Friday, December 12, 2008

More evidence the economy is heading down the tubes...

My landlord put an envelope on my door today offering to extend my lease by 18 months at the current terms. My lease expires on May 15 of next year. I.e., basically, my landlord is saying he expects rents to go down for the next two years... which is only going to happen if the economy goes *splat*!

As for whether I should do it or not... well. I'll have to calculate some pros and cons to figure that one out...

-- Badtux the Economy Penguin


  1. This may sound silly, but the surest sign here in Phoenix that the economy is in the shitter is that nail salons are going out of business.

    We AZ women wear open-toed shoes ten months out of the year; pedicures are a MUST for Arizona chicks.

    My local salon has gone under. The manager told me that women just simply aren't coming in to have their nails done any longer.

    I nodded guiltily; I've been doing my own for six months now as a way to save some money.

  2. Meanwhile, the company that manages our rental house for the owner (a Chinese-surnamed lady living in London) just delivered a letter with a 5% rent INCREASE. The rental market used to be so hot here that people would bid against each other for how much they'd be willing to pay per week. (Down here, rent is quoted in "per week" amounts, which makes it seem like less. But you still have to pay up once per MONTH. So many queer customs.) That competition has slacked off as the economy cools, but the housing market has a long way to collapse yet.

  3. I actually expect rental property to become more difficult to obtain as defaults force more people out of mortgaged homes and into rental property. It may be that inability to obtain credit and displacement will actually raise prices. Your landlord is obviously betting against that. Perhaps you should make a counter offer that you will sign the lease at a discount, and lock in your lower cost.

    Bukko, do you also buy gas by the liter? We did that in the states back in the 70s when the prices for a gallon would have been over a dollar and most gas pumps couldn't deal with the extra digit. I always felt as you do, it's just a way to make you think you're paying less than you are.

    How does your rent vary to account for the four extra weeks in a year of twelve four week months? (12x4=48 weeks vs 52 weeks in an actual year)

  4. One of the things that is going to happen is that all the repo'ed homes are eventually going to get sold off to investors by whatever institution took over the banks that held the mortgages, and then put out to rent. It will be a glut of rental properties on the market. My landlord is already seeing a significant vacancy rate at the current rental rate, indicating that the current rental rate is already above-market-rate.

    I have until January 12 to decide, so I'll continue thinking on it for a while.

    Bukko, quoting weekly but paying monthly could never work here in America, because nobody here has the math skills to prorate the rent according to how many days were in the various weeks that made up the month. I had a slumlord friend who charged by the week, but every week he made the rounds of his properties and collected the rent. That was because in order to evict someone, he had to document that they had missed their rental payments for four weeks in a row, and since he was leasing to low-income people he had to evict on a regular basis. Collecting rent monthly would have meant possibly two months of "free" rent before the eviction went through. Oh yeah, he was cash-only too, he had discovered that a) low-income people often don't have checking accounts, and b) when they do, usually the checks they give you are hot, which gives you a lot of hassles with the bank.

    He eventually tired of the constant struggle to collect rents. He sold one group of properties to some investors who wanted to tear them down and build a modern townhouse complex (sad, these were classic 1920's cottages). He sold the other group of properties to one of the riverboat casinos who tore them down and built a parking garage, probably a good replacement (these were post-WWII concrete block tenements, ugly, nasty, and with no redeeming qualities).

    And yeah, I'm aware that his renters were having just as much of a struggle *paying* the rents, even though his rents were quite low ($40 per week during most of the 90's, $50 per week after that). But it really pissed him off when he evicted someone, the Sheriff came in to serve the eviction and haul that person's possessions out, and he ended up hauling out five trash bags of empty beer bottles, making it clear that this (former) tenant had cared more about booze than about the rent money... sigh. Bad choices aren't just for bank executives, they were/are top to bottom throughout America.


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