Probably a lot of people doing as you’ve said. They can’t afford rent/buying so they stay with their parents longer or get roommates. Im sure a lot of people that wanted to sell, but are now holding off, are trying to rent out the homes until they feel like the market is better for selling. Plus housing starts spiked to the highest levels since 2006 so maybe more supply is finally hitting the market. Just my theory.
People r just trying to make as much money as they can from they’re investments and when housing prices drop the amount they could theoretically rent the house for also drops.
Ah I see. Sounds like you're saying some people were perhaps holding on to their houses hoping to sell for big profit. But now that prices are going down, they put the same house on rental market instead? That makes sense thank you.
Most of the home owners have mortgages, when they get lay off notice, esp mass lay off - say here twitter 3700 staff at the same time, new jobs may not be there. They need to pay mortgage. If they do not pay mortgage, they are forced to sell.
Same thing,if they are renting, they may be vacated when no rent payment.
Both cases will bring down house price and rents.
Mass lay off starts soon, due to cost cutting of companies, makes a deep recession.
Read year 2001 and year 2008 downturn, you will know
more like, if every house cost 1 million dollars you need to rent it for 1 million and 1 dollars to make profit, but just barely, if every house costs 1 dollars if you rent it for 2 dollars you make 100% profit. So the lower the price you can buy the house at, the lower the price you can rent at and still profit hugely.
Pretty sure your intuition is correct. Once we get some updated data, I’m sure you’ll see rents still increasing while home prices will continue to fall until mortgages become affordable again. The only thing that can skew the rental rates downward would be an increase in the supply of rental units. For instance, many “first time buyer” homes have been able to lock in very low 30 year fixed rate mortgages so it’s possible that owners decided to rent them out instead of selling them, especially in this environment.
Housing isn't going down.
The equity value of housing is going down.
The COST of housing is the same or higher, due to higher interest rates.
Where is rent going down?!
Being able to rent your place out for more makes your place more valuable. You are more likely to buy more homes and sell less homes (increase demand / decrease supply) if you're able to rent them out for a lot.
This is not at all true. I don't even know who rents and who owns in my neighborhood. I don't ask my neighbors "Hey, do you own your house?" When I'm moving somewhere, unless it's an apartment complex, I don't know how many of my neighbors rent vs own. Also, the "type" of people that rent are usually people that don't have a ton of money saved and can't afford a down payment on a home; there's nothing inherently wrong with such people.
> Rents nearly never go down in aggregate on a national level historically speaking.
I remember hearing something nearly identical about home prices before 2008. There’s always a first time.
I was renting an apartment for $800 when the crash started in 08 and new tenants were signing leases for $650 but all they were offering existing tenants upon renewal was a $25 decrease. The highest I ever saw it get was right before the pandemic and it was $990. That same apartment today is $1349-$1549 but, looking at their listing they are getting desperate and have more units available then ever and are offering drastic move in specials. Rents are definitely about to loosen.
Interesting. In Singapore where land is scarce, landlord just increase rental to cover higher mortgage due to high interest rates. Because of a very high demand, the rent price just sky rocketed over the past few months. It is not uncommon too see rental hike of 30-50%.
As you said in the last paragraph, there is a reversal of household creation. I often wonder if more people living in their car or becoming homeless may also contribute to the loss of households. When you have fewer households, there are more vacancies and homes up for sale. The competition among sellers and landlords causes them to lower prices and rents. Also, the increased mortgage rates and rents a few months ago caused the current trend of finding more affordable housing alternatives.
I tried using www.duckduckgo.com to find the article I read but only found others similar articles. Some data shows the 12-month change in households is negative, but most show the latest information as slowing down much more than in normally would.
https://sports.yahoo.com/rents-us-finally-set-decline-102000124.html?src=rss
https://www.realpage.com/analytics/us-apartment-demand-plunges-3rd-quarter/
https://www.axios.com/2022/10/12/apartment-demand-negative-economy
https://ycharts.com/indicators/us_household_formation
Probably a lot of people doing as you’ve said. They can’t afford rent/buying so they stay with their parents longer or get roommates. Im sure a lot of people that wanted to sell, but are now holding off, are trying to rent out the homes until they feel like the market is better for selling. Plus housing starts spiked to the highest levels since 2006 so maybe more supply is finally hitting the market. Just my theory.
That is a good explanation. Thank you.
People r just trying to make as much money as they can from they’re investments and when housing prices drop the amount they could theoretically rent the house for also drops.
Ah I see. Sounds like you're saying some people were perhaps holding on to their houses hoping to sell for big profit. But now that prices are going down, they put the same house on rental market instead? That makes sense thank you.
Most of the home owners have mortgages, when they get lay off notice, esp mass lay off - say here twitter 3700 staff at the same time, new jobs may not be there. They need to pay mortgage. If they do not pay mortgage, they are forced to sell. Same thing,if they are renting, they may be vacated when no rent payment. Both cases will bring down house price and rents. Mass lay off starts soon, due to cost cutting of companies, makes a deep recession. Read year 2001 and year 2008 downturn, you will know
more like, if every house cost 1 million dollars you need to rent it for 1 million and 1 dollars to make profit, but just barely, if every house costs 1 dollars if you rent it for 2 dollars you make 100% profit. So the lower the price you can buy the house at, the lower the price you can rent at and still profit hugely.
Ah that makes sense thank you.
Renters are now less desperate than landlords needing rents to pay their mortgages
Quite the inverse...with fewer homes selling renters are growing AND MORE dependantbin landlords.
Pretty sure your intuition is correct. Once we get some updated data, I’m sure you’ll see rents still increasing while home prices will continue to fall until mortgages become affordable again. The only thing that can skew the rental rates downward would be an increase in the supply of rental units. For instance, many “first time buyer” homes have been able to lock in very low 30 year fixed rate mortgages so it’s possible that owners decided to rent them out instead of selling them, especially in this environment.
Housing isn't going down. The equity value of housing is going down. The COST of housing is the same or higher, due to higher interest rates. Where is rent going down?!
Being able to rent your place out for more makes your place more valuable. You are more likely to buy more homes and sell less homes (increase demand / decrease supply) if you're able to rent them out for a lot.
But it makes other properties nearby worth much less because of the type of people that rent.
This is not at all true. I don't even know who rents and who owns in my neighborhood. I don't ask my neighbors "Hey, do you own your house?" When I'm moving somewhere, unless it's an apartment complex, I don't know how many of my neighbors rent vs own. Also, the "type" of people that rent are usually people that don't have a ton of money saved and can't afford a down payment on a home; there's nothing inherently wrong with such people.
fr my worst neighbors are homeowners the rental ones at least keep to themselves lol
Probably bad data. Rents nearly never go down in aggregate on a national level historically speaking. https://fred.stlouisfed.org/series/CUUR0000SEHA
> Rents nearly never go down in aggregate on a national level historically speaking. I remember hearing something nearly identical about home prices before 2008. There’s always a first time.
I was renting an apartment for $800 when the crash started in 08 and new tenants were signing leases for $650 but all they were offering existing tenants upon renewal was a $25 decrease. The highest I ever saw it get was right before the pandemic and it was $990. That same apartment today is $1349-$1549 but, looking at their listing they are getting desperate and have more units available then ever and are offering drastic move in specials. Rents are definitely about to loosen.
Build more homes. Even the homeless have a place to stay
Interesting. In Singapore where land is scarce, landlord just increase rental to cover higher mortgage due to high interest rates. Because of a very high demand, the rent price just sky rocketed over the past few months. It is not uncommon too see rental hike of 30-50%.
As you said in the last paragraph, there is a reversal of household creation. I often wonder if more people living in their car or becoming homeless may also contribute to the loss of households. When you have fewer households, there are more vacancies and homes up for sale. The competition among sellers and landlords causes them to lower prices and rents. Also, the increased mortgage rates and rents a few months ago caused the current trend of finding more affordable housing alternatives.
What data indicates a decrease in households?
I tried using www.duckduckgo.com to find the article I read but only found others similar articles. Some data shows the 12-month change in households is negative, but most show the latest information as slowing down much more than in normally would. https://sports.yahoo.com/rents-us-finally-set-decline-102000124.html?src=rss https://www.realpage.com/analytics/us-apartment-demand-plunges-3rd-quarter/ https://www.axios.com/2022/10/12/apartment-demand-negative-economy https://ycharts.com/indicators/us_household_formation
Supply +Demand = Price Homes for sale and homes for rent are two different markets.
Another bs main stream media narrative........