May 4, 2017

It’s Damning To The Homeowner Who’s Just Bought

A report from Vegas Seven in Nevada. “Nearly a decade after the Great recession, Las Vegas has rebuilt its real estate market. John Restrepo—principal of local firm RCG Economics—shares his expertise in regional economics and real estate trends. Q: Are apartment rental costs rising as well? A: The fact that the vacancy rate continues to drop, although it’s dropping a little slower than it was before, indicates that rents are going to continue to moderately increase.”

“Q: What does this mean for apartment construction? A: If the economy slows, because we’ve built so many apartment complexes and still others are under construction today, we could have an oversupply situation in the next couple of years. We have to monitor the economy and the ratio between job growth and number of apartment units permitted. If that ratio gets out of whack, then we could have an oversupply in the market.”

The Atlanta Journal Constitution in Georgia. “A burst of building has brought the Atlanta rental market to a tipping point, possibly tilting rents lower in the next few months. About 12,000 units are being added this year, up 29 percent from last year and 45 percent higher than during 2015, and most of them are in just a few areas, according to Apartmentdata. ‘It is kind of a wait and see,’ said Bruce McClenny, president of the company. ‘But from the renters’ perspective, this is a little bit of a breather and a chance to make deals.’”

“Of course, from the owners’ side of things, it looks a bit different. The over-supply of apartments has meant some discounts and promotions and that trend is threatening to pick up. More than 80 percent of the 15,000 units now under construction are in a handful of places, McClenny said. ‘With the building concentrated, these are markets that will be under the most stress.’”

The Dorchester Reporter in Massachusetts. “City housing officials say new data are revealing encouraging trends in the rental market for existing housing stock in Boston neighborhoods. Statistics reviewed by the Reporter show a slight reduction in the cost of rental units housed in older properties as residents who can afford to are moving into new, higher-end units. Across Boston, existing property rental costs dropped by 4 percent during that period, with the median older stock rental price in Dorchester dropping by 5 percent.”

“‘You don’t want any large swings,’ said Sheila Dillon, the city’s housing chief. ‘Because it’s damning. It’s damning to the homeowner who’s just bought… When we see a four- or a five- or a six- or a seven-percent decrease, that’s okay. You just don’t want a repeat of 2009 where you’re seeing big volatility in the market.’”

“Rents in studio and one-bedroom apartments from the older stock dropped significantly. Dorchester studio rents fell 13 percent between 2015 and 2016, averaging $1,400 compared to the citywide six- percent decrease to $1,600. An overall 17-percent rent decline in Dorchester one-bedrooms during that time was driven mostly by rents dropping by 21 percent in the Uphams Corner/Savin Hill area. In 2015, the median rent in the area was $1,650; it fell to $1,300 in 2016.”

From Silicon Beat in California. “The softening of rents around the Bay Area continues, with Oakland leading the way. The median monthly rent for a one-bedroom apartment in the East Bay hub is now $2,060 — down 14.9 percent from a year ago. A two-bedroom apartment there typically runs $2,500 monthly — down 15.0 percent, according to the Zumper apartment rental website, which analyzed over 1 million listings in 100 U.S. metros.”

From DNA Info on New York. “Real estate agent Anna Sankova braced herself when her clients told her they had two dogs. The couple, relocating from Boston, didn’t have much time to hunt for apartments, and Sankova thought it would take a while to find a building willing to take both pooches. She was wrong. Not only did Sankova find several landlords receptive to more than one dog, some were even willing to lower pet fees.”

“With the current rental glut, especially in the high-end of the market where prices are slipping and concessions are rising, dog-friendly policies are the latest incentive to lure tenants, experts say. New luxury towers need to fill units, said Karla Saladino, co-founder of Mirador. ‘It used to be maybe one dog was allowed in, and ‘We’re going to weigh it, interview it and analyze it,’ Saladino recounted. ‘Even a year ago, it was very hard to find something if you had a 40-pound dog or a Lab retriever. It was like, ‘What three buildings can we visit?’ Now it’s like 10 buildings.’”

The Dallas Observer in Texas. “According to the Dallas Central Appraisal District, the city’s tax base increased by almost $14 billion last year, a boost of more than 11 percent. Over $2.5 billion or 18 percent of the total increase came from new construction. So we’re loaded, right? According to the mayor, we can’t afford to fix the police and fire pension fund. The police force is already dwindling down so low we’ll have to start hiring bad guys with guns to protect us pretty soon. Who knows what we do about the fire department.”

“The city manager sent a memo to the City Council recently revealing that all of the tax increment finance districts or TIFS, in the city have a combined budget of $3.04 billion to spend on such things. In terms of the apartments that have been built in TIFS, that comes to a subsidy of about $94,000 per unit.”

“Do we need to spend almost a hundred grand per apartment in order to get more apartments in the city? Well, the one word that no one is ever allowed to say out loud in Dallas because it will call down tornadoes, pestilence and acne on anyone who says it is ‘glut,’ but as Dave Brown reported in The Dallas Morning News last month. It raises the question: Why is Dallas still trimming billions out of its general fund to subsidize apartment construction? If this many people want in anyway, why do we have to pay them to come?”