Renters folly: Popular delusion of crowds

Renters should take a page from George and do the opposite before its too late....

http://www.youtube.com/watch?v=cKUvKE3bQlY

That's funny because when I walk around fido and the ues, I see more " apartment for rent" signs than ever before. I think the rental broker psychology strategy is gonna run out of gas soon.

http://seekingalpha.com/article/202133-equity-residential-q1-2010-earnings-call-transcript?page=-1&find=rent

From Equity Residential's Q1 Earnings Call Transcript....

Yeah we ended last year with same-store revenues down only 2.9% and we shared with you in early February our sense that we are at the beginning of a recovery. We said in February that we are experiencing improving occupancy across many markets when seasonally we would have been expecting just the opposite at to be happening. We also have said that our net effects in new lease rates were beginning to term positive in many of our markets and that we are beginning to see more renewals with an upward bias.

During the first quarter, those trends have continued and we think they are even stronger today. Our occupancies continued to improve; it’s up 100 basis points from January 1, to 95.3% today. Our net effective new lease rates continue to increase, up 2.3% from one year ago and 4.6% since the beginning of the year.

So that for the month of April, the difference between move-out rents and net effective new lease rates was on average across the portfolio down only 1%. And this is quickly trending towards flat with some markets today already positive and to put this in perspective, you recall that this delta was negative 10% one year ago.

We continue to renew our residents 23,000 so far this year and those renewals have been up 2% and not a single market across the country is renewing leases today for less than at least a 1% increase. The 13,000 renewals that we’d already done year-to-date, there were new leases a year ago so that a year ago the lease rates were likely down about 10% on average. Those 13,000 renewals have been renewed on an average increase of 3.2%.

We’re clearly beginning to recover some of the reduction of rents that we needed to give the market a year ago. And we’re delighted that sequential revenues were essentially flat in the fourth quarter of ‘09 to first quarter ‘10. This is of course primarily the result in the pick up in occupancy while increasing net effective new lease rates contributed as well.

Wow! A $6 increase in asking rents going from winter into spring, almost 0.2%, almost keeping up with inflation!

Funny, we never saw a "rents have peaked" article the month rents dropped by $6...

Inonada, A year from now rents will be higher, I'm just not sure by how much. Are you of the opinion they will be lower?

I gave my crystal ball to w67th. he was able to see the most interesting things in it.

I don't have a clue where rents will be and I don't think anyone else does either. there are far too many unknown elements. but I do know that a lot of people who signed two year leases in the summer of '08 are overpaying. unemployment is still high, recruiting in most areas is still weak, and large numbers of rental inventory is coming on line. make of all that what you will.

Rents for the better buildings I think are up from last year and up from earlier this year, on an actual and on a net basis. But despite weakness in the Manhattan ownership market, I still think now is a good time to enter into a two year rental lease.

"unemployment is still high, recruiting in most areas is still weak, and large numbers of rental inventory is coming on line. make of all that what you will. "

AR, recruiting in law firms didn't recover by now? finance picked up, but once current non performing loans (1.5 times bigger than total losses acknowledged since 2005) and basel III are finally taken into account, i wouldn't be surprised to see a 2nd big round of layoffs in finance.

my issue with these rental reports is the unreliable accounting of inventory (vacancy rates cannot be taken seriously when inventory is for sure being under reported, even among rent stab ones, not only because of unsaleable new condos). exactly the same as what's going on with foreclosures and even with non performing loans at the main banks.

w67th has crystal ballz?!!!

"So that for the month of April, the difference between move-out rents and net effective new lease rates was on average across the portfolio down only 1%"

Rents are down 1$ y-o-y and this bozo is saying they are starting to boom again? Must be tough being a rental broke-whore...

1% not $1

EQR is an owner, not a broker.

Not only is EQR an owner but Sam Zell's been buying more properties. Very bullish.

does anyone remember what a W looks like?

First it goes down...
Then it goes up...
Weeeeeeeeeeeeee
Then it goes down...
get ready

I'm thinking more like this

http://etc.usf.edu/clipart/41700/41750/fc_sqrootx_41750_md.gif

notadmin, the law firm situation is firm by firm. some are doing quite well, others not so much. and almost all of them still have extra bodies, so hiring will likely be below peak levels for some time. they also seem to be changing their business models. partners are doing more and more of their own "work", reducing the need for people lower on the food chain.

some areas are seeing increased activity. litigation is finally heating up, an area that is typically almost immune to recessions that got whacked very badly this one. bankruptcy hasn't been as active as anticipated, actually, and insiders wonder if that will change (extend and pretend there as well?). there's been some recent corporate activity increase but most are ones you'd expect in an uncertain economic environment.

RS, zell? vulture purchasing is not bullish. it is part of the process. an early part.

http://therealdeal.com/newyork/articles/will-sam-zell-s-confidence-be-contagious

It's hard to find a real estate figure with a better reputation for timing the markets than Sam Zell. The blunt, motorcycle-riding, Chicago-based mogul is known for snapping up distressed assets when prices hit bottom.

No surprise, then, that a spate of unexpected, high-profile deals involving the Zell-chaired REIT, Equity Residential, is generating a growing sense of elation among local real estate players desperate for signs of a recovery.

Like Real Capital's Fasulo, Barry Hersh, a clinical associate professor at the Schack Institute of Real Estate at New York University, said industry players will likely regard Zell's moves as an indication the market may be approaching its bottom.

"Sam Zell is as good a picker of distressed real estate as there has been," Hersh said. "I would never bet against him.

"I take it as a sign that he thinks it's bottoming, and that the New York market in general, and his properties in particular, were a bargain," Hersh said.

"Does it get any better than when Sam Zell starts buying property in your market?" said Dan Fasulo, managing director at Real Capital Analytics. "I don't know how much more confidence investors need to start making decisions. Everybody has got to realize that the world is not over."

"Inonada, A year from now rents will be higher, I'm just not sure by how much. Are you of the opinion they will be lower?"

I would hope they'd be higher by inflation: a 20-30% inflation-adjusted drop is plenty for me. I'm just questioning the premise of the article.

he picks up distressed properties when THOSE properties have hit bottom. for many reasons. bankruptcy, distress, etc. it doesn't mean the entire market has hit bottom. it means he is doing what i said, vulture investing for the future and he is able to do it because he has a lot of cash.

geez, i thought you had learned a little over the last year or so.

almost everyone and their mother would like to interpret any and all signs as indicators that the market has turned. but then again the same people never saw the problems coming.

oh and by the way, how do you reconcile your views that the us economy is at great risk and gold may be king with your unwavering belief that real estate will be going up?

Crystal and it's shiny.

and it tellz allz.

Gold will Trump Real Estate. Real estate will be better than cash if the Gov't does what I expect and starts printing their way out of debt. Rents have bottomed and are poised to rise given the shift away from buying(we've probably seen the highs in terms of percentage of Americans owning homes for quite some time). That said, I'm not bullish on real estate values, but I'm not bearish either. I see real estate flat to slightly up, which again will be better than cash.

Riversider. F u. No seriously f u. My last name is Fu from shanghai.

Flmao. Dudette get out and get some exercise. Oh yeah, Sammy now that dude looke like an elf. I have excpected Him to give me some gold coins at a conference. Didn't he buy some newspaper and lose the $.50 before he even got to read it? Oh that zell, should be named sell at the moment, but $500psf in manhattan, I'm glad he listened to me.

1% means shit statistically. Might as well look at a morning boner and say well if that's what I am starting with this morning!!!!, tonite is gonna be greeeeeaaaaattttt! (Tony tiger)

newspapers are ego magnets. stupid.

speaking of stupidity. f'ng stupidity. no bubble. problem is limited. no crash. crash is limited. won't spread. has spread but will have limited effect. recovery is getting stronger. unemployment rate just increased.

you f'ng listen to any of this shit?

in my bldg. they were asking $7500 for a three bedroom/two bath and a lease was signed for $4400.00 AND what's really intereting they left it as a rent stabl. apart. The two/two were renting two years ago for $5800.

With unemployment being what it is and the economy seriously at risk of re-contracting because of
the collapse of Europe, the rise of the dollar, the rise of oil relative to spring 2009, and the likely reduction or outright reversal of wealth effect spending driven by the March 2009-April 2010 run up of the stock market, as an owner I am petrified at the prospect that residential rents will collapse because of an imbalance between the supply of willing and able tenants, and the supply of available housing. Despite all the happy talk, there does not appear to be much meaningful sustainable growth
occurring in the US right now outside of Intel and the consumer electronics industry, which is doing
well because of technology advances, new products, and substantilly lower finished product costs.

You are right to be worried. Fellow owner here. All I can think to do is diversify, diversify, diversify. Put the rest of your wealth in something not tied to the economy here.

A friend of mine is subletting her place; she wants $4500 monthly. Guess what? She's feeling lucky she can find a reliable renter with a good record who'll pay $1700.

TREGNY found Manhattan vacancy rate was HIGHER, not lower. Way to cherry pick the data.

Its all gonna come out in the wash...good sales tactics can only take you so far...when the poeple just arent there, prices come down again. its the smae story as last summer but actually worse because there is even more supply.

Dogismy
about 2 hours ago
ignore this person
report abuse A friend of mine is subletting her place; she wants $4500 monthly. Guess what? She's feeling lucky she can find a reliable renter with a good record who'll pay $1700.

this must be the biggest pile of bullshit anyone ever bothered to actually type. there is no way in the world an apartment that is actually worth $4500 per month isn't drawing interest from those who can, and will, pay for it.

you are like a bunch of old crones telling each other it was so much better in the old days, that everything is fucked now, that there is no hope.....and you will look for any reason you can find to support your views.

Dogismy, your example speaks better to natural ownership than a support for rental markets. Simply put, if the place is worth $4500 to the owner, and only $1700 to the rental market, then the simple decision would be to stay put and live in your own residence. Not only is that the natural solution and the long-term economic sensible solution, but it also is the sensible solution in the short-term. It seems as if there is a very winnable situation for your friend.

Just went through west side listings on NY Times Web site. Extell is renting out the Ashley and the amenities rock! Pool, bowling rock climbing, concierge. What does this do for owners who need to rent out units in Rushmore & Avery right next door? The cost of carry for a condo owner is too high and those two buildings have far less in terms of services.

Jim Jones uses his own personal and non-verifiable anecdotes as "proof" of his views. Meanwhile, he dismisses not only others' anecdotes, but actual legit third-party data. So his is a giant pile of BS.