Speaking of newcomers, it won’t just be outsiders who fuel the future demand.
Mortgage rates dipping into the threes make buyers giddy, but today’s low rates are just the sweetener. Demand is being driven by the soaring rents.
Rich people can choose in or out – I heard the story yesterday about the doctor couple who have been renting a house in Santaluz for 13 years. But for those with static incomes, the reality is grim.
More on rents here:
Yep, my rent increased 10% YoY from 2012-2014, my current landlord tried to raise 10%, I was able to negotiate it down to only a 5% increase. Lucky me.
I work in recruiting for a major STEM employer statewide. This is the #1 challenge we are facing. Migration into the state of California is next to none, unless you are right out of college and willing to have roommates. Migration within state is limited as well, as many homeowners are handcuffed by prop13.
Something will have to give. If you have engineers and scientists in their late 20s and early 30s struggling to afford rent, let alone afford a house, it does not bode well for the future.
Anyone else think Yellen is holding the line at 0%, because at 1% interest, this whole charade come crashing back down again?
At 3 percent mortgages and 8 percent rent increases it makes property investment a no brainer. A license to print money is the American phrase I believe.
“Rich people can choose in or out – I heard the story yesterday about the doctor couple who have been renting a house in Santaluz for 13 years. But for those with static incomes, the reality is grim.”
A friend of mine, in LA, had a tenant move out of a one bedroom apt. Tenant was paying $1850. It’s okay, nothing fancy. He’d lived there a little over a year. Friend put in new carpet, paint, and new stove. Nothing else. Moved the rent up to $2350, and rented it out in a week. I was amazed.
Rent-wise, the decent areas of LA are getting brutal.
@Daytrip
You think LA is bad, try renting in the SF Bay Area. All of those newly minted millionaires from all the IPOs these past few years are not only well qualified to buy housing, but are willing and able to pay that much more for rentals.
Maybe the Twitter layoffs may relieve some of that pressure?
336 Twitter employees are not going to make any difference. The venture capital that is fueling all these business ideas has to pull back. All the developers being paid premium salaries and promises of equity have to lose their jobs and move to make any real difference.
And yes, Yellen is holding rates artificially low. Outside of a few bright spots, the economy’s performance is anemic, at least from the POV of the middle class. Employment has improved, but is still weak. Lots of underemployed folks and unexpected early retirees. Think Japan…