April 29, 2017

It Turns Out We Might Have Too Much Housing

A report from Costar.com. “Having borne the brunt of declines in U.S. apartment rents since the third quarter of last year, urban luxury apartment communities are in some cases now cutting base rents and offering multiple months of free rent and other incentives to attract a depleted pool of high-income renters, according to CoStar Portfolio Strategy. Consistent with trends it has observed for a couple of years, AvalonBay saw rent growth in its suburban submarkets outperform urban areas in its Northern California, New York/New Jersey and Boston portfolios by an average of more than 300 basis points in the first quarter of 2017, CEO Timothy J. Naughton said.”

“Most of Equity Residential’s New York City portfolio is exposed to the high-end luxury segment of the market in Manhattan and Brooklyn, Chief Operating Officer David Santee said. ‘The question that that will be answered soon is, will Long Island City become a new value destination, and will that draw folks from Manhattan or Brooklyn in search of a lower rent,’ Santee said, adding that more than 30% of EQR’s revenue is from West side properties where construction and competition is booming.”

The Jamaica Plain News in Massachusetts. “Many people believe rents are higher than ever — and they certainly are higher than five years ago. But according to a city report, rents for Jamaica Plain’s older housing stock — buildings built before 2011 — went down 5 percent in 2016 compared to 2015. With more rental units being built, are overall rental unit prices going to drop? Josh Brett, Nextdoor Realty Team at Unlimited Sotheby’s International Realty: ‘The rental market seems to have stabilized with the recent spike in new-construction luxury apartments in Jamaica Plain. Possibly as a result of the increased supply of luxury apartments and concessions being made to fill those apartments, it seems that the rental rates have moderated for units in existing buildings.”

The Post and Courier in South Carolina. “Charleston’s overwhelming popularity these days has led to nothing short of a real estate crisis. City Councilman Robert Mitchell says he’s in the same boat as a lot of locals: He could not afford to buy the house he lives in on the open market today. How many people have you heard say that in recent years? Probably quite a few. The sad truth is, more and more people have to rent to live here. And even with an apartment glut under way, that is not getting any cheaper.”

The Capital Journal in South Dakota. “Pierre’s housing problem has once again reared its ugly head. This time, though, we’re faced with an interesting wrinkle. It turns out Pierre might have too much housing, at least when it comes to high-end apartments. That, at least, was one of the arguments behind reevaluating the taxable value of two apartment complexes. Both Highlands Ridge and Country View are asking more, perhaps hundreds of dollars more per month than most folks can pay. Both complexes have found themselves short of renters, which makes paying their property taxes more difficult.”

“Now that it appears that the Pierre and Fort Pierre area has, for now, reached the cap of ‘luxury’ apartments it’s market can support, the question becomes where and how will our community expand the available housing options.”

The Denver Business Journal in Colorado. “The priciest area in Denver to rent an apartment is getting cheaper. By just a little, though. According to apartment rental site Zumper, the Golden Triangle area near downtown remains the city’s most expensive area for renters, with a median monthly rent for a one-bedroom apartment of $2,090. In August, a one-bedroom apartment in the Golden Triangle had a median rent of $2,200.”

“More apartments are planned for Denver’s Golden Triangle: In February, ground was broken on a 322-unit apartment complex, and in December, plans were announced for a 16-story, 302-unit apartment building.”

The News Tribune in Washington. “Rent bargains in Lakewood? Sure, if you can find them. According to Zumper, Lakewood posted the highest rent increase in the Puget Sound region this month. Comparatively, Seattle rents for a two-bedroom apartment dropped 6.6 percent compared with last year, to $2,400 per month — also the highest rent in the region for a two-bedroom.”

The Portland Tribune in Oregon. “Portland’s skyrocketing rent increases have slowed dramatically in recent months as more apartment buildings have been completed. A report the Zumper rental tracking firm says Portland has the 19th most expensive rents in the country. But unlike recent years, citywide median rents are no longer increasing by double digits. In fact, according to Zumper’s Spring 2017 report, the median price of a one bedroom unit decreased 1.5 percent to $1,340.”

“The increasing supply of new apartments is tempering what owners can charge for them because of increasing competition. Although down $100 from last quarter, the report says the highest median rent for a one-bedroom apartment was in the Pearl District at $2,090.”

The Berkeley Daily Planet in California. “Downtown land use activist Kelly Hammargren has written to Berkeley Mayor Arreguin, City of Berkeley planning staff and the city council to report her discovery that a very large new apartment complex on South Shattuck Avenue in downtown Berkeley is being rented as a hotel instead of as the dwelling units for which it was permitted.”

“In a letter sent to them on Saturday night, she says: ‘For all the cries for affordable housing and the posturing that Berkeley isn’t approving and building enough housing, recently opened projects in the Berkeley downtown area can’t seem to find renters. Possibly luxury priced projects in the downtown are overbuilt or possibly there is more interest by the developer in being a hotel than providing housing.’”