I'm currently paying a $1600 / month mortgage, of which $1000 is principal, $400 is interest and $200 is escrow (tax / insurance) in an area with $2000/month rent.
So I'm really paying $600 / month for interest, tax, insurance. It's another $1400/month before I get to rent prices.
And even with a new roof and new deck last year, I'm no where close to renters prices in terms of actual cost. Especially considering that I had no maintenance costs in 2019 (lucky year)
And those $2000/month apartments are literally my next door neighbors. I get way more room than them, a private garage and lots of other benefits. (Those apartment dwellers occasionally ask me if they can park in my driveway when space runs out. That's how close they are.).
What about the landlords that bought property twenty years ago, when prices weren't going up? What's their excuse?
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Their excuse is that they, as landlords, will charge as much for rent as they get away with, regardless of what their expenses may or may not be. Two identical apartments, owned by two different landlords, one of which costs its owner ~$1000/month, and the other ~$1,500/month will both be rented out for essentially the same price.
There's no need to spill ink on moralizing and justifying why rent's going up. It's going up because you (or someone else) has the money to pay for it to go up, and because you have limited alternatives.
Exactly. But this is coming off a series of rent increases I've encountered, including one for $500 more per month (needless to say I found different housing).
Or, if rents in your area go up, your landlord might ask you for hundreds more per month in rent when it's time to renew your contract.
I was renting a place for $950/month starting in 2011, then for 2012 it went up to $1,050, then for 2013 the landlord wanted $1,350/month to renew. Meanwhile home prices were still low (30% of inventory still short sales in my area) and mortgage interest rates were under 4%. No-brainer. I now pay less in principal and interest than I paid in rent, for a much larger, nicer house compared to the apartment I lived in. And my mortgage payment is never going to go up. (My property tax bill might go up, but that just means my investment is appreciating.)
Interesting. My rent increase was 6% this year. It was 4.5% the previous year and in prior years was around 3%. This would be in a suburb a few miles from Boston.
The advertised price for apartments in my building is actually higher than my cost. I am waiting on renewal to see if they are forced to drop the price so I can use that to request a smaller increase.
I suppose the smart money was to have leveraged up on some housing while I had the chance, but I just can't stand the entire home purchase and ownership ecosystem.
Those costs are all baked in to the price of rent. It's not like you get out of paying property tax by renting. Housing prices go up = your rent goes up.
Good luck with that. It appears hard to know when the getting is good.
I'm stuck in the rental loop. Looking outward and seeing rents have increased by at least 200-300 dollars a month for similar sized units is disheartening. It's hard enough to save as it is.
I and most people my age in my area are trying to purchase our living space. When you rent, you don't have to pay for maintenance, but you also don't get any return from the money you put into it. It's a fee you pay for a place to sleep, rather than an investment. There being more rental space in my area isn't beneficial to me or most people in my generation and socioeconomic class. It's beneficial to those who own the rental homes. You'd think the price of rent would at least go down with all these new apartment buildings coming in, but it's risen much faster than inflation even for my no frills, poorly maintained apartment.
"..but your rent will likely triple or more in that time in a city like Boston."
Is after tax take-home pay increasing at that rate? If not, or if its declining like in most areas, you can ask for whatever you want, but that doesn't mean anyone will line up to pay it... This is why as an international discussion on the internet, the topic doesn't make much sense. Nationwide, of course, rents will be declining because nationwide the line item on the budget for rent is in long term permanent decline.
Also be on the outlook for "grass is greener..." syndrome. I remember the glory days of the bachelor apartment and no matter how big the problem, the labor never exceeded a phone call to the onsite manager and the cost never exceeded one phone call. Someone else had the headache of the new hydronic heater unit for the whole building, replacing the garage door, upgrading the garage door opener to keyless from keypad, fixing the leaky water pipe, unclogging the storm drain, fixing the broken snowblower and the broken lawnmower, steam cleaning the hallway carpet, fixing the broken front door window, fixing the leaky roof, obviously not all at the same time, but I'd gladly trade all that away for "unable to paint the walls"
Also note you can do all that remodeling you're planning; it will never cost more than your security deposit. In practice the LL doesn't care as long as he doesn't find out and the work looks as good or better than he could do. So, sure, I painted.
Who's bluffing? I'm not the one claiming that I'd be willing to do something drastic to lower my rent. I'm perfectly happy where I am.
This country is full of low-rent places. If you don't like your rent you don't have to stay in the city. What people want is to be somewhere desirable but not have to pay a premium for being someplace desirable.
That happens briefly when you find a good place that nobody discovered yet. But it never lasts. Eventually people find out. My property taxes have gone up 3 times in 5 years for precisely that reason. It's a small price to pay, IME, to be somewhere you like even if you have to pay extra.
If all of your potential tenants are getting an extra >$10,000 per year, and the supply of cheap housing in your city is basically fixed in the short term, you're not going to be looking for a small increase in rent...
Let's say I'm a different landlord. If the other landlords are raising their rents, I know that by not raising mine, I can attract more tenants and increase my occupancy rate. Maybe I'm at 70%, and I need 80% to cover my costs. I know that if I raised my rents by $1,000/month, I would lose tenants to the landlords who didn't.
To make matters worse, renting often means dealing with annual rental increases. Since the pandemic started my apartment rent has gone up roughly 8% per year, compared to the annual 2-3% raises I get for good performance at work. Some people have to contend with much more dramatic rent increases. Many people end up getting priced out of renting due to rent increases, forcing them to either move further away (which means longer commutes or even switching jobs) or downsize/downgrade, such as living in a smaller space or living with roommates. A fixed-rate mortgage would shield me from rent increases, but the price of a mortgage is substantially higher than market rents on equivalent properties in my area (San Francisco Bay Area), and home ownership has many costs that are not fixed, such as maintenance, HOA dues, property taxes, and insurance.
It's truly sad to see the price of owning or renting a home rising faster than most people's ability to keep pace. There's a major homelessness crisis in California, and one of the causes is very high home prices and rents.
The rental market in the USA for sure is greatly distorted by the people who think there is “guaranteed easy money” to be made. They’re the type who say “mortgage $1500, rent $1600, it’s free real estate.”
Sadly for them, eventually they learn why professional landlords want to see debt service be 50% or less of revenues. And it’s not because they get to pocket 50%.
It’s been covered up because appreciation has been so high as to cover the bad accounting, but a few years of increased rates and near zero appreciation will put the hurt on them - and then watch out!
I'm currently paying a $1600 / month mortgage, of which $1000 is principal, $400 is interest and $200 is escrow (tax / insurance) in an area with $2000/month rent.
So I'm really paying $600 / month for interest, tax, insurance. It's another $1400/month before I get to rent prices.
And even with a new roof and new deck last year, I'm no where close to renters prices in terms of actual cost. Especially considering that I had no maintenance costs in 2019 (lucky year)
And those $2000/month apartments are literally my next door neighbors. I get way more room than them, a private garage and lots of other benefits. (Those apartment dwellers occasionally ask me if they can park in my driveway when space runs out. That's how close they are.).
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