The Housing Bubble

A report from Bloomberg on New York. “Manhattan apartment vacancies dropped in August to the lowest level in more than four years as landlords, facing the end of peak leasing season, focused on filling empty units before the slower winter months arrive. Taken together with a decline in rents and an increase in concessions, it’s a sign that landlords cared more about finding tenants than pushing the line on prices. ‘These landlords know what comes after the summer so, yeah, they definitely want to fill these vacancies as best they can,’ said Hal Gavzie, executive manager of leasing at Douglas Elliman.”

“Owners offered sweeteners, such as a month’s free rent or payment of broker fees, on 35 percent of new leases in August, up from 24 percent from a year earlier, Miller Samuel and Douglas Elliman said. The median rent, with the value of those concessions subtracted, fell 2 percent to $3,310. It was the third straight month with a decline.”

“‘The past few years, the strategy of being aggressive and not willing to react to market conditions caused them to rack up more vacancies,’ said Gary Malin, president of brokerage Citi Habitats, which released its own report on the rental market Thursday. ‘They learned their lesson.’”

The Wichita Eagle in Kansas. “The Douglas is no more. The 240 posh downtown apartments at Douglas and Market will now be known as ReNew Wichita — the result of a recent change in management. As of last Friday, the apartments at 200 E. Douglas are managed by California-based Trinity Property Consultants. Previously, they were managed by the South Carolina-based Greystar, which operated the complex since its opening last year. The most notable change: Rent has been lowered by about $200 per apartment.”

“Studios now start at $650 per month, while one-bedrooms start at $850 and two-bedrooms start around $1,200. Previously, the cheapest studio at The Douglas rented for about $890 per month. ‘The property’s gorgeous, but the main thing we hear from people is the price point,’ said Kim Lewis, who is the new community manager for ReNew Wichita.”

“The property is currently at about 74-percent occupancy, Lewis said. The new management wants to fill those vacant units — so much so that the first 10 applicants who move into the complex will receive two tickets for a Royal Caribbean cruise (good for up to three years). ‘The reason we’re a little more motivated than normal is because we’re at the tail end of leasing season,’ Lewis said. ‘We just don’t want to go into the winter months and have a huge amount of vacancies.’”

“All the amenities of the luxury complex will stay: included with the rent, residents get valet parking, 175 cable TV channels and internet, as well as access to the ‘Sky Lounge’ with rooftop wading pool, a ‘bark park’ with dog wash, a 24-hour fitness center and more.”

The Advance Titan in Wisconsin. “The Annex of Oshkosh informed students it would not be ready for move-in on Monday, Sept. 3, three days before the start of the fall semester. The luxury student housing told residents that move-in day would start Labor Day, even doing hard-hat tours every so often to show residents what the place looked like.”

“According to an anonymous source, promises were made about the readiness of the apartment complex. ‘We came in for a tour and the guy was just like, ‘Oh yeah, don’t worry about it, we have a hundred men here today. It’ll be fine.’ And that was like a month before that,’ the source said. ‘I came again and it looked the same from the outside.’”

“On Wednesday, Aug. 29, The Annex emailed residents telling them that they would have to push the move-in time on Sept. 3 from starting at 8:30 a.m. to noon, adding they will be having a final inspection that Friday, three days before move-in day and that there is a possibility they may not get approved. Residents were informed that The Annex had booked rooms at a temporary hotel in anticipation.”

“According to an anonymous source, on Saturday, Sept. 8 residents were able to move into the Annex, but not without having some problems. ‘They were supposed to have the elevator working and everything, and they weren’t working at all,’ the source said. ‘So everyone had to carry their things. It was insane.’”

“Many of the units still have chipped paint, no screens on the windows and some residents even got reassigned units because theirs weren’t ready. ‘When I got into the apartment, it looked very rushed,’ said Mailine Yang, a resident at The Annex. ‘There were holes in the wall, drywall dust on counters and dents and cracks in the walls. It’s pretty disappointing to see that in a brand new complex.’”

From KTRK in Texas. “Some students moving into off-campus housing at Prairie View A&M University say their move-in has been nothing but chaos. Students who applied to live at the brand new Panther Hill Apartments say their move-in date was delayed several times and they say the new construction units aren’t completed.”

“‘There’s debris everywhere, her bedding was still in boxes, a construction worker had to come in and put her bed together. It’s dirty,’ said parent Tracie Watson.”

“Watson says they had to clean up the mess from construction in their daughter’s apartment, the furnished apartments are missing furniture and they say they had to assemble some of the furniture. Some students moved in as workers were still painting the walls. Construction trash litters the hallways, equipment is parked outside doors and in some cases, the new tenants say the air conditioning isn’t working either.”

From Crain’s Chicago Business in Illinois. “Suburban apartment landlords keep hiking rents, but they’ve lost some of their pricing power. Ron DeVries, senior managing director in Integra’s Chicago office, attributed some of the slowdown to a shift in jobs from the suburbs to downtown. At the same time, landlords in some suburbs are having a harder time raising rents amid competition from new buildings.”

“The rising rents of the past few years have fueled a suburban construction boom, with developers adding 1,363 units in the suburbs so far this year and another 4,148 under construction, according to Integra. Developers completed 2,831 suburban apartments in 2016, an annual record, and 1,843 last year.”

“The construction is spread out over a large metro area, reducing the risk of a glut, but some suburbs where developers have been especially busy have felt the impact. On the North Shore, which has added 1,917 apartments since the beginning of 2015, the median net rent fell 6.2 percent in the second quarter from a year earlier, more than any other suburban submarket, according to Integra.”

“Landlords in northwest suburban Des Plaines will also face competition over the next year or so from three new apartment developments totaling 619 units. ‘That’s going to be a challenge,’ DeVries said. ‘That’s quite a bit of inventory for one community.’”