Posted on 06/02/2017 4:13:30 PM PDT by Lorianne
Honolulu rents plunge 19%. Landlords scramble.
In the still ludicrously expensive rental market of San Francisco, the median asking rent for a one-bedroom apartment dropped 6.1% in May from a year ago to $3,370 and is down 8.2% from the peak in October 2015. For a two-bedroom, the median asking rent dropped 6.3% year-over-year to $4,500 and is down 10% from the peak in October 2015. Reality creeps into rental la-la land.
The last episode of year-over-year rent declines in San Francisco ended in April 2010. So this is a rare occurrence. Last time, the declines started well into the Financial Crisis. This time, there is no Financial Crisis, only a “Housing Crisis,” where the middle class can no longer afford to move into a modest apartment.
In New York City, the median asking rent for a one-bedroom plunged 10.8% year-over-year to $2,900 and is down 13.9% from the peak in March 2016. For the median two-bedroom, it dropped 7.9% year-over-year and is down 10% from the peak.
These are asking rents in multifamily apartment buildings, based on Zumper’s National Rent Report. Single-family houses for rent are not included.
Asking rents do not consider incentives, such as “1-month-free” or “2-months-free.” In San Francisco, incentives were rare. Now, as a result of a historic construction boom, new high-end apartments and condos are flooding the rental market just as job creation is sharply slowing. So landlords are scrambling to keep their units filled, and incentives have become common. The impact? With “2 months free,” the first-year median rent of a two-bedroom apartment would be down 25% from its peak, or $15,000 for that year!
Incentives allow landlords to lower the rent without showing the declines to the public, thus maintaining the perception of a rent level that no longer exists. They fear that common knowledge of lower rents would repress rents further. Plus, if tenants don’t move after the lease is up, the effective rent in the second year, without rent increase, jumps back to the former asking-rent level.
In the third most expensive large rental market in the US, San Jose, median asking rent for a one-bedroom rose 3.5% year-over-year to $2,370 but is down 2.5% from the peak in April 2016. For a two-bedroom, it fell 1.4% year-over-year to $2,870 and is down 6.8% year over year.
SNIP
Wow. California is completely out of reach for rent. How do tey sustain those levels? Especially as businesses flee?
Honolulu rents plunge 19%. Landlords scramble.
Really? News to us here in Hawaii. Rents and prices are still going up.
I check on Hawaii from time to time, just in case, I win the lottery.
In California’s San Fernando Valley near Los Angeles a studio apartment that is 350sq/ft will rent for close to $1,000 a month. Water and electric included.
1 bedroom at around 550sq/ft are $1,300 and you pay electric. 700sq/ft are much higher depending on what part of the valley. The owners price like 2 people are living there and each has a job.
I remember living near Minneapolis, Minnesota in 1988 and paying $300 a month for a 2 bedroom townhome with dining room, a living room and large kitchen with access to a basement and I had a garage and a yard. I paid utilities, water and electric.
How much of this apartment rent is generously subsidized by Section 8?
Live in a nice large apt complex in San Diego, there are a lot of college age and a bit older, more than a few apts with 4-5 to a 400 sq ft studio. Have a neighbor just went into the hospital, said he was an investor, found out today he was two months behind rent for the “couch” he slept on.
Another guy leaving for Texas, cannot believe the rents in Dallas. A retired guy really worried he is living too long and may need to move where rents are lower. It is really brutal. I live here and work from home, after I sold my house in San Francisco I could not afford the rent, my boss was very understanding and asked me to keep working when I told him I was going to have to leave.
Section 8 is actually hard for renters to get, and once they get on they rarely voluntarily get off. From a landlord perspective, it is ungodly expensive to get on and stay on, so only professionally managed units are Section 8. The training and number of inspections that Section 8 landlords get is incredible. I managed some Section 8 housing for a while, and while the rents are more than what I thought they were worth, I can guarantee that you would not want to live in the units for the most part.
If you bought a home in So Cal with a payment you could afford, and have a 30 year fixed rate mortgage paying interest and principal, you are OK. If you rent you are screwed. I know people who own condominiums in good areas and their monthly mortgage, property taxes, and HOA are a lot less than what their neighbors pay for rent. We still have Proposition 13 limits on property tax increases, than God.
In 1990 I was renting a one bedroom, ground floor apartment in Waikiki for $1200 a month. That year I bought a sailboat and moved aboard. At that time, slip rent was under $100 a month in the Ala Wai Boat Harbor. I have been living aboard my boat ever since, but not in Hawaii.
I sailed away in 2007. Since then, slip rents have varied from free for short term or under $100 monthly in Alaska to a high of $800 a month in San Francisco Bay. Currently in this island town in SE Alaska it is $97.50 a month plus a $70 live aboard fee. but much cheaper rents are available. For example, the village of Kake at $200 per year. Most places water is included and electricity is metered. These days wireless internet is available most places.
The lifestyle is not for everyone, obviously, but we are loving it. https://youtu.be/pqZjo-nN4Lk
Unexpected!
*drink*
“...Another guy leaving for Texas, cannot believe the rents in Dallas. ...”
What will he be paying in rent?
Great time to own rental property in San Jose...*snicker
How big is your boat?
Have a 26 on a trailer and a 37 in a slip in the SF Bay.
Hawaii scares me...
*smile
“I come home one particular evening
The landlady said, “You got the rent money yet?
She's an Albin Vega 27. Starting in Hawaii, we have done three trips between the islands and the US Mainland/Alaska in this boat.
Its somewhere around $1 per sq ft to rent in Vegas. Heaven help us if California gets pushed here.
what’s the length of your boat? I am so envious.
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