“For example 83 percent of the more than 1,200 new downtown condo units that came on line in 2007 sold. All of the more than 1,400 downtown units built from 2000 through 2006 have sold, according to market research firm Realogics.”

I’m not sure that really supports an argument for continued demand for condos. This all happened in a market that didn’t even consider the possibility of a downturn. Where does it go from here? how many of the recently constructed and purchased condos will re-enter the market?

The chart in the article does indicate that nearly as many downtown condos were built in the last several years as where in the previous six, and that there are plans to build even more every year for the next three or four years!

Except of course the “confidence” that the projects will be completed seems to be waning greatly according to the chart. Is this the “confidence” of the builder they are talking about?
If so, it looks like they have considerably less confidence in the market a year down the road, and exponentially less confidence for every year beyond that.

My point was that they didn’t even need to advertise in the mid 90’s, if you had an average or better place – you just kept a waiting list of pre-reviewed tenants. SF is a very small market with rent control, very little turnover, and people were willing to double, triple, quadruple up to live there. Prices seem to be not much higher either.

If you’re advertising a vacant apartment you are losing money. Turnover kills you in the apartment game.

Re: SF rental prices -
When I worked in SF all of the best apartments were never advertised and you had to know the landlord to get a chance at one. CL shows over 2000 listings – unheard of in the 90’s.

You can rent a home in PHX now for the same price you could 10 years ago. 2 years ago, when the bubble started deflating, flippers were asking 20-50% over market for rents in a desperate attempt to cover their bubblicious mortgage payments.

if you assume that the local economy isn’t changing, then rent prices will follow supply vs demand rules as normal for any market

supply has been reduced by apartments being converted to condos, and by houses sitting unoccupied for any reason (while selling, in the foreclosure process, etc)

demand is being increased by people putting off buying, people leaving ownership (by selling or being foreclosed on), and by a net influx of people

higher demand and lower supply should lead to increasing prices

these increases aren’t likely to be anywhere near to close enough to make buying a financially sound investment

Moved here from Phoenix earlier this year, where this was the case. Its only getting uglier down there. Bubble still has a long ways to deflate, and it doesn’t happen overnight.

My guess – 25%-30% price declines over the next 4-6 years.

These are just last resort ’scare’ tactics being used by RE professionals (or those who take their money) to extend this bubble as long as they can.

Increasing rents given current market trends defies logic. Do you have an opinion / explanation?

But I am left with the thought…
$xxx,xxx for my "golly" house,
$800 / year for insurance
$x,xxx for property taxes
$800 for sewage & garbage collection
$500 to get the "golly" tree pruned

Never having to deal with a dumb landlord ever again…PRICELESS!

I think there is a about a six month lag between RE prices starting to fall and rents starting to fall – if you want a clue as to what will happen to Seattle, note how many “investors” are trying to rent out condos in central Seattle/Capitol Hill at the moment.

http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2007/09/16/BUK1RVMVQ.DTL&o=3

Here are rental trends in Los Angeles. Notice rents are increasing despite declining real estate market.
http://www.latimes.com/business/la-101807-fi-rent-g,0,7203039.graphic?coll=la-home-center

As someone that experienced a 12.5% rent increase in 2007 prior to leaving LA I felt the impact of rental inflation. But perhaps Seattle is speical after all. Rents will decline here as real estate prices decline.

Cost of a downturn: $100,000 (or so)

Bottle of aspirin: $5.99

Today’s headline? Priceless…

WILL CONDO WAVE SWAMP THE MARKET?

http://seattlepi.nwsource.com/business/336370_downtown22.html

They are the same people who think that Listing Price – Purchase Price = Profit.

So they are left with lies and blank pages as the blogs eat their lunch.

I know these people don’t have business degrees, but don’t they realize that the rent must more than cover the mortgage if you want to come out even? You have repairs, you have taxes, and you have time the rental sits empty. All of these things cost very real money, which the landlord doesn’t have because he is renting for less than the mortgage.

Lord help us!

As FB go bankrupt, as lower income folks can no longer get 100% adjustable loans , as job losses increase, people will be forced to look for cheaper housing. Yes, folks will double up, get roomates, move back home, but in the short term I believe there will be an increase in rental prices for middle quality apartments over the next 6 months. This year my rent went up by 3% following several years of no increase. In the longer run when the recession kicks in, then rental rates will drop.

Of course just because rental rates will increase does not mean that I should go out and commit economic suicide by buying an overpriced house or condo at double my current rent.

P.S. Tim, long time reader and even used to post a bit back when you first started this blog, will try to participate more.

Why can’t reporters learn how to use craigslist?

Prices listed on craigslist are not always representitive of what you are going to pay. Ever tried to buy tickets there? You get a response back on almost every good deal that the seller just sold them for more than the listed price, but they do have another pair.

My sister is looking for a 1br on craigslist right now, and there is a lot of crap to filter out.

http://www.eastvalleytribune.com/story/99970

But I get the feeling a lot of would-be-sellers-turned-landlords have a hefty nut to cover each month, especially with all the HELOC and MEW activity the last few years. Thus, their asking price to begin with with try to cover as much of that nut as possible. I expect new houses put on the market will have unrealistically high monthly rents at first. As the market gets saturated with homes for rent, though, more and more landlords will deal and bring their rents back to Earth.

Of course, all of this depends upon if these newly-minted landlords throw in a pink pony or two…