What is reasonable here?

[CalBears96]

Yeah, I'm considering total housing payments. HOA, taxes, insurance, principal, interest.

I think HOA at GP is probably another $300-$400/month. Insurance is pretty cheap though. I got mine through Mercury and it's based on replacement costs, so sq ft matter. Mine is 2606 sq ft and it costs less than $600 per year.

 

[usctrojancpa]

Ok, but what would YOU find acceptable as a long term tenant renewing?

I mean, I'm sure our landlord could get those prices if we vacate and she finds a new tenant. And if that's what she wants to do, that's fine. But I'll take my $4800 and find one of those 3 story condos over at Great Park to rent. And I'll probably get another bedroom for that price too.

$4800 for this condo is laughable.

I definitely give a discount to longer term rents who pay on time and haven't bugged me. I'd say $4,000 to $4,200 would be fair compromise.

 

[potsticker]

I'm wiling to pay $4000. No more. I know prices are higher but those are for incoming tenants, and those will always command a higher price than a renewal. I lived in apartment complexes long enough to know that's how it works. You get to raise the price to market rate when you have a vacancy to fill. You don't gouge a long term renter. That's unethical.

To be honest, I don't find it unethical to ask for market rate from a current tenant in non-rent control scenarios. Of course, there are benefits to keeping a long-term tenant but it all comes down to dollars and cents. If your landlord can get $4,500/mo on the open market, and you're willing to go at a max $4,000/mo, that's a delta of $6k annually. The landlord has to think - is it worth it to kick you out over $6k factoring in that they'll lose out on 1 month's rent?

 

[brergnat]

To be honest, I don't find it unethical to ask for market rate from a current tenant in non-rent control scenarios. Of course, there are benefits to keeping a long-term tenant but it all comes down to dollars and cents. If your landlord can get $4,500/mo on the open market, and you're willing to go at a max $4,000/mo, that's a delta of $6k annually. The landlord has to think - is it worth it to kick you out over $6k factoring in that they'll lose out on 1 month's rent?

She has 2 of these identical Jasmine condos. She rented out the other one in October 2022 for $4800. But she has had to turn over that one numerous times, and didn't even have a renter in there for several years. She used it as her winter residence. So, not sure how that will play in.

 

[Liar Loan]

Not really sure if there is a simple rule where $x/mo rent is equal to about $y/mo mortgage.

But this is where I question where future prices are going to go... do we really think 3/2s in Irvine will go below $600k? Cheapest in Irvine is $740k and that's a stacked unit (someone on top). You need a 20% drop to get to under $600k for undesirable units.

I don't even think @Liar Loan is predicting that large a drop in Irvine.

I think another 20% drop is more than reasonable. According to USC, prices have already dropped 9% in less than a year.

 

[usctrojancpa]

I think another 20% drop is more than reasonable. According to USC, prices have already dropped 9% in less than a year.

Yeah, prices have dropped 9% from the peak in April but most of that decline came in May through Oct and price declines have began to flatten out as interest rates have bled lower and inventory levels have remained low. I think prices will come down a bit more but the magnitude will be dependent upon where interest rates are and the level of inventory on the market.

 

[The Motor Court Company]

you may also get discount for 1 year prepay.

 

[OCtoSV]

Yeah, prices have dropped 9% from the peak in April but most of that decline came in May through Oct and price declines have began to flatten out as interest rates have bled lower and inventory levels have remained low. I think prices will come down a bit more but the magnitude will be dependent upon where interest rates are and the level of inventory on the market.

While all RE is local the Bay area is always a good barometer given the combination of the highest incomes in the country and the lowest housing inventory, and this Monday article from the Merc News is the most sober RE article I've seen them print since I moved here 16 yrs ago:

https://www.mercurynews.com/2023/01...ed-to-keep-tumbling-amid-high-interest-rates/

“There’s still buyers out there, but they have to have some intestinal fortitude to buy in this market,” said Jeff LaMont a real estate broker with Coldwell Banker Realty in Burlingame."

more pain to come:
"Despite the slowdown, December’s median home price was 19% higher than in December 2019, meaning prices still aren’t approaching pre-COVID levels."

 

[usctrojancpa]

While all RE is local the Bay area is always a good barometer given the combination of the highest incomes in the country and the lowest housing inventory, and this Monday article from the Merc News is the most sober RE article I've seen them print since I moved here 16 yrs ago:

https://www.mercurynews.com/2023/01...ed-to-keep-tumbling-amid-high-interest-rates/

“There’s still buyers out there, but they have to have some intestinal fortitude to buy in this market,” said Jeff LaMont a real estate broker with Coldwell Banker Realty in Burlingame."

more pain to come:
"Despite the slowdown, December’s median home price was 19% higher than in December 2019, meaning prices still aren’t approaching pre-COVID levels."

Irvine prices are still about 5% above 12/31/21 prices. I don't think we'll go below summer 2021 prices in Irvine. Other parts of Orange County are down 3-5% more than Irvine from the peak. In fact, as of this afternoon we have less homes on the market in Irvine then we had the end of the year 3+ weeks ago.

 

[OCtoSV]

Irvine prices are still about 5% above 12/31/21 prices. I don't think we'll go below summer 2021 prices in Irvine. Other parts of Orange County are down 3-5% more than Irvine from the peak. In fact, as of this afternoon we have less homes on the market in Irvine then we had the end of the year 3+ weeks ago.

No surprise - only motivated sellers are on the market. I sure hope I'm very very wrong about my rate prediction. The debt ceiling thing will involve new Treasury issuance. Coincidence that Yellen is traveling to China? China re-opening though is also a potential highly inflationary wildcard. While I get mocked for the $300 oil story from JPM recall in 2008 it got close to $150 and that was without Russian oil sanctions.

 

[CalBears96]

No surprise - only motivated sellers are on the market. I sure hope I'm very very wrong about my rate prediction. The debt ceiling thing will involve new Treasury issuance. Coincidence that Yellen is traveling to China? China re-opening though is also a potential highly inflationary wildcard. While I get mocked for the $300 oil story from JPM recall in 2008 it got close to $150 and that was without Russian oil sanctions.

You got mocked on $300 oil price because you thought that Russian oil sanctions has a HUGE impact on the oil price. Russia exports less than 10%. You think that 10% less oil would triple the price?

 

[brergnat]

you may also get discount for 1 year prepay.

Yeah, we don't just have $50,000 laying around.

 

[usctrojancpa]

No surprise - only motivated sellers are on the market. I sure hope I'm very very wrong about my rate prediction. The debt ceiling thing will involve new Treasury issuance. Coincidence that Yellen is traveling to China? China re-opening though is also a potential highly inflationary wildcard. While I get mocked for the $300 oil story from JPM recall in 2008 it got close to $150 and that was without Russian oil sanctions.

Agreed, only the people that need to sell are selling now and there are plenty of buyers out there. I had 39 sets of buyers in 6 hours of open houses this past weekend for a $3.6m listing. If inventory stays low, don't expect big price declines especially if rates not materially increase.