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Basically, rents are going up (in some areas, 1/2 pay is going to rent) due to a shortage related to un affordable housing, low salaries, etc. The implication is that this hurts homeowners bc it will be harder to find a buyer. Then, they say, housing prices will be forced down.
It will be harder to find buyers when rents keep going up? I don't see how that even makes sense. As rents keep rising at higher rates than the cost of owning a home I would expect more people to buy because it can be the cheaper option. If compairing the same property where I live and looking at ownership cost vs. rent cost, ownership has a good chance of winning already, and rents here are still rising faster than ownership costs. There is of course more risk in ownership, and you have to be a little smarter with money, but I think a lot of money smart people rent when it makes sense and I think those people will switch to ownership if that makes sense for them to do.
I also don't see why housing prices would be forced down when rents are going up, again that doent make sense. Housing in general is getting more expensive, i think the two tend to be tied together as for as local market cost trends are concerned (maybe not in rates of increase/decrease, but I would expect them to both move in the same direction).
If this is really so, it will simply become socially acceptable once again to have families with kids sharing housing with each other, even if it means having 10 people living in an 1800 sq ft abode. Just like many decades ago. I don't see the long-term harm.
Location: Stuck on the East Coast, hoping to head West
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The renters can't afford to buy b/c they aren't able to save for downpayment/closing costs for a house. They have no extra money b/c most of its going to rent. What's not to understand?
I do not think it will hurt homeowners if my situation is any example. I finally decided to leave the rental game after being a renter for 30 years. My latest rental situation was renting a room in my friends house. I had this arrangement for three years. When I decided it was time to get my own place I was shocked at how much rentals had increased in my area in those three years. It just made no sense to rent when I could own for only 400 more a month and get equity, my own place and nearly triple the living space.
The renters can't afford to buy b/c they aren't able to save for downpayment/closing costs for a house. They have no extra money b/c most of its going to rent. What's not to understand?
Plenty of renters can afford to buy but choose not to because it makes financial sense for them to rent. As that continues to shift with rents rising at a faster rate than home ownership some of them will turn to the RE market to buy.
I don't think home owners are going to be hurt by rising cost of rent, I believe it is quite possibily the opposite.
Just look at San Francisco for an idea of how this is playing out. Real estate prices are going sky high, rent prices are also going sky high and people are being forced out of the city to go to places like Sacramento, Stockton, etc, etc. Lots of towns that used to be white flight areas are now filling up with the families that got pushed out of Oakland/SF/South Bay.
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