economic forecasting and predictions, please

[grasswire]

A question, for starters.

1. When the real estate bubble pops and the economy dives, will residential rentals fall, or rise? We know that many people will lose their homes. Some with money will buy up those assets for pennies on the dollar. So how will rental prices be affected?

2. Suppose you had a business as a handyman or fixit man. Would you be more in demand after things crash, or less in demand?

[Somawas]

1. The price of residential rentals

will be only slightly affected by the cost of acquisition of the rental units. Residential rental is a market driven by housing supply and demand from potential tenants.

A fixit guy may be less in demand. Homeowners will either fixit themselves or will defer maintenance.

[no_hypocrisy]

2. As much as I worry about whether my landlord will be able to break the

lease and raise the rent because of an economic crisis, I also worry about him losing this property and I'll be evicted in any case.

[Somawas]

3. Depends on the "term" of the lease,

but if the lease is still in force and the landlord defaults, tenants not in default do not lose their rights under leases in force as of the time of the foreclosure. Most places, anyway.

[grasswire]

6. Here's the particular situation I'm wondering about

I've been eyeballing a move to a particular fourplex, very close to my nearest of kin's home. The owner has just put the property on the market for sale. That plus the prospect of economic downturn has made me wonder whether it's wise to try to rent the place now, or wait, or what? Will rents go down? Dunno.

[offcenter]

4. Here's the worst case ...

High rents during economic crash (stagflation) ...
Dollar crashes, leading to high interest rates on treasury bonds to attract investment capital. Inflation first on energy, food, then rent. Consumers already carrying massive debt. Unemployment rises. High mortgage rates and economic stagnation take down real estate. Banks call back loans when balances exceed equity, leading to foreclosures and bankruptcies. It becomes a vicious cycle leading to economic depression.

Lots of people out of work. Maybe lots of handymen & nobody to pay them?

Then again, maybe it won't get that bad. ;)

[grasswire]

5. does anyone have personal experience with...

...rents rising during economic turmoil? When would this have happened in our recent history? In the 70s?

[BillZBubb]

7. Some observations

1. When the real estate bubble pops and the economy dives, will residential rentals fall, or rise? We know that many people will lose their homes. Some with money will buy up those assets for pennies on the dollar. So how will rental prices be affected?

Rental rates will change but only after some time. There will be a lag time. You will also see an even longer lag time in the buying of distressed properties. Smart money won't jump in until all the blood is flowing. There will be a surge in people moving in with relatives--particularly the young moving back with parents.

Rental prices should drop in time, since there will be an excess of supply and lower demand.

2. Suppose you had a business as a handyman or fixit man. Would you be more in demand after things crash, or less in demand?

Generally, less in demand. People simply defer maintenance, anything to conserve what little cash they have.

[lovuian]

8. I know my grandfather in the Depression lost his rental property

because the renters couldn't pay him ... He had to lose them for cheap because he couldn't afford the taxes on them!!!

[grasswire]

9. well, that's another angle!

lots of people get hurt, for sure.