Wrong. I merely restated your general arguments with differring particulars. It is precisely apples to apples. It is just a matter of whose ox is getting gored.

Employees are as much necessity for some employers as housing is for you. Arguably more so, as you could live in your car and no one else would really be impacted. Nixon’s actions or what we might want to call him are totally beside the point. As for rising up pitchfork and torch in hand…..well, that’s why God invented the 50 caliber.

Q) What do you call a landlord who can do basic math in this real estate market?
A) Ex-landlord.

That’s one reason why the market is flooded with new listings. Is the value of a stock dividend based on what you paid for a stock in 1995? Or what it’s worth to you today?

It must be nice to have been born ten years prior to other people that can’t do the same things as you did, now, at the same age you did them at.

Those stupid younger people!

It doesn’t seem to matter what Cohen puts in an ariticle, some editor slaps on a simplistic headline, or often a misleading one pointing to the pink pony strenghts of the Seattle Real Estate market.

Unless the asking rents approach the mortgage payment, almost always the case to start. For SFH’s as well as condos. So, you end up with an oversupply over overpriced rentals. Then what? Maybe that is why many are walking away, instead of lowering the price on a depreciating asset, and suffering negative cash flow. I still don’t see traditional supply and demand adequately addressing an untraditional and unprecidented credit bubble. So, then we get the pick of forclosures? Not so fast. There are already mega-corps setup to gobble them up, and sell them at only slightly lower than the original price. It could happen. Renters still bear the brunt. The game is rigged. So, waiting it out may not save you much when the rents in fact do not come down. Unless you get lucky.

I certainly hope it does not play out that way. It is just one alternate universe against another when you have an environment that cannot be dealt with, with more of the same.

If there is indeed more housing per person than in 2000, then why are not the prices lower right now?

I think bitterrenter is on to something. How cynical the cycle is. At least according to rentometer, the median rent for a 1 BD in my neighboorhood is $125 higher, and $225 higher for a 2BD, than last summer. The ads on Craigslist seem to support that too.

We predicted that as the bubble starts to burst rents will go up. As houses are put on the market they are emptied. Empty houses that are unavailable for immediate tenancy reduce supply. Reduced supply increases prices.

After some time, loss aversion will lead some sellers to take their homes off the market and rent them out (especially when encouraged by rising rents). This will increase supply and make prices fall again.

This article (http://seattlebubble.com/blog/2006/10/25/big-picture-supply-vs-demand/) shows there is more housing per person today than there was in 2000.

I believe it’s an effort to get renters to buy to help prop up the dying real estate market. I also think that the loan-owners relish the idea of quick rental increases for two reasons: it will validate their decision to buy into this insane bubble and bring the cost of renting closer to that of buying so their home values won’t crash as hard. Neither terribly altruistic. And they call us bubblesitters bitter.

By the way, in Sacramento, rental prices are FALLING in sync with house prices.

Right on, Ira! And, how ’bout that free market regarding the Bear Sterns bailout with our tax payer dollars. I have seen many examples in life of how we socialize loss to protect private profit.

Until then, renters have every right to resent it.

Sure. It’s a free country. They would be better off finding a cheaper place to live. I got a new rental last summer from craigslist. I still monitor the search I did. Rents are cheaper this summer than they were last year.

Supply and demand is too simplistic to completely explain it this time. I would hope that in time the effective demand will have more of an impact than supply and demand. I do hope you are right, and the reversion to the mean will happen with rents too. Until then, renters have every right to resent it.

Sometimes government must save us from ourselves. The “free market” will eventually will eat itself and posion the well for all without sensible controls. Just look what happened to the manipulated market here and in the rest of the country. From the raters to the appraisers to the title insurance companies to the mortgage CDO’s, it adds up. So now the renters pay, but maybe not in the long run.

What happens when everyone colludes to raise the rents rapidly and dramatically

There is too much incentive for landlords to defect from the cartel for that to happen.

Now, if demand truely is outstripping supply then prices will go up. That is a simple effect of supply and demand. But when rents go up it encourages people to invest in rentals. That means supply goes up to bring prices back down.

This blog has pointed out before how the median income is even more closely tied to rental rates than SFH prices, and the other cost increases for necessities add to the effective demand. As was mentioned, property owners are not seeing the effective demand, just some articles and anecdotal back patting that tells them “you can do it!” like some motivational speaker. I don’t believe they just woke up out of some kind of stupor, and said “I could have had a financial V8!”

What happens when everyone colludes to raise the rents rapidly and dramatically (like the price SFH/condos), and you have no place cheaper to move? Serfs can only get pushed around so far before they storm the castle with pitchforks and torches.

The big bias is not asking landlords, why not sell? Are they crazy? Smart landlords are putting their rental properties on the market. Yesterday.

Rents are still at a pathetic excuse of a number compared to the price they’d get by selling, and with the rental market slowing they won’t get away with raising them much more. So it’s lose, lose for landlords from here forward.

Explorer provides a service to his employer. Why not set up similar protections for his consumers?

The law should provide that explorer cannot charge them more than 3% over last year. The employment consumer should be free to terminate the relationship on 30 days notice, but explorer must be able to justify his desire to terminate against legally pre-defined conditions. And if he can’t make it on his pay, well, that’s no excuse. Success is not guaranteed in the employment world. If explorer is leaving them to greedily or speculatively make more money, it seems only right he should provide relocation, er, I mean rehiring assistance to his consumer. From his posts, it looks like 6 to 12 months of salary should be about right.

Sauce for the goose.

Serfs up, dude.

They aren’t building in the city??? I can see 10+ cranes from my deck in Belltown. This city is not very dense, perhaps you should do a search for Tim’s density post comparing Seattle to most other metro areas. This city still has plenty of room to build.

Why should the current tenant always be forced to move because of a greedy mistake, because the landlord had to learn their lession by being unable to rent at the inflated rate, thereby reducing it to a point that the previous tenant would have accepted it?

I might be in favor of some sort of protection for renters of a property that is being foreclosed on. The main reason banks don’t allow it is that they are not in the property management / rental business. I think a business with the right argument to the banks could make a killing in this area.

Why should the current tenant always be forced to move because of a greedy mistake, because the landlord had to learn their lession by being unable to rent at the inflated rate, thereby reducing it to a point that the previous tenant would have accepted it?

There is a difference between socialism and feudalism.

That is one thing that should be addressed in Seattle.

I found my place in 2003, and the landlord had plenty (20% vacant), but they cut the rents and the units went fast. My unit wasn’t even advertised. I was the first to see it… and I took it.

There are plenty of new apartment units going up around me – QA, Uptown, SLU; but they are going to be more expensive and lack the character of my place. I know the landlord is asking more for units as they turnover, but they are also spending more fixing up each unit before they rent them again (mine needs some TLC).

Granted, there is an incentive to stay longer under rent control. There is no legal “expiration date” on any tenancy anywhere. However, as the poster indicated, it does not put much of a damper on the market for rental properties from an owner’s standpoint. With the capital improvement allowance, it is not a disencentive to improve the properties, but a choice by the property owner.

LA is a very transient city, and the number of people who move around, in and out of town, is far higher, even now, than you think. No one’s “mobility” is restricted, but they still have a choice.

Besides, if the owner is so unhappy with the rental income they recieve, they can always sell the building. Double digit profits in a short time may be the continued fantasy, but that is not the reality. The fact is, that there is still money to be made under the existing ordinance, not to mention the tremendous leverage and equity building, or no one would bother with owning rental property as an investment. It is not ALL about cash flow.

I like this part of the ordinance below. That should go double in Seattle:

“Anti-Speculation Provision. If the only justification offered for the requested rent increase on the landlord’s application is an assertion that the maximum rents or maximum adjusted rents permitted pursuant to this chapter do not allow the landlord a return sufficient to pay both the operating expenses and debt service on the rental unit or units or on the housing complex containing the rental unit or units, a rent adjustment will not be permitted pursuant to this subsection to a landlord who acquired an interest in the rental unit or units after October 1, 1978.”

This one below is good too. And people whine about paying $500-1500 here for condo conversions!

If the termination of tenancy is based on the grounds set forth in Subdivisions 8., 10., 11., or 12. of Subsection A. of this section, then the landlord shall pay a relocation fee of: $14,850 to qualified tenants and a $6,810 fee to all other tenants who have lived in their rental unit for fewer than three years, or $17,080 to qualified tenants and a $9,040 fee to all other tenants who have lived in their rental unit for three years or longer, or $17,080 to qualified tenants and $9,040 to all other tenants whose household income is 80 percent or below Area Median Income (AMI), as adjusted for household size…

Mikail, I agree. I left a rented house because they raised the rent too much.

http://www.city-data.com/forum/los-angeles/35104-rent-control-city-l.html

“My rent is going up in February, and again in February next year (the rent can’t be raised more than once a year). I’ll be paying more than $1,000 a month for my little two-bedroom apartment in an area where comparable apartments go for $1,350 and up. Is it any wonder I can’t wait to get out of L.A.?”

The individual is complaining about two future increases in rent that will take them to $1000 a month, which is still less than the *current* market rate of $1350.

The building this person is in seems to be an example of why rent control doesn’t work. It’s in disrepair, because the owner can’t do any significant renovation and has no incentive to keep good tenants. Landlords are motivated to lower the quality of rent controlled apartments over time to get people to leave. I suppose as long as it’s “safe” there’s no need to make it nice, legally speaking.

Rent control in action… Lowering standards and restricting mobility.

Once you see them you will NEVER forget them.

Ray Pepper
http://www.500Realty.net

I agree. I suppose the question is regarding what is “outrageous”? In my mind, allowing the market to dictate rents is entirely reasonable.

“Notabull: Whenever some says something like that is “impossible,” regarding rent control, I that does not come from knowing all the facts. Stating the obvious, and what I already took into account, still does not make it “impossible.’ I would consider it “impossible” for home sellers right now to get 20 percent + over what they paid within the last 3 years, yet some are likely to hold out for a long time until they have permanent dents in their heads from striking the wall.”

You said, “Overall, I see that article as giving landlords the green light to raise rents beyond what the median individual income can support.” I was not referring to rent control, just that your statement was not correct on the context of supply and demand for rentals. If rents are going up, and people are still paying them and not getting evicted (as is the case today) then the individual income of those renters *can* support those increases. The article is just telling landlords that others in the market are successfully raising rents (because the market *will* bear it). The green light they are getting is telling them to raise rents and that this is *within* the limits that income can support. This is counter to your statement.

Also, your example of how rent control worked (or didn’t!) in LA is a perfect example of how rent control does not work! It puts too much power in the hands of the renter and tips the scales too far in that direction. You get more power over the landlord in terms of your ability to stay as long as you want, and then leave when *you* want. And you get a better deal on rent, as the CPI is lower than wage inflation (historically, at least), due to productivity increases in the economy. So every year you get a better deal, slightly, until you eventually can’t “afford” to move because all the other places out there are so much more expensive because they’re up at market rates which are more linked to wages, supply and demand.

There’s a reason that almost all economists think that rent control is a terrible idea. It’s great for those that get in early but for everyone else it sucks. The only people that like rent control are the minority that currently or previously benefited from it.

Not much construction inside the city? Have you actually been to the city in the last 3 years?

Sure, it’s also the case that “efffective demand” comes into play, eventually. As with overpriced houses, overpriced rentals (repartmented condos especially), will take some time to work itself through the noggins of the stubborn. From where I sit in the thick of things, It is not an abstraction, and ideology, or an academic excercise.

I lived and rented in LA from 1979-1990. My experience is anecdotal, but I’m pretty confident if someone did the research, it would back up the anecdotes. Rents did go up beyond the CPI levels set after rent contol was recinded, and then went down with the local RE market crash and recession in 1990.

Here is how it worked in LA:
Rent increases were limited to the CPI for the city in the previous year. If it was zero or negative, rents would not change. When someone moved out, the rents could be raised to the current market rate for the next tenant. The next year, that new tenant would not see an increase for more than the CPI for the previous year, and so on.

Here is how it was subverted:
The city council came under repeated attack from the property owner’s Associations. The could not get them voted them out, because the citizens overwhelmingly supported the ordinance. Eventually, they bribed enough city council members who were overseeing building, health, and safety codes to not enforce them for their members. The staffing and budget of city building code enforcement inspectors was drastically cut. So, the buildings fell into disrepair, and the property owner associations realized their self-fulfilling prophesy and greed. Landlords also were illegally harrassing tenants and pulling ruses to get them to move. When tenants complained or protested to the city, they were mostly ignored in all but the most serious situations. At best, the landlords got a paltry fine, and repair orders were not enforced. I was subjected to the “I want my relative to live here,” ruse. I sued, and won. However, most people were not in my position. That threat did not deter the property owners one bit, since they had the city government in their pockets.

Unfortunately several people died as a result of non-compliant buildings and neglect, where the codes were no longer enforced. That was one of the public reasons for recinding the rent control ordinance. It was not the main reason. I have heard the rent contol in Philadelphia was removed in a similar fashon.

I think the real point of contention for renters is: You want to raise rents, fine. Give the renters something for it in return. Outragous increases for less value or even the same, is neither fair, nor justified. There is no law the mandates you must make a profit, or how much, in any business venture. The reality, is that many rental property owners must relearn the lesson of effective demand over and over.

As for LA, I haven’t looked at the numbers, but I read the news. Rent control eliminates the incentive for owners to improve properties. As they decay, the properties eventually become attractive only to people who think of indoor plumbing as a luxury. Once a neighborhood transitions over to that demographic, it would take decades before the worn out junk to get torn down and replaced with up to date construction. So yeah, I’m not suprised that rents don’t go up always when rent control is lifted.

Impossible. If landlords raise rent beyond what people are willing to pay from their income, then the place won’t rent and they’ll lower the price to what the market will handle. If the renter truly can’t handle the rent payment, they’ll eventually get evicted. This rarely happens in my experience.

If there is a lot of supply and not much demand, the higher priced properties won’t rent and they’ll either sit there or the rent will go down.

“Renters are people too, not serfs.”

You have a lease. It’s a contract and it’s two-sided. If the landlord breaks the contract or the law, enforce it. If you move in with a one year lease, that lease applies for a year. You’ll *likely* get to renew it beyond that, but that’s not guaranteed, and neither is the price you’ll get it for in the next lease. If you don’t like the place, you can move very easily. If the landlord doesn’t like you, they get to kick you out.

“Rent contol is overdue.”

Rent control is terrible. It limits the supply of places, so you end up with a situation where new arrivals are punished for being new, and people that have been there for a longer time can’t afford to move anywhere else because the rent price of a new place is so much higher.

If you want a long term payment for a place that doesn’t change (much), buy it with a 30 year fixed mortgage. Obviously, buying at the top isn’t a good idea, but the conventional wisdom is still correct in conventional times.

If you want the flexibility to move more easily, not have to take care of maintenance, but deal with the issues of rent increases, decreases, and stagnation, then rent a place.

You can’t have it all…

Do you have an data to back up anything in your post? Because according to this post:

http://seattlebubble.com/blog/2006/10/25/big-picture-supply-vs-demand/

The occupancy percentage in 2005 indicates that building has more than kept up with demand (since the boom post 2000), and that there are not a glut of people waiting on the sidelines to sweep up all the unsold inventory.

If you have some data that shows otherwise I would be very interested.

Investors in particular, are having a tough time accepting that they won’t be able to rent for enough $$ to cover mortgage. That will change soon too.

This gives some explanations about the rental rise. Has to do with the slumping housing.