>To clarify a bit: The monthly cost of renting a house is way higher in California, not because it costs more to rent the house, but because it costs more to rent the land the house sits on
Rent is not really tied to land in CA. If it were, a 1br in an apartment complex would be cheaper than a 1br detached unit since you are renting less physical land, and while much rarer, both 1brs tend to be about the same prices. Biggest factors influencing local variance in rents in California seem to be quality of neighborhood which is proxy for access to high paying jobs, fit and finish of the unit, and size of the unit.
> There are cities where rent on a one bedroom apartment is nearly $1000/month.
And I think the reality of this statement is lost of many folks, because it's not just large cities that have this problem. I live in a moderately sized city (~100k people) and rents here are nearly $1000/mo for an average one bedroom apartment.
If you run the numbers, no one should want to be a landlord. Atrocious ROI. Homes are horrific investments if you live in them and still terrible even if you rent them out. I would encourage anyone who thinks otherwise to model this out for any major city/region to convince themselves.
Renting is a great deal. You pay less, get better ROI on what would have been the downpayment by investing it elsewhere, and there's someone contractually obligated to deal with most things that can go wrong. And if you're in California, chances are you benefit from a lot of regulations that protect tenants as well.
Property taxes according to Redfin are $2,471 a year, for a total cost of $74,130. A thirty-year mortgage at 4.5% interest will see you paying $350,229 in interest over 30 years.
Together, that's $1,178 not going into equity.
Here's a Craigslist search for homes with 4 bedrooms or more in the same neighborhood:
I couldn't find good data on housing appreciation for the Bay Area, but I'm going to go out on a limb and suggest it doesn't mirror the U.S. overall.
And either way, appreciation only matters if you're thinking of your home as an investment. Assuming you're thinking of it as a place to live, it makes sense both in pure cost terms and for some things that are harder to put a price on.
For instance -- how much is having a permanent address worth to you? Or the price of never having to move again, never having to sit in another group housing interview again, never being able to be evicted by "owner move in" or whatever shibboleth is currently popular in Bay Area eviction bootcamps? (this is a real thing: http://www.sfgate.com/bayarea/article/Lawyer-pumps-up-S-F-la...)
> If the median rent costs double (or tripple, or more) the median income any discourse about how indivduals spend their money is not only pointless, it is cynical.
It obviously does not. The cost to purchase an entire house and the land it sits on is at that multiple or slightly more. The cost to merely use the median rental for a year is under the median income.
False equivalence. The other option in most cases isn't no decrease in rent (i.e., 0%), it is an increase in rent (> 0%). So if with no increase in supply the rent increase would have been 10% (like it has been on my rent for the past several years in San Diego), than it suddenly seems like a pretty good deal.
> Rent gets raised by $500 because someone else would actually pay that much.
In many cases, rent gets raised by $500 for the unit to be vacant so the landlord can claim to have $500 more in revenue per month (and get loans on that).
In some parts of the country - you have >50% of units in large population centers owned and/or operated by just a few companies.
Like KSA reducing oil supply by 10% to increase prices 5% - sometimes strange things make sense when you have a cartel.
In SF, I had many friends have their rent raised by 10% - move out - the unit sit vacant for 6 months, and then the price reduced back to what it was and still be vacant.
I wouldn't assume any time landlords are raising prices - it's because they had a bidding war on the unit and someone's paying more.
> the weighted average asking rent for an apartment in the city, which currently measures around 2.3 bedrooms when counting a studio as having one, has dropped to $3,100 a month.
Still too high. Was checking into apartment prices earlier in the year and it is amazing the number of landlords that will try and sell you on a “kitchen” that is a mini-fridge, tiny sink, microwave and a hot plate whilst still charging you full rent.
San Francisco’s rental market is a good lesson in how supply and demand informs pricing that the residents and the Board of Supervisors alike continuously and willfully ignore.
Because income is one half of LA.
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