SF and Daly City: Curious Side Effect of Slumping Sales: Soaring Rents
I am the Redfin blogger acting as voice for the renter. I think I might be the only one of us SF Bay Area writers who does not already own something. I guess that gives us a nice spectrum of housing insight; unfortunately for me, I’m handling the would-be/first time buyer side of that spectrum.
Last year at this time, my man and I were trying to buy a house. We were nearly talked into a $650,000 condo with a really sweet 1 year ARM that would have had us paying no more than our then current rent. We got scared off. Actually, my man did. He’s less inclined to be charmed by sexy master bedrooms with huge skylights, seafoam tiles in the bathroom, a chef’s kitchen with adorable stacked washer/dryer cleverly hidden in a pantry. He wanted to know what the payment would be when the ARM expired.
No one would tell us in exact terms. So we sat down with a calculator and a dictionary to help us wade through realtor/broker-ese. Our payments, we found, would be $3200, not including taxes, insurance, or the HOA fee (and possible assessments to come down the line). If we’d have been charmed by that kitchen with its evil-temptress stacked washer, we’d be in foreclosure right now.
So, we rent. Still. But I watch the market with an eagle eye. I can’t wait to tell my landlord exactly what I think about her “house rules.” I can’t wait to sink my hands into the earth of my own garden. (I can, I can, I will make tomatoes grow in the SF fog.)
Interestingly, from the renter’s standpoint, this currently turbulent market is not the fix we have been looking for. We might see housing prices falling, but we also see the ability to get a loan falling. In the meantime, rents are soaring. Carol Lloyd, San Francisco Chronicle Real Estate columnist writes that “in the past few months, the rents seem to have shot up. Average one-bedrooms, which hovered around $1,770 between September 2006 and April 2007, now go for about $1,980. And though two-bedroom prices dropped from about $2,600 in October to about $2,400 in February, they have since catapulted up to more than $2,900. Three-bedrooms, which hit an annual bottom at around $2,950 in November, rose to around $3,800 in August.”
Why? Lloyd echoes my confusion when she writes
I had always assumed that people’s inability to buy expensive homes (and the correlative decline in the real estate market) would go hand in hand with people’s inability to afford outrageous rents (and a correlative fall in rental rates). But James Wavro, a broker specializing in San Francisco rentals, disagrees.
“The rational explanation is that as the real estate market softens, the rental market would take off,” says Wavro, founder of J. Wavro Associates, a company that specializes in high-end residential rentals and leasing.
Kelly Zito, in another SFgate.com article, agrees:
A strong economy, uncertainty in the mortgage business, a flood of apartment conversions to tenancies-in-common and the start of the school year have joined to create one of the most competitive rental markets in years.
So, here I am, the renter, hoping to be the buyer. Are crazy rents (mine is sure to go up when the lease expires) a good reason to try to buy? Can we buy? Should we? Hard to say. For now I guess those tomato plants will have to wait.
