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2 years ago

Cool. Thanks. It is expected
Cool. Thanks. It is expected that “it’s ok, rates are low” offset is gone.

But looks like there’s still some room for the valuation to get even worse. Stock market has now seems to go back up, ignoring the Ukraine war (it’s reasonable that its impact is limited), the yield is now terrible in all assets…even value stocks have appreciated more recently making the future yields worse.

It’s depressing for new savings…as we have to accept lower yields. The only positive development to me is that the 30 years treasury will soon yield more than my 30-years mortgage rate.

2 years ago

Where rent most comes into
Where rent most comes into play are currently renting buyers and RE investors. In theory the big middle of the market of existing owners buying one and selling another might be affected by rents. In practice I think they give it little thought.

So taking group one, they may (or may not) have a below market CPI rent, but they probably have outgrown their rental and are thinking about either upgrading to a another rental, or upgrading to a purchase. For them, the market rent of their potential upgrade rental is what counts.

For investors, nobody in SD buys with the intent of keeping lower CPI rents in place. And sellers too often realize that such tenants hurt value, so raise rent first.

Maybe you have to use CPI rent to do a long term chart, but it isn’t relevant to current purchase decisions like market rent.

This is a pretty big deal when SD market rents may be up 29% in one year.

2 years ago

Rent increases are
Rent increases are accelerating! Most recent now shows YoY is 31.5% in SD.

See here, scroll down to Table 2.

2 years ago
Reply to  gzz

Are you gonna raise your
Are you gonna raise your tenants rents 31.5%?

2 years ago
Reply to  sdrealtor

I recently did my first rent
I recently did my first rent increases ever on both rentals. One is up 18% from 2017 the other up 28% from 2015.

They are still below market rent and I will be doing another small increase in January. But I don’t believe in squeezing every penny when I am doing well anyway. However, the 2017 lease had become about 35-40% below market. There are a lot of reasons besides making more money that it is imprudent to let that happen. It creates complex emotions and feelings of ownership and entitlement, and the IRS may consider it a gift or undisclosed income.

2 years ago
Reply to  gzz

Just out of curiosity. Isn’t
Just out of curiosity. Isn’t there a rent cap of 10%?

2 years ago
Reply to  pinkflamingo

Does not apply to single
Does not apply to single family homes

2 years ago
Reply to  sdrealtor

I recently went up 25% on
I recently went up 25% on one.

Had kept the rent flat for about 3-4 years.

Long story, don’t want to share too many details, but they had pleaded poverty and I was probably being too nice.

After becoming more aware of their financial situation in its totality, I went from $3500 to $4400. Market is probably $4700-$4800.

2 years ago

Rich Toscano wrote:
Up until

[quote=Rich Toscano]
Up until recently, you could make the argument that despite sky-high purchase prices, low rates were keeping the monthly nut pretty reasonable. It’s a lot harder to do so now, and with inflation still running in the high single digits, there seems to be a good chance that it will become harder yet.

This seems unhealthy to me. I realize that there is nothing for sale right now, and that the mismatch of demand and supply is pressuring prices upward. Further out, I worry about the sustainability of these prices and this level of affordability. I will note that we’ve blown right past the affordability level that, when reached in 2018, ushered in a mild housing downturn that lasted until rates declined again.

just was sent an eMail listing by Marcus and Millichap and something caught my eye (which I’ve bolded ‘below’)

2430 Union St, San Diego, CA 92101

Arguably the nicest Income Producing Property in Bankers Hill. Opportunity to Operate as a Long Term Apartment Rental at a 4.13% Cap Rate or raise the Potential Income by continuing the current use as a Short Term Vacation Rental. STR income potential north of $260,000/year & a Conservative 6% Cap Rate. Additionally the city has approved plans to build a 257 SQ FT Accessory Dwelling Unit (ADU) which should rent for over $2,000/month.

so 257 sq ft and rent is $2,000 a month???

perhaps its just me,… but I find this “unhealthy”