people will always be caught off guard; many have complete disregard for risk and pay for it; the more leveraged u biz, da higher da bang..
very true, funny how people in 2001-2002 where not buying houses around here at 7% when housing was affordable, yet now it's a bargain at 3-4 times the price at 6%
If there is a crash in the housing market, does that mean rent prices will likely drop as well, or would they increase, considering that people owning property would decrease? Just curious as to how this all works... I'm currently considering moving out into an apartment. *I also don't have a credit rating, since I never own a credit card (do you have to own a credit card to have credit?), so I don't know how it works*
That's why I'm worried(I'm a bear) I would prefer everyone hold a copy of "Prosperity is around the corner!" with optimistic faces... In this sense, perhaps I need to go on the streets and hand out copies of "Why the next bull market is here" so us bears can get some bulls out there {to fleece}
Rents increase in a crashing housing market. Since lower home prices= lower homes built= more demand for rents.
i'm not intentionally trying to contradict you, but not so fast here. it's not as simple as that. take a look at japan since 1991. rents and housing prices have gone down together. take a look at late 90s argentina, take a look at the data after the great depression. deflation typically knocks both the price of a property and its rent down simultaneously. rents are increasing according to cpi data, but in the same data set housing prices are rising too, albeit much more slowly than they used to. my guess is that landlords raise the price of their apts during energy shocks, and that may be seeping into the data. i suspect both housing and rent prices are lower in '08. then again, if oil is at $200 a barrel, rents are prolly much higher.
Rents do increase in a slowing housing market as would-be buyers are forced to rent. You need look no further than last week's CPI, which was up not due to energy prices, but to the Housing Equivalency component, which measures what a homeowner "could get" if he were to rent his property. And it's up. Simply supply and demand. People have to live somewhere - if not in thier own home, then in someone else's rented one. And it's a tad ironic that these components move counter to one another. Fewer buyers = More renters = Higher rent. In a way, increasing rents in a slowing housing market act as a bit of a hedge against decreasing real estate values. There are many landlords here in NYC, for example, who took the peak in the housing market as an opportunity to update/renovate thier building in preparation for this phenomenon. Once again, proof that countertrending can and does work.
Again - I REALLY think that EqtTrdr should start a reverse signal service. Because I think we all know he's not making any money from the markets. So, why not sell his services as a professional idiot. When someone is that good at being wrong, they deserve to get paid for it.
in this "new economy" rents will fall with housing . there is a large inventory of houses on the market and apartments and still building ! bgp