Interesante -- Renting May Become the Norm

good article.

yep. many of my friends wonder why is owning better than renting (very rational people those ones). here in usa poverty is related to renting. so maybe those from abroad are not so biased against renting cause it does not mean you are poor. without the sentimental part, it has to be much cheaper than renting to compensate for the lower mobility and cost of opportunity of down payment.

plus of course many people cannot buy again because their capital is tied up in the home that they cannot sell.

Which would force rents to shoot up and people will look to buy.

"Which would force rents to shoot up and people will look to buy."

nothing will shoot up while the economy keeps on killing jobs like there's no tomorrow.

this reminds me of a real estate class at columbia (rufus, where are you?) back in 2005/6. the prof candidly said "well... true... salaries are not keeping up with prices, people are saying that salaries will have to double"... when seeing my wtf? face she excused herself "i'm only telling you what people are saying! very knowledgeable people by the way"

bob420, this is forcing people to move back with their families, or in with friends. this is not a typical downturn. and in terms of NYC, preventing people from moving in.

If everyone looks to rent and nobody buys, rents will go up and eventually people will buy. I didn't say anything about time frame.

bob420, the problem is that structural unemployment is going up, many think by as much as two percentage points. the composition of households and how they evolve will be altered, perhaps for at least a generation. developers were counting on demographics when they made their determinations to build. i can't recall whom, but someone estimated that the current oversupply of homes for sale could be sufficient for more than 5 years (i think it was 10, will look for the source). Until the inventory overhang corrects, those homes will be available for rent.

> Which would force rents to shoot up and people will look to buy.

Folks are trying to rent out places they can't sell and aren't able to, or have to take horribly low rents.

Rents 'aint shooting up, that's super wishful thinking.

> If everyone looks to rent and nobody buys, rents will go up and eventually people will buy.

You are pretending that places that can be bought can't be renting. More housing stock will just become rental stock.

Wait, don't make that a will... make that a.... it IS becoming rental stock.

Just look around you.

bob420, right now, on top of the increasing inventory of rentals, you have the 5000plus apartments on new devs that are not selling, not even listed to sell, many of which will be going rental. I don't see a shortage of rentals anywhere in the future, unless you're talking broadly about events that could happen in, say, 2025

bob420 is looking ahead, could be 2025 or 2125, true, buying will come back in vogue at some point.

if everyone rents, here is what will happen:

1. Rental Inventory will be scarce
2. Rents will increase (it's called supply and demand nyc10022)
3. People will decide that they can own for the same price
4. People will buy
5. Property values will increase

Plus, people HAVE to own, otherwise there will be nobody to rent from! If the homeownership rate in the U.S. gets cut in half, where are all those people going to rent? Who will their landlord be? The government?

regarding the "everybody": most people are stuck on their homes. being able to decide "do i rent or do i buy" is a luxury. that said, pricing happens at the margin.

"3. People will decide that they can own for the same price "

you need to be able to buy for LESS, not for the same price once you get rid of expected price appreciation. that said, also take into account lower household formation, thanks to a not booming economy.

"1. Rental Inventory will be scarce " why???????????????????

OK. I want to sell my place and rent. Any takers?

alpine, their landlord will be the bank, which means it will be you and me.

Most people are not "stuck" in their homes. First, some people can afford to carry 2 mortgages. Second, those who must move can rent out their houses, and then buy or rent in their new location. And third, while extremely rare in Manhattan, those who are foreclosed on must rent. They can't buy becasue their credit is trashed, and they obvivously can't stay in their current house.

As New York has always been populated - overwhelmingly - by renters, I think this article's a bit of a red herring. Maybe it's interesting in terms of the overall economy, but I think in this case NYC actually IS different.
http://www.nytimes.com/2007/05/27/nyregion/27owners.html

Tina
(Brooklyn broker)

yes, NYC is the complete opposite of the rest of the country as renters outnumber homeowners. So from a NYC perspective, the article in the OP is quite useless.

I look forward to the day when I rent from Citi, and just before they are about to hike my rent 100%, I take an offer from Chase to transfer my lease with $0 introduction rent for 6 months.

> 2. Rents will increase (it's called supply and demand nyc10022)

Alpine, before you try and give an economics lesson, take an economics class.

You just ignored half the equation.

Demand increases, but supply has increased DRAMATICALLY more. There are so many folks trying to rent out that they simply can't find enough renters.

Again, try an Economics 101 class.

> if everyone rents, here is what will happen:
> 1. Rental Inventory will be scarce

Seriously.... didn't you take this in high school?

You're completely backward.

> 1. Rental Inventory will be scarce
> 2. Rents will increase (it's called supply and demand nyc10022)
> 3. People will decide that they can own for the same price
> 4. People will buy
> 5. Property values will increase

Pretened you weren't horribly wrong on 1-3.

Say they happen anyway.

You just said that the balance of cost will lead people to buy, then prices increase. That balances it out to rent again, so prices would then decrease.

Seriously, dude, take an economics class.

This is the worst logic I've seen not coming from the State legislature in 20 years.

justincase, bravo. maybe they'll throw in a free welcome home mat.

Who can say no to a ree door mat?

I agree with 10022 that alpine is out of his mind. This trend will go on and on and more and more people will become renters. At the end of the day everyone will be renting from one dude, and he will be stuck will millions of houses with no one to sell to. How much would it suck to be that guy?

Oh, wait. I heard from somewhere else that being a monopoly is not such a bad thing.

"he will be stuck will millions of houses with no one to sell to. How much would it suck to be that guy?

Oh, wait. I heard from somewhere else that being a monopoly is not such a bad thing. "

lol, hello fannie & freddie! public housing will be born in usa, not a natural birth htat is.

everyone can't become renters you dimwits. Accordng to your idol nyc10022, nobody can sell their houses to become renters! Plus, not everyone wants to deal with a landlord. Plus, there are plenty of young people out there who have never owned but would like to one day.

"I agree with 10022 that alpine is out of his mind. This trend will go on and on and more and more people will become renters. At the end of the day everyone will be renting from one dude, and he will be stuck will millions of houses with no one to sell to. How much would it suck to be that guy?"

It is pretty funny that the guy came up with some a cockamamie argument that he thinks he actually proved that if no one wants to buy, prices go up...

Only in denial township, NJ...

I said that if nobody wants to buy, RENTS go up. Values only go up if people do want to buy. Learn to read!

10022, which guy? He sounds crazier than alphine.

> I said that if nobody wants to buy, RENTS go up.

Uh, no you didn't.

> 5. Property values will increase

And, your new statement is wrong, too.

Seriously, dude, economics 101.

> 10022, which guy? He sounds crazier than alphine.

He is alpine.

Actually, it's not that tough to become a housing monopoly.

Look, all you have to do is running around the country offering a $ or two to every homeowner to take their house and rent it back to them for free. Better promise a 3-year lease with no rent hike. After all, who would want to own if then can rent for a few bucks cheaper, right?

10022 now you are not making any sense. How can alpine be crazier than alpine? It's like saying 10022 is dumber than 10022. Can't happen.

"> I said that if nobody wants to buy, RENTS go up.

Uh, no you didn't."

What did I type for #4 in my list, right before I wrote "Property values will increase"? Each number in my list is dependent on the previous one occurring. If you could not figure that out, then you really need to take a reading comprehension course.

"Which would force rents to shoot up and people will look to buy."

Let's look at the entire lead paragraph of the article:

"CNBC ran a brief segment on the number of people who have decided to rent homes and apartments rather than buy them. The point of the reporting was simple. People who need to move out of their houses sometimes cannot sell them. Instead, they rent wherever they have moved and hope to sell their homes later when the market improves.In addition, people who cannot sell their homes often rent them out to others to help cover mortgage and maintenance costs."

This is all talking about rental stock INCREASING as people leave their "owned" homes and rent them out.

http://www.youtube.com/watch?v=WBW7CcVDVNQ&eurl=http%3A%2F%2Fwww%2Ecalculatedriskblog%2Ecom%2F&feature=player_embedded

Case in point: Newport Beach, CA. May 12th, 2009. Houses both For Sale and For Lease.