Is rent falling in accordance with wages?

[Union Yes]

I've lost hope in ever being able to afford a home. But rents seem to keep rising.

What's wrong with that picture.

Chalk up for-profit housing as another national disgrace, along with for-profit healthcare, our wasteful military spending....

Homelessness in the "Land of Plenty". What happened to this country? When did America take a turn for the worse?

[Dappleganger]

1. It sure as hell isn't!

Not in NE FL, that is.

[Captain Hilts]

2. No. And you get no tax break like those paying mortgages do. nt

[Zenlitened]

27. In Massachusetts, you do.

General Rules

A deduction is allowed for rent paid by the taxpayer during the taxable year for a principal residence located in Massachusetts. This deduction is limited to 50% of the rent paid not to exceed a total deduction of $3,000. The deduction must be for rent that the taxpayer paid to a landlord for the rental or lease of taxpayer's principal residence in Massachusetts.

Link:
http://www.mass.gov/?pageID=dorterminal&L=6&L0=Home&L1=Individuals+and+Families&L2=Personal+Income+Tax&L3=Current+Year+Tax+Information&L4=Guide+to+Personal+Income+Tax&L5=Deductions&sid=Ador&b=terminalcontent&f=dor_help_guides_abate_amend_personal_issues_rentded&csid=Ador

[branders seine]

3. it's the 'ownership' society.

A few people own everything. The rest of us are screwed.

[no_hypocrisy]

4. As long as property taxes and other expenses for the landlord keep rising,

so will your rent.

[lib2DaBone]

10. My modest 2 BR home in Florida has lost half its value since 2007

However..may taxes and insurance and utilities have continued to increase.

Now.. as oil oozes up on the beaches... help is nowhere to be found. The calvary is not coming.

[no_hypocrisy]

16. Here's the thing about property taxes.

Unless you go to court to have the property re-assessed at a lower value, theoretically they stay the same or rise.

However, knowing the mind of the municipalities, if you succeed in court and lower your property value, the tax assessor will send someone to re-assess your property and find things they "overlooked" before and raise you back.

[JDPriestly]

23. Actually, each person should check the law on property taxes in their

state and county. I'm not so sure that everyone has to actually go to court to get a reassessment. Might depend on the state. I'm talking from vague memory. I'm not sure about this. It's worth checking the law in your state if you need a reassessment.

[RKP5637]

11. All I see around here are costs going up. I used to own an apartment building and

sold it because costs continued to go up and up... taxes, supplies, labor, utilities, ongoing maintenance. I was a very fair landlord, had great tenants and charged reasonable rents. For many small property landlords that maintain the property well and really take good care of and appreciate their tenants the costs get excessive. Some tenants in my building had been there 43 years!

[truedelphi]

33. Thank you for being one of the "Good Landlords."

There are many out there, and ours is a peach.

But we always hear about the Bad Landlords.

Sorry you decided to sell out of the situation. Since property values are not now going up every year, it is understandable.

[RKP5637]

34. Thank you for your kind words.

[Dont TS Me Brah]

5. pretty much the opposite,,,

rents are on the way UP, all the foreclosed families are renting apt's and houses... rental inventory is way down.

[Cal Carpenter]

6. It's been this way for a long time for most people

Since the inception of this country. There is no past with an 'American dream', it's a false memory.

Yes, the huge rift between rich and poor, between owner and worker/unemployed, is more brutally obvious now - but the longer we believe in some past that never existed, the longer we will fail at finding solutions to our problems.

[Warpy]

7. Wages never rise to meet inflation.

In a deflationary cycle (which I'm afraid we're entering), people are thrown out of work and the complete lack of wages and therefore customers requires business people to start lowering prices to attract the few people with money away from competitors.

Working people suffer under both inflation and deflation unless the government steps in, something I don't see happening unless Congress is relieved of all that conservative dead weight in both parties.

Liberals went out of power in 1969. That's when this country started to become hell on earth for working people.

[RKP5637]

14. +1000 +++ n/t

[laughingliberal]

26. +10,000 nt

[notesdev]

8. Nope

as long as the government keeps going all-in on supporting housing prices (at their present wildly unsustainable levels) not only will rents not go down but all sorts of other terrible economic consequences are to follow.

[hobbit709]

9. Next silly question?

[Raineyb]

12. No. n/t

[William Z. Foster]

13. no

People are locked into mortgages and have to keep charging high rents or they lose the property. We have the odd situation here of a glut of abandoned properties, while rents are still going up.

This situation is analogous to what is happening in all areas of the economy. The wealthy few can pick up bargains and start a new round of profiteering - until everything is gone and there is nothing more to take. The struggling many are locked out of the game and are sinking fast. It is an ongoing massive destruction of the country, the infrastructure and the working people as wealth is transferred up into fewer and fewer hands.

Someone posted today on a thread about oil reaching the Mississippi shore - "there are some good real estate bargains to grab down there - tragedy means opportunity." Yes, tragedy means opportunity for the clever and fortunate few. And opportunity means tragedy for the many. Maybe that should be our new national motto - we could put it on the currency, add it to the pledge of allegiance. "Tragedy is opportunity and opportunity is tragedy. From sea to oily sea. Amen."

What is wrong with this picture? Indeed.

[RKP5637]

15. Well said!!! I'll probably get slammed for this by someone, but IMO the

majority of the people have no gov. really representing their interests, and I'm not speaking of R vs. D vs. I., etc., I'm just looking at the big picture. What I see supported is extreme wealth and corporations. And that IMO is indicative of a corporate owned and run government.

You can't have a fair country for all citizens with individuals spending millions of their personal cash to get elected. A SCOTUS that thinks corporations are citizens for political contributions. Endless lobbyisists... and revolving doors between government and corporations and expect much for most citizens.

[Xithras]

19. Yep. Few landlords "own" property anymore.

Most landlords owe mortgages on their property, just like any other homeowner. The property "value" is irrelevant if the mortgage balance and monthly payment remain the same.

If the landlord owes the bank money on the home, he has to make the payment from the rent. Unless the bank will lower the mortgage, the rents aren't going down.

[Statistical]

30. Exactly. However new landlords are continually buying new properties

and those will be at lower prices and thus lower mortgages. Eventually you get enough properties in an area mortgaged at new lower prices and that will bring rents down.

[Xithras]

55. Yeah, that's exactly what happened to me.

Up until last year I actually owned (well...the bank owned) two rentals. I live at ground zero for the housing meltdown, and many of the REO's have been bought up by investors and are now renting at substantially less that they were just a few years ago. My rentals had mortgages right around $1000 a month, and I was renting them out for $1200, which was average for the area. Comparable houses are now renting for about $750 a month.

Predictably, my tenants moved into other homes to save money (one of my tenants moved ACROSS THE STREET and ended up with an even nicer home, for $300 less than he was paying me). Stuck by those mortgages and carrying costs, I couldn't bring my rent under $1,100, and nobody would rent them at that price.

Both homes were sold via shortsale last year. I'm happy to say that I'm no longer a landlord, but financially it was fairly devastating. The bank was kind enough to not demand the sale of my primary residence, but they scoured my finances and demanded virtually every other penny I had in order to approve the short sale (savings, retirement, investments, the kids college savings...all gone).

It's not a good time to be a small landlord.

[joeybee12]

17. Historically, it does not...

one can always hope, though.

[The Straight Story]

18. Here in my area they have to some degree

Overview: My old house, which I bought for 95k and was foreclosed on sold for $25k. The new owner is eventually going to rent it out for $700 (which is cheaper than my payments were. Houses before the crash were renting for 950-1100/mo.

My son got an apt for $450/mo, 2 bedroom. A few years back it would have been $600.

Problem is - those who did not lose places they bought for an investment are still saddled with the initial, overpriced, payments - and since they have to make the mortgage each month they pass that inflated price on.

As more homes/apts get foreclosed on and resold at lower prices we will see (most likely) rental prices dropping (but still not enough IMHO).

[Johonny]

24. same here

rent has basically leveled out for the last few years.

[aikoaiko]

20. Almost every complex by me has free rent for a month and prices are at 2003 levels

Rent is severely discounted in Southeast Georgia.

[Liberal_in_LA]

32. I'm seeing rent discounts in los angeles

[BR_Parkway]

21. The most recent turn for the worse was Reagan

and no, all these people foreclosed on so people have to rent, pushing up occupancies (and prices) once the initial unemployment hit the rental market (people moving back with parents, former singles splitting a 2 bedroom) - the 1 bedroom market seems to be falling still, but the larger units are on the way back up in many locales

[FBI_Un_Sub]

22. Falling but

falling SLOWER then wages.

[Peacetrain]

25. Rents are outrageous.. It can be cheaper to buy a house than rent one

[amborin]

38. Nope; it depends on the area, it's very regional/local; some cases cheaper to rent than to buy

[Statistical]

44. Most people fail to consider the extra costs of owning.

They just look at mortgage vs rent.

When it is mortgage + insurance (difference between homeowners & renters insurance on same property) + real estate taxes + repairs/maintenance vs rent.

[raccoon]

52. +10,000. Maintenance & repairs can burn you up. nt

[anarch]

28. LOL

umm...no.

[Statistical]

29. I haven't raised rent on my townhouse in 3 years.

Then again I have some great tenants who respect the place likely won't raise it again this year either.

[Roon]

56. Yes, I grew up working for my parents' rental business..

and one thing I have learned,if you have a good tenant, don't rock the boat. On the other hand, all of my parents' properties are all paid for. When I was working we never were pressured to raise the rent.

[Pharaoh]

31. NO!

[SemiCharmedQuark]

35. Well, my rent hasn't risen...but it hasn't dropped either.

It's the same as it was in 2008.

Still 730.00

[LooseWilly]

36. Rent in the Bay Area has fallen, but not like wages...

Especially if unemployment is factored into the issue of wages.

Rent prices here doubled (literally doubled) during the DotCom boom of the late 90's... they've fallen back by about 20-30% toward what they were before the DotCom boom. Wages have dropped back to well below what they were during the boom. People not only can't afford the homes they bought during the real estate bubble, in many cases they can't even afford the (slightly declining) costs of renting... so there are a lot of vacant housing units.

Apparently landlords didn't get the "supply & demand" memo from the economists though, costs aren't dropping to line up supply with demand... rather the landlords who can afford to are holding out for the desperate to go into hock to pay for their supply- rather than live on the sidewalks in front of their properties... (extortion economics, I suppose it should be called)

[Statistical]

42. Is landlords costs don't go down why would their rent go down.

Mortgage and insurance is largest component of rent.

You mortgage doesn't drop in price just because housing prices have declined.

Eventually new properties will be bought at lower prices (and thus rented at lower prices) however if there is that much excess supply it likely is driving away any interested investors.

[old mark]

37. Rents are so high we would be homeless if we hadn't bought our house

15 years ago. Our neighbor's house is smaller yet he pays nearly 75% more per month in rent than our morgtage payment-and we still have our old high rate mortgage (for a few more months anyway).

No jobs, no money, high rents....makes no sense to me.


mark

[Statistical]

45. 15 years of inflation. your mortgage is based on the value of your home 15 years ago.

Rent is based on current (or at least relatively) current properties values.

This is one of the greatest (and often most overlooked) advantages of owning a home.
Your "housing cost" is inflation protected.

[old mark]

54. Our mortgage including insurance and all other costs is under $600/month.

We were going to refinance - we have what today is a very high rate-but our mortgage is so cheap we would spend more on the refi than we sould save.

We will be paying it off completely this year.Oh, yeah - houses in our block are selling for almost $30,000 more than we paid for our 1920 era end of row house....:)

mark

[rucky]

39. Sorry. All the lifeboats are full. n/t

[treestar]

40. It should be according to the laws of supply and demand

Landlord left with empty premises is making no money at all.

[TheKentuckian]

41. Supply and demand are minor issues in our economy anymore

Prices on nearly everything are mostly artificial.

[Statistical]

43. It is but don't expect people to willingly rent at a loss.

Say I have a property for rent. Say my fixed costs (mortgage, insurance, taxes) are $1200 a month.

If I rent the home to you for $800 a month I just locked in a "guaranteed" $4800 loss for the year. I also make it virtually impossible to raise rent from $800 to $1200 next year thus locking in even more losses next year.

When you consider the habitation cost (wear & tear, repairs, etc) my loss is even higher.

It may simply be cheaper to "hold out" for 6 months in hopes of getting at least $1000 in rent. Pretty soon if wages don't recover a lot of those rental properties will end up in foreclosure especially among less capitalized investors.

[RKP5637]

48. I'm starting to wonder if the margins are so close or negative that owning

rental property is a loss for most in the "new" economy. I often think many that rent do not realize how expensive it is to own and rent properties, and keep them in a nice/pleasant condition.

[treestar]

57. I've seen people do it

They can take the loss on their taxes and it will lower their taxable income. The $800 is better than nothing, if those costs have to be paid anyway.

[Stinky The Clown]

46. I heard something about "The Rule of 15"

If a house can be bought for 15 times its annual rent, buying is the better strategy. If not, then renting is the better strategy.

This supposedly came from some non-partisan economic think tank.

[RKP5637]

47. That's an interesting formula... just my hunch, but it seems about right... n/t

[kestrel91316]

49. My rent is $80 less than when I moved in almost 3 years ago.

After the first year they raised it $20 rather than the % they were allowed to, which would have been $50. Then last year they offered me a $100 reduction without my even asking.

This year I will ask for another $100 reduction if they don't offer it first. Rents are definitely lower now than they used to be. And every building has vacancies.

I currently pay $1150 for my 1-BR. The 2-BR, 2-BA right nextdoor goes for $1350 now, so I think mine is too high.

[TexasObserver]

50. It's difficult for rents to fall lower than debt service.

Damn near impossible. As long as the debt on the building exists, and the interest rate is constant or increasing, most of rental payments go to paying that debt service. Because the note payments do not attentuate, there is little cost savings an apartment landlord experiences when occupancy drops from 95% to 85%. The variable cost savings are minimal, and certainly insufficient to drop rent charges on other units.

Only landlords who own their properties free and clear, or who have very low debt service, can effectively ratchet down their rent charges in a bad economy. Others are caught between the rock of debt service and base expenses and the hard place of lower demand and less money available to tenants for rent payments.

Foreclosed properties are often not available for rental, so they are off the market. A foreclosure doesn't reduce area rentals, because it takes out of the market one more viable home for habitation. Foreclosures will eventually be sold, and as they are sold, many will be sold to investors, and those investors will have debt service that is lower, allowing them to charge lower rents. That takes time, however. Years.

[HughMoran]

51. Never does

...the backslide continues...

[raccoon]

53. In my own case, mine didn't fall but I asked the property manager if I could keep my rent the same

as last year. I've been in this complex for years, and they know I'm a good tenant.

She said she'd let several people recently renew their leases at the same rent as last year and allowed me to do that too.

Also, she said she had too many vacancies.