A few anecdotal-ish observations about the economy

[oyarde]

I forgot about all the holes in the walls. Dear Lord , I am glad I am out of the rental business.

[Jordan]

Hogwash. That's like saying two Chevy Tahoes have the same value because they're off the same assembly lines, regardless of the amenities the manufacturer or dealer adds or the upgrades made by owner over the years or the amount of maintenance each has received. I don't know where you live but houses here are not all the same. Maybe when they were built in the 50's they were all the same but not anymore. Some are heavily upgraded, others are nearly as they were when they were built. Where -do- you live Jordan? Location bias probably has an impact, hence the anecdotal nature of my observations.

That's not what I'm saying at all. Obviously there are very big differences between a $500,000 home for rent and a $200,000 home for rent.

What I am saying, though, is that you can't just go buy a condo unit in a building where rents for a 1bd are typically $600 per month and start renting units at $900 or $1500. Your unit will be empty all day every day. The rest will be full.

Melissa has it right: there is way more to it than just the rent. Real estate is a pretty efficient market. If you get more in rents from a similar building, it's because 1) you invested more capital into it, and thus your returns stay the same 2) you take on the risk of crappy tenants that ruin your home, which reduces the actual profit from renting a home 3) you have lower turnover because you're a better marketer (turnover and vacancy being the biggest cost of renting)

Real estate is a competitive and efficient market. If you think you can make money by just raising rents you're a fool, but it does leave me to wonder why you aren't invested in real estate since it's that easy.

[devil21]

That's not what I'm saying at all. Obviously there are very big differences between a $500,000 home for rent and a $200,000 home for rent.

What I am saying, though, is that you can't just go buy a condo unit in a building where rents for a 1bd are typically $600 per month and start renting units at $900 or $1500. Your unit will be empty all day every day. The rest will be full.

Again, my observations are about rental houses, not condos or apartments. Apples and oranges. There are very few condos/apartment buildings in my area.

Melissa has it right: there is way more to it than just the rent. Real estate is a pretty efficient market. If you get more in rents from a similar building, it's because 1) you invested more capital into it, and thus your returns stay the same 2) you take on the risk of crappy tenants that ruin your home, which reduces the actual profit from renting a home 3) you have lower turnover because you're a better marketer (turnover and vacancy being the biggest cost of renting)

Real estate is a competitive and efficient market. If you think you can make money by just raising rents you're a fool, but it does leave me to wonder why you aren't invested in real estate since it's that easy.

I don't debate there is more to it than just rent (there always is) but this phenomenon is definitely putting upward pressure on rental prices of surrounding area properties. There's only so many houses that you can pack more and more people into and not have their collective ability to pay higher total rent affect other properties.

Anyway, take my observations for what you will. Done debating it.

[gerryb1]

I don't debate there is more to it than just rent (there always is) but this phenomenon is definitely putting upward pressure on rental prices of surrounding area properties. There's only so many houses that you can pack more and more people into and not have their collective ability to pay higher total rent affect other properties.

Anyway, take my observations for what you will. Done debating it.

I thought you conceded that these living situations were actually driving prices down, and not up. That it was really the "shadow inventory" causing price to rise?

[devil21]

Seems ZeroHedge agrees with me on one of my observations.

http://www.zerohedge.com/news/2013-0...s-surge-record

Why? Because as we have been warning for quite a while, everyone is now piling into student debt (and NINJA Uncle Sam subprime car loans). Sure enough, non-revolving credit soared by $18.2 billion in December - a monthly record for this time series since its revision several months back - and shows that when it comes to levering up, few are using their credit cards, as increasingly more opt to rotate proceeds from their "student loans" into everyday purchases.

[BlackTerrel]

2. Student "loans" are being used to finance lifestyles of young people without careers to eventually pay for the loans. When I went to college, loans and grants were paid directly to the school. Now, the students get the checks and spend them on a lot of things other than school. Is this a backdoor stimulus?

This one is definitely true and it's going to bite a bunch of people in the ass. It used to be smart people went to college and got better jobs - partly because of college and partly because they were smarter than average.

So the government thinks "well if everyone goes to college everyone will make more money". False. Now that every dumb person I know goes to college they graduate and are still dumb. Just dumb with $50K of student loan debt.

If you graduate Harvard with $100K debt it's probably worth it. If you graduate University of Phoenix with $20K debt you're never paying that shit off.

[BAllen]

Around here, landlords charge different rates. They'll rent a house for x dollars. If you try to get a roommate to split expenses, they'll go up on your rent. They charge according to how many people are in the house. How does the market prevent that?

[VBRonPaulFan]

Around here, landlords charge different rates. They'll rent a house for x dollars. If you try to get a roommate to split expenses, they'll go up on your rent. They charge according to how many people are in the house. How does the market prevent that?

It doesn't - and shouldn't. Two young guys living in a house are going to be rough as fuck on it when compared to a couple of 30 sometimes with a kid and a cat. I know, I used to always go to one of my fathers rental houses after people moved out to help him fix it up for the next folks. The 20 something college kids/navy guys find the most interesting ways to fuck up a house.

If I was renting a place, you're goddamn right i'd charge more if a group of 3 or 4 college kids came to me and wanted to rent.

[BAllen]

It doesn't - and shouldn't. Two young guys living in a house are going to be rough as fuck on it when compared to a couple of 30 sometimes with a kid and a cat. I know, I used to always go to one of my fathers rental houses after people moved out to help him fix it up for the next folks. The 20 something college kids/navy guys find the most interesting ways to fuck up a house.

If I was renting a place, you're goddamn right i'd charge more if a group of 3 or 4 college kids came to me and wanted to rent.

Who said anything about college kids? I said roommate. You rent a house it is for the house. Number of tenants should not matter if you keep the place up. There's no guarantee that a single renter will keep the place up better than multiples, is there?

[oyarde]

I would only want to rent to hermits that wish to live behind the house in a tent