CALIFORNIA FOCUS
FOR RELEASE: TUESDAY, SEPTEMBER 19, 2023, OR THEREAFTER
BY THOMAS D. ELIAS
"RENTERS NOW GETTING SLAMMED,
RIGHT ALONG WITH HOME BUYERS”
A UC
Berkeley study the other day concluded that home buyers in California now pay
double each month what apartment dwellers shell out for rent.
That’s
right: It takes twice as much ready cash to live in this state as a new
homeowner than as a renter, for a comparable property.
That’s
also the conclusion of a year-long study by Dwellsy, a Los Altos-based Internet
platform that often assists renters in finding houses, townhomes, condominiums
and apartments.
Despite the high levels of today’s
California rents, this is a new reality, spurred in part by the steadily
rising
interest rates on today’s mortgages. It means that fewer folks than ever can
afford to buy, and helps
explain the
relatively new California reality which sees renters making up well over half
the populace.
But Dwellsy CEO Jonas Bordo believes that
most folks can still afford fairly financially comfortable
living, even
as both home prices and rents begin rising again after a pause – or for
owner-occupied homes, a bit of a slowdown over the last few months of
uncertainly about the national debt ceiling.
For sure, neither rents nor home prices
have been major contributors to the severe inflation that has afflicted most of
America, and especially California, this year. “The normal seasonal rent cycle
typically has prices increasing from April through October, so the bump right
now is not unexpected,” said Bordo. “When you take the long view, renters are
coming out on top.” Since April 2022, asking rent for one-bedroom apartments
has decreased 0.8 percent, or $11 per month nationally. And since January 2021,
it has gone down 1.9 percent.
Overall, rents for one-bedrooms were up
just $14 in March and April, the most recent months measured by Dwellsy.
Meanwhile, house payments skyrocketed in California, even as base prices are
down a bit. Typical house payments for just-sold median-priced homes that in
this state carry price tags around $800,000 include a $3,000 monthly interest
component when buyers get loans in the 4.5 percent range.
The interest alone is more than typical
renters pay in California’s priciest markets for one-bedroom apartments. In the
state’s most expensive metropolitan area, San Francisco-Oakland-Hayward, the
typical one-bedroom now goes for $2,495 a month. In nearby San Jose-Santa
Clara, the price is exactly $100 less. And in the Los Angeles-Long Beach-Santa
Ana area, it’s “only” $2,070. That still means renters must have a monthly
income topping $5,000 to be comfortable unless they are roommates sharing the
expense. So without doubling or tripling up, things are still not affordable
for most residents of this state’s urban areas.
But a bunch less pricy than if they were new home buyers.
This is rarely mentioned when realtors gripe that sales have
been down this spring and summer, running about 45 percent below last year’s
volume. But when new buyers must come up with more than $40,000 in yearly
mortgage payments and then add taxes and insurance into the mix, who can be
surprised when some look to other states as financial solutions? Especially
since most employers remain comfortable with the remote work ethos imposed on
many by the coronavirus pandemic.
All this is good news for renters. For when current homeowners
need to raise money to cover medical and other expenses, some are willing to
consider becoming landlords and landladies rather than selling in a tight
market.
And the more homes become rental properties, the more
acceptable that alternative will look to homeowners, especially if they are
empty nesters who might be comfortable downsizing into an apartment of their
own, or using rental income from houses to cover the cost of condos.
What’s more, the new reality of renters paying far less for
their quarters than owners with mortgages will likely not change much until or
unless the Federal Reserve Board drops interest rates far below present levels.
-30-
Elias is author of the current book “The Burzynski Breakthrough: The Most
Promising Cancer Treatment and the Government's Campaign to Squelch It,” now
available in an updated third edition. His email address is tdelias@aol.com
No comments:
Post a Comment