Intent to Sell: Forcing Out of Apartment - Rent vs Buy (CA Metro)

[RobbieB]

Yeah, if the new owner is an investor you may not have to move.

We were renting a townhouse and the owner decided to sell and sent (served) an eviction notice. So we bought a house. Just before the move the new owners agent called and asked if we were staying. I said no, the old owner evicted us. She says "well the new owner would really like you to stay"

Too bad. If the owners agent had done her homework she would have known the development was most investors and investors love good tenants.

 

[euro]

Yeah, if the new owner is an investor you may not have to move.

We were renting a townhouse and the owner decided to sell and sent (served) an eviction notice. So we bought a house. Just before the move the new owners agent called and asked if we were staying. I said no, the old owner evicted us. She says "well the new owner would really like you to stay"

Too bad. If the owners agent had done her homework she would have known the development was most investors and investors love good tenants.

Well, if he really is paying only half of the going market rent for his apartment, then it is highly unlikely that they'll want him to stay - unless he is ok with doubling the rent.

 

[Bryan Barnfellow]

Thanks BB - yes we think so, and they're anchoring our thinking. Thanks for the confirmation. My coworkers seem to agree with predictions, but that is an unknown...who would've thought Russia invades Ukraine and resulting affects etc. Where in Switzerland do you live? ..... pictures of places there are outstanding.

My wife and I live in Lugano, in the Italian speaking canton of Ticino in southern Switzerland. We could walk to the Italian border, it's that close. Lugano is on a lake, which is beautiful and a draw for international tourists looking for a sunny, inviting, resort city which combines the best of Switzerland and Italy in some respects. We came here 13 years ago for my job and retired seven years ago. We are permanent residents and plan to live the rest of our lives here.

 

[RobbieB]

Well, if he really is paying only half of the going market rent for his apartment, then it is highly unlikely that they'll want him to stay - unless he is ok with doubling the rent.

I think that's a given. New owner is going to pay big bucks and going to charge same if renting.

And CA metro? That place is going to sell in a week.

 

[Teacher Terry]

When I bought my condo last year it was a rental. I wrote into the offer that it had to be empty before closing. Years ago I bought a house where the renters were supposed to be gone because we needed to live there and they didn’t leave. It was a mess and I didn’t want to be in that situation again. If I was in your position I would rent and keep a eye out for a affordable place to buy.

 

[Morgan22]

We went through this last year in San Diego. Our landlord sent a letter letting us know he was going to try to sell the place and let us know the name of the real estate agent. Once the place was sold the buyer sent a notice to vacate.

If there is no date to vacate in the letter you received then its just a notice to let you know they intend to sell. The real estate agent will get in touch with you to arrange showings when they have interested parties.

The law in San Diego is that if you've lived more than a year in your rental, then they have to give you 60 day notice to leave. That should be plenty of time to find a new rental, especially in San Diego.

There are always apartments available. And as long as you don't need brand new high end kitchen and bathroom, you can find affordable places too.
If you don't want to wait it out start looking now to get an idea of prices and what you can or can't live without.

 

[pc95]

We went through this last year in San Diego. Our landlord sent a letter letting us know he was going to try to sell the place and let us know the name of the real estate agent. Once the place was sold the buyer sent a notice to vacate.

If there is no date to vacate in the letter you received then its just a notice to let you know they intend to sell. The real estate agent will get in touch with you to arrange showings when they have interested parties.

The law in San Diego is that if you've lived more than a year in your rental, then they have to give you 60 day notice to leave. That should be plenty of time to find a new rental, especially in San Diego.

There are always apartments available. And as long as you don't need brand new high end kitchen and bathroom, you can find affordable places too.
If you don't want to wait it out start looking now to get an idea of prices and what you can or can't live without.

Thanks for the information and related experience. With most everything close to double or more our current rent, affordability is subjective. If not for our jobs, we would likely move out of the area. The doubling of rent is most annoying, but being forced to move is a close second. The bidding processes for property buying is exceptionally discouraging. People up-bidding - throwing around higher 10s of thousands or low 100s of dollars like bird-feed - always a bigtime put-off. We are well-off, but not wealthy. When I think of those amounts of money, I think in terms of time - how long would it take us to work and save those new figures.

Take a look at the San Diego Case-Schiller Index:
https://fred.stlouisfed.org/series/SDXRSA

If you draw an imaginary trendline out from ~Jul-2020 to recent-2022, you get around about a ~300 index point at the right end of the graph; however in actuality its ~400 - so about a 33% increase above the prior trendline. That's what buyers are staring at these days. Rates cant rise fast enough.

 

[aja8888]

pc95, I understand your pain here. I have been around a long time and lived in California for 12 years (1981 - 1993). The real estate bubble now will pass as it always has in the past. As mortgage rates rise, there are less buyers and prices will fall over time. This process historically takes a couple of years.

We live in Texas now and left Ca in the 1990's. During the GFC bubble of 2009, when the smoke was clearing, in 2010 we picked up a nice three year old 2,000 sq. ft. brick ranch house in Spring, Texas for 64/sq.ft. That was about 1/3 of the value it sold for new.

We are heading into a recession and this thing will come apart as the FED raises rates and the stock market tanks. There will be a lot of homes "under water", and the buyers will run for the exits.

My recommendation is to get a new rental (painful, of course) and sit tight until things ease up. They will.

Good luck!

 

[pc95]

pc95, I understand your pain here. I have been around a long time and lived in California for 12 years (1981 - 1993). The real estate bubble now will pass as it always has in the past. As mortgage rates rise, there are less buyers and prices will fall over time. This process historically takes a couple of years.

We live in Texas now and left Ca in the 1990's. During the GFC bubble of 2009, when the smoke was clearing, in 2010 we picked up a nice three year old 2,000 sq. ft. brick ranch house in Spring, Texas for 64/sq.ft. That was about 1/3 of the value it sold for new.

We are heading into a recession and this thing will come apart as the FED raises rates and the stock market tanks. There will be a lot of homes "under water", and the buyers will run for the exits.

My recommendation is to get a new rental (painful, of course) and sit tight until things ease up. They will.

Good luck!

Thank you for the encouragement aja - much appreciated. I hope you're right. Very nice on the Texas house. We visited San Antonio and Austin and were impressed in early 2020. I read the housing craze is there in Texas similarly - maybe even worse in terms of %. In the rearview mirror is always a nice feeling with problems. I dont foresee that level deal you found, but just want a fair shake....I was ready to purchase at the 300 index example above. I cannot reconcile paying an extra $250,000 on the condos I liked in 2020 in the span of 1.5 years. That's a modern-day fleecing of the highest order. Housing is becoming modern day serfdom.

 

[Brat]

I still like my job here well enough, and have a longtime network of coworkers while leading some younger folks now - if I was miserable at work, then certainly an option.

Start looking for rentals now if for no other reason than to become familiar with the market. Also, you and your wife should share the fact that you may need to move and if they have any apartment leads let you know... network, network, network. Consider housing with a commute.

Visit with a lender to explore mortgage options should you find something you want to buy. Don't overlook the impact of property taxes and HOA fees. Talk to a realtor. No harm in asking a realtor what they think your current building will sell for.

 

[Morgan22]

Thanks for the information and related experience. With most everything close to double or more our current rent, affordability is subjective.

What neighborhood(s) are you looking in? I can find some 1 bedroom apartments on craigslist for under $1,800 in Hillcrest/University Heights/North Park areas. Of course these are in older buildings. If you don't need to live near the fun areas, you could move a little further out and find more available affordable apartments.

Or is $1,800 for a working couple too expensive for you? Or is it that you are used to amenities like a gym and door man? Those type of amenities would raise the price also.

Not trying to be confrontational, just curious what your meaning of expensive is and what that includes. Because I think I could easily find an "affordable" place to live again once we get back to SD. (We are full time RVing right now since we moved out of our rented granny flat back in Feb).

 

[aja8888]

Thank you for the encouragement aja - much appreciated. I hope you're right. Very nice on the Texas house. We visited San Antonio and Austin and were impressed in early 2020. I read the housing craze is there in Texas similarly - maybe even worse in terms of %. In the rearview mirror is always a nice feeling with problems. I dont foresee that level deal you found, but just want a fair shake....I was ready to purchase at the 300 index example above. I cannot reconcile paying an extra $250,000 on the condos I liked in 2020 in the span of 1.5 years. That's a modern-day fleecing of the highest order. Housing is becoming modern day serfdom.

Yeah, we got a good deal in 2010, but they were everywhere. I should have bought three more!

The 2008 - 2009 GFC was banking issues and many people owning homes with subprime mortgages. This time it is a bit different, but the housing bubble will pop. I went through that when I moved to Ca in 1980 and I picked up a nice three bedroom house in Thousand Oaks for $205 K at that time.

During the GFC, I recall that California houses were deeply discounted also. You can check that history.

It's sad that the FED has let this thing get so far out of control with the QE situation (essentially money printing). And the FED has a history of poor timing. Now they will be raising the fed funds rate and killing lending to start a recession. And in June they will start unloading the FED's balance sheet (QT, Quantitative Tightening) and clearing out $5 + trillion in bonds and mortgage backed securities over a few year period. That will take a lot of liquidity out of the economy that will cause more pain.

The real question is how far the FED will go before they get cold feet and reinflate everything like they did in late 2018.

Anyway, please don't panic and sit tight. Take this one step at a time and watch the action. San Diago is a beautiful place to live and even if you have to cough up more for rent for a while, it's not all bad.

If you want to follow what's going on in the economy, here's a site I subscribe to (free) and is California based with a big following:

https://wolfstreet.com/

Latest article on real estate:

https://wolfstreet.com/2022/05/24/h...highest-since-2008-sales-collapse-below-400k/

He publishes articles on the economy frequently and has a lot of California based commentors who are generally pretty knowledgeable folks. This is a no BS site. It's worth a read as he also focuses on real estate trends.

 

[RetiredAndLovingIt]

Thank you for the encouragement aja - much appreciated. I hope you're right. Very nice on the Texas house. We visited San Antonio and Austin and were impressed in early 2020. I read the housing craze is there in Texas similarly - maybe even worse in terms of %. In the rearview mirror is always a nice feeling with problems. I dont foresee that level deal you found, but just want a fair shake....I was ready to purchase at the 300 index example above. I cannot reconcile paying an extra $250,000 on the condos I liked in 2020 in the span of 1.5 years. That's a modern-day fleecing of the highest order. Housing is becoming modern day serfdom.

Just be ready to strike if we go into a recession and have all your financial ducks in a row if you plan to buy a home.
Back in 2009 investors who were cash buyers got a lot of these short sale deals. I bought a house that sold for $300,000 in 2006 for $103,000. I made the offer in late 2008 and the bank just stalled and stalled and finally I e-mailed the banks agent myself much against my agents wishes and told them i was walking if they had not accepted or declined my offer by a certain date. I think they waited till pretty close to the date to accept and upped the price a couple of thousand from my original offer which I was fine with. I think they were hoping for a better offer and luckily they did not get one and we finally closed in April 2009. Today it's worth $378,000 according to Zillow. I bought the home for my daughter and had her name as a joint owner and once she paid me back my down payment I quit claimed it to her and she and her husband refinanced the loan at 2.75% I think at the time and still live there today.
Also in 2009, My son bought his bank owned home at the same time for $120K and then the house next door for $140K a couple of years later. He moved into that one and rented out the original one. He sold them both within the past 2 years in the middle of Covid for about 3 times what he paid for them, bought a mountain cabin to use as an AirBnB on a 1031 exchange to ease the tax burden and a 3000+ sq foot home on the lake for him and his wife. Now he's in the process of selling the cabin and getting out of the rental business for now. It's also time to pay the piper tax wise but he has made a ton of money overall so he shouldn't complain but of course he's still complaining bitterly.
I hope it works out for you, just be aware the whole short sale process is not for the faint of heart and cash is king if you can swing it.

 

[SnowballCamper]

Take a look at the San Diego Case-Schiller Index:
https://fred.stlouisfed.org/series/SDXRSA

I was a renter for over a decade because the job required moves every few years. It sounds like you are pretty set with the job and location. I think home mortgage rates are a factor to consider, and that they will be going up, along with inflation, for a couple years (some more time to get inflation back down). Locking in a fixed rate thirty year mortgage is a lot of price protection for housing with current rates. The housing bubble in the chart peaked in 2006, but caught back up by 2018, less than half the length of the 30yr mortgage, then was off to the races.

I agree that there will be a leveling off of housing prices, but I think any decline will be slow. Good Luck!

 

[Starsky]

Timing can be a real dilemma in a place like San Diego where prices just seem to keep going up. It is a very different property market than most of the rest of the US. I'm not sure there is a bad time to buy, especially if you plan to stay for awhile. In my lifetime, every dip has been succeeded by a strong rise above previous price levels. I honestly don't feel like a real estate crash is imminent in San Diego because replacement costs are way, way up, and so is the cost per square foot of new construction [and land to build it on], thanks to inflation and supply and labor shortages. There may be a small correction in some lower-tier markets, but I doubt San Diego will feel much of an impact. At worst, it may flatten out for awhile.
A few things to consider:

• Interest rates now are probably lower than they will be later.
• Wages and prices will rise long-term to match inflation, keeping housing price levels high. In other words, tomorrow you will wish for today's prices.
• Banks seem to be lending again. Not sure how long that will last. If your credit is great, use it! If you can borrow at 5% when inflation is 8%, you're making 3% on the deal.
• No matter how expensive it seems now, owning a home gets cheaper over time as your housing costs are locked in and future-proofed - taxes too.
• Housing supply is definitely not growing as fast as demand in San Diego in the foreseeable future.

It may be good to begin your search now to become familiar with the entire local market and if you find something you love, you can consider a purchase. You might discover some neighborhoods you hadn't considered [like Tierrasanta] that offer something a little different and might be more accessible price/value-wise. Happy house-hunting!

 

[Sunset]

Timing can be a real dilemma ......
.....
No matter how expensive it seems now, owning a home gets cheaper over time as your housing costs are locked in and future-proofed - taxes too.
....

+1
Many years ago, I was in the situation of having FREE rent , but I went ahead and bought a small place.

I knew my FREE rent would not last forever, even if it could last a few years.
I compared regular comparable 2-bedroom apts rental cost to the ownership cost of a very similar same neighborhood 2 bedroom condo.

Sure the rental was cheaper, but as soon as I projected out a few years with the constant mortgage vs the increasing rent, I could see they crossed. The GIANT bonus came when 25 yrs out, the mortgage is paid off, and the rental gets another increase, but the condo was cheaper long before then !

 

[Librarian]

Sounds familiar

Greetings, we've been in a West Coast (CA) Metro area for 20 years working (no kids). Have been renting for the duration - in hindsight, probably a bad idea now (given pandemic fallout and blastoff of housing), but that's in the past and hindsight is easy to scrutinize. We received a notice of intent to sell from our landlord this last week ( without dates) - he's 76 yro and we discovered more recently he has brain ailment unfortunately. I found out about it several months ago during a phone conversation, so the notice wasn't a complete surprise, but I had decided to ride it out as long as possible. He'd given power-of-attorney to a tax consultant/broker attorney in his notice. When I contacted my landlord, he replied "talk to my attorney" when asking for an extension. CA regulations seemed to state 60 days if on a month-to-month lease, but there was no date listed....anyway.

In our situation prior to this, buying housing clearly wasn't good with a way-below-market rent we have/had. I had planned on buying in 2021 years back, but that got deep-sixed by the pandemic and our financial circumstances I won't get into. We've been on a month-to-month lease for 13 years - our landlord has been good. I think its a simple case of old age, and he needing to liquidate his real-estate....unfortunately we are casualties of the situation and my lethargy.

Problem now is the market rents are double our current rent .....however, I'm thinking to eat the double rent for a year while keeping a closer eye on the real-estate market. Lower end (smaller) Condo Prices seemed to have plateau'd and even a bit decline after going upwards steeply for 6-8 months. We have savings to purchase cheaper end now (if I sell a chunk of our stock portfolio), but I don't like pressure-buying for housing when we need it. There's the other problem of stocks tanking more which would make selling stock at a loss for condo purchase undesirable. Our jobs are pretty good, but remote work isn't doable, so moving out of area/starting anew isn't a good option for us. I have no idea how the housing market will move, but how do you weigh waiting longer to buy against horrid rent surge? The more desirable units (houses) would be stretching for us. Is paying for excessive rent for 1 to 2 years worth the gamble that housing will cool for more affordability? -- I calculated it at ~$15,000+ a year (increase in rent) .....its kind of like asking where stocks will be in 12 months. The numbers seem to indicate renting given the price run-up - that's how I'm leaning, but thought I'd ask.....its an incarnation of the Rolling Stones song, "Rock and a Hard Place"....

Our DS27 moved out to San Clemente Jan 2020 with his best buddy from college. They had both completed their Master's & the BFF wanted to try to break into the music business. But they got an INCREDIBLE deal on their apt.
One block from the beach, 2 BR in decent shape for $2K.

Obviously Jan 2020 was a VERY VERY VERY BAD time to try to break into ANY business. 6 weeks after they secured jobs quarantine occurred. Luckily both of their jobs paid them so they muddled thru. But a year later BFF decided he had enough. DS thought he would get a roommate. NOPE. Place sold & raising rents 50% (we knew it was a deal to begin with).

All good things must come to an end...

 

[almost there]

Agree, better to rent now than buy. (never thought I would say that) If/when prices drop. Then buy. A million dollar home rents for $3500 -$4k. Not smart to buy now. So my advice is to wait. Then buy.

 

[almost there]

Yea, SC has gone nuts. Been since HS. So much has changed in 45 yrs.

 

[Librarian]

I agree!

Agree, better to rent now than buy. If/when prices drop. Then buy. A million dollar home rents for $3500 -$4k. Not smart to buy now. So my advice is to wait. Then buy.

DD24 lives in Fort Worth & would love to get out of her apt.
Grandparents dissolved a family trust so she has a chunk of $ for a down payment.
She works near TCU so wants to live not too far.
Housing market isn't as bad there as here in Lincoln.
But she needs to spend $250K to get something decent.
Sadly house taxes there are RIDICULOUS (this from a Nebraskan; people complain all the time here. 1.7% is a LOT better than 2.3%!)
Even putting 90K down, by the time she pays taxes, insurance & interest, she will only be putting $150/mo toward principal.
I told her I'm not sure that is worth the risk of ownership.

 

[Rambler]

Thanks Cathy - this is good information- maybe our land-lord was thinking similarly to you. Are you sure about the 120 days? I thought the CA regulations said 60 days from notice to vacate when month-to-month lease. We could use the extra time if 120 days. I will ask his attorney also.

I think you are mixing two things. 1) notice of intent to sell. Cathy says they have to give you 120 days notice that they are going to put it on the market. That does not mean you have to vacate. 2) notice to vacate is separate from notice of intent to sell. We used to have rentals in California. At that time, notice to vacate (can only be given to month to month renters, not leases) was in fact 60 days. In this market, you’ll need at least that much time to find something.

If I were you, I;d go back to the landlord’s lawyer and find out for certain which notice you have been given: Intent to sell, or vacate. If it was just intent to sell, stick around and negotiate with the new landlord.

 

[zippy2020]

Can't speak for San Diego metro, but in the San Francisco Bay Area, it takes a whopping recession (or a quake, LOL) to lower both condo and SFH prices. One reason most RE analysts aren't expecting another "hit" like the 2008/9 bubble is the fact that afterwards banks tightened up their lending standards.

In addition, a good percentage of housing loans aren't being carried directly on the banks' books; they're packaged and re-sold as investments.

Inflation and rising interest rates will hit condos harder than SFHs. If you can't work remotely or find a reasonable commute, you're stuck within the urban area where demand for housing is highest but the ability of developers to erect dozens/hundreds of SFHs is almost non-existent.

A big problem with waiting for short sales/bankruptcies is that often the property gets trashed. So when you look at sales stats, it seems that RE prices have fallen. But in actuality a move-in ready home - NOT turnkey and sparkling new, but where the roof hasn't sprung a leak yet and the furnace is 15 yrs old but still works - didn't actually drop very much in asking price.

Our next door neighbor bought what must have been one of the last bankruptcy SFH in our neighborhood, selling for about 55% of its previous value. The last rental tenants, at the end of their lease, also stole all the major appliances. Less than a week later all the copper piping was stolen, meaning it had to be replaced before a Certificate of Occupancy could be issued. Between the bank and the interior damages, it was 18 months before the family finally moved in.

It was profitable in the end, but they admitted later they came really close to the end of their financial rope because everything - including repairs - took so long. They bought the property just as RE values began to rise again, but it took an additional $175K on top of the $308K mortgage...and of course, like all us homeowners they're continuing to spend $$$ on additional remodeling projects.

The OP is in a tough spot. Condos will be cheaper and more easily found for rent or sale in a bad market, but the HOA costs can fluctuate if not enough tenants/owners are resident. But when it comes to SFHs, there will never be enough of them in CA metros, because there just aren't the thousands of acres nearby to support affordable housing.

In the almost 40 yrs we've lived in the heart of the SFBA, only the Loma Prieta earthquake seriously impacted RE values. They dropped 25% in our city and it took 10 yrs to recover. But none of the other so-called bubbles had any long-term lasting effect. On average the decline was 10-15% in our gentrifying starter home neighborhood, lasting about 18-24 months. Then prices, once recovered, shot up even higher - every time.

We have a mix of home sizes with modest-sized apartment bldgs; some have been converted into condos. But zoning doesn't allow big hi-rise condo units in most of the city's residential neighborhoods (NIMBYism lives on, unfortunately or fortunately, depending on one's PoV).

Again, not familiar with San Diego so YMMV. Good luck to you whatever you decide.

 

[pc95]

We found out that the land-lords Attorney/Agent is selling to an "investor". A contract was signed. The agent said the "new landlord" (his words) will be by to view the apartment tomorrow.
He mentioned the investor bought all 4 units. They were never listed on MLS....my guess is they gave him a discount for buying all 4 units. I was told verbally ok until 31AUG22 for staying, and have not gotten a notice to vacate yet. I expect the new land-lord to raise the rent to similar rent prices around us. We're now trying to ascertain the cost of new rent/new amentities vs the time to move/possibly staying. Our old landlord raised the rent $275/month cumulative in 13 years. Wondering now, does the new land-lord need to serve notice to vacate for the new rent to take affect? If the agent told us 31AUG22, I understand that to be the end of the prior arrangement. If the contract is already in motion, I guess the rent I paid for July is going directly to the investor, as will August's.

 

[cathy63]

We found out that the land-lords Attorney/Agent is selling to an "investor". A contract was signed. The agent said the "new landlord" (his words) will be by to view the apartment tomorrow.
He mentioned the investor bought all 4 units. They were never listed on MLS....my guess is they gave him a discount for buying all 4 units. I was told verbally ok until 31AUG22 for staying, and have not gotten a notice to vacate yet. I expect the new land-lord to raise the rent to similar rent prices around us. We're now trying to ascertain the cost of new rent/new amentities vs the time to move/possibly staying. Our old landlord raised the rent $275/month cumulative in 13 years. Wondering now, does the new land-lord need to serve notice to vacate for the new rent to take affect? If the agent told us 31AUG22, I understand that to be the end of the prior arrangement. If the contract is already in motion, I guess the rent I paid for July is going directly to the investor, as will August's.

You should really talk to a tenants rights organization. You're making a lot of assumptions here that are probably incorrect and taking just a few minutes to describe your exact situation to someone who knows the state laws would probably help you understand what might or might not happen in the next few months and how to respond just in case your new landlord doesn't know or follow the law.

Generally your rent can't go up by more than 10% per year in CA and you are entitled to get a 60-day notice in writing before an increase can take effect.

Generally, your landlord can't terminate your tenancy unless they are planning to move in themselves, or withdraw the unit from the rental market, or undertake substantial remodeling. If they do have a valid reason for terminating your tenancy, then you will get a 60-day notice of that in writing. They may also be required to provide you with relocation assistance or a rent waiver equalling one month of your current rent.

I say that these are "generally" true because here are exceptions. It depends on what type of building you live in; whether the landlord also lives in the building; how old the building is; whether you've previously been notified that your tenancy is exempt from the rent-control law; etc.

Here are a couple of links that may help: https://housinghelpsd.org/ https://www.tenantstogether.org/tenant-rights-hotline

 

[pc95]

Hi Cathy, the sale of the unit went through July 9th - we'd paid our July rent to the old owner, and have "met" the new owners via email. They said they would let us know about what to expect and get back to us - its been over a week

If the sale has gone through, but no notice to vacate I'm assuming we're going to receive a new lease. How long can we continue under our old month-to-month rent - do we have a grace period under the old lease?
Does the 10% CA rule protect under a change of ownership? We still have not gotten notice to vacate.

Thanks.