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Rental Glut Sends Chill Through the Hottest U.S. Housing Markets

Ether_Snake

Ether_Snake

Banned
Oct 29, 2017
11,306
Rental Glut Sends Chill Through the Hottest U.S. Housing Markets https://www.bloomberg.com/news/arti...chill-through-the-hottest-u-s-housing-markets

Seattle-area rents didn't budge in july after anual increases of 5% and 10% the past two years, observed as part of a national trend. Rents in Nashville, Portland, Oregon have started falling. Nationally rents were up only 0.5%, the smallest gain for any month since 2012. "It's spreading through what was once the fastest growing rental markets." "Rents are softening most on the high-end and within city limits." Landlords are also losing renters to homeownership as millenials start buying in suburbs. A lot of the drop is attributed to the large influx of new constructions that began over the past few years.

"For the first time since 2010, it's now easier to build wealth over an eight-year period by renting a home and investing in stocks and bonds, rather than buying than buying and accumulating equity, according to national rent-versus-buy index of 23 cities produced by Florida Atlantic University and Florida International University faculty".

Sorry can't copy/paste from the article from the Bloomberg app. More info at the link.

tldr; build more and house prices/rents go down, duh.
 
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AlteredBeast

AlteredBeast

Don't Watch the Tape!
Member
Oct 27, 2017
4,766
Omaha has seen a massive rental boom over the past 12 years. Like, entire sections of the city that used to be industrial/mixed-use have been reinvigorated by apartment concepts with shops below, something that literally up until about 2006 did not exist in Omaha. With that, the housing market was on absolute fire for most of the past 12 years. Yes, even when the rest of the country was suffering under the housing collapse, Omaha's market was pretty insulated and we continued to have one of the lowest unemployment rates in the country.

I think it is starting to get to the point where there are too many rental units, however, and the market is starting to cool rapidly. Our housing prices are still way lower than the national average for a city this size, though.
 
Shiloh

Shiloh

Member
Oct 25, 2017
3,710
Feels like construction starts on a new apartment complex in Nashville every week. Can't say I'm surprised with the cost stagnating/declining.
 
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Ether_Snake

Ether_Snake

Banned
Oct 29, 2017
11,306
Malleymal said:
Wait I thought millennials weren't buying houses? Why happened this past week
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That was always bull from manipulated numbers or no numbers at all.

The article reports that home ownership among millenials is at 36.5%, compared to 35.3% a year ago. Don't believe the incessant doomer articles about millenials.
 
GodofWine

GodofWine

Attempted to circumvent ban with alt account
Banned
Oct 26, 2017
2,775
Shiloh said:
Feels like construction starts on a new apartment complex in Nashville every week. Can't say I'm surprised with the cost stagnating/declining.
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Same here in NJ (near Philly where I am, and Im sure up North near NY too). Condo's EVERYWHERE - lots of 'affordable rentals' too, the initial concern was that our school districts would go to shit from over crowding (and yes, from a down tick in clientele - no reason to not state the obvious - we moved where we moved for the schools - now they are adding 1000's of low income units in the district - and yes, most will probably be younger without kids, or seniors on fixed incomes - and many with kids will be great people, BUT you know they wont all be...anyway...).

But now the feeling is they will be lucky to fill 20% of the units..NJ is so fucked up, once the kids are done school, Im leaving - its a terrible state tax wise, especially to die in.
 
Walter White Walker

Walter White Walker

Member
Oct 27, 2017
21,537
It's great. I'm north of Seattle and last year my rent shot up by like 18%. This year it only went up only 0.004%. All the apartments around me are having trouble getting units rented - the one across from me has had a sign-spinner out at a nearby intersection for the last five months which is something that I haven't seen in years. They're also all remodeling - my apartments just got new roofs and they repaved and painted the parking lot this week.
There's a huge apartment complex going up, too, on the east side of I-5 in Everett. There must be at least 1,000 units going in there.
 
vacantseas

vacantseas

Member
Oct 27, 2017
1,734
Well shit, here in the suburbs of Chicago an hour (on a good day) outside of downtown, they're building cookie cutter "designer" apartments with up to date amenities, etc etc. A one bed, one bath 760 sq foot apartment rents from $1330-$1476/month.

My wife and I bought a 4 bedroom, 2.5 bath home, 2500 square feet and our mortgage is $1800/month.

Now I get that putting money down for a house affects mortgage, and it might not be feasable for some people to have money saved up to put money down to buy, but come on.....
 
Lunar Wolf

Lunar Wolf

Banned
Nov 6, 2017
16,237
Los Angeles
Dang and I was thinking about investing in real estate so I could rent out houses and apartments.

But if rental units are having a hard time in getting filled then I might as well put my money in index funds and CDs.
 
Eidan

Eidan

Avenger
Oct 30, 2017
8,569
Yeah, my apartment gave me a notice saying that because I was such a loyal tenant, they were keeping my rent flat for the year. I'm sure it has nothing to do with the four massive apartment developments being built within a mile of my place.
 
PeakPointMatrix

PeakPointMatrix

Member
Oct 25, 2017
19,076
Can someone give LA the memo?

For the love of god, there must be 20 new buildings going up in a 20 mile radius and rents are still climbing.
 

rockinreelin

Member
Oct 27, 2017
1,156
scottstephan said:
Man, come on down to LA where a vacant dirt lot in our neighborhood is going for 900k!
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It's starting to happen in LA too. Rents stabilized (but didn't go down sadly) this year as there is a ton of new apartment building projects going up around the city. I expect a big change in the LA rental market within the next couple of years once these large projects complete and people move on from their rickety old apartments to the new towers.
 
Dr. Feel Good

Dr. Feel Good

Member
Oct 25, 2017
3,996
rockinreelin said:
It's starting to happen in LA too. Rents stabilized (but didn't go down sadly) this year as there is a ton of new apartment building projects going up around the city. I expect a big change in the LA rental market within the next couple of years once these large projects complete and people move on from their rickety old apartments to the new towers.
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What? Prices in desirable neighborhoods are still going up. Hollywood, DTLA, Venice, Santa Monica ate still seeing increases far sharper than inflation annually. Downtown especially, despite what is said is high vacancy rates, are still demanding $2,000+ studios. There's still a 1 million shortage of housing. This problem is not going anywhere in LA.

Also rent stabilized for two months. That means jack shit.
 
Stinkles

Stinkles

Banned
Oct 25, 2017
20,459
SpartyCrunch said:
At least there's a ton of construction still underway unlike SF.
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Yeah but mostly condo rather than rental stock - and they're not building schools or other infrastructure to absorb the impact. Just condos that evaded simple zoning requirements for adequate parking based on future transit magical thinking.

The density is only sustainable if the rest of the city is adapted. And it ain't.
 
chirt

chirt

Member
Oct 25, 2017
1,691
vacantseas said:
Well shit, here in the suburbs of Chicago an hour (on a good day) outside of downtown, they're building cookie cutter "designer" apartments with up to date amenities, etc etc. A one bed, one bath 760 sq foot apartment rents from $1330-$1476/month.

My wife and I bought a 4 bedroom, 2.5 bath home, 2500 square feet and our mortgage is $1800/month.

Now I get that putting money down for a house affects mortgage, and it might not be feasable for some people to have money saved up to put money down to buy, but come on.....
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Living in Hoffman now, 2 bed apartment is around 1400/mo. I keep seeing these cookie cutter townhomes going up around me for 400k, its ridiculous...
My partner and I would love to buy a house, but as you say not having enough money to put down is halting our progress...
 
captmcblack

captmcblack

Member
Oct 25, 2017
5,063
I want this to keep happening, but to the point that landlords have to actually reduce rents.

Right now, landlords would rather give incentives like free months of rent instead of actually lowering the price. They need to feel more pain so that prices come down and people actually want to use this housing stock.
 
vacantseas

vacantseas

Member
Oct 27, 2017
1,734
chirt said:
Living in Hoffman now, 2 bed apartment is around 1400/mo. I keep seeing these cookie cutter townhomes going up around me for 400k, its ridiculous...
My partner and I would love to buy a house, but as you say not having enough money to put down is halting our progress...
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I'm nearby in Algonquin and the area you're in is driven by the school districts. The 400k townhomes is really crazy, but if people want to live where the schools are good, they'll pay that.
 
ezrarh

ezrarh

Member
Oct 27, 2017
146
Keep building. Today's luxury apartments are tomorrow's "attainable" housing. Although here in Denver, while there's a lot of projects underway - I'm seeing less announcements for new projects the last year.
 
Violence Jack

Violence Jack

Drive-in Mutant
Member
Oct 25, 2017
41,743
In my time in Denver, our rent went up $7 and $10 the last two years. But for the price we were paying, we could just buy a house for a couple hundred more a month. It was almost $1700 a month for a 2 bedroom.
 
Wolf

Wolf

Member
Oct 25, 2017
4,849
Seattle area renter here, this is extremely inaccurate, at least on the east side. My rent went up almost $200 a month.
 
badcrumble

badcrumble

Member
Oct 25, 2017
3,732
ezrarh said:
Keep building. Today's luxury apartments are tomorrow's "attainable" housing. Although here in Denver, while there's a lot of projects underway - I'm seeing less announcements for new projects the last year.
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Part of this that really sucks is that the get-rich-quick promise of the housing boom attracted a lot of really shoddy, cheap construction with a nice glossy paint job on top of it. A lot of fairly new luxury housing in Brooklyn is already falling apart, with clearly zero interest from the building owners in making any kind of more-than-surface-level repairs.

I worry that today's desirable housing will really quickly turn into tomorrow's broken piece of shit just as rents drop anyway.
 

meow

The Fallen
Oct 27, 2017
1,094
NYC
yeeeeeeeh the rents in NYC are supposedly falling too.

Crossing my fingers because a super swank building is opening later this year close to me. Maybe we can get a good deal on a 2br but I am not holding my breath (let's be honest, that place is probably gonna be like $6k for a 2br). But I can dream...
 
Titik

Titik

Member
Oct 25, 2017
7,490
Building more... works?


Build, baby, build!

Unfortunately for California we still aren't building enough.
 
Hokahey

Hokahey

Banned
Oct 28, 2017
2,288
As I've predicted on here before and been scoffed at. New construction, for the first time since the housing bust, is coming back. Which is of course driving down rents. The recovery was long and extremely challenging, but we're finally completely turning the corner.
 
Cotton McKnight

Cotton McKnight

Member
Oct 28, 2017
2,700
Siloam Springs
The Gunslinger said:
Dang and I was thinking about investing in real estate so I could rent out houses and apartments.

But if rental units are having a hard time in getting filled then I might as well put my money in index funds and CDs.
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Now's the time to low ball the rental owners, so you can catch the up swing.

The guy who owns the most rentals in my town is selling like crazy cakes.

He's getting too close to retirement and wants to cash out. I told him to hold on for the residuals or just buy more properties. But his business plan is far too heavy on the costs and upkeep (most of the properties are really old and he has employed everyone in his family and wants out of that mess).

I just made the mistake of buying a bigger house for the family, unnecessarily (long story why we bought the house). We had lived far beneath our means with the hopes to grow our savings/retirement, and our business/investing funds. We wanted to buy a rental instead. But sometimes life gets in the way.
 
BladeoftheImmortal

BladeoftheImmortal

Banned
Oct 27, 2017
6,467
Ether_Snake said:
That was always bull from manipulated numbers or no numbers at all.

The article reports that home ownership among millenials is at 36.5%, compared to 35.3% a year ago. Don't believe the incessant doomer articles about millenials.
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What is that percentage compared to previous home owners and how long did it take for them to purchase their first homes?
 
ezrarh

ezrarh

Member
Oct 27, 2017
146
badcrumble said:
Part of this that really sucks is that the get-rich-quick promise of the housing boom attracted a lot of really shoddy, cheap construction with a nice glossy paint job on top of it. A lot of fairly new luxury housing in Brooklyn is already falling apart, with clearly zero interest from the building owners in making any kind of more-than-surface-level repairs.

I worry that today's desirable housing will really quickly turn into tomorrow's broken piece of shit just as rents drop anyway.
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That's why while I'm a proponent for more housing, I'm not a huge fan of the "luxury liner" style apartment buildings where it's one giant massing with 400 units. As soon as the owner stops giving a shit like you say, it has a risk of becoming slummy. I'd rather have ten 40 unit buildings than what's common here in Denver, where it's one giant block of the same building. Having 10 owners instead of 1 in one block spreads out the risk a little more. Unfortunately, our financial system, construction process, zoning and building process tends to favor these larger buildings.
 

Deleted member 18179

Account closed at user request
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Oct 27, 2017
863
rockinreelin said:
It's starting to happen in LA too. Rents stabilized (but didn't go down sadly) this year as there is a ton of new apartment building projects going up around the city. I expect a big change in the LA rental market within the next couple of years once these large projects complete and people move on from their rickety old apartments to the new towers.
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What I read recently is that there are falling rents in the Luxury Market, but the rest of the rental market is still out of control. So many units that were built were "luxury", 3k+ 1BRs that there's a glut of those, but still a huge shortage of places where regular folks can afford to live.
 
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Ether_Snake

Ether_Snake

Banned
Oct 29, 2017
11,306
BladeoftheImmortal said:
What is that percentage compared to previous home owners and how long did it take for them to purchase their first homes?
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Not really meaningful. People could own later because it's actually advantageous to do so (studying longer, more employment mobility as they chose to form families later, etc.).

What matters in the end is quality of life, not ownership rates nor specifically when one purchases something in their lives compared to previous generations. If it was more advantageous to rent all your life until retirement, owning later would not be an indication that you are worst off than your parents. Societies change, the benefits of owning the house you live in isn't set in stone especially at a specific time in life isn't set in stone.
 
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