The silver lining in the housing crisis

800px-soviet_apartment2As surely as many bad things pertain to our current global depression, it has had a twofold benefit for me personally. Mind you, I am little fond of the decimation of my retirement accounts or the continuing unemployment of my significant other. Still, I am a renter in L.A., and one has to see some redemption in the free-fall of rental prices (even if they are not, perhaps, quite so rapid as those of underlying property values).

I just moved to a new apartment a few days ago. As with most moves, it was accompanied by endless fretting over finding just the right place, with advantages and drawbacks of each one. Quite a few candidates went through the mill, in various neighborhoods (but generally roughly West Side). The ultimate result was renting a Fairfax District place, 400 feet away from our prior apartment…with similar size and architecture, but at $2650 for a 3BR rather than $3500.

The obvious advantage here is, well, it cost a lot less money. We got a perfectly good deal when we started renting the other place 2 years ago; but in today’s market, the prior place was simply overpriced.

Which arrives at the second advantage, also not to be neglected: schadenfreude over the “plight” of the owning classes. Prior to moving, we suggested to our landowner that we would be happy to continue renting at a reduced rate of $3000/mo. With a sense of arrogant entitlement, she insisted that she “could not afford” to collect less rent than our prior amount, it apparently being the moral duty of tenants to buy a house for her.

Especially living so close by, there is a joy in seeing the continuing “For rent” sign on the lawn of the old place, with a slowly dropping purported rental amount listed on it. My guess is that after a month vacant, she’ll arrive at the fair-market amount of $3000, and rent the place. As with most situations, I do not see schadenfreude in this matter as the venal sin or guilty pleasure that so many misguided moralists might. As long as one does not cause, nor even desire to cause, equitable suffering, pleasure in its observation seems a noble endeavor.

3 thoughts on “The silver lining in the housing crisis”

  1. I’m sure you have your sound reasons and congrats for getting a better rental deal, but at $2650 a month. given the down status of the real estate market, was there thought given to becoming one of them there home owners?

    PS. Welcome to LA Metblogs!

  2. That might make more sense if I believed that housing prices were close to the bottom of their free-fall. I own a house in another state, in a place where a large house costs less than a shack in L.A. So while the scale of dollars is wholly different than it would be here, the experience leaves me less than anxious to buy a $700k house in order to watch it promptly fall to $500k.

    The truth is, despite what most of the boosterist news will tell you, that the ratio of home prices to personal incomes stayed at a fairly constant ratio from 1900-2000, through wars, depression, changing economics and politics, etc. The bubble that started around 2000 pushed that ratio to over twice its historical norm, entirely outside any precedent. We’ve seen a fall of 30-40% from those dizzy highs of housing-price escalation, but there is another good 30% left to fall to reach prevailing historical trends. Overall, not a good time to buy, to my mind.

  3. Your former landlord sounds a lot like my former landlord – also in the Fairfax District. That area particularly took FULL advantage of skyrocketing rent prices. For renters sake (and in all fairness), I hope that some of those landlords also feel the pinch as well.

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