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View Diary: Housing Secretary: “the worst rental affordability crisis that this country has ever known" (301 comments)

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  •  isn't that psychotic? (26+ / 0-)

    houses are terrible rental properties.

    a 400 unit apartment building is a wonderful
    rental property.

    You have an office, an office manager, a gardener,
    a superintendent and a maintenance schedule.

    every spring AC maintenance,  Every Fall, Furnace maintenance,  Every 10 years pull all the fridges,
    and dishwashers.  Every 10 years redo the roofs.

    In Housing it's all crazy ass psycho, small fixes.

    You roll trucks at $300/ roll to find out a door is sticking.

    these houses will become slums.

    •  Right (8+ / 0-)

      If you're going to be a landlord it is far better to own an apartment building or complex than a collection of single family homes; with SFHs there are no economies of scale.

    •  Housing investors do not make landlords (10+ / 0-)

      and don't know what they are in for.

      What will happen next? Here's my best guess:

      people will start bunking down many to a room. There's really no choice when rents get so high, do the 0.01% really think the rest of us will shrivel up and live in packing cartons?

      And what will the absentee 1% landlord say about it? He'll be too scared to knock on the door. He will have to hire private military. And then?

      The place will get trashed, the tenants will move on. The landlords will sue the tenant who signed the contract ... and of course will win big (just like Bush) ... and won't be able to collect.

      Investors are driving up the housing market again. Bubbles always burst.

      •  Exactly, and this is the model (13+ / 0-)

        The housing stocks held by securitized investment vehicles and managed by some national crony corp. will be slowly destroyed through lack of maintenance and increasingly adversarial tenant relationships. In the meanwhile the value is being sucked out in the short term by the banksters, who will then dump the broken husks with their inflated values on your pensions and funds, or perhaps get bailed out by the government.

        They are basically looting the housing infrastructure in a 2nd round of wealth redistribution upwards, like that second razor blade that comes by to get the little nub of beard, while it is overextended from the first one. The reversal of emancipation is proceeding into the sharecropping phase.

      •  This has already happened in (7+ / 0-)

        San Francisco.  You know those "elite tech workers" who ride the "Google Bus"?  They are holed up 2-to-a-room in rentals, just like dorms in college, only without a dining hall provide to  food along with the room.  And the housing stock is nearly full.  Tell me, just how are these tech drones with their $100K college loans supposed to make it?

        •  And when the tech market plummets due to lack (1+ / 0-)
          Recommended by:
          dksbook

          of demand?

          Already starting ...

        •  yes. it's very scary here. (1+ / 0-)
          Recommended by:
          gjohnsit

          My partner's tech company is in Palo Alto and they have some housing bonuses for living close to the offices. Even with that, though, almost all of them I know are living with roommates (who work in the same office).

          So their rents are higher than average, and keep getting pushed up, because they have some wiggle-room in their finances to support the rent. But everyone else can't afford to live in these places, so they end up moving elsewhere.

          My partner and I got VERY lucky and are renting a 3BR house with a finished garage in San Mateo for $2850/mo. Our landlord is a retiree who bought for investment purposes, and he's fairly hands-off. We end up doing a fair bit of maintenance on the property, because we know we have a great deal for the area. Part of me wants to see if we can buy the place, but we know we're in a bubble - even though the Peninsula really didn't suffer much during the downturn .

    •  If it does somehow crash (5+ / 0-)

       - either political party will bail the rich assholes out.  That was proven.

      They tested the system.  They now know it's fool proof for them.

      You're approaching this from the perspective of a person who doesn't even own one Senator.

      Dear Boomers: The dirty Rooskies aren't coming to get you. Breath in sanity through your mouth, breath out the Cold War propaganda through your nose.

      by JesseCW on Sun Apr 20, 2014 at 07:44:10 PM PDT

      [ Parent ]

      •  Jesse - nope, the institutional all cash buyer of (1+ / 0-)
        Recommended by:
        OrganicChemist

        single family homes won't be bailed out because they aren't banks, there is no debt, and plan to be long term owners.

        "let's talk about that"

        by VClib on Sun Apr 20, 2014 at 10:38:26 PM PDT

        [ Parent ]

        •  You seem to think this all individual speculators. (7+ / 0-)

          That's far from the truth.

          This was back in October -

          http://www.bloomberg.com/...

          In addition, individual investors who own literally hundreds of homes in one CD have immense leverage on Congressional Reps to get themselves a piece of any bailout offered to the institutional buyers.

          14% of all homes going to institutional buyers, of course, doesn't really paint the picture.  The percentage is much higher in the tightest markets.

          Dear Boomers: The dirty Rooskies aren't coming to get you. Breath in sanity through your mouth, breath out the Cold War propaganda through your nose.

          by JesseCW on Sun Apr 20, 2014 at 11:14:19 PM PDT

          [ Parent ]

          •  Jesse - if investors are buying all cash (3+ / 0-)
            Recommended by:
            OrganicChemist, mmacdDE, nextstep

            there isn't anything to bailout. If the value of the property declines, they still have rental income and aren't underwater because there is no mortgage. If they choose to sell at less than what they paid they have a realized loss. No big deal.

            "let's talk about that"

            by VClib on Sun Apr 20, 2014 at 11:25:24 PM PDT

            [ Parent ]

            •  There is a big difference... (3+ / 0-)
              Recommended by:
              VClib, gjohnsit, nextstep

              when you have paid for something in cash or you have it on credit. A big difference in how you view your investment, your market psychology, how you treat it on your books, your tax treatment, and on and on.  I hope you can keep trying to make this clear to people.

            •  Correct (0+ / 0-)

              Notice Jesse never responded?

              •  Can you read a time stamp? (3+ / 0-)
                Recommended by:
                JVolvo, trumpeter, socindemsclothing

                Dear Boomers: The dirty Rooskies aren't coming to get you. Breath in sanity through your mouth, breath out the Cold War propaganda through your nose.

                by JesseCW on Mon Apr 21, 2014 at 09:32:31 AM PDT

                [ Parent ]

              •   The chickenshit rec (3+ / 0-)
                Recommended by:
                JVolvo, maregug, socindemsclothing

                from VClib bugs me even more.

                Have you people no jobs?  No families?

                I leave 9:30 to go work a graveyard, I get a few hours of sleep when I get home, and then pop back on to find this shitty little jab from a cowardly clown supported by the right-wing "Free Market" extremist who was pretending to have a good-faith discussion?

                Why I keep engaging with the tiny pack of irrational bullies who are desperate to warp the Democratic Party into a vehicle for advancing their delusional and self Fiscal Libertarian extremism is beyond me.

                People this utterly self centered and calloused to their fellow human beings aren't capable of good faith.

                Dear Boomers: The dirty Rooskies aren't coming to get you. Breath in sanity through your mouth, breath out the Cold War propaganda through your nose.

                by JesseCW on Mon Apr 21, 2014 at 09:40:41 AM PDT

                [ Parent ]

            •  Once upon a time, there would be no bailout (3+ / 0-)
              Recommended by:
              gjohnsit, JVolvo, socindemsclothing

              for CDO's, either.

              Until there was.

              Now, tell me why you're so sure that they won't engineer a bailout in the form of a new "Mae" buying distressed properties?

              What part of a wholly owned Senate and Congress serving the interests of the rich do you believe will prevent that?

              Dear Boomers: The dirty Rooskies aren't coming to get you. Breath in sanity through your mouth, breath out the Cold War propaganda through your nose.

              by JesseCW on Mon Apr 21, 2014 at 09:34:12 AM PDT

              [ Parent ]

              •  Jesse - I think rescuing banks, even major (0+ / 0-)

                Wall St banks and insurance companies like AIG, which guaranteed millions of financial obligations, is very different than Congress bailing out the likes of a big private equity fund like Blackstone. If Blackstone has significant losses in this rental housing program it primarily impacts Blackstone, and its investors, and does not have the ripple effect of failing banks with depositors who have federal guarantees.

                We have a difference of opinion here, but it is certainly not personal from my perspective and no attack on you was intended. We likely won't ever know who was right because I don't think this rental housing program, even if packaged as CROs, will completely collapse.

                "let's talk about that"

                by VClib on Mon Apr 21, 2014 at 10:28:46 AM PDT

                [ Parent ]

            •  I am sorry for thinking that unlike Shrike you (1+ / 0-)
              Recommended by:
              JVolvo

              may be interested in actual discussion.

              Your rec below shows who you are, and what you'll resort to when you can't defend the insane claim that our Government will never bailout large institutional investors if their bad real estate deals threaten to cause their collapse.

              Don't expect me to be civil to you in the future when you fucking join in to attack me for having to go to fucking work.

              Dear Boomers: The dirty Rooskies aren't coming to get you. Breath in sanity through your mouth, breath out the Cold War propaganda through your nose.

              by JesseCW on Mon Apr 21, 2014 at 09:44:44 AM PDT

              [ Parent ]

            •  Two wrong assumptions (1+ / 0-)
              Recommended by:
              JVolvo
              If the value of the property declines, they still have rental income and aren't underwater because there is no mortgage.
               First you make the assumption that the value of the asset never gets audited. That's wrong.
                 Secondly, you are overlooking the fact that many of these investments are being packaged into CRO's and sold. Just like CDO's during the real estate bubble, except with rents.
                Eventually, someone looks at the actual value of the assets. It always happens.

              "The oppressors most powerful weapon is the mind of the oppressed." - Stephen Biko

              by gjohnsit on Mon Apr 21, 2014 at 09:49:26 AM PDT

              [ Parent ]

              •  If the homes are packaged as (0+ / 0-)

                collateralized rent obligations the investors are taking a risk that rents will fall and their income will decline.  By selling the CROs the institutional owners take some cash out of the properties, can hold the property and wait for capital appreciation. If the rents decline, which seems unlikely to happen in dramatic fashion, the investors still own a home with no mortgage and some rental income.

                Are the income streams on the CROs guaranteed by the institutional investors? That would seem to be the only way there could be a default on the CROs.

                In any event I still don't think you would see any federal bailout of investors like Blackstone.

                "let's talk about that"

                by VClib on Mon Apr 21, 2014 at 10:17:58 AM PDT

                [ Parent ]

    •  pat - owning one or two single family homes (1+ / 0-)
      Recommended by:
      OrganicChemist

      as rentals is a bad investment. But owning a large enough concentration, in a metro market, allows for professional management.

      "let's talk about that"

      by VClib on Sun Apr 20, 2014 at 10:36:46 PM PDT

      [ Parent ]

      •  Yeah, that's how our neighborhood is run (4+ / 0-)

        We purchased a house in a foreclosed neighborhood.  Our mortgage is about $600/month (that's including escrow for insurance).  The house was brand new - no one had lived in it, as it was the model house for the neighborhood.  They only got 8 hours in when 2008 happened and the investment company went under.

        Of the other seven houses, five were purchased as rental properties and rent for $1200/month.  Another is owned by an occupant, like us.  The last one was owned by an elderly couple - the husband died, and the wife tried to sell but 30% of the value of the house was gone.  So she turned it into a rental, and left.

        The six rental houses are all managed by a private company, who keeps 10% of the rent fee for themselves.  So the elderly lady pays $120/month for someone else to manage the house, and the remaining money goes to the mortgage.  She makes nothing.

        It's a depressing neighborhood, but our home is small and tidy.  The rentals keep the crime rate at 0% - turns out the head of the police department's mother in law lives on the street, so we have a regular patrol here (go figure.)  

        We just hit the 50% equity mark because we are aggressively trying to pay off the house.

        The Cake is a lie. In Pie there is Truth. ~ Fordmandalay

        by catwho on Mon Apr 21, 2014 at 08:58:31 AM PDT

        [ Parent ]

    •  I am president of a condominium. . . (4+ / 0-)

      . . .When the housing market crashed we had people clamoring to rent their units.  We restricted rentals a few years before, because the board was plagued by complaints and maintenance issues caused by landlord/renter relationships.  Our board is non-paid. Our neighborhood is an inner ring suburb of a "Stylish " inner core city.  Single family homes are increasingly rented near my home.  I can walk down the street and tell you which units are rented and which are owned.  It is that obvious.  

      If we are going to elect Democrats, lets elect real ones!

      by waztec on Mon Apr 21, 2014 at 08:51:28 AM PDT

      [ Parent ]

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