Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Marc Hyman who wrote (50367)	1/20/2006 11:11:11 AM
From: mishedlo	Respond to of 110194

I'd expect falling house prices to have minimal impact on rents unless and until the price/rent ratio gets back to historic norms. Probably. Mish

To: Marc Hyman who wrote (50367)	1/20/2006 11:15:25 AM
From: kris b	Read Replies (2) \| Respond to of 110194

In this case rent is impacted more my vacancy rates. I am not forgetting about anything. I lived through it in 1980's. This is how it works. As speculative (they sit empty right now) house prices go down by up to 50%, defaults and foreclosures will skyrocket. Lenders can’t afford empty houses so they rent them at whatever they can get. The other group of people (they live in their houses) gets foreclosed and moves in with their parents. Both of these groups will increase vacancies by 5%-10%. Of course investors who buy these houses at 50% discount can afford to drop the rents by half undercutting you in the process. It all depends what investors capital cost is. Renters (who lose their jobs in recession) move back in with their parents or group with other people in one suite leaving behind them scores of empty units. They add another 5%-10% to the vacancy rate. We had an average 22% vacancy rate where I lived in 1985.Three months free rent was very common. With 10.000 foreclosed houses lenders would let you live in them just for taking care of the property, payment of utilities and property taxes. At least they didn’t have to pay Property Management Company to care for them. CAN YOU COMPETE WITH THIS?????