CNN: Rent is getting pretty darned high, guys

posted at 10:01 am on July 5, 2012 by Ed Morrissey

An interesting if not exactly shocking CNN report this morning shows rents rapidly increasing in large urban areas, driving a national average increase of 5% — at the same time that housing prices continue to fall.  Also not exactly shocking, the largest rent increases have occurred where foreclosure rates are higher.  The rent increases are a market reaction to heightened demand from people who can no longer afford to buy, either because a foreclosure and/or bankruptcy has ruined their credit rating or through unemployment:

Apologies to the Rent Is Too Damn High Guy, but this is exactly what we should expect from the normal and natural market forces in play.  Thanks to the poor economy, we have not seen a big expansion in rental-property construction, although it has picked up a bit better than single-family housing since the bubble.  When demand increases as it has for rentals and supply cannot expand at the same rate, prices go up.  The same is true for housing prices.  We actually need them to fall back to a level of rational valuation, which would be the pre-bubble level adjusted for inflation.  We’re getting close to that level now, and we should start seeing housing prices stabilize fairly soon.

The real issue, though, is job creation and unemployment.  Without an expanding set of qualified homebuyers, housing prices may fall below that level of rational valuation and continue to decline.  The drop to a 30-year low in the civilian population participation rate, coupled with the chronic 8%+ topline jobless rate, means that a robust supply of qualified homebuyers is still a few years from reality.  If people are fortunate enough to buy now, they’d better be prepared to stay in that home for several years.

 


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You want rents to drop, get rid of HUD and Section 8

Oil Can on July 5, 2012 at 10:07 AM

You should plan on staying in your home for many years anyways. Flipping houses is one of the problems on why values went way up too.

watertown on July 5, 2012 at 10:09 AM

What we need is for the SCOTUS to arbitrarily cement rent levels at say, $300 per month so that everyone can afford a place.

Bishop on July 5, 2012 at 10:09 AM

Thank you, housing bubble.

Philly on July 5, 2012 at 10:09 AM

You want rents to drop, get rid of HUD and Section 8

Oil Can on July 5, 2012 at 10:07 AM

Exactly, rents are artificially high because of section 8.

darwin on July 5, 2012 at 10:10 AM

CNN: Rent is getting pretty darned high, guys

Hey CNN, so is electricity. When are you going to report on who’s fault that is?

Flora Duh on July 5, 2012 at 10:10 AM

Our rent is pretty high-for our area-but that includes washer/dryer, cable/ internet, pet fees(we have 3 cats) and our place is a townhouse. It’s not a bad deal at all.

annoyinglittletwerp on July 5, 2012 at 10:12 AM

If people are fortunate enough to buy now, they’d better be prepared to stay in that home for several years.

The problem is that this job market increasingly asks people to move often for work.

libfreeordie on July 5, 2012 at 10:15 AM

…MSM…but we are headed down the right path!…just give it more time…

KOOLAID2 on July 5, 2012 at 10:15 AM

…it’s the ECONOMY stupid…!!!

KOOLAID2 on July 5, 2012 at 10:16 AM

Bishop on July 5, 2012 at 10:09 AM

Only problem is at the same time they mandate $300 a month rent, they’d mandate $350 a month salaries. Hey, they gave us an extra 50 bucks. What else could we ask for? /s

Duncan Khuver on July 5, 2012 at 10:19 AM

Tax landlords who raise their rents or don’t lower them. SCOTUS says it’s constitutional.

bgibbs1000 on July 5, 2012 at 10:20 AM

BTW, I’d like to call what’s going on now with jobs, housing etc a result of the law of unintended consequences, but I’m not so sure.

Duncan Khuver on July 5, 2012 at 10:21 AM

The biggest rent prices are in the heavily liberal, dense metro areas.

If you don’t like the high rent, live somewhere else.

Neo on July 5, 2012 at 10:21 AM

The rent increases are a market reaction to heightened demand from people who can no longer afford to buy, either because a foreclosure and/or bankruptcy has ruined their credit rating or through unemployment.

That’s part of it, but rents are going up because people cannot qualify for loans to purchase homes. The rules went from being way too lax to way too stringent. I have heard many stories from realtors who are beyond frustrated, where (for example) even doctors with high income who wish to purchase a home equal to one year’s income cannot qualify. Many have sufficient resources they could pay cash but don’t want to because they lose the tax benefit.

Buy Danish on July 5, 2012 at 10:22 AM

If they think rent is high now they should have been around in 46-47 or so. All the GI’s came home, started families and no housing and OPA in effect. Got crowded at our house.

Herb on July 5, 2012 at 10:23 AM

You want rents to drop, get rid of HUD and Section 8

Oil Can on July 5, 2012 at 10:07 AM

Exactly, rents are artificially high because of section 8.

darwin on July 5, 2012 at 10:10 AM

Agreed.

jimver on July 5, 2012 at 10:23 AM

My landlord is a greedy b*stard. Always trying to raise the rent illegally and fixing nothing.

Blake on July 5, 2012 at 10:23 AM

Flipping houses is one of the problems on why values went way up too.

watertown on July 5, 2012 at 10:09 AM

Flipping houses didn’t make the values go up, realtors and buyers did. Buyers willing to pay the higher prices while realtors were selling a unjust higher market just made flipping houses profitable and viable so everybody jumped in on it.

It is still going on now, only the initial cost of the house is much cheaper and profits are larger.

plutorocks on July 5, 2012 at 10:25 AM

The problem is that this job market increasingly asks people to move often for work.

libfreeordie on July 5, 2012 at 10:15 AM

This is true, and that is part of the reason for average rents going up. Have been lucky to be able to stay in the same apt for about 10 yrs now, and currently pay just $45 over what I paid 10 yrs ago, since longstanding good tenants get an “allowance” of about $100 off market rent. If I had to move I’d immediately see my rent jump by over $100 for a comparable place.

inviolet on July 5, 2012 at 10:26 AM

Thanks to the Dems and regulations, costs have gone up for property owners.

Take for instance part of the Stimulus Plan where all painted surfaces in buildings built before the late 1970′s have to be treated as hazardous before any cut or hole put into a wall. All construction personnel have to suit up with respirators and a negative air pressure with HEPA filtration have to be placed on a room before any work can begin.

Only people who had problems with lead paint poisoning have been little starving kids eating paint chips in tenement buildings.

Kermit on July 5, 2012 at 10:27 AM

ObamaVille

PappyD61 on July 5, 2012 at 10:31 AM

The rent increases are a market reaction to heightened demand from people who can no longer afford to buy, either because a foreclosure and/or bankruptcy has ruined their credit rating or through unemployment.

That’s part of it, but rents are going up because people cannot qualify for loans to purchase homes. The rules went from being way too lax to way too stringent. I have heard many stories from realtors who are beyond frustrated, where (for example) even doctors with high income who wish to purchase a home equal to one year’s income cannot qualify. Many have sufficient resources they could pay cash but don’t want to because they lose the tax benefit.

Buy Danish on July 5, 2012 at 10:22 AM

There’s yet another reason why people don’t rush to buy..the job market is so bad and volatile tha people are forced to relocate more often that before…now, granted you can rent out a house that you own, make a profit and then rent a place for yourself somewhere else, where your new job is…but it’s rather a complicated and cumbersome process…besides, it depends if a particular area attracts new people or not (that is also a factor of how good/bad the economy is), problem with that being that you might actually not manage to rent out your property easily…unless you rent out to section 8 :) (god forbid)…

jimver on July 5, 2012 at 10:32 AM

In a normal down market, rising rents and lower vacancies are a very reliable indicator of a coming upswing in home purchases, as the relative cost/benefit of ownership becomes more attractive than renting. This should be especially true given the extremely low interest rates and prices we have now.

But government induced uncertainty throughout the industry has held back these market forces. On the bright side, there is a huge amount of pent up demand, and even the perception of a sustained improvement in the economy will unleash it. That’s one more reason to get rid of Obama.

RadClown on July 5, 2012 at 10:36 AM

I live right dab in the middle of flyover country in Davenport, Iowa. Rent here is outrageous. My wife and I are paying rates comparable to what friends of ours are in big cities. Everyone with a decent credit score and a little job stability just buys a house. A mortgage for a mid range home in our area is about 70% of what we pay in rent. Only the irresponsible are left to rent as there.

Every appartment complex turns into ghetto and we are forced to pay about 2x rent to escape it with a luxury appartment. It’s crazy high but I don’t want to live next to a bunch of welfare queens and meth heads.

jhffmn on July 5, 2012 at 10:37 AM

Thanks to the Dems and regulations, costs have gone up for property owners.

Kermit on July 5, 2012 at 10:27 AM

I used to have a rental property. Got rid of it when the city decided that they had a right to have inspectors “certify” rental homes at the cost of several hundred dollars not counting the cost of making a 100-year-old home wheelchair accessible.

Happy Nomad on July 5, 2012 at 10:37 AM

The increase in rents and occupancy rates is a direct factor in the housing turnaround we are seeing. Combine with record low mortgage rates, and it is not surprising that home builders are at 52-week highs and builder sentiment is the highest it has been in years. Very strong evidence that the housing market has bottomed and is on the way back, another reason business is picking up again …

TouchdownBuddha on July 5, 2012 at 10:38 AM

Talk about a buyer’s market. I just looked online at condos here in Atlanta–right off the bat I found a 3 bedroom, 2.5 bath in a reasonably good neighborhood that they are asking 42 K for.

radjah shelduck on July 5, 2012 at 10:38 AM

Every appartment complex turns into ghetto and we are forced to pay about 2x rent to escape it with a luxury appartment. It’s crazy high but I don’t want to live next to a bunch of welfare queens and meth heads.

jhffmn on July 5, 2012 at 10:37 AM

So get yourself a double-wide! You can move it if the neighborhood goes to pot. ;0

Happy Nomad on July 5, 2012 at 10:38 AM

As we say in NYC gubernatorial races…

THE RENT IS TOO DAMN HIGH!!!

Rixon on July 5, 2012 at 10:40 AM

Invest in garden-style multi-family portfolios.

Retire.

Buy house.

Easy.

Ben Hur on July 5, 2012 at 10:40 AM

The problem is that this job market increasingly asks people to move often for work.

libfreeordie on July 5, 2012 at 10:15 AM

This has been the case for a very long time. You go where the jobs are. We’ve made and lost money on moves for work but it always ends up to be the right thing to do in the long run.

Fallon on July 5, 2012 at 10:42 AM

So get yourself a double-wide! You can move it if the neighborhood goes to pot. ;0

Happy Nomad on July 5, 2012 at 10:38 AM

I’m not living in a trailer park… I’d just buy a house before that. My wife and I are not planning on being in the area 3 years from now and don’t want to commit to a house. But we moved here from a college town and it just seems silly that rent is twice as high in the middle of nowhere.

jhffmn on July 5, 2012 at 10:42 AM

Bankruptcy Forgiveness and Rent Ceiling Act to follow in September…

hillsoftx on July 5, 2012 at 10:42 AM

When I leave here, I’m gonna’ be replacing some floors where a tenant had a leak and didn’t tell me. Some tenants deserve higher rent.

Though I agree with the section 8 hatin’. I once bought a place that had some nice section 8 tenants. Hated the section 8 hoops more than I liked the tenants. The section 8 qualification went away at the first second opportunity.

cozmo on July 5, 2012 at 10:46 AM

We’re getting close to that level now, and we should start seeing housing prices stabilize fairly soon.

Your smoking crack Ed. We’re not even remotely approaching that level. Since 1970 there has been an approximate 20% percent per year increase in home valuation. While idiots and fools might believe that to be a good thing, it is in fact utterly insane.

A home is suppose to be the safest and most secure investment an individual came make. Anyone who tells you that they have a safe and secure investment for you that returns over 5% per year is deceiving you.

In 1970 the average home in America was valued at $17500, at 5% appreciation over the last 40 years that same home should be valued at $35,000 today.

SWalker on July 5, 2012 at 10:52 AM

hillsoftx on July 5, 2012 at 10:42 AM

was thinking the same thing…another distraction for dear leader to focus on

cmsinaz on July 5, 2012 at 10:52 AM

SWalker on July 5, 2012 at 10:52 AM

We are in the minority in our thinking.

This is one area where home owners and appraisal districts are on the same side and winning. Go figure.

cozmo on July 5, 2012 at 10:55 AM

ObamaVille ObamaVile

PappyD61 on July 5, 2012 at 10:31 AM

FIFY. :)

dominigan on July 5, 2012 at 10:57 AM

The market will correct this.

Eventually some folks who haven’t been able to sell their houses will put them up for rent.

itsnotaboutme on July 5, 2012 at 10:59 AM

The same thing has been true in the used car market. “Cash for Clunkers” took so many decent used vehicles out of the market that prices soared and are still considerably higher than before “Cash for Clunkers.”

It’s all about supply and demand.

bw222 on July 5, 2012 at 10:59 AM

We rent our property to section 8 family as well. We didnt didnt think it was to much of an ordeal to get setup here in North Texas. The rent is steady and guaranteed, much worth the intial red tape. We are gonna buy another property and do the same thing.

paulsur on July 5, 2012 at 11:01 AM

Tell me about it but it’s still better for me than owning a home.

All about choices :)

gophergirl on July 5, 2012 at 11:03 AM

paulsur on July 5, 2012 at 11:01 AM

And you are fine with spray painting the interior every five years?

Rather than upgrades you would prefer to make?

cozmo on July 5, 2012 at 11:03 AM

Since 1970 there has been an approximate 20% percent per year increase in home valuation…In 1970 the average home in America was valued at $17500, at 5% appreciation over the last 40 years that same home should be valued at $35,000 today.

SWalker on July 5, 2012 at 10:52 AM

No, annual housing increases are based on the prior year’s prices. In other words, they are compounded annually. Using your example, a 5% annual appreciation of a $17,500 house over 40 years, would give you a current value of 123,199.80.

RadClown on July 5, 2012 at 11:04 AM

That’s part of it, but rents are going up because people cannot qualify for loans to purchase homes. The rules went from being way too lax to way too stringent. ***
Buy Danish on July 5, 2012 at 10:22 AM

Well, there’s a lot of factors at play. In my area, one thing that I’ve noticed is that most of the “good” housing inventory is being held off the market, as homeowners try to ride out the storm rather than sell now and incur a steep loss. I rent now, and would love to buy a home. But most of the homes I see on the market now are distressed, in poor condition, or are being “dumped” by sellers who have no choice but to sell now. So I look at it and say, “why do I want to take on all the burdens of homeownership and the huge cash outlay necessary to fix up some dumpy house, in the hopes that maybe, possibly, it will appreciate 10 years from now, when I can just keep renting and have a nice place to live?”

Outlander on July 5, 2012 at 11:06 AM

Rent to house price ratios are simply returning to historic norms. AEI had a post on this a couple a days ago if I recall.

http://www.aei-ideas.org/2012/07/now-this-is-the-mother-of-all-housing-bubbles/

besser tot als rot on July 5, 2012 at 11:08 AM

SWalker on July 5, 2012 at 10:52 AM

We are in the minority in our thinking.

This is one area where home owners and appraisal districts are on the same side and winning. Go figure.

cozmo on July 5, 2012 at 10:55 AM

I figured out a long time ago that there was a criminal collusion involved in the home valuation appreciation rates. That collusion involved three principal players, State and local governments who want the valuation to increase for tax revenue reasons, Bank and Mortgage lenders who want it to increase for interest derived revenues and Realtors who want it to increase for increased sales commission revenues.

While what they did may not technically fall into the category of criminal conspiracy, it is definitely collusion, and they played dumb greedy home owners for suckers deceiving them into believing that the increased valuation of their homes meant they were earning a profit on the increased valuation of their homes.

Couple that with the increased credit levels made available to Mortgage holders and nearly everyone who purchased a home between 1970 and 2007 were taken in with this criminally corrupt scam.

SWalker on July 5, 2012 at 11:13 AM

No, annual housing increases are based on the prior year’s prices. In other words, they are compounded annually. Using your example, a 5% annual appreciation of a $17,500 house over 40 years, would give you a current value of 123,199.80.

RadClown on July 5, 2012 at 11:04 AM

SUCKER…

SWalker on July 5, 2012 at 11:14 AM

Multifamily construction is pretty hot here in Austin. Houston too from what I hear.

TexasDan on July 5, 2012 at 11:16 AM

Easy solution, Rent Stamps.

NoDonkey on July 5, 2012 at 11:17 AM

SWalker on July 5, 2012 at 11:13 AM

I figure the homeowners aren’t just dumb, but a greedy part of that collusion.

Every time I hear some yayhoo mention trading up or flipping, I want to punch them out.

Home owners associations (new ones in established neighborhoods) and historical districts are also a particular nuisance.

cozmo on July 5, 2012 at 11:20 AM

Does anyone realize how much it costs and how risk you take on when you decide to rent a property? I know some property investors who have had to raise rents to keep their margin the same, making only about 15-20% in net cash-flow. Of course, if a major problem happens, that’s gone too.

Renting to strangers is fraught with risk. Tenants tend to break things and then lie about how it happened. You are stuck fixing it anyway.

It seems like if you turn down a tenant for rent everyone thinks its discrimination, even when their references aren’t exactly glowing.

goflyers on July 5, 2012 at 11:25 AM

Easy solution, Rent Stamps.

NoDonkey on July 5, 2012 at 11:17 AM

Absolutely. I went to law school in the Boston area. Boston and Cambridge had rent control until the late 90s. The result was severe underinvestment in housing stock and, ultimately, massive price increases. It still hasn’t fully been corrected.

Outlander on July 5, 2012 at 11:25 AM

Easy solution, Rent Stamps.

NoDonkey on July 5, 2012 at 11:17 AM

Rent Stamps = Section 8 Housing

College Stamps = Pell Grants

bw222 on July 5, 2012 at 11:28 AM

There’s yet another reason why people don’t rush to buy..the job market is so bad and volatile tha people are forced to relocate more often that before…now, granted you can rent out a house that you own, make a profit and then rent a place for yourself somewhere else, where your new job is…but it’s rather a complicated and cumbersome process…
jimver on July 5, 2012 at 10:32 AM

We are among those who are stuck and are looking at renting out our house, and then renting something else (UGH!). Part of the impetus is that our son is going off to college and we need to downsize. And my husband commutes 100 miles a day. I am not looking forward to the hassle and I hate renting.

Well, there’s a lot of factors at play. In my area, one thing that I’ve noticed is that most of the “good” housing inventory is being held off the market, as homeowners try to ride out the storm rather than sell now and incur a steep loss.
Outlander on July 5, 2012 at 11:06 AM

There are beautiful homes available in my area for a song due to foreclosures and short sales. That’s why my house is now worthless and has lost 50% of its value. You couldn’t build it for what I would have to sell it for. I’m beyond furious. I’m one of the ones who put 20% down but have been screwed by those who got deals which permitted them to put zero (or nearly nothing) down. So they lose their house? So what? It’s like moving out of a rental – the only financial loss they incur is the cost of a moving van.

Buy Danish on July 5, 2012 at 11:28 AM

Does anyone realize how much it costs and how risk you take on when you decide to rent a property?
goflyers on July 5, 2012 at 11:25 AM

Yes, and you only scratched the surface.

cozmo on July 5, 2012 at 11:29 AM

SUCKER…

SWalker on July 5, 2012 at 11:14 AM

I’m a sucker because you don’t know what the hell you’re talking about?

RadClown on July 5, 2012 at 11:34 AM

Rent Number of Democrats in Congress Is Too Damn High

Archivarix on July 5, 2012 at 11:38 AM

SUCKER…

SWalker on July 5, 2012 at 11:14 AM

I’m a sucker because you don’t know what the hell you’re talking about?

RadClown on July 5, 2012 at 11:34 AM

Hey, you go right ahead and tell yourself whatever it takes for you to get through your day. News flash for you though, home valuations are not compounded yearly, loans are. Your homes valuation IS NOT a loan. You do not get any of the interest you pay on a loan back, EVER under any circumstances. The compound interest accrued on your home loan, and the rate of home valuation appreciation are two completely and separate things.

SWalker on July 5, 2012 at 11:45 AM

Your smoking crack Ed. We’re not even remotely approaching that level. Since 1970 there has been an approximate 20% percent per year increase in home valuation. While idiots and fools might believe that to be a good thing, it is in fact utterly insane.

SWalker on July 5, 2012 at 10:52 AM

LOL

Let’s say the average home price was $15,000 in 1970. Using your argument here; the average home price today would be $31+ Million.

Ed is right, we’re close to the bottom.

Norwegian on July 5, 2012 at 11:52 AM

SWalker on July 5, 2012 at 11:45 AM

Yeah, but you are taking it a little bit to the extreme. There are decent deals to be found and good loans out there.

Its all about what it is worth to the buyer.

Speculators and “keep up with the Jones’” is what you are mostly referring to. And they are making it harder for everybody.

cozmo on July 5, 2012 at 11:54 AM

I am used to all the negative comments regarding renting your property..However..my take is a little different..That is the business that I am in..Am a Realtor and specialize in rentals and property mgmt..for 45 years..People hire me to take care of renting their property..I get them good tenants..some of them I manage..the majority of them I do not..and don’t want to..I would have too many of them..but, it can be relatively painless if you hire a pro to do it..Some of my owner’s I have been dealing with for 30 years..and they are a pretty happy bunch.

Xango Annie on July 5, 2012 at 11:54 AM

Ed is right, we’re close to the bottom.

Norwegian on July 5, 2012 at 11:52 AM

It depends. Location, location, location.

And I disagree with Ed on this one.

cozmo on July 5, 2012 at 11:55 AM

It depends. Location, location, location.

cozmo on July 5, 2012 at 11:55 AM

True. My persective is from the Rocky Mountain West, where prices have increased nearly 5% Year-to-Year.

I am sure it is a completely different story in California and the East Coast.

Norwegian on July 5, 2012 at 11:58 AM

Xango Annie on July 5, 2012 at 11:54 AM

Yep. For most owners of rental properties that is the way to go.

The internet makes it easier.

cozmo on July 5, 2012 at 11:58 AM

This is basic economics – the laws of supply and demand. When these irresponsible people, who took out mortgages only to use them as a way to pay for their out of control spending habits, decided to walk away from their mortgages, they are then forced to rent a house. People like me, who own several rental properties, were just salivating over the power we just received. The choice came down to two things – is it comparable in the existing market and will it allow me the opportunity to float my mortgage when these people decide they don’t want to pay anymore. People need to realize that the renters are the ones who take all the risk and the courts always find for the leasers, regardless if they pay or not. It takes about 6 months to officially evict a deadbeat tenant, so renters need the additional cash to float them through those times.

djaymick on July 5, 2012 at 11:58 AM

You want rents to drop, get rid of HUD and Section 8

Oil Can on July 5, 2012 at 10:07 AM

Then we’ll hear about how people are going to be thrown out on their @$$ without gov’t assistance! (Because market forces would not force landlords to come down on their rent. Landlords are just evil 1%ers…duh!)

CycloneCDB on July 5, 2012 at 12:00 PM

Norwegian on July 5, 2012 at 11:58 AM

Dallas had a few 10-20% increase years. In 97 (I think, I would have to check the records) one area had a 50% increase and I sold a few of mine. I, and a realtor familiar with the area, told the appraisal district they were nuts and the properties wouldn’t sell at those prices. They were right, I was wrong, though now those properties can now be bought for less than that.

I liked them, but not enough to buy them back. I don’t hate many things, but appraisal districts come close.

cozmo on July 5, 2012 at 12:05 PM

People need to realize that the renters are the ones who take all the risk…

djaymick on July 5, 2012 at 11:58 AM

What have you been smokin’?

cozmo on July 5, 2012 at 12:07 PM

Hey, you go right ahead and tell yourself whatever it takes for you to get through your day. News flash for you though, home valuations are not compounded yearly, loans are. Your homes valuation IS NOT a loan. You do not get any of the interest you pay on a loan back, EVER under any circumstances. The compound interest accrued on your home loan, and the rate of home valuation appreciation are two completely and separate things.

SWalker on July 5, 2012 at 11:45 AM

And you can keep telling yourself you’re not an ignoramus. If you don’t use prior year prices to measure annual increases, then what is your baseline? But don’t take my word for it, even though I’ve been in the commercial and investment end of this business for 32 years and have been teaching it part time for 12.

According to the National Association of Realtors, average home prices from 1968 – 2004 went up an average of 6.4%. But you stick with your ridiculous 20% number while the rest of wonder why anyone would invest in anything other than housing over that time if you weren’t embarrassingly wrong.

By the way, loans are not compounded and the interest is calculated based on the remaining balance. That’s why on a fixed rate, self-amortizing mortgage, the amount of the payment that goes to interest is reduced over the term of the loan, while the amount going to principal increases, even though the payment remains the same.

RadClown on July 5, 2012 at 12:13 PM

LOL

Let’s say the average home price was $15,000 in 1970. Using your argument here; the average home price today would be $31+ Million.

Ed is right, we’re close to the bottom.

Norwegian on July 5, 2012 at 11:52 AM

Again, like I told Radclown, compound interest ONLY applies to loans, not home values. Thats how you, Radclown and every other home owner in America were conned and deceived.

Interest paid on a loan is not home value appreciation, if it were then the Bank would be paying the home owner to purchase the house. And no bank or mortgage lender anywhere is ever going to pay their client to borrow their money.

If you purchase a home at $17,500.00, you sign a loan agreement wherein you agree to PAY not just for the house you are purchasing (that’s %$17,500.00), but for the money you are borrowing to purchase it with (That’s $17.500.00 at 5% compounded yearly over the life of the loan). NONE of the interest payments on that $17500.00 are home value appreciation points, they are 100 percent debt service payments. So out of the $123,199.00 that you agree to pay on a $17,500.00 loan $105,699.00 of it are debt service payments that you NEVER EVER get back.

If your homes value is the same as your loan plus yearly compounded interest, then your bank/mortgage lending institute is paying you to purchase your house, and I absolutely guarantee you that that is not only not happening, it’s never going to happen.

This is why when you make a payment on your mortgage the lending institute takes out the interest payment first which is 90 percent of the payment amount you send in, and then the principal payment. So when you send in your $1200.00 monthly payment, $1000.00 of it is interest and only $120.00 of it is principal payment.

SWalker on July 5, 2012 at 12:13 PM

Where’s that dude with the great looking moustache. He could run third party “The Rent is Too Damn High Party” and get a few votes.

Decoski on July 5, 2012 at 12:14 PM

SWalker on July 5, 2012 at 12:13 PM

Your loans have penalties for early payoff?

cozmo on July 5, 2012 at 12:18 PM

Again, like I told Radclown, compound interest ONLY applies to loans, not home values.

SWalker on July 5, 2012 at 12:13 PM

Math fail.

Regardless if we talk about the price of rice or the price of homes, if you state an annual percentage increase over a extended perior, that naturally assumes compounding.

The reality is, home prices have increased by an average of 3.3% per year since 1900. If you adjust for inflation, it is less than 1.0%.

Norwegian on July 5, 2012 at 12:25 PM

SWalker on July 5, 2012 at 12:13 PM

You need to learn some basic math. You’re the one who said housing values have increased 5% per year for the last 40 years. Do you even understand the math behind that statement?
Radclown had it right. If you start with $17,000 and increase that value 5% you get a new value of $17,850. Then you increase another 5% the next year – which comes to what? – 17,850 * 1.05 = 18,742.50. Continue that equation for 40 years and what started as $17,000 is now worth $123.199. But that value of the house is not the same thing as the compunded interest resulting in what you pay for it in total over a 30 year mortgage.

dentarthurdent on July 5, 2012 at 12:41 PM

Norwegian on July 5, 2012 at 12:25 PM
dentarthurdent on July 5, 2012 at 12:41 PM

Pat yourselves on the backs fellas, congratulate yourselves for the “Housing Bubble”. You earned every bit of the screwing of your children’s futures you have produced.

SWalker on July 5, 2012 at 12:47 PM

The reality is, home prices have increased by an average of 3.3% per year since 1900. If you adjust for inflation, it is less than 1.0%.

Norwegian on July 5, 2012 at 12:25 PM

I think that’s basically right. Setting aside the recent housing “bubble,” the only time I’ve see meaningful change in home prices is when population shifts occur that put upward (or downward) pressure on the prices of ALL homes in the area.

Outlander on July 5, 2012 at 12:53 PM

Pat yourselves on the backs fellas, congratulate yourselves for the “Housing Bubble”. You earned every bit of the screwing of your children’s futures you have produced.

SWalker on July 5, 2012 at 12:47 PM

Go learn some basic math.
I’m an engineer. How about you?
If you want to talk about the housing bubble and how it happened, there’s nothing wrong with a lot of what you and others are saying.
But you failed miserably on the basic math. Don’t try throwing around numbers like “5% per year increase in value” unless you actually know what that means – mathematically speaking – or you just make yourself look stupid.

dentarthurdent on July 5, 2012 at 12:56 PM

What we need is for the SCOTUS to arbitrarily cement rent levels at say, $300 per month so that everyone can afford a place.

Bishop on July 5, 2012 at 10:09 AM

Don’t laugh! I’ve got at least one nitwit Facebook friend who’d think this is a great idea!

She was bugging me to sign a “Student Loan Forgiveness” petition just last week.

Kensington on July 5, 2012 at 1:18 PM

Rent Number of Democrats in Congress Is Too Damn High

Archivarix on July 5, 2012 at 11:38 AM

And not to mention the rent ON those members.

Axeman on July 5, 2012 at 1:20 PM

Buying a home is not necessarily an excellent investment (especially if you bought at the height of the recent bubble), but it is a very good idea today. Why?

1. It’s a decent hedge against inflation

2. It’s a decent savings tool. Housing is a cost we all incur, and with mortgage rates being at an historic low while rents are skyrocketing, owning beats renting by a country mile. Yhis is universally true if you plan to stay in your home for more than a few years.

3. With some local variances, current home prices are at or below the 100 year moving average in the vast majority of the country.

Norwegian on July 5, 2012 at 1:31 PM

Chris Rock was on Jimmy Fallon last night, and he said that because of Obama the economy has been improving every month for 2 years now, so, no worries!

yubley on July 5, 2012 at 1:36 PM

Norwegian on July 5, 2012 at 1:31 PM

I think owning is always a good investment if you can do it – and if you don’t expect to have to move at the wrong time. I know a lot of military people (and others) who lost a lot on houses because they bought and sold at the wrong times – ususally not by their choice.
As with many things, it’s all about the timing. I’m in the third house I’ve owned, and as long as I’m not forced to move too soon, I’ll easily make money on it – as I did with my first 2. But I don’t play the flip game either. I was in my first house for 10 years and held it as a rental for another 1.5 years until the market was right to sell, then my second house for 6 years, and I’ve been in my current house for 11 years – and probably will be in it for another 10.

dentarthurdent on July 5, 2012 at 1:38 PM

Well folks can save there money and live in their cars if they think rents are too high.

I am wondering if evictions have increased and if so at what rate relative to foreclosure rates the past few years. Evictions tend to occur a lot faster than foreclosures.

Anyone know? Ed?

Bubba Redneck on July 5, 2012 at 1:38 PM

5.4.3.2.1..National rent caps.

The only question being does the President announce at a press conference where he runs the chance of a rogue press agent who could dare to ask a question or just childishly absorb the adulation of an announcement at a taxpayer funded campaign rally.

Speakup on July 5, 2012 at 2:04 PM

BIG GOVERNMENT.

Government will make it just declare it a crime to raise rents.

Government will make it a crime to buy certain amounts of gold/silver.

Government will make it a crime to move your money/capital overseas.

GOVERNMENT WILL MAKE CONSEQUENCES A CRIME.

You had your chance to stop all of this by supporting Ron Paul and you failed. Now you will get to live out those consequences. Unless you just make those consequences illegal. haha

fatlibertarianinokc on July 5, 2012 at 2:19 PM

Maybe they could ask of few of the hundreds if not thousands of financial sector crooks who lied, cheated and stole those hundreds of millions to lend them some bread.

You can start by stringing up the former head of Washington Mutual from a lamp post and picking his pockets. Then work your way down the line from CEOs to the fund managers of the major investment houses.

Then move on to Congress….

rickyricardo on July 5, 2012 at 2:54 PM

Owning your own home/property is not what it is cracked up to be.
Costs in maintaining said homes/property can be crippling.
Now we only live in an old early 70s doublewide here just north of the SD border on our ranch. So there aren’t building inspectors coming out & harassing us over any repairs etc.
We did what we had to do to keep our home livable & that was hard enough for us.
As far as our ranch property, we are burdened with unreasonable property taxes & of course let’s not forget about spraying for noxious weeds.
We have an a-hole neighbor that always reports us to the weed board for not spraying for spurge. Which is a LIE.
But bcs we don’t spray on the time scale the county sets (we have better results in killing leafy spurge in the early fall), we get all sorts of harassment over it.
$hit like this makes it very hard for anybody to want to do anything regarding their property.
And I have very little incentive for upgrading anything on my property bcs that would only increase its worth.
Which will increase my property taxes.
So why bother when I’m not looking to sell the property ever. Bcs I live on it & maKE my living from it.
All of this state & federal govt interference is what makes renting far more attractive than owning.
And that is very very unfortunate for all of us, renters & owners.

Badger40 on July 5, 2012 at 3:43 PM

You had your chance to stop all of this by supporting Ron Paul and you failed. Now you will get to live out those consequences. Unless you just make those consequences illegal. haha

fatlibertarianinokc on July 5, 2012 at 2:19 PM

I just saw your rantings.
Ron Paul had half of the message right.
His other half regarding foreign policy is suicidal.
So while many of his ideas are wonderful, voting for someone who is half nuts would not have solved all of our problems.
Bcs you still have to have Congress on your side to fix all of this $hit.

Badger40 on July 5, 2012 at 3:45 PM

Well folks can save there money and live in their cars if they think rents are too high.

Bubba Redneck on July 5, 2012 at 1:38 PM

I’ve done this before. When I lived in the Bothell WA area.
Rents were so ridiculously high there that I would live in my car & a tent in the summers to save $$, as a college student.
I knew of whole families living in the greater Seattle area who rotated living in campgrounds in tents bcs they could not afford to rent.
And they weren’t welfare people. They had jobs. They chose to deal with the housing situation this way.

Badger40 on July 5, 2012 at 3:48 PM

As a Realtor for the past 23 years, I can tell you when mortgages are difficult to get (ie when the government gets involved)and it is easier to rent, RENTS GO UP!!

When we are in a normal market, Interest rates down, money less expensive to borrow, prices for sale go up!

But in this market, where people are without jobs, selling short, or in foreclosure,NOTHING IS HAPPENING!!

When closings used to be in thirty days and have now gone to MONTHS, …….talk about no pay checks!! Foreclosures, short sales….

Get rid of Obama and the market regulations,market manipulations, and we will be on the track to a normal world.

Until then RENTS will be sky high.

Delsa on July 5, 2012 at 4:07 PM

The biggest rent prices are in the heavily liberal, dense metro areas.

If you don’t like the high rent, live somewhere else.

Neo on July 5, 2012 at 10:21 AM

WHAT!!! I DON’T WANT THAT URBAN WELFARE TRASH MOVING TO MY CITY!!!

ARIZONAVETERAN on July 5, 2012 at 4:11 PM

SECTION 8 housing vouchers are based on the rents in the area.
$1600 and up.
Paid for by the AMERICAN TAXPAYER!

It is great for my clients who take the Vouchers because they are paid by direct deposited, like clockwork to the owners of the properties. The government just keeps on paying and paying and paying….

Delsa on July 5, 2012 at 5:06 PM

Does anyone realize how much it costs and how risk you take on when you decide to rent a property? I know some property investors who have had to raise rents to keep their margin the same, making only about 15-20% in net cash-flow. Of course, if a major problem happens, that’s gone too.

Renting to strangers is fraught with risk. Tenants tend to break things and then lie about how it happened. You are stuck fixing it anyway.

It seems like if you turn down a tenant for rent everyone thinks its discrimination, even when their references aren’t exactly glowing.

goflyers on July 5, 2012 at 11:25 AM

-
Been a landlord for 17 years. I could melt rock with some of the horror stories. Even had a few “Excellent tenants” go bizzaro-world crazy on the last week of a few years of great L/T relationship.
-
The one where I ended up on my knees in the yard with a cop yelling at me to keep my hands away from my pockets… and ready to draw… and with my triplex surrounded by 8 other cops (most in swat gear)… that one was an attitude changer.
-
The problem is that when the market crashed places like mine became all but impossible to sell in this area. It’s a good town and a nice street, but the multi-s on the market have all been sitting since 08′…

I hear now that because of this rent increase stuff a few have sold, and I talked to a young guy who is looking to buy a duplex a few towns from here.
-
I gave him the quick version of the lessons I’ve learned… and then tried to sell him my place. I may list soon… or not. It’s not fun anymore… but it has it’s advantages. Hell, I’ve had 2 offers of sex instead of rent! It’s not gonna happen like that though… “I need you to pay me the rent” (sop no matter the offer)
-

RalphyBoy on July 5, 2012 at 5:46 PM

RalphyBoy
YOU crack me up…

Delsa on July 5, 2012 at 6:14 PM

RalphyBoy on July 5, 2012 at 5:46 PM

What fun!//
I had a rental house for a year and a half – and I wouldn’t want to do it again.
The first tenant was a single girl, college grad, home healthcare rep of some sort – she paid her rent on time but trashed the place – I kept every penny of her security deposit.
The second tenant was a stripper with 3 kids and a live-in boyfriend who was only a few years older than her oldest kid – the rent was always late (probably took time to cash in all the ones) but they actually fixed the place up from how the other girl left it – so I gave them more than their original deposit back (incentives in the lease to fix things) when they left – then I promptly sold the place first day on the market for a decent price.

dentarthurdent on July 5, 2012 at 6:43 PM

Thanks to the generosity and foresight of a family member, at the end of last year we finally came to have the means to buy a house. As we had rented for all of our marriage and had some pretty bad landlords, I will never rent again. They will take me out of this house in a body bag.

The thing I’ve learned is landlord-tenant law, ultimately, protects neither the landlord nor the tenant when it’s absolutely necessary. My parents were one of the forgotten numbers who lost their house to foreclosure in 2006 (which, in my opinion, was sad but ultimately a blessing because they couldn’t keep up with the physical demands of a house). Most landlords wouldn’t touch them. When they did rent, they got a doozy of a landlady. It’s been a nightmare because she doesn’t want tenants, she wants slaves.

They are moving in with us at the end of the month.

Renting sucks. Work hard, save your money, and buy a house. It can be done, even without our really fortunate circumstances. I am SO happy because this is MY property and I never have to deal with landlords or crazy pot-smoking neighbors upstairs, etc. ever again.

englishqueen01 on July 5, 2012 at 8:00 PM

Someone mentioned that it takes 6mo. to evict someone..Not in our city..it can be 30-45 days..we have had tough landlord/tenant laws in place in Ohio since the early 1970′s….

Xango Annie on July 5, 2012 at 10:40 PM

The other morning I took a walk down the street and saw a “For Sale” sign on a beautiful house. And when I say “beautiful,” I mean steps from the beach, gorgeous three-story home with sandstone blocks, five bedrooms, five bathrooms, two apartments in back for the servants to live in, a pool, a three-car garage, a twelve-foot wrought-iron fence around the whole property, and its own diesel backup generator with an automatic transfer switch, right in the nicest part of the hotel strip. I figured, what the heck. I’ll call and get the price. I met the owners a few years ago when they moved in and they told me the place was a deal at $10.3 million, and they were putting hundreds of thousands of dollars into making the roof a beautiful deck area overlooking. So I call. The guy tells me $1.5 million. After I pick my jaw up off the floor, I ask, “So is that the assessed price?” He goes, “No, that’s the comparable price, comparing it to other properties for sale in the neighborhood.” I walked away feeling the most amazing sense of wonder, plus a bit of depression about what that means for my own home’s value. Ed, stop telling us prices are stabilizing. A luxury home is worth a tenth of its value just up the street from me. That’s not stable. That’s bottom-dropped-out bad.

JoseQuinones on July 6, 2012 at 1:28 PM