[bjensen]

BobS,

Sounds reasonable to me.

[bjensen]

BobS,

Sounds reasonable to me.

[bjensen]

BobS,

Sounds reasonable to me.

[bjensen]

BobS,

Sounds reasonable to me.

[bjensen]

BobS,

Sounds reasonable to me.

[bjensen]

I understand that rents are set by supply and demand.

However, I can’t help but wonder if what happened in the mortgage market didn’t increase demand in Southern California over the past 8 years.

The only thing I can think is that there were enough rational and honest people that preferred to rent vs. buy even if they were able to buy to fill in the spots opened up by people who had no business buying homes and then some. I know a lot of people my age put off purchases as they graduated college even though they could technically “afford” (i.e. qualify) for a mortgage.

I don’t have any data to back any of this up. I don’t know what demand was 8 years ago. But I do know that there were sharp increases that outstripped the increase of local incomes for Orange County.

I just don’t know if I trust history to tell me that rents don’t go down, and if they do, they only go down slightly. It wasn’t a few years ago the mantra was that house prices never go down as well. So much for that theory.

BobS, do you believe that barring a strong recession that there is no chance of decreased rents going forward? Would you then consider real estate fairly priced when rent is equal to the mortgage on a property?

Who here would buy a personal residence when rent equals the cost of a mortgage for a similar property? Who would hold out for further price reductions?

[bjensen]

I understand that rents are set by supply and demand.

However, I can’t help but wonder if what happened in the mortgage market didn’t increase demand in Southern California over the past 8 years.

The only thing I can think is that there were enough rational and honest people that preferred to rent vs. buy even if they were able to buy to fill in the spots opened up by people who had no business buying homes and then some. I know a lot of people my age put off purchases as they graduated college even though they could technically “afford” (i.e. qualify) for a mortgage.

I don’t have any data to back any of this up. I don’t know what demand was 8 years ago. But I do know that there were sharp increases that outstripped the increase of local incomes for Orange County.

I just don’t know if I trust history to tell me that rents don’t go down, and if they do, they only go down slightly. It wasn’t a few years ago the mantra was that house prices never go down as well. So much for that theory.

BobS, do you believe that barring a strong recession that there is no chance of decreased rents going forward? Would you then consider real estate fairly priced when rent is equal to the mortgage on a property?

Who here would buy a personal residence when rent equals the cost of a mortgage for a similar property? Who would hold out for further price reductions?

[bjensen]

I understand that rents are set by supply and demand.

However, I can’t help but wonder if what happened in the mortgage market didn’t increase demand in Southern California over the past 8 years.

The only thing I can think is that there were enough rational and honest people that preferred to rent vs. buy even if they were able to buy to fill in the spots opened up by people who had no business buying homes and then some. I know a lot of people my age put off purchases as they graduated college even though they could technically “afford” (i.e. qualify) for a mortgage.

I don’t have any data to back any of this up. I don’t know what demand was 8 years ago. But I do know that there were sharp increases that outstripped the increase of local incomes for Orange County.

I just don’t know if I trust history to tell me that rents don’t go down, and if they do, they only go down slightly. It wasn’t a few years ago the mantra was that house prices never go down as well. So much for that theory.

BobS, do you believe that barring a strong recession that there is no chance of decreased rents going forward? Would you then consider real estate fairly priced when rent is equal to the mortgage on a property?

Who here would buy a personal residence when rent equals the cost of a mortgage for a similar property? Who would hold out for further price reductions?

[bjensen]

I understand that rents are set by supply and demand.

However, I can’t help but wonder if what happened in the mortgage market didn’t increase demand in Southern California over the past 8 years.

The only thing I can think is that there were enough rational and honest people that preferred to rent vs. buy even if they were able to buy to fill in the spots opened up by people who had no business buying homes and then some. I know a lot of people my age put off purchases as they graduated college even though they could technically “afford” (i.e. qualify) for a mortgage.

I don’t have any data to back any of this up. I don’t know what demand was 8 years ago. But I do know that there were sharp increases that outstripped the increase of local incomes for Orange County.

I just don’t know if I trust history to tell me that rents don’t go down, and if they do, they only go down slightly. It wasn’t a few years ago the mantra was that house prices never go down as well. So much for that theory.

BobS, do you believe that barring a strong recession that there is no chance of decreased rents going forward? Would you then consider real estate fairly priced when rent is equal to the mortgage on a property?

Who here would buy a personal residence when rent equals the cost of a mortgage for a similar property? Who would hold out for further price reductions?

[bjensen]

I understand that rents are set by supply and demand.

However, I can’t help but wonder if what happened in the mortgage market didn’t increase demand in Southern California over the past 8 years.

The only thing I can think is that there were enough rational and honest people that preferred to rent vs. buy even if they were able to buy to fill in the spots opened up by people who had no business buying homes and then some. I know a lot of people my age put off purchases as they graduated college even though they could technically “afford” (i.e. qualify) for a mortgage.

I don’t have any data to back any of this up. I don’t know what demand was 8 years ago. But I do know that there were sharp increases that outstripped the increase of local incomes for Orange County.

I just don’t know if I trust history to tell me that rents don’t go down, and if they do, they only go down slightly. It wasn’t a few years ago the mantra was that house prices never go down as well. So much for that theory.

BobS, do you believe that barring a strong recession that there is no chance of decreased rents going forward? Would you then consider real estate fairly priced when rent is equal to the mortgage on a property?

Who here would buy a personal residence when rent equals the cost of a mortgage for a similar property? Who would hold out for further price reductions?

[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

[Author]

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