Just Rent It

Posted by Dave Fratello on Saturday, August 25th, 2007 at 5:46am.

Why buy now when you can rent?

That's a question that seems to be ever-present in our comments here.

Who knew that that would also be the question posed by builders offering new (and newer) construction?

But that's what's happening. Among homes now simultaneously for sale and for lease, MBC notes:
  • 2105 Oak (new, 95 DOM) – list price: $2.19m, rental price: $8,500/mo.
  • 2709 Oak (new, 373 DOM) – list price: $2.29m, rental price: $8,500/mo.
  • 3611 Vista (new, TH, 45 DOM) – list price: $1.85m, rental price: $7,500/mo.
  • 217 Sea View (big remodel, 5 DOM) – list price: $1.52m, rental price: $5,300/mo. (lease-option available)
  • 512 John (newer, 190 DOM) – list price: $3.99m, rental price: $20k/mo.
MBC is pretty certain two recent listings at $2m+ in the Tree Section were rented instead:
  • 2609 Oak (new), listed for 400+ days at $2.3m-$2.4m – no info on rental price
And we also recently saw the most expensive listing in the Sand Section go rental. 232 16th, cum 234 16th, rented for $9,500/mo. instead of selling for $4.55m (70 DOM).

For new construction, we're guessing that "just rent it out" wasn't part of the initial business plan. It's a stopgap. These folks didn't mean to become landlords.

And yet, offering your new stuff for lease has got a bullish edge. Doesn't it convey that the builders expect demand and prices to recover in the near term, so they can later take the profits they penciled out at the start? An intriguing gamble.
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