SF: Will Landlords Be the Next Victims of Economic Woes?

Here’s a weekend in review, edited version:

Friday

-bought gas: $60 (up from $25)

-bought bread, milk, and cereal: $11 (up from $6.50)

-met with a friend to comfort her; she’d been laid off that afternoon ($30 for 4 glasses of wine and a cheese plate, although I should not be putting a price on comforting someone. The lost job is the point.)

Saturday

-got notice in mail our rent is going up the allowed amount (2.5%) so will now by $1968 for a 800 square foot 1 bedroom with a large closet they claim is a second bedroom.

-bought dog food ($30). Geez! I do want him to eat healthy, non-filler, organic food, but… he needs to get a job. Wait, there are no jobs. Read on…

-met friends to see a movie. Two of the four had been laid off Friday. That the movies now cost $11 per ticket (I admit we did not go to an art house theater– my mistake!) was a salt in the wound. We decided, to my dismay, that we simply had to forgo $6 popcorn.

When the movie turned out to suck, everyone was quite bitter and the ensuing bar tab was too high to mention.

Sunday

-read in paper that deal on $700 billion bailout has been reached. Really? Where’s my bread and cereal money? Who’s paying my friends’ rent now that they’ve lost their jobs? Somehow I don’t think those provisions are part of the deal.

Okay, so now I get to the point of this post. We see inflated prices on everything, including things we cannot go without out (so I differentiate between say, popcorn, which I could I suppose, give up; and actual food, which cannot be healthfully avoided). We see people losing their jobs. We see our investments tank. So will we also see a decline in rents?

It seems possible. After all, if people can’t afford to stay in the city, they’ll have to leave; thus, the demand that allows rents to be so high will logically dissapate. The spending bill also lifts the ban on oil drilling along the Pacific Coast. Will SF be so beautiful with oil rigs, greasy water, and dead birds littering the beaches?

And for those of us committed to trying to stay (I love my job, and luckily, it’s unionized. I am pretty safe unless the entire State University system crumbles), how many will sign leases for one bedrooms that cost $2400 a month? Further, even if we hate our current apartments, we have no incentive to look for better: most of us enjoy rent control. Moving would take it away.

Interested in the idea that rents can’t possibly stay so high in this market, I did a search for “reduced” on Craigslist San Francisco apartments for rent. A whole page of listings came back. I also saw several “first month free” and “flexible lease terms,” all signs that the strength of the “landlord” position is weakening. Overall, the prices are still very high, but I see a chink in the armor.

If rents do go down, does that have an inverse effect on buying? After all, many of us speculated that high rents serve as incentive to buy: If I’m already paying what amounts to a mortgage, why not actually own the house? But if rents go down and real estate stays high as it is, and frankly as scary as it is right now, who’ll buy?