Comments on: Getting the housing market moving A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: TEP Mon, 30 Aug 2010 13:47:43 +0000 the main problem is that the vast majority of prospective landlords are locked out by current lending standards. it’s currently REALLY HARD to get a loan on a 2nd property even if you have cash and good credit. read joe nocera’s ny times article about this from last friday.

By: TFF Sun, 29 Aug 2010 19:22:59 +0000 I’m confused… Hasn’t Felix written multiple times that home ownership is for idealistic idiots? How, then, can buying for the purpose of renting make sense?

If I can buy a place on a $1000 mortgage with maintenance/taxes of another $500 a month, why should I prefer to pay $2000 rent? Especially since I get a federal tax benefit from the mortgage and taxes that I do not get as a renter.

Ah, yes… If I rent instead of buying, then I can put that $50k downpayment into the stock market where it will earn double-digit returns that will make me rich. Right? Except Felix has written that the stock market is also a fool’s game… And if I put that $50k into treasury bonds, it will pay a paltry $1.5k a *year*. Not nearly enough of a return to justify the higher cost of renting.

Where’s the consistency?

By: FelixSalmon Fri, 27 Aug 2010 19:56:54 +0000 I don’t think I ever said it was a good idea to get into rental housing as a business. But back of the envelope, if your mortgage is $1,000 a month and maintenance and taxes are another $500 a month, and you can rent for $2,000 a month, that looks like a good business to me.

By: dsucher Fri, 27 Aug 2010 15:22:52 +0000 Felix,

Then just pick ANY example.

On the one hand you state that it is a viable option to get into rental housing as a business (I.e. on net positive cash flow) basis. Am I wrong that you state that you believe that? And have many times?

Then prove your point by showing a particular instance of what combination of $$$ numbers make sense to you. Just curious.

If you simply believe that it would be nice to see a detached SF rental housing business then I would agree and add in a pony, too. But maybe I have misunderstood so please clarify.

By: FelixSalmon Fri, 27 Aug 2010 13:16:03 +0000 dsucher, I’m not really saying that. I’m saying we NEED a new wave of landlords, but all real estate is local, and I have no idea whether it makes sense to do the buy-to-let thing at these prices. All depends on how much you can rent out the house for!

By: dsucher Fri, 27 Aug 2010 04:42:35 +0000 Felix,

You keep urging that it is time for home rentals as a good investment; at least I think you say that.

So why don’t you work up a pro forma to show how a typical house rental deal would work?

I am curious to see what you thinkmwould work.

By: freedomadvocate Thu, 26 Aug 2010 11:43:12 +0000 This all gone a lot faster if the government just stayed out of the housing business. Buying a house used to be hard not just changing not just like changing your shoes.

It will take years for the excess housing inventory to be to sold or torn down. The new effect we are getting now is the demographic of the baby boom moving out of large real estate and retiring to lesser accommodations.

When the government gets out of the way, which is starting with the ending of the housing credit, prices will move to the price that generates demand. There was an anecdote in the WSJ yesterday that talked of a buyer of a home paying $120k for a home that was originally $300K. The bright side is people are getting some low prices.

By: STORYBURNthere Thu, 26 Aug 2010 02:18:27 +0000 7 million homes are sitting foreclosed at the banks, waiting for the banks to unload back onto the market. That is pathetic

By: rodgermitchell Thu, 26 Aug 2010 01:57:32 +0000 Zdneal,

The problem with Japan was the bad loans. The government spending prevented a collapse of the economy. Had our government spent enough, we could have avoided the recession. Sadly, the debt hawks were more concerned about deficits than the many-trillion dollar cost of this recession.

Rodger Malcolm Mitchell

By: BenE Thu, 26 Aug 2010 00:00:05 +0000 Heh, I thought you meant a lot of metaphorical hand-waving, but no that was a very literal description. :]

With interest rates as low as they are now, it’d be interesting to look at a mortgage payment to rent ratio as a proxy for landlord affordability. I did that a couple of years ago during the bubble, but I imagine things have changed quite a bit lately. I’ll add it to the to-do list…