Tales from this insane real estate *rental* market

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CletusCaddy
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Tales from this insane real estate *rental* market

Post by CletusCaddy »

Since the other thread is about home sales, I thought I would start this thread documenting the insanity in the rental market.

I own a 2 bed condo in a high rise in downtown Chicago. In the depths of the early pandemic, it was hard to find anyone who was interested. We went weeks without a single showing. Finally had to settle for a $2000/month lease.

Well I just put the unit back on the market over the weekend. Got two applications at full asking price almost immediately, sight unseen. Today, the first day of showings, had 12 parties come through. Applications flowing in now, including one with a blank bid price and a note saying "willing to pay $100 above the highest bidder, no cap, willing to sign 2+ year lease or whatever is convenient for landlord".

At this point it is likely we will be closing this out at close to $4000/month.

Absolute insanity. Realtor says they've never seen anything like it, and definitely never an escalation clause with no cap on a rental.

Seems to confirm this recent WSJ article
https://www.wsj.com/articles/bidding-wa ... singmarket

Any other landlords seeing similar insanity?
wackeym
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Re: Tales from this insane real estate *rental* market

Post by wackeym »

I live in Wicker Park in a 1BD/1BA walk up and rent was not raised from $1,700 upon recent renewal. Similar but slightly more spacious unit on 1st floor rented for $1,800.

Not quite the craziness you are seeing. Real estate is extremely local.
newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

CletusCaddy wrote: Tue Jul 05, 2022 9:42 pm Since the other thread is about home sales, I thought I would start this thread documenting the insanity in the rental market.

I own a 2 bed condo in a high rise in downtown Chicago. In the depths of the early pandemic, it was hard to find anyone who was interested. We went weeks without a single showing. Finally had to settle for a $2000/month lease.

Well I just put the unit back on the market over the weekend. Got two applications at full asking price almost immediately, sight unseen. Today, the first day of showings, had 12 parties come through. Applications flowing in now, including one with a blank bid price and a note saying "willing to pay $100 above the highest bidder, no cap, willing to sign 2+ year lease or whatever is convenient for landlord".

At this point it is likely we will be closing this out at close to $4000/month.

Absolute insanity. Realtor says they've never seen anything like it, and definitely never an escalation clause with no cap on a rental.

Seems to confirm this recent WSJ article
https://www.wsj.com/articles/bidding-wa ... singmarket

Any other landlords seeing similar insanity?
Man... I find it a little hard to believe (not that i dont trust you) but isnt chicago a city where RE price has stayed stagnant for the last decade or so? Whats the reason for an increase in rent?

Also, if rates go up and prices come down, how will that affect rent? I think no effect as monthly payment on houses are staying the same.


My rental property did get rented out in few days.
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Re: Tales from this insane real estate *rental* market

Post by LadyGeek »

Here's the home sales thread: Tales from this insane real estate market [Home sales]

To keep this discussion actionable, please focus on your own situation.
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Harry Livermore
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Re: Tales from this insane real estate *rental* market

Post by Harry Livermore »

We are planning on selling our SFH rental, and I'm in the process of spiffing it up right now, but I still keep a careful eye on the rental market in our locale. It's absolutely insane. 1BR townhome/ apartment units going for what we had been charging our most recent tenants. If it was not for the desire to throttle back (lifestyle decision for us) we could be charging 50% more than we had been. Our ex-tenants tell me that there are waiting lists at all the properties in our town, and there are only a few 2BR, small homes for rent.
Good to know that if we can't find the right buyer, I can easily re-rent.
Cheers
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Re: Tales from this insane real estate *rental* market

Post by TomatoTomahto »

It’s been a long time since we have rented, but recently felt that we preferred to rent a 1BR/1BA pied a terre rather than book hotel rooms for our recurring need to be in NYC.

The prices were bad enough, but we are not current, so maybe that’s the market. What surprised us was the back and forth on being approved for the apartment. We are well above any financial threshold for being able to pay the rent. The lease agreement exceeded 70 pages. At one point, my wife said that it would be easier to buy a place.
I get the FI part but not the RE part of FIRE.
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ResearchMed
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Re: Tales from this insane real estate *rental* market

Post by ResearchMed »

TomatoTomahto wrote: Wed Jul 06, 2022 9:17 am It’s been a long time since we have rented, but recently felt that we preferred to rent a 1BR/1BA pied a terre rather than book hotel rooms for our recurring need to be in NYC.

The prices were bad enough, but we are not current, so maybe that’s the market. What surprised us was the back and forth on being approved for the apartment. We are well above any financial threshold for being able to pay the rent. The lease agreement exceeded 70 pages. At one point, my wife said that it would be easier to buy a place.

70+ pages??

What in the world was included in the agreement?
Anything particularly unusual?
Is there anything particularly unusual about the apartment?

Furnished?

RM
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TomatoTomahto
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Re: Tales from this insane real estate *rental* market

Post by TomatoTomahto »

ResearchMed wrote: Wed Jul 06, 2022 9:25 am
TomatoTomahto wrote: Wed Jul 06, 2022 9:17 am It’s been a long time since we have rented, but recently felt that we preferred to rent a 1BR/1BA pied a terre rather than book hotel rooms for our recurring need to be in NYC.

The prices were bad enough, but we are not current, so maybe that’s the market. What surprised us was the back and forth on being approved for the apartment. We are well above any financial threshold for being able to pay the rent. The lease agreement exceeded 70 pages. At one point, my wife said that it would be easier to buy a place.

70+ pages??

What in the world was included in the agreement?
Anything particularly unusual?
Is there anything particularly unusual about the apartment?

Furnished?

RM
Nothing unusual about the apartment; 1BR/1BA, unfurnished, washer and dryer included, etc. The lease seemed to have a lot of boilerplate about utilities, having to reserve elevators for move in/out, pets, etc., but nothing bizarre.

We figure that NYC makes it difficult to evict bad tenants, but IME bad tenants will sign anything anyway.
I get the FI part but not the RE part of FIRE.
averagelonghorn
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Re: Tales from this insane real estate *rental* market

Post by averagelonghorn »

ResearchMed wrote: Wed Jul 06, 2022 9:25 am
70+ pages??

What in the world was included in the agreement?
Anything particularly unusual?
Is there anything particularly unusual about the apartment?

Furnished?

RM
Leases are for sure long. In Texas the form most often used for properties that are NOT apartments are 16ish pages long. At first when I worked in Real Estate, that seemed off to me... Purchase contract is like 4 pages (if No addenda/amendments), Lease is 4 times longer? But upon reflection that actually made sense to me.... A lease is an ongoing thing, a sale is over and done with in a month.

All that said, yea, 70 pages is ridiculous.

And to OP: Roll with it, take the best offer you get (that meets your needs and any regulations in your market), make your Realtor do their work running the apps and pick the best one for your needs. I was hoping for a hint of such on a recent listing in a really hot market where we've always ended up renting to the first person who looked (and there HAVE been some lease bidding wars lately)... this time, second looker applied, sounded good, then ghosted us when time to sign the lease; and since then not much activity, so my advice is sign up your best candidate as soon as possible.
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Re: Tales from this insane real estate *rental* market

Post by lgs88 »

CletusCaddy wrote: Tue Jul 05, 2022 9:42 pm Since the other thread is about home sales, I thought I would start this thread documenting the insanity in the rental market.
...
I recently lost two rental bidding wars. One place went for 15% over the asking rent, with the year's rent paid up front; the landlord (an individual, not a corporation) ended up running an auction. It came down to me and one other renter at the same price and terms. They went with the other renter, because they were personally known to friends of theirs. No hard feelings with this landlord, whom I got the impression genuinely misunderstood demand for their property and accidentally underpriced.

The second was a landlord who didn't ask for (and said he wouldn't take) anything over the original asking rent. What he wanted instead was a multi-year term and a "perfect" tenant (read: no pets or other such complications). I got the sense through the process that he was a micro-manager and would give his tenants a hard time and was ultimately not disappointed to not be offered the lease.
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TomatoTomahto
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Re: Tales from this insane real estate *rental* market

Post by TomatoTomahto »

Wow. It would never dawn on me to “bid up” rent, but I guess these are the times we live in.
I get the FI part but not the RE part of FIRE.
poker27
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Re: Tales from this insane real estate *rental* market

Post by poker27 »

I’m about to put my house on the market (Chicago) and assuming it sells, will be moving and renting in charlotte.

To be honest, I’m dreading the rental process. All of these rental companies get horrible reviews, and I feel like I’m treated like a child when inquiring.
Marseille07
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Re: Tales from this insane real estate *rental* market

Post by Marseille07 »

poker27 wrote: Wed Jul 06, 2022 11:18 pm I’m about to put my house on the market (Chicago) and assuming it sells, will be moving and renting in charlotte.

To be honest, I’m dreading the rental process. All of these rental companies get horrible reviews, and I feel like I’m treated like a child when inquiring.
Same. I can hardly find any apartment complex with good reviews; but I think the key is to go for a townhouse rather than a condo unit. Those are more expensive but well worth it as you don't have people upstairs or downstairs.
ryanpj
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Re: Tales from this insane real estate *rental* market

Post by ryanpj »

Marseille07 wrote: Wed Jul 06, 2022 11:22 pm
poker27 wrote: Wed Jul 06, 2022 11:18 pm I’m about to put my house on the market (Chicago) and assuming it sells, will be moving and renting in charlotte.

To be honest, I’m dreading the rental process. All of these rental companies get horrible reviews, and I feel like I’m treated like a child when inquiring.
Same. I can hardly find any apartment complex with good reviews; but I think the key is to go for a townhouse rather than a condo unit. Those are more expensive but well worth it as you don't have people upstairs or downstairs.
I definitely recommend looking for an owner landlord to rent from. Very relationship dependent but my last two have been great and very responsive. The last guy was a licensed contractor who had bought and renovated the two unit building as his retirement project. He definitely put some love into it which made it a great place to live. You do get some weird experiences though, for instance he built a new porch for the other unit while I was there and lived in his camper in the parking area behind the building for a few weeks while he was doing it but he never bothered me. I was sad to PCS.

My current place rented last for $975 and I just rented it for $1300. The landlords are also the owners and are very easy to work with but still hurts to be paying 30% more than the guy who moved out. The did some work on it but you can tell they went with the cheapest finishes and counters. Also not thrilled that yardwork and water/sewage is a tenant responsibility here. It does have in-unit laundry which most places don't around where I am for some reason. At least it is still several hundred dollars under my BAH.
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Re: Tales from this insane real estate *rental* market

Post by CletusCaddy »

Update: lease signed at $3500. A wildly successful outcome compared to my expectations. One peculiarity was the surprisingly large number of applicants who were offering two or even three year leases. Could be its own macro indicator of inflation expectations.
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max12377
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Re: Tales from this insane real estate *rental* market

Post by max12377 »

I consider myself fortunate. I was nervous about a big rent increase this year, and mine only went up 2%. So my personal inflation rate is still low. I am in a LCOL and have a pretty nice place, much cheaper than what I see others deal with. Honestly, when I look at the condo's around here, a lot of them would cost more per month, require a significant cash outlay, and are probably near a peak in appreciation. I never planned to be a renter for very long, but until it makes sense to buy again, I am staying put. In hindsight, I would have (likely) been better off financially to not to be a renter all these years (owned a couple houses but been renting after I sold the last one), but then again, I haven't had to pull a weed, mow a lawn, or fix a leaky basement in many many years. I even call someone to change out my light bulbs. Not a bad lifestyle for a single guy who just wants to travel, read, and focus on learning the piano.

If I do buy in the future, I will pay cash for a condo. My return on investment will now be closer to a guaranteed 6 percent (and climbing) rather than 2.5. But adding in condo fees to rising tax rates, I don't know if I want to trap myself. I am really concerned that we will see declining real estate for a while while rates are rising. It seems it is happening now in some areas.

I think about it though. In my mid 50's maybe I should just dribble out rent payments for the next x years and forget about owning. Never thought I would not own again, but it may be something that makes sense going forward.
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Re: Tales from this insane real estate *rental* market

Post by DrChronzworth »

In the North shore of Chicago my apartment renewal offered this year was around the same price as I was paying but I'm now trying to find something reasonable in NYC and coming up short - back to roommates for me!

I think part of the craziness of downtown Chicago is all the Tiktoks advertising a particular brand "city life" - whenever I check my app there's some person (usually a Gen-z woman) extolling how carefree and easy it is living in River North or w/e while the video maker's day generally consists of eating cute salads in the lunch room and knocking off at 3:30 to go to happy hour on a rooftop. However none of the Tiktoks mention budgets so I'm guessing there's a bit of parental subsidy going on but that might explain why the market in downtown Chicago is so booming while places that don't have cute Tiktoks i.e. Rogers Park or Logan Square are fairly normal rent increases.
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Re: Tales from this insane real estate *rental* market

Post by CletusCaddy »

DrChronzworth wrote: Thu Jul 07, 2022 1:42 pm In the North shore of Chicago my apartment renewal offered this year was around the same price as I was paying but I'm now trying to find something reasonable in NYC and coming up short - back to roommates for me!

I think part of the craziness of downtown Chicago is all the Tiktoks advertising a particular brand "city life" - whenever I check my app there's some person (usually a Gen-z woman) extolling how carefree and easy it is living in River North or w/e. However none of the Tiktoks mention budgets so I'm guessing there's a bit of parental subsidy going on.
A bit but not much. Only one of the 5 applications I received relied on a full parental subsidy, but the applicants were grad students at UChicago so I'm assuming they'll do fine.

The others ranged in combined income from $140k through $400k. Lots of 22 year olds straight out of U of I or ND with consulting or finance jobs paying $90-100k base with bonus on top.
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Re: Tales from this insane real estate *rental* market

Post by Californiastate »

You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
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Re: Tales from this insane real estate *rental* market

Post by harrychan »

Californiastate wrote: Thu Jul 07, 2022 2:22 pm You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
+1. I'm not going to get into the argument of buy vs rent but I recall having to move every year from when I moved out until I bought my own home. That's moving 13 times primarily due to increase in rent. I'm glad I haven't moved in over 12 years! I can't imaging having to pack and move right now.
This is not legal or certified financial advice but you know that already.
newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

harrychan wrote: Thu Jul 07, 2022 5:30 pm
Californiastate wrote: Thu Jul 07, 2022 2:22 pm You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
+1. I'm not going to get into the argument of buy vs rent but I recall having to move every year from when I moved out until I bought my own home. That's moving 13 times primarily due to increase in rent. I'm glad I haven't moved in over 12 years! I can't imaging having to pack and move right now.
I have said multiple times. Buying a real estate for a primary residence is no brainer. Mortgage payment doesnt go up unlike rent.

Unless one plans to move within few years, renting for life is as dumb as it can get.
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Re: Tales from this insane real estate *rental* market

Post by SantaClaraSurfer »

newyorker wrote: Thu Jul 07, 2022 5:33 pm Unless one plans to move within few years, renting for life is as dumb as it can get.
I dunno, "dumb as it can get"???

Our rent here in Silicon Valley in 2022 is still 10% less than when we moved into our unit in 2018, mostly due to the pandemic and work from home. When we renewed in late 2020, we got a one year lease renewal that was 18.5% less than the previous year's.

At this point we've saved about $15,000, as renters, over the last two years. It's the opposite of what's happening with rents in many other parts of the country, but it's true here.

What we're paying now is easily $3,000 to $4,000 a month less than purchasing the equivalent residence with a similar commute time with 20% down. And that would mean condo or town home living in a development close to a freeway.

To get a place we'd really like for the long term in a walkable neighborhood that we would want to live in long term here would definitely be more than twice what we pay in rent. That's just a fact of life in this market.

Every place is different and everyone's finances are different.

Imho renting long term pencils out if you like where you rent, your rent to gross income ratio is healthy, and you have a high savings rate.

Eventually, the high savings rate and greater flexibility on location as years pass means purchasing a residence should, on balance, work out for us, if that's something we want to do.

I'm not opposed to owning a residence. However, I don't think renters are being dumb, and would not make that blanket statement.
newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

SantaClaraSurfer wrote: Thu Jul 07, 2022 6:42 pm
newyorker wrote: Thu Jul 07, 2022 5:33 pm Unless one plans to move within few years, renting for life is as dumb as it can get.
I dunno, "dumb as it can get"???

Our rent here in Silicon Valley in 2022 is still 10% less than when we moved into our unit in 2018, mostly due to the pandemic and work from home. When we renewed in late 2020, we got a one year lease renewal that was 18.5% less than the previous year's.

At this point we've saved about $15,000, as renters, over the last two years. It's the opposite of what's happening with rents in many other parts of the country, but it's true here.

What we're paying now is easily $3,000 to $4,000 a month less than purchasing the equivalent residence with a similar commute time with 20% down. And that would mean condo or town home living in a development close to a freeway.

To get a place we'd really like for the long term in a walkable neighborhood that we would want to live in long term here would definitely be more than twice what we pay in rent. That's just a fact of life in this market.

Every place is different and everyone's finances are different.

Imho renting long term pencils out if you like where you rent, your rent to gross income ratio is healthy, and you have a high savings rate.

Eventually, the high savings rate and greater flexibility on location as years pass means purchasing a residence should, on balance, work out for us, if that's something we want to do.

I'm not opposed to owning a residence. However, I don't think renters are being dumb, and would not make that blanket statement.
Your case is an exception. In areas of VHCOL ex Manhattan or SF, rent price is usually 1/2 of mortgage payment. Rest of the country, rent is usually little less than mortgage payment. It makes no sense to rent in these areas.
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Re: Tales from this insane real estate *rental* market

Post by Grogs »

I'm living in the Northern Virginia (Arlington) area for a few years because of work. I'm in a 2 BR, 1200 sf apartment with nice views into DC. When I first started looking at places online around April 2021, there was a glut of 2BR units available for under $3,000/mo. Things started getting frothy last summer though, and by July when I finally signed a lease, I ended up paying about $3,700/mo on a 1-year rental. That was a little disappointing because my company gives me a stipend of around $3,500/mo to cover housing and the rest is out of pocket.

I'm now coming up on the end of my first year. Back in June, the management company sent me an offer for a new lease with a 4% increase. That didn't sound too bad, but when I looked at the listings in my building I saw 2BR units were being offered for $3,300-$3,500. They weren't quite as nice as mine (lower floors or worse views), but I thought they were good enough comps that I made a counteroffer to keep my rent the same. They accepted immediately, so I'll be staying at $3700/mo for another year. I probably could have gotten a little less if I had bargained harder, but I didn't think it was worth it to possibly have to move if they called my bluff.

Overall, I feel like the 2BR market in my area is a bit softer than this time last year with most of the recent listings in the $3300-$3600 range. The 1BR units are going for around $2,300-$2,600 and there are a lot available. Studios are hard to come by, but if you can find one they go for around $2,000/mo. They're building the Amazon HQ2 just a few blocks down the street. When it opens next year, I suspect rents will be quite a bit higher than they are now.
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Harry Livermore
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Re: Tales from this insane real estate *rental* market

Post by Harry Livermore »

ryanpj wrote: Thu Jul 07, 2022 9:58 am
I definitely recommend looking for an owner landlord to rent from. Very relationship dependent but my last two have been great and very responsive.
I wanted to highlight this as well. Not to "toot my own horn", but I hope that all of my tenants along the way still think of me fondly. I have tried my best to be responsive, friendly, and fair. I have my phone on my hip 18 hours a day, and texts from tenants are answered within minutes. Without getting into specifics, I have had a couple who have gotten into "life trouble" and I think I have gone above and beyond helping them.
I know there are tons and tons of shady private landlords, but keep in mind the "little guy" who often works very hard at excellence.
Obviously not every locale has an abundance of these properties, and the "amenities" at large complexes are nice. So YMMV.
Cheers
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Re: Tales from this insane real estate *rental* market

Post by humbledinvestor »

newyorker wrote: Thu Jul 07, 2022 5:33 pm
harrychan wrote: Thu Jul 07, 2022 5:30 pm
Californiastate wrote: Thu Jul 07, 2022 2:22 pm You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
+1. I'm not going to get into the argument of buy vs rent but I recall having to move every year from when I moved out until I bought my own home. That's moving 13 times primarily due to increase in rent. I'm glad I haven't moved in over 12 years! I can't imaging having to pack and move right now.
I have said multiple times. Buying a real estate for a primary residence is no brainer. Mortgage payment doesnt go up unlike rent.

Unless one plans to move within few years, renting for life is as dumb as it can get.
Maybe not dumb. Some renters may not be able to afford to buy.
In my case I was wiped out by divorce. I rent and maybe one day when I recover I may buy. I have owned a condo, townhome and SFH. All good properties that I was not meant to live in. So not dumb, just don’t have the money.
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Re: Tales from this insane real estate *rental* market

Post by humbledinvestor »

newyorker wrote: Thu Jul 07, 2022 5:33 pm
harrychan wrote: Thu Jul 07, 2022 5:30 pm
Californiastate wrote: Thu Jul 07, 2022 2:22 pm You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
+1. I'm not going to get into the argument of buy vs rent but I recall having to move every year from when I moved out until I bought my own home. That's moving 13 times primarily due to increase in rent. I'm glad I haven't moved in over 12 years! I can't imaging having to pack and move right now.
I have said multiple times. Buying a real estate for a primary residence is no brainer. Mortgage payment doesnt go up unlike rent.

Unless one plans to move within few years, renting for life is as dumb as it can get.
Maybe not dumb. Some renters may not be able to afford to buy.
In my case I was wiped out by divorce. I rent and maybe one day when I recover I may buy. I have owned a condo, townhome and SFH. All good properties that I was not meant to live in. So not dumb, just don’t have the money.
newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

humbledinvestor wrote: Sat Jul 09, 2022 3:03 pm
newyorker wrote: Thu Jul 07, 2022 5:33 pm
harrychan wrote: Thu Jul 07, 2022 5:30 pm
Californiastate wrote: Thu Jul 07, 2022 2:22 pm You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
+1. I'm not going to get into the argument of buy vs rent but I recall having to move every year from when I moved out until I bought my own home. That's moving 13 times primarily due to increase in rent. I'm glad I haven't moved in over 12 years! I can't imaging having to pack and move right now.
I have said multiple times. Buying a real estate for a primary residence is no brainer. Mortgage payment doesnt go up unlike rent.

Unless one plans to move within few years, renting for life is as dumb as it can get.
Maybe not dumb. Some renters may not be able to afford to buy.
In my case I was wiped out by divorce. I rent and maybe one day when I recover I may buy. I have owned a condo, townhome and SFH. All good properties that I was not meant to live in. So not dumb, just don’t have the money.
Of course, if one cant afford to buy and thus rent. That is not dumb at all. My statement is to those who continue to rent despite having more than enough financial ability to buy.
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ResearchMed
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Re: Tales from this insane real estate *rental* market

Post by ResearchMed »

newyorker wrote: Sat Jul 09, 2022 4:56 pm
humbledinvestor wrote: Sat Jul 09, 2022 3:03 pm
newyorker wrote: Thu Jul 07, 2022 5:33 pm
harrychan wrote: Thu Jul 07, 2022 5:30 pm
Californiastate wrote: Thu Jul 07, 2022 2:22 pm You took the risk and now you reap the reward. This is the main reason why I don't support the idea of renting for life. I'd rather be on the landlord side of the equation when rents rise like your example.
+1. I'm not going to get into the argument of buy vs rent but I recall having to move every year from when I moved out until I bought my own home. That's moving 13 times primarily due to increase in rent. I'm glad I haven't moved in over 12 years! I can't imaging having to pack and move right now.
I have said multiple times. Buying a real estate for a primary residence is no brainer. Mortgage payment doesnt go up unlike rent.

Unless one plans to move within few years, renting for life is as dumb as it can get.
Maybe not dumb. Some renters may not be able to afford to buy.
In my case I was wiped out by divorce. I rent and maybe one day when I recover I may buy. I have owned a condo, townhome and SFH. All good properties that I was not meant to live in. So not dumb, just don’t have the money.
Of course, if one cant afford to buy and thus rent. That is not dumb at all. My statement is to those who continue to rent despite having more than enough financial ability to buy.

I'm not sure that negative connotations are automatically warranted. Someone may have different priorities than you have.

For example, someone else may prefer to know they could just *move* without dealing with selling (and especially if they've got a month-to-month rental or some other less strict terms, etc.).
Or someone may just *not* want to deal with any repairs or maintenance, etc.
Or perhaps a rental had "just the right features", and they couldn't find anything close enough, so they preferred to rent the special place than to buy something they just didn't like nearly as much.

Not everything is about maximizing the monetary aspect of something.

RM
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CletusCaddy
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Re: Tales from this insane real estate *rental* market

Post by CletusCaddy »

Edujo
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Re: Tales from this insane real estate *rental* market

Post by Edujo »

newyorker wrote: Tue Jul 05, 2022 10:14 pm
CletusCaddy wrote: Tue Jul 05, 2022 9:42 pm Since the other thread is about home sales, I thought I would start this thread documenting the insanity in the rental market.

I own a 2 bed condo in a high rise in downtown Chicago. In the depths of the early pandemic, it was hard to find anyone who was interested. We went weeks without a single showing. Finally had to settle for a $2000/month lease.

Well I just put the unit back on the market over the weekend. Got two applications at full asking price almost immediately, sight unseen. Today, the first day of showings, had 12 parties come through. Applications flowing in now, including one with a blank bid price and a note saying "willing to pay $100 above the highest bidder, no cap, willing to sign 2+ year lease or whatever is convenient for landlord".

At this point it is likely we will be closing this out at close to $4000/month.

Absolute insanity. Realtor says they've never seen anything like it, and definitely never an escalation clause with no cap on a rental.

Seems to confirm this recent WSJ article
https://www.wsj.com/articles/bidding-wa ... singmarket

Any other landlords seeing similar insanity?
Man... I find it a little hard to believe (not that i dont trust you) but isnt chicago a city where RE price has stayed stagnant for the last decade or so? Whats the reason for an increase in rent?

Also, if rates go up and prices come down, how will that affect rent? I think no effect as monthly payment on houses are staying the same.


My rental property did get rented out in few days.
Chicago rent, in a few key neighborhoods, is insane. My rent went up from 3K to 4K. I thought it was unreasonable (33% hike), but any vacancy in my building gets filled so fast. Not all of chicago is like this, but it’s terrible where it’s happening.
newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

Edujo wrote: Sun Jul 10, 2022 9:22 pm
newyorker wrote: Tue Jul 05, 2022 10:14 pm
CletusCaddy wrote: Tue Jul 05, 2022 9:42 pm Since the other thread is about home sales, I thought I would start this thread documenting the insanity in the rental market.

I own a 2 bed condo in a high rise in downtown Chicago. In the depths of the early pandemic, it was hard to find anyone who was interested. We went weeks without a single showing. Finally had to settle for a $2000/month lease.

Well I just put the unit back on the market over the weekend. Got two applications at full asking price almost immediately, sight unseen. Today, the first day of showings, had 12 parties come through. Applications flowing in now, including one with a blank bid price and a note saying "willing to pay $100 above the highest bidder, no cap, willing to sign 2+ year lease or whatever is convenient for landlord".

At this point it is likely we will be closing this out at close to $4000/month.

Absolute insanity. Realtor says they've never seen anything like it, and definitely never an escalation clause with no cap on a rental.

Seems to confirm this recent WSJ article
https://www.wsj.com/articles/bidding-wa ... singmarket

Any other landlords seeing similar insanity?
Man... I find it a little hard to believe (not that i dont trust you) but isnt chicago a city where RE price has stayed stagnant for the last decade or so? Whats the reason for an increase in rent?

Also, if rates go up and prices come down, how will that affect rent? I think no effect as monthly payment on houses are staying the same.


My rental property did get rented out in few days.
Chicago rent, in a few key neighborhoods, is insane. My rent went up from 3K to 4K. I thought it was unreasonable (33% hike), but any vacancy in my building gets filled so fast. Not all of chicago is like this, but it’s terrible where it’s happening.
The value of chicago property has not risen (at least last 10 years or so) so the rising rent can only be associated with (other than increase in demand) 1) rise in property tax 2) rise in HOA
Edujo
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Re: Tales from this insane real estate *rental* market

Post by Edujo »

NewYorker I’m agreeing that it’s increase in demand in specific neighborhoods. It’s all dynamic pricing driving the rents up due to high demand in West Loop, Fulton market etc.
deikel
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Re: Tales from this insane real estate *rental* market

Post by deikel »

newyorker wrote: Thu Jul 07, 2022 6:51 pm
SantaClaraSurfer wrote: Thu Jul 07, 2022 6:42 pm
newyorker wrote: Thu Jul 07, 2022 5:33 pm Unless one plans to move within few years, renting for life is as dumb as it can get.
I dunno, "dumb as it can get"???

Our rent here in Silicon Valley in 2022 is still 10% less than when we moved into our unit in 2018, mostly due to the pandemic and work from home. When we renewed in late 2020, we got a one year lease renewal that was 18.5% less than the previous year's.

At this point we've saved about $15,000, as renters, over the last two years. It's the opposite of what's happening with rents in many other parts of the country, but it's true here.

What we're paying now is easily $3,000 to $4,000 a month less than purchasing the equivalent residence with a similar commute time with 20% down. And that would mean condo or town home living in a development close to a freeway.

To get a place we'd really like for the long term in a walkable neighborhood that we would want to live in long term here would definitely be more than twice what we pay in rent. That's just a fact of life in this market.

Every place is different and everyone's finances are different.

Imho renting long term pencils out if you like where you rent, your rent to gross income ratio is healthy, and you have a high savings rate.

Eventually, the high savings rate and greater flexibility on location as years pass means purchasing a residence should, on balance, work out for us, if that's something we want to do.

I'm not opposed to owning a residence. However, I don't think renters are being dumb, and would not make that blanket statement.
Your case is an exception. In areas of VHCOL ex Manhattan or SF, rent price is usually 1/2 of mortgage payment. Rest of the country, rent is usually little less than mortgage payment. It makes no sense to rent in these areas.
Besides the heavy judging that is misplaced IMO

Its interesting to see how quick the 08/09 mortgage triggered recession is forgotten in the hive mind. I am pretty sure those homeowners were not laughing, but a lot of renters were.

Also worth considering that when you rent a place, you usually rent the space you need (because it is perceived expensive to rent), whereas when you buy, you tend to buy more space then you (currently) need - its almost never an apples to apples comparison.

I have rented, I have owned - ownership is a lifestyle that sucks a lot of time and energy into your property. If you were to properly price that in, I highly doubt that owning in my medium to low cost area is actually a financial advantage.
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newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

Rate is up a lot. It hit 6 percent yesterday. Prices are dropping. However, despite lower prices, increase in rate makes it even more expensive to buy a house now. This may be why rent is going up.

Maybe now is the best time to pull the trigger?
HereToLearn
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Re: Tales from this insane real estate *rental* market

Post by HereToLearn »

TomatoTomahto wrote: Wed Jul 06, 2022 7:36 pm Wow. It would never dawn on me to “bid up” rent, but I guess these are the times we live in.
I have heard of people bidding up the broker's commission, in addition to bidding up the rent. The NYC rental market is crazy at the moment.
gougou
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Re: Tales from this insane real estate *rental* market

Post by gougou »

HereToLearn wrote: Tue Aug 09, 2022 10:39 pm
TomatoTomahto wrote: Wed Jul 06, 2022 7:36 pm Wow. It would never dawn on me to “bid up” rent, but I guess these are the times we live in.
I have heard of people bidding up the broker's commission, in addition to bidding up the rent. The NYC rental market is crazy at the moment.
That’s interesting. NYC office REITs such as VNO and SLG are trading at rock bottom prices. They seem to have trouble leasing their office spaces. Maybe they should convert their skyscrapers to apartments…
The sillier the market’s behavior, the greater the opportunity for the business like investor.
FreelancerNYC
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Re: Tales from this insane real estate *rental* market

Post by FreelancerNYC »

NYC/Manhattan has been absurd for a year, and it was already absurd before.

Spring of ‘21 my rent was $4500 (1-bed/bath) for a low-door in a high-rise. The new owners renovated the still-new common spaces last year when I moved. Now they’re trying to get $7K for my old apt.

The other day I set the StreetEasy filter to $8k-$10k just to see the 1-bedrooms in that range. Over a hundred results but I didn’t really like any…

NYC needs to 100% start converting office spaces to residential zones.
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Re: Tales from this insane real estate *rental* market

Post by rich126 »

newyorker wrote: Tue Aug 09, 2022 10:27 pm Rate is up a lot. It hit 6 percent yesterday. Prices are dropping. However, despite lower prices, increase in rate makes it even more expensive to buy a house now. This may be why rent is going up.

Maybe now is the best time to pull the trigger?
In my case, I'm hoping the rate keeps rising since we can pay cash for a retirement home. Our lease on the apartment is coming up for renewal and rent went up about 3% (in Maryland). I'm trying to juggle the timing of the lease, my retirement date and where/what to buy for a retirement home. Lots of balls to juggle and most likely I'll be dropping at least one :(
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TomatoTomahto
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Re: Tales from this insane real estate *rental* market

Post by TomatoTomahto »

HereToLearn wrote: Tue Aug 09, 2022 10:39 pm
TomatoTomahto wrote: Wed Jul 06, 2022 7:36 pm Wow. It would never dawn on me to “bid up” rent, but I guess these are the times we live in.
I have heard of people bidding up the broker's commission, in addition to bidding up the rent. The NYC rental market is crazy at the moment.
DS got an email that his rent would be going up 10% on his apartment in West Chelsea. He sent an email back asking for reconsideration. They insta agreed to a much more modest increase. Apparently landlords still appreciate good renters.
I get the FI part but not the RE part of FIRE.
HereToLearn
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Re: Tales from this insane real estate *rental* market

Post by HereToLearn »

TomatoTomahto wrote: Wed Aug 10, 2022 5:48 am
HereToLearn wrote: Tue Aug 09, 2022 10:39 pm
TomatoTomahto wrote: Wed Jul 06, 2022 7:36 pm Wow. It would never dawn on me to “bid up” rent, but I guess these are the times we live in.
I have heard of people bidding up the broker's commission, in addition to bidding up the rent. The NYC rental market is crazy at the moment.
DS got an email that his rent would be going up 10% on his apartment in West Chelsea. He sent an email back asking for reconsideration. They insta agreed to a much more modest increase. Apparently landlords still appreciate good renters.
That is nice to hear!
strummer6969
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Re: Tales from this insane real estate *rental* market

Post by strummer6969 »

They are forced to increase rents due to higher property taxes, utilities, and cost for repairs. Unfortunately, wages aren't keeping up with the cost of rent.
muffins14
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Re: Tales from this insane real estate *rental* market

Post by muffins14 »

FreelancerNYC wrote: Tue Aug 09, 2022 11:22 pm NYC/Manhattan has been absurd for a year, and it was already absurd before.

Spring of ‘21 my rent was $4500 (1-bed/bath) for a low-door in a high-rise. The new owners renovated the still-new common spaces last year when I moved. Now they’re trying to get $7K for my old apt.

The other day I set the StreetEasy filter to $8k-$10k just to see the 1-bedrooms in that range. Over a hundred results but I didn’t really like any…

NYC needs to 100% start converting office spaces to residential zones.
Hope you can negotiate. The market is definitely softer now than a few months ago.
Crom laughs at your Four Winds
muffins14
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Re: Tales from this insane real estate *rental* market

Post by muffins14 »

newyorker wrote: Sun Jul 10, 2022 9:31 pm
Edujo wrote: Sun Jul 10, 2022 9:22 pm
newyorker wrote: Tue Jul 05, 2022 10:14 pm
CletusCaddy wrote: Tue Jul 05, 2022 9:42 pm Since the other thread is about home sales, I thought I would start this thread documenting the insanity in the rental market.

I own a 2 bed condo in a high rise in downtown Chicago. In the depths of the early pandemic, it was hard to find anyone who was interested. We went weeks without a single showing. Finally had to settle for a $2000/month lease.

Well I just put the unit back on the market over the weekend. Got two applications at full asking price almost immediately, sight unseen. Today, the first day of showings, had 12 parties come through. Applications flowing in now, including one with a blank bid price and a note saying "willing to pay $100 above the highest bidder, no cap, willing to sign 2+ year lease or whatever is convenient for landlord".

At this point it is likely we will be closing this out at close to $4000/month.

Absolute insanity. Realtor says they've never seen anything like it, and definitely never an escalation clause with no cap on a rental.

Seems to confirm this recent WSJ article
https://www.wsj.com/articles/bidding-wa ... singmarket

Any other landlords seeing similar insanity?
Man... I find it a little hard to believe (not that i dont trust you) but isnt chicago a city where RE price has stayed stagnant for the last decade or so? Whats the reason for an increase in rent?

Also, if rates go up and prices come down, how will that affect rent? I think no effect as monthly payment on houses are staying the same.


My rental property did get rented out in few days.
Chicago rent, in a few key neighborhoods, is insane. My rent went up from 3K to 4K. I thought it was unreasonable (33% hike), but any vacancy in my building gets filled so fast. Not all of chicago is like this, but it’s terrible where it’s happening.
The value of chicago property has not risen (at least last 10 years or so) so the rising rent can only be associated with (other than increase in demand) 1) rise in property tax 2) rise in HOA
I imagine rents can increase simply due to demand, even with no change to HOA or tax. Landlords can change because they want to and the market will bear it
Crom laughs at your Four Winds
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Re: Tales from this insane real estate *rental* market

Post by mervinj7 »

strummer6969 wrote: Wed Aug 10, 2022 9:38 pm They are forced to increase rents due to higher property taxes, utilities, and cost for repairs. Unfortunately, wages aren't keeping up with the cost of rent.
I'm a small time landlord. Even if my costs go up, I can't be "forced" to raise the rent. I set the tent based on whatever level the market will support. Some years, we can have little to no cost increases but due to market demand, rents for new tenants can be raised drastically. Other years, there can be high inflation, lack of availability of services, high costs of repairs but if the market is slow then rents can actually decrease.
kmurp
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Re: Tales from this insane real estate *rental* market

Post by kmurp »

newyorker wrote: Thu Jul 07, 2022 6:51 pm
SantaClaraSurfer wrote: Thu Jul 07, 2022 6:42 pm
newyorker wrote: Thu Jul 07, 2022 5:33 pm Unless one plans to move within few years, renting for life is as dumb as it can get.
I dunno, "dumb as it can get"???

Our rent here in Silicon Valley in 2022 is still 10% less than when we moved into our unit in 2018, mostly due to the pandemic and work from home. When we renewed in late 2020, we got a one year lease renewal that was 18.5% less than the previous year's.

At this point we've saved about $15,000, as renters, over the last two years. It's the opposite of what's happening with rents in many other parts of the country, but it's true here.

What we're paying now is easily $3,000 to $4,000 a month less than purchasing the equivalent residence with a similar commute time with 20% down. And that would mean condo or town home living in a development close to a freeway.

To get a place we'd really like for the long term in a walkable neighborhood that we would want to live in long term here would definitely be more than twice what we pay in rent. That's just a fact of life in this market.

Every place is different and everyone's finances are different.

Imho renting long term pencils out if you like where you rent, your rent to gross income ratio is healthy, and you have a high savings rate.

Eventually, the high savings rate and greater flexibility on location as years pass means purchasing a residence should, on balance, work out for us, if that's something we want to do.

I'm not opposed to owning a residence. However, I don't think renters are being dumb, and would not make that blanket statement.
Your case is an exception. In areas of VHCOL ex Manhattan or SF, rent price is usually 1/2 of mortgage payment. Rest of the country, rent is usually little less than mortgage payment. It makes no sense to rent in these areas.
Coming up with a large down payment or all cash offer in a bidding war is one reason many are forced to rent.
newyorker
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Re: Tales from this insane real estate *rental* market

Post by newyorker »

Expensive houses (2M property in my neighborhood, very high end for my mcol area) got snatched up in 5 days. Market isnt hot but good houses still move.
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Sandtrap
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Re: Tales from this insane real estate *rental* market

Post by Sandtrap »

Apartment buildings that i was strongly considering to buy 7-10 years ago, selling from 900k to 3.5 million, have nearly doubled and tripled in value today.
Crazy.

….if only….if only…..

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rockstar
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Re: Tales from this insane real estate *rental* market

Post by rockstar »

You know the market is nuts when the entry level employees pay more in rent than your mortgage for a third of the space.
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Re: Tales from this insane real estate *rental* market

Post by stoptothink »

rockstar wrote: Fri Aug 12, 2022 4:34 pm You know the market is nuts when the entry level employees pay more in rent than your mortgage for a third of the space.
We bought our (town)home in December 2015, our 15yr mortgage was (now paid off) $1,047/month. Our next-door neighbor (essentially same, except ours is end unit and has nicer finishes) is paying $2,750/month to rent his. Those who bought here when the community was first being built (2012 and 2013) probably have 30yr mortgages in the $600/month range.
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