No, in fact, rental prices in the Bay area are dropping. To get an apt in the building in which I live, you practically had to inherit it. For the last nine months we've had three vacancies, and they're not renting because the prices are too high.
Joanna
Doug Henwood wrote:
Jurriaan Bendien wrote:
Same in Holland, same in Australasia, same in many European countries. In the 1990s you had the hot air bubble and now they're breeding. But now you have to explain why people would do that, under what conditions they would borrow against inflated property values. Presumably, they would do that only if for example they were sure that they had job security, or if they gained a rise in pay, and so on.
They're doing it because they feel secure in their jobs and certain that house prices will continue to rise. Since, as the late credit market pundit Ed Hart used to say, "housing inflation is the American national religion," they've got history and public policy on their side.
I don't have the stats at hand, but truly huge numbers of people have refinanced. If you want to investigate further, Freddie Mac has stats on refinancing.
I said previously that GDP includes the rental value of owner occupied housing. This is to be precise the IMPUTED rental value of owner occupied housing, strictly speaking a fictitious entry (because no "production" is involved here) which would of course boost the GDP figure if you have a housing boom, in addition to the increased turnover in the construction industry and its suppliers as shown by the input-output tables.
An odd feature of the U.S. housing boom is that the rental index hasn't gone up all that much - $46b gain between 2000 and 2001 (latest available). The annual GDP tables have data on imputations - specifically 8.21, at <http://www.bea.gov/bea/dn/nipaweb/TableViewFixed.asp?SelectedTable=185&FirstYear=1996&LastYear=2001&Freq=Year>.
Doug
