Without some form of “economic eviction” protection in the form of rent controls, and conversion restrictions e.g. limit on numbers, enforcable affordable unit percentages, zoning changes, etc. This will continue. By the time it hits the wages wall, there will be few middle income folks left to take advantage of it.

I’m not convinced that there will suddenly be large numbers of people moving back en masse, but I hope I am mistaken.

See the proof:

http://www.marketwatch.com/news/story/bernanke-foresees-moderate-2007-growth/story.aspx?guid=%7BFED1A306%2D9818%2D4A52%2D8022%2D7B38996586BC%7D&siteid=bnb

Now read the truth in part that contradicts MSM lies from the National Association of Realitors:

The National Association of Realtors, on July 11, reduced its sales forecast for this year for a seventh straight month and projected that purchases of single-family homes will probably fall in 2008 to their lowest level since 1995.

The rest of the Dr. Roubini URL:

http://www.rgemonitor.com/blog/roubini/206137/

When MSM says North, it probably means South!!!!

Thank God for blogging and talk radio or we wouldn’t get any decent news. Thom Hartmann (a REAL LIBERAL Democrat against far right Conservative Fascist OVERPOPULATION) is on AM 1090 Air America every weekday at about 9am to 12pm and is my favorite talkshow host now. He is brilliant.

After sellers get realistic, (although never underestimate the stupidity of large crowds), they’ll realize that in order to rent their ‘investment’ property, they’ll have to drop the rent price and we’ll see the “conversion-reversion” phenomena that’s happened in EVERY OTHER MARKET!!

That’s right, EVERY OTHER MARKET! I know, its hard to imagine, yes, we too could become another Boston, D.C., San Diego… Shocking I realize.

“Even where PMI found relatively low risk for dropping prices, sales have slowed way down. In Everett, Wash., in the Seattle-Bellevue-Everett region with a 34.3% risk of lower prices in two years, homes are sitting on the market an average of 59 days before selling, says Susan Funk, agent with Keller Williams Realty. “Last year, you knew you were overpriced if you did not have offers within the first 10 to 14 days,” Funk says.”

More likely, you go on a hiring freeze, or even let some people go.

Tenant rents for commercial properties are going up too. If I were a business owner, and suddenly money was more expensive to obtain, the dollar was worth less, consumer spending dropped, the economy started hitting the skids, and for the biz to survive I have to tighten the belt…I’d be taking a long, hard look at operating costs and see where I could snip out dead wood. Including rent.

Anybody with more finance or rationale experience have other perspective on this?

At $18.02 an hour I pay about 45% of my total take home pay in housing cost ($945 month.) 36,000 a year is a joke in todays market. Sadly I’m alot better off than everyone I know. Some of my friends are paying well over 55% of their income on housing.

There is a braking point for those of us who are not Dotcomers.

We may be able to watch it play out with our former bubblicious, immune to the housing slump sister city known as Portland. A recent report from the Oregonian said, “The Portland-area housing market continued its slow drift downward in June. The median home price for the Portland area dropped to $295,000, from $297,000 in May, according to the Regional MLS. That marked the first May-June decline since 2000, and indicated to economists who follow the local market that housing is weak and could become weaker through the end of the year.”

“After striding past the national housing slowdown for about a year, the local housing market is showing signs of losing its stamina. Rising inventories suggest sellers have lost leverage, and the widespread exit of first time buyers and investors have cut severely into demand.”

To put it another way, if rents were declining we would need to be worried about the bubble dragging out for much longer (i.e. because fewer people were wanting to rent, etc).

I would much be paying higher rents rather than own a home that was dropping in value.

Sigh. Listen, “Guru”: LANDLORDS CAN’T CHARGE MORE FOR RENT THAN PEOPLE CAN AFFORD TO PAY. There is no way to speculate on rent. There is no options market, no rent-backed securities, no derivatives. Landlords don’t take credit cards, and people can only over-extend, or move to a cheaper place. Housing is an inelastic commodity, but it isn’t a rock; there’s a hard upper limit to what people will pay.

“In an article I read about the vacancy rates in some parts of Seattle are 1.88%.”

That was in the linked article, genius.

“As I always say it comes down to SUPPLY & DEMAND. Right now it looks like people are demanding rentals.”

Holy crap, man. Someone actually hired you? (As a janitor, right? Right?)

As for the rent scare, this is at least the dozenth time in the last year that I’ve seen this non-news piece of propaganda in one of the local RE shill rags (formerly known as the P-I and the Times). Too bad I have a landlord who can think for himself. So sorry.

To paraphrase Derek Bok, if you think renting is expensive, try buying into a deflating bubble.

When I was first shopping for an apartment 5 years ago, there were a lot of great deals that were overlooked because they weren’t advertised or they only had 2 lines in the newspaper. When I was forced out by a conversion last year, I noticed that walking around to find a good deal was pointless and anything that looked great on craigslist was gone in an hour.

I figured that the increased efficiency of finding renters was killing the cheaper units, because even lazy managers and landlords could jack the prices up.

It doesn’t help matters that most people renting out houses/condos ask for so much that they don’t register on the radar. Maybe when the desperation sinks in, craigslist will have the opposite effect.

Likewise, it is still rather difficult for the “average” renter to use debt to finance their rent for repayment at some later date.

Most of the credit related causes of the housing bubble have fairly muted effects on rental rates and I have a hard time seeing how the market could shift towards either trading of “rental options” or lease agreements that allow only partial payment of rent in the short term.

With that said, if there is some fundamental change in how people pay rent, such as moving to credit cards en mass, it could be possible to see unsustainable bubble like characteristics in the rental market.

Also how many more hours are you going to spend in your car each day…what is your time worth to you?

I googled my new job I start next month downtown Seattle and is going to be 5 blocks (0.15 miles) from my condo, woo hoo! Or about a 5 to 7 min walk to work (depending on cross walk signals). No more driving to Redmond for me!

Is the trend with large Rent increases going to continue on longer than a few years…YES they probably will. With any bubble such as rent rates, there most likely will be several more years of above avg rent increases. Its just a fact of life with any boom/bust cycle.

In other overheated markets what was the avg lag time in rising rental rates to the slump of house appreciation? DJ you do a fantastic job with graphs! My prediction is that rent will increase in the 5% to 10% range for the next two years (or until this region experiences a recession, which I predict will happen in about two years)

In an article I read about the vacancy rates in some parts of Seattle are 1.88%. Also after reading an article by Dupre & Scott (apt specialists) they mentioned that the number of apt units coming online in the next few years is going to be less than initially planned due to several condo & commercial buildings build on property instead. This cant be good news for those looking for lower rent increases…as I always say it comes down to SUPPLY & DEMAND. Right now it looks like people are demanding rentals. A friend recently had to overbid the rent rate to get a place by $50/month (she said it was about $50/mo less than the next door place so it worked out ok for her), think rental bidding wars are a dream…think again (said with some sarcasm).

My own landlord had the guts to tell me that he “felt bad for renters”, because of the rent increases that he was going to “have” to impose over the coming years. Yet when I lightly suggested to him that the giant condominium complex next door might not have buyers (and that this might impact his “need” to raise rents), the fool spouted off the usual MSM talking points: Strong Jobs, local millionaires, blah blah blah….

I nearly punctured the tires on his Mercedes as I left, that day.

My rent was increased 3%.

Rents have definately spiked :-).

Its like following the lemmings to the wolf jaws when you take MSM’s advice and their OVERPOPULATION agenda’s news’ slants.

Here’s a great example: A couple years ago, President Bush had a State of the Union and told us we needed to privatize Social Security [he really meant add low wage OVERPOPULATION to America, as its is the real MSM Conservative slavery secret], because we were all living longer. Sooooo….not believing a word coming from Bush’s mouth, I looked up mortality rates in the Census Bureau website. Guess what….not only are we living significantly shorter lives in America since the mid-90s [about a 4 year decrease], it hasn’t been this bad since the 60s. The CDC came out with mortality statistics indicating the opposite conclusions of the Census Bureau. Which government agency’s mortality statistics does MSM preach? CDCs.

Two weeks later [I mailed the Adobe Census Bureau results documenting SIGNIFICANTLY higher mortaliy rates lately to friends, so the evidence is clear and they saw it too], the Census Bureau findings were WIPED CLEAN, nonexistent….

You think we get TRUTH from this Orwellian MSM, controlled by FAR RIGHT FASCIST CONSERVATIVE CORPORATIONS? Hades no!!!!

The FEAR factor is always used against us too, just like this RENT INCREASE SCARE. Another FEAR FACTOR MSM uses is “BUY NOW BEFORE ITS TOO LATE”.

There is a good chance that rental rates will reverse and start dropping within a year. This is exactly what happened (i.e. rising rents) in other bubbly markets just before they turned down.

Ironically, rising rents may be the final indicator that real-estate prices are about to take a dive.

Ouch!

Maybe that’s how we are special in Seattle. Starbucks salaries!