Rents rise as home buyers wait. Fewer homes are selling because of volatile prices and sub-prime uncertainties, pushing up rents in San Francisco.
Most people would like to move out of their apartment, buy a bigger home in the suburbs and start a family. But they won’t do it anytime soon in this climate.
At this point they are waiting to see how the housing slowdown, the local market bubble and problems in the sub-prime lending industry pan out before committing to a mortgage. In cities like ours, would-be buyers fear the market is inflated as prices rise even while properties take longer to sell.
The national picture looks like this: Fewer homes are selling and rents are on the rise.
It’s a big change from just a few years ago, when home prices were appreciating like mad. As a result, there are fewer vacancies and increased demand for apartments, allowing landlords to raise their rents.
According to New York real estate firm Reis, the average U.S. asking rent rose 1.1% in the second quarter of 2007. That is 7.74% higher than it was two years ago. This has been magnified here in SF as rents have risen approximately 15% in the last year alone.
I don’t think this makes sense in San Francisco. From where I’m standing as a potential buyer – the San Francisco market is on freaking fire. We’ve been overbidding and loosing on houses for the last year. In the year we’ve been seriously looking we’ve gone from being able to barely afford what we want to being priced out. Rents aren’t rising because people don’t want to buy – I think in San Francisco rents are rising because people can’t buy. We rent a lovely stand alone house that if marketed for sale would be called a 3/1.5 on a great block. If we wanted to own it with a traditional mortgage – with 20% down we would increase our monthly payment by about 3X. We just can’t make that make sense.
Shawna – Then why buy if it costs you 3X? I would just rent, and rent forever. You are right though, within SF prices keep goin up as there is a ton of demand.
Have you thought about leaving SF and going to Vallejo, Antioch or other places which are getting hit?
See my last statement – “we just can’t make that make sense”. We’re keeping our toes in the market – but for the most part have decided we’ll need to rent for now. I have no interest in living in Vallejo or Antioch. I’d much rather invest the difference between my rent and a hypothetical mortgage and stay in SF. Owning a house for me is more than just an investment – it is a place to live. For as strong as the psychological urge is to own – I keep reminding myself that it just fails to make sense financially for us right now. I can’t imagine we are alone.
Shawna – Then there’s no need to stress about not being able to afford. Nothing wrong with being a life long renter. Just use your disposable income on investments and other things.
It is tough that only a minority in SF can buy a place, but that’s just the way it is. That’s why there are so many bubble blogs out here, despite prices continuing to rise. Heck, even on Socketsite, where there are a lot of postings, basically all postings that are pro housing market are not allowed and deleted.
I can’t even post about how the two properties that did sell (Cow Hollow/PH and Russian Hill) are very indicative of the market we’re seeing, and how no surprise, bad location properties aren’t selling as well! Don’t believe me? You try posting something positive on real estate there.
Thnx Alex for keeping freedom of speech.
http://www.socketsite.com/archives/2007/08/a_few_values_for_properties_weve_previously_featured.html#comments
[Editor’s note: Thanks. I’m trying. It ain’t easy, but I’m trying. So keep telling everyone you know about theFrontSteps, or you will find me running a B&B in Mexico, sipping fresh lime margaritas and talking all day long about the wave of the day, not the overbid of the week. Actually, I love doing this sh*t, so I’ll probably keep doing it for a long time to come.]