Craigslist for this area have doubled since last year, yet the identical condo across the street from us is asking for $400 more than what we pay now, a 22% increase.

More supply, plus higher prices? Or is Craigslist not a good indicator? It has occurred to me that some of these listings may also be distressed properties, which makes it even more treacherous for unsuspecting renters.

We are lucky (in a way!) that we couldn’t afford to buy during the bubble, we dodged that bullet, however, it doesn’t mean renters necessarily have it easy either.

Just my experience.

[Anonymous]

As a renter in San Diego going on 9 years, I can tell you that I have personally experienced rents increasing. We try to keep our rent under $2,000 a month, but it is getting increasingly harder for us to do. We are priced out of the areas we once could afford and keep moving farther North in order to keep our budget.

We’ve been in San Elijo now for a year, and our landlord is going into foreclosure, so we have to move yet AGAIN. Listings on Craigslist for this area have doubled since last year, yet the identical condo across the street from us is asking for $400 more than what we pay now, a 22% increase.

More supply, plus higher prices? Or is Craigslist not a good indicator? It has occurred to me that some of these listings may also be distressed properties, which makes it even more treacherous for unsuspecting renters.

We are lucky (in a way!) that we couldn’t afford to buy during the bubble, we dodged that bullet, however, it doesn’t mean renters necessarily have it easy either.

Just my experience.

[Anonymous]

As a renter in San Diego going on 9 years, I can tell you that I have personally experienced rents increasing. We try to keep our rent under $2,000 a month, but it is getting increasingly harder for us to do. We are priced out of the areas we once could afford and keep moving farther North in order to keep our budget.

We’ve been in San Elijo now for a year, and our landlord is going into foreclosure, so we have to move yet AGAIN. Listings on Craigslist for this area have doubled since last year, yet the identical condo across the street from us is asking for $400 more than what we pay now, a 22% increase.

More supply, plus higher prices? Or is Craigslist not a good indicator? It has occurred to me that some of these listings may also be distressed properties, which makes it even more treacherous for unsuspecting renters.

We are lucky (in a way!) that we couldn’t afford to buy during the bubble, we dodged that bullet, however, it doesn’t mean renters necessarily have it easy either.

Just my experience.

[Author]

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