High cost of rentals-WHY? (Arlington, Manassas: apartments, foreclosures, renter) - Northern Virginia - Virginia (VA) - City-Data Forum

Dazed&Confused · 11-04-2009, 08:14 AM

Would someone please tell me why home prices are falling but rents are still on the rise? I moved away three years ago and want to come back but honestly, when I go to realtor.com and look at what rent people are asking for a 3BR 21/2 BA townhouse now I am astounded. Are landlords hoping that the rent will pay the entire mortgage payment on a place that was purchased in the midst of the housing bubble and is now not worth half of what they paid for it? I see places sitting for months with no tenant. I know they must be on the brink of foreclosure by now. Why don't the owners wake up? Will rents ever even out again?

oneasterisk · 11-04-2009, 08:25 AM

Interesting as I heard that rents have gone down about 3%. I'm not sure if that's nationally or in this specific region though. 3% isn't a huge sum, but it's something.

Since this area has a lot of migration in/out it'll always have a healthy rental market.

FindingZen · 11-04-2009, 08:32 AM

In terms of apartments, there are probably a lot of former and potential homeowners who decided that it was cheaper and more prudent to rent at this time. This may have driven up or stabilized rent, particularly in the most desirable areas.

As far as renting houses goes, there may well be landlords who are unrealistic that others would be willing to pay the underwater mortgages on their now-overvalued homes. On the other hand, if a renter is hoping to rent a home in say, Arlington, for what they could once only aspire to in, say, Manassas, then that might be unrealistic as well.

Quote:

Originally Posted by Dazed&Confused

Would someone please tell me why home prices are falling but rents are still on the rise? I moved away three years ago and want to come back but honestly, when I go to realtor.com and look at what rent people are asking for a 3BR 21/2 BA townhouse now I am astounded. Are landlords hoping that the rent will pay the entire mortgage payment on a place that was purchased in the midst of the housing bubble and is now not worth half of what they paid for it? I see places sitting for months with no tenant. I know they must be on the brink of foreclosure by now. Why don't the owners wake up? Will rents ever even out again?

NOVA06 · 11-04-2009, 08:55 AM

The housing bubble is just taking longer to pop around here because job lossed haven't been as bad as other parts of the country. Home prices and rents are still unsustainable. Better off renting a nice apartment and waiting for SF and TH home prices to drop back to mid 1990's levels

DennyCrane · 11-04-2009, 10:33 AM

Quote:

Originally Posted by Dazed&Confused

Would someone please tell me why home prices are falling but rents are still on the rise? I moved away three years ago and want to come back but honestly, when I go to realtor.com and look at what rent people are asking for a 3BR 21/2 BA townhouse now I am astounded. Are landlords hoping that the rent will pay the entire mortgage payment on a place that was purchased in the midst of the housing bubble and is now not worth half of what they paid for it? I see places sitting for months with no tenant. I know they must be on the brink of foreclosure by now. Why don't the owners wake up? Will rents ever even out again?

This makes perfect sense. First, many people are either unable to secure loans because of higher lending standards or they're nervous about buying a house when homes values continue to decline. That means more and more people are choosing or being forced to rent. Second, as you pointed out, a lot of people are looking for tenants who can pay the mortgage on investment properties they bought.

bornindc · 11-04-2009, 10:52 AM

Quote:

Originally Posted by NOVA06

Better off renting a nice apartment and waiting for SF and TH home prices to drop back to mid 1990's levels

I wouldn't hold my breath waiting for that to happen. Think of the population increase here since 1990 (1 million or so) alone. Jobs (and incomes) aren't exactly going to disappear around here anytime soon either.

novahousehunter · 11-04-2009, 11:00 AM

Agree, former homeowners are losing houses and becoming renters, a lot of renters are not sure they want to buy.

Would also guess that the rentals on the MLS (realtor.com, etc.) are going the be the pricier ones since they are paying agent commission. Probably the standard craigslist rentals will be cheaper?

I too would be shocked to see mid-90s home prices again--unless we also saw mid-90s everything-else prices (gas, groceries, cars, salaries). That would require a lot of across the board deflation and other costs do not appear to be falling.

robbobobbo · 11-04-2009, 11:01 AM

Quote:

Originally Posted by NOVA06

The housing bubble is just taking longer to pop around here because job lossed haven't been as bad as other parts of the country. Home prices and rents are still unsustainable. Better off renting a nice apartment and waiting for SF and TH home prices to drop back to mid 1990's levels

I disagree. The area's housing market hasn't so much delayed a bubble pop as it has had it cushioned. I don't see a pop coming. Prices dropped and homes sat unsold much longer than usual starting more than a year ago, but things have actually improved a little since then, rather than slide, at least in suburbs closer to DC.

You're right that job losses haven't been as bad as other parts of the country - and they won't be. Home prices are indeed sustainable because there is so much money here and there's so many people continuing to come here for jobs they can't get elsewhere. Owners can no longer expect the rate of price appreciation that they once took for granted, but I don't expect prices to go to 1990's levels.

Caladium · 11-04-2009, 11:16 AM

I agree with Rob, seems like the foreclosures are being released in a controlled manner, over a long period of time. I don't think we'll see a pop, if anything it'll be like a tire with a very slow leak of air that regularly gets patched up.

NOVA06 · 11-04-2009, 11:21 AM

Quote:

Originally Posted by bornindc

I wouldn't hold my breath waiting for that to happen. Think of the population increase here since 1990 (1 million or so) alone. Jobs (and incomes) aren't exactly going to disappear around here anytime soon either.

The jobs won't disappear, but they don't suuport the current prices. The entire RE market is leveraged beyond sustainability. As soon as interest rates increase again, the number of households that qualify for $350K+ homes will decrease even further. Not to mention the utility and energy cost increase comming with cap and trade. Both of these trends will cut demand for SF homes.