How-to Mondays: Apartment intelligence
Photo of the 39 West Lexington apartment building by Sun photographer Kenneth K. Lam
Good news, apartment-hunters: The slump in home sales and rise in foreclosures haven't meant skyrocketing rents. Many landlords are increasing monthly rental costs more slowly than usual.
Average rents rose 2 percent in the Baltimore metro area from a year ago, to about $1,090, according to M/PF YieldStar, which tracks the multi-family housing industry. Annual increases are typically at least twice as big, says Greg Willett, the company’s vice president of research.
Why the slowdown? The housing slump, Willett says. Yes, the trend that apartment owners thought would work to their advantage.
Problem is, a number of people who would like to sell their houses, rowhomes or condos are having no luck and renting them out instead. Some are investors; some are regular homeowners who had to move. Their properties add to tenants' choices and keep rents from rising at a normal clip, even though the ranks of renters have grown.
"The slowdown in the economy is part of it, but the job numbers don’t look that bad for Baltimore — it’s more [the] competition from the 'shadow market' products," Willett says.
Rent growth hasn't been so pinched in downtown Baltimore, though. Monthly rents there are up 4 percent to about $1,770, Willett says. This comes despite competition not only from an active shadow market but also five new apartment complexes within a mile of Pratt and Light streets.
"Demand for downtown housing is not slowing down," says Bob Aydukovic, vice president of economic development for the Downtown Partnership of Baltimore. "All else being equal, ... we're going to be coming to a point where there are not a lot of available units out there, period. There is virtually nothing under construction, save for a few hundred units, that's going to deliver in 2009 and 2010."
Downtown Partnership, which surveyed large apartment buildings last month, said occupancy rates downtown have risen to 93 percent. M/PF YieldStar said its research shows a downward trend to about 88 percent occupancy, which it blames on that 4 percent increase in rent.
"Some of that product is just being overpriced," Willett says.
By the way, M/PF YieldStar tracks how rents have changed among the same properties, so its numbers aren't being skewed by pricier newcomers. (That's my one wonkish aside for today, I promise.)
So what about the shadow market? M/PF YieldStar, looking at metro areas across the country, has found that those rents tend to be on par with top-tier apartments. Willett says there's no way that covers mortgage payments for landlords who bought in the last few years, when housing prices eclipsed rents.
Keep that in mind if you're a renter looking for a deal. When landlords ask you about your financial situation, you might return the favor. It's a hassle at best if you’re forced to move because the guy you're paying rent to got foreclosed on.
Want to do your own price-comparison research? An earlier How-to lists a variety of sites to help apartment-hunters. Shadow-market hunters might want to start with Craigslist or real estate agents. And you can make sure your landlord isn't in imminent danger of foreclosure by putting his or her name into the state's court case lookup site.
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Comments
What is your connection with Baltimore City?
Posted by: Dunn | September 9, 2008 1:51 PM
Oh, Christian -- you ask me a question to which you already know the answer: I work here, that's my connection. I've got Calvert Street out my office window.
I've also lived in the metro area for all my life minus 10 months in Iowa, but -- as you have pointed out many times -- the 'burbs and the city are not the same place.
I'm not sure what that has to do with apartment rents and vacancies, though.
Posted by: Jamie Smith Hopkins | September 9, 2008 2:00 PM
Jamie,
Take a survey and see how many readers would welcome your blocking Dunn. I swear that guy is losing it (I guess not being able to sell a house in this market is turning him hostile).
Dunn,
Lay off. You've already turned me off to ever using you as a realtor (and hopefully everyone else who reads this blog). GO AWAY!
Posted by: Anon | September 9, 2008 6:12 PM
I'd really like blog comments to be on-point and collegial, but I'm not going to block someone for asking pointed questions or saying negative things about me (as long as there's no profanity). Blocking is a bad precedent -- you should all feel welcome to question, suggest and argue.
Posted by: Jamie Smith Hopkins | September 9, 2008 7:15 PM
I love Baltimore City!
That is the reason I complain. This is a local paper/blog that comments on my town. Yet, it comments on the metro area, the 'burbs and national trends. City and Suburban folk are different, yet this blog only points out generalities. Safe behind statistics. I forgot who said it, "there are lies, d*mn lies, and statistics." Baltimore City living is special.
This paper was once a great paper with literary historic super-heroes. During this papers's hey-day it was about the City. Times have changed and the 'burbs and media culture are favored. While I still try to appeal to the energetic and unique qualities of this city, this local real estate blog is from Columbia. Maybe that is good in your eyes. While statistics are helpful they don't relay the voice of a neighborhood or intimacy. These are what once made this paper great. Do I know everything or consider myself a "wonk?" No! I rarely leave 3 zip codes. I know what's happening there. I know what will afford the best lifestyle, what the best price is and where the deals are here.
This blog owner has a sense of the city that differs from mine. I have lived here, left and moved back. I love Baltimore City - Let me be clear about this - I don't care about the suburbs, in fact I dislike them. If you feel like you are being priced out there - Baltimore City will welcome you with open arms.
I get it. You are upset. I love this city: I walk or scooter to work most days, put less than 3000 miles on my car a year, have a community that is fun, run around the harbor and interact with people and have great experiences. Yes, I can imagine, if I lived in the 'burbs I would be upset too. I don't wish for a house with plastic siding or 10 miles from a mall, away from people who make me uncomfortable etc...
In the city we are "greener", less divisive, and most of all needed.
I only complain because there is better way of life. Not one that rips up everything for McMansions and SUV living, it is less divisive.
I understand why you want me to go away. But I can't, I am compelled to stand up for the city.
Posted by: Dunn | September 19, 2008 2:35 PM
Oh Dunn,
You love the cash housing sales in the city generate for you, not the city. You are a blatant shill!
Posted by: Anon | September 19, 2008 5:45 PM
Please, everyone -- play nice. I'm too ill today to want to make a call about whether a post is over the line.
How about some lively discussion that isn't aimed at me or Wonk readers?
Posted by: Jamie Smith Hopkins | September 19, 2008 6:07 PM