Rent dropping fast in Bay Area

Rent in Bay Area continues to drop in 2017

But house prices continue to rise because of low inventory and stock prices of hi-tech businesses are rocketing upwards.

Is that stable?

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Rents and house prices aren’t necessarily tied together. .Houses are mainly owner occupied …and are not fungible liqud assets. …

They are building a lot of rentals in the bay area. They are not building much housing. Good for homeowners, not so good for investors.

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What is the difference between rentals and housing?

I am building 6 townhomes… each will have an APN/ water/ gas/ electric meter. They will be offered for rent. And maybe for sale once 10 years have passed.

Are they housing or rentals?

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Everyone is doing their own rent-vs-buy calculation. They may not be perfect substitutes but pretty darn close. If it’s much cheaper to rent fewer will buy. So no, house prices can’t stay afloat of falling rent forever. If something can’t goes on forever it will stop. Eventually.

They are rentals now. Once they sold for the first time they will affect they homeowners market, but 6 of them will not affect it very much

This evaluates 1 bedroom apartments. There are bigger factors that can influence home prices than single people living in what they consider a temporary stop.

Anecdotally, I haven’t seen a drop in Fremont. I was considering holding rents steady 6 months ago, but now no longer.

The new construction is mostly MFH. Even the “SFH” construction has lots so tiny that they are basically a TH. I think the bay area is hitting the point where SFH ownership is a luxury few will be able to afford it. That’s only going to accelerate demands for rent control, affordable housing, and all the other “solutions” people think will help.

10 years wait to sell, that’s a long time. Just to avoid any construction defect lawsuit? Construction defect lawsuit might be another reason for less new homes.

Why do we have more lawsuits in California? Is it because of liberal judges or too much regulations?

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