San Mateo County: Renters beware!

Developers are not building new rental units in San Mateo county and many landlords are converting their apartment buildings to for-sale units. Why? The high cost of building in San Mateo county. When developers build condos they can sell them and see an immediate return on their investment. Rental properties can take years to break-even. Full story can be found at condo construction outpacing rentals. The end result will be an acute shortage of rental units. This means that rents will go up. According to the housing Leadership Council of San Mateo County the median price for a 2-BR apartment is $1,536 while the median mortgage on a condo is $3,239 ($550,00 & 30yr mortgage). I have been counting on the spread between owning[$3,239] and renting[$1,553] to remain the same or even increase. I belive in the housing bubble logic presented on Patrick.net. I want the spread to remain the same or increase because this means I get more value for my rental dollar and I get to stash money away for a down payment on a home. My stashed money gets invested in things like ETF and stocks. So we all know that housing cost are sky high and this article leads me to believe the median rent will increase beyond $1,553. According to The Housing Council of San Mateo County, 27 percent of households are living beyond their means (PDF) and renters need a salary of $61,440 to afford the average rent on a two bedroom aparment. We are all getting squeezed. Home owners living on the edge will fall off as ARMS ratchet upward and renters will be hard pressed to find a decent place for their families. Frankly it is too late for those who bought homes with the idea of flipping the home in a year or two. The slowing appreciation rate has singled the end of this game. However RENTERS now is your time to optimize your budgets, invest wisely and wait on the sidelines for the decline in Bay Area housing prices.