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Excellent Post on Rents, Foreclosure, and the DC Market



August 08, 2008 – Comments (1)

Here, at Calculated Risk.

My opinion: this is indeed the inevitable result of a Ponzi-scheme real-estate bubble.

It shows that prices on DC area homes are still way out of whack. If you can't make a mortgage payment with the rental yield, you paid too much. Everyone here has been paying too much for a long, long time. (See Fannie's results today? Byebye Alt-A. That's going to create more home market tankage...) 

No one need shed tears, because there are still plenty of places to rent, and they're desperate, offering free months, etc. And these are established rental communities, not houses that are going to go poof.

And finally: Anyone who rents a home in the DC area without checking out whether or not the owner actually owns it, or is current on the mortgage, is not behaving responsibly. We all need to look before we leap.


1 Comments – Post Your Own

#1) On August 08, 2008 at 2:07 PM, ByrneShill (82.32) wrote:

You know those free months and other freebies landord gives, they don't seem like it, but they do lower the annual rental yield of a property. Now if rents start going down (and they seem to be going down, or at least not increasing), and house prices are still too high compared to rents, just imagine how much and how fast prices will have to drop to get back in line with rents.


A lot of pain coming to a DC aerea soon. Or maybe not that soon, sometimes it takes forever for reality to catch up to dreams.

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