My landlord recently told me how much they think the place I’m renting would sell for, and now idk why the owners even bother renting to me because the price is like 50 years worth of my rent.
Because he gets a steady supply of money and then in 10-20 years it will be worth 100 years of your rent on top of the 10-20 they collected already.
Well you see, he can take a loan on the equity, you pay the loan for him and he doesn’t have to pay any where near as much in taxes. You’re just helping out a landlord in need.
It’s because your landlord never paid for it. The bank did. You’re paying the interest on his loan.
I don’t think you know how loans work.
I think I do. I’ve been managing properties for some 20 years. Mostly commercial.
What I’m saying is that in order to understand why the landlord doesn’t just cash in on 50 years of rent, you first need to understand the difference between the profit/loss and assets/liabilities sections in a financial statement.
The tenants (income) are not paying for the building (asset). They only need to cover the interest (cost) from the loan (liability) in order for the the landlord to make money (profit).
The only time it makes sense to compare the rental income to the value of the asset is for the annual asset evaluation.
If the landlord waves the evaluation and rent around like OP says, it just shows that the landlord doesn’t understand it either and is just throwing numbers into the air to impress people.
$3M for 1,300sqft (120m²)…
That’s absolutely insane. You can get a proper mansion for that here in Scandinavia…
Well, to be fair this in an insanely overpriced area of the United States. If Scandinavia was the size of pretty much the entirety of Europe you’d have price extremes as well.
For example if you look up a similar house in the Midwest of the United States (Illinois, Missouri, Wisconsin, Iowa, ect) this house would be under $200,000.
We have overpriced places to, just look around the capitals. That doesn’t have to do with sizes.
This area of San Jose is in commuting distance to Silicon Valley offices, where you can get very large pay packages upwards of $400,000/year (average for L5 at Google in the Bay Area).
Artificial housing scarcity (the zoning restrictions in San Jose are very strict) combined with the massive incomes in the area has led to the situation we see today.
Fuck me dead that is not a three million dollar house.
The expense is land. Often, land location matters more in pricing than what’s on the land.
Right next to cupertino. It’s a $120k house on a $2.9million dollar lot
Housing crash when?
It’ll never crash again. Private equity will buy every home and rent them back to us. Forever.
Then make sure private equity goes out of business
How?
Hopefully, violently.
The french have some interesting machine solutions
At this point, not without a bloody upheaval.
Not that I’m encouraging that. It sounds horrible. But still.
THERE were two “Reigns of Terror,” if we would but remember it and consider it; the one wrought murder in hot passion, the other in heartless cold blood; the one lasted mere months, the other had lasted a thousand years; the one inflicted death upon ten thousand persons, the other upon a hundred millions; but our shudders are all for the “horrors” of the minor Terror, the momentary Terror, so to speak; whereas, what is the horror of swift death by the axe, compared with lifelong death from hunger, cold, insult, cruelty, and heart-break? What is swift death by lightning compared with death by slow fire at the stake? A city cemetery could contain the coffins filled by that brief Terror which we have all been so diligently taught to shiver at and mourn over; but all France could hardly contain the coffins filled by that older and real Terror—that unspeakably bitter and awful Terror which none of us has been taught to see in its vastness or pity as it deserves.
Asking 2 got 3. Did a corporation buy that?
The implication is that multiple buyers put in offers on the house, and someone placed a 3 million offer to make sure they were the winning one, or the vendor went back to the people who had put in offers and asked them to make a better one if they wanted to beat the other offers
“Just learn to kiss some ass. That man has the power to fire you! When he says come in on Saturday, show up on Sunday also too!”
– My Silent Gen parents, every goddamn day
Something something avocado toast
Where did a boomer say that?
They all say that.
So I guess no one said it too you.
Those asshole grandparents, they all hate you.
>Asking 2M
Ok
>Sold 3M
Ok
>Over asking 1M
What? Isn’t that overpaying 1M instead? Am I just stupid and don’t get it?It’s shorthand for “we sold this particular home for 1.02m over (more than) the initial asking price!”
It’s advertising that it’s a hot market and this realtor will get you a ton of money, even more than you will initially ask for. Probably due to multiple bidders.
I see, I should’ve noticed it reads over asked and not overasked. Thanks.
Perhaps ‘Over Asking [Price]’
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And they use the 3mil to buy a nice small house and outbid a working class family that currently live in a 2 room apartment
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As a rental, obviously. No way they’d actually live there like poors.
The oldest sale I could easily find was 1988, when it sold for $338,000 or about $956,400 today. In 1960 when it was built it likely sold for $15,000 and $22,000 so about $249,077 today. So from 1960 to 1988 it increased by 3.84x and from 1988 to now it increased by 3.16x. Wages increased by around 5.2x from 1960 to 1990 and about 2.4x from 1990 to 2025. In 1988 the house was 10.5x the average American families gross annual income. In 1960 it was 3.9x the income and today it’s 36x the average American families gross annual income. I didn’t really account for the area so the last part should really be done for California. Even today it’s not fair to lump in the economics of somewhere like West Virginia or Mississippi with California. Either way it’s probably more accurate to use the median instead of average.
Thank you for doing this research! It’s the first thing I thought of as well.
You’re welcome. I was curious. Pretty fucked. I redid the calculation for the median income of the area and the house is still 30x the annual yearly income. From 3x to 30x in 65 years is not good.
San Jose is not considered Southern California. It is Silicon Valley.
visits silicon valley
no silicon in sight
mfw
Was there a valley at least?
It’s more of a bowl really.
The music video: https://www.youtube.com/watch?v=_cZC67wXUTs
Its all under the skin
Updated
Right. I had to get up in the morning at ten o’clock at night, half an hour before I went to bed, eat a lump of cold poison, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad would kill us, and dance about on our graves singing “Hallelujah.”
But you try and tell the young people today that… and they won’t believe ya’.
Nope, nope…
A Monty Python reference? In this economy???
Who knows all of these boomers scolding anyone? I’ve never heard one say that. Do I only know or am I only related to nice boomers?
- It’s corporations buying up all of the extra housing
- It’s price fixing the rentals and housing through software they bought up.
You have nice boomers. Mine understand the inherent changes in the market since they were our age, but they still blame us for not doing what they did.
