Apartment Glut Expands

[WriteDown]

Source: WSJ

Apartment vacancies hit their highest point since 1986, surging in cities from Raleigh, N.C., to Tacoma, Wash., as rising unemployment continued to chip away at demand during the traditionally strong summer rental months.

The U.S. vacancy rate reached 7.8%, a 23-year high, according to Reis Inc., a New York real-estate research firm that tracks vacancies and rents in the top 79 U.S. markets. The rate is expected to climb further in the fall and winter, when rental demand is weaker, pushing vacancies to the highest levels since Reis began its count in 1980.

Meanwhile, the air leaving the market is driving rents down, most sharply in markets that had been chugging along until a year ago, when unemployment accelerated, including Tacoma; San Jose, Calif.; and Orange County, Calif.

In New York, Jennifer Hyman rented a one-bedroom apartment in July at a monthly rate of $1,950 -- down from $2,450 for the previous tenant -- when she returned to the city after graduating from Harvard Business School. Her first month's rent was free -- and her landlord painted the apartment, scrubbed the floors and added window coverings.

"The experience was night-and-day different from before," said Ms. Hyman, who had rented other Manhattan apartments between 2002 and 2007, each time paying a brokers' fee and feeling pressured to sign a lease the minute she found an apartment. Now, she says, "Renters are the ones with the power.".....


Read more: http://online.wsj.com/article/SB125479559237566623.html?mod=igoogle_wsj_gadgv1&

[BrklynLiberal]

1. There are many of us to whom this is great news...

[short guy]

22. This is good news

Agreed!!!

[KamaAina]

2. Rents being driven down in San Jose?

Details, please! I just looked at (actually, didn't even bother to look at) this $850 studio:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=105&topic_id=9062528&mesg_id=9062528

Now the question is, how much longer can I hold out in the extended-stay hotel until something opens up? Would you believe, I couldn't even open a bank account because it "isn't a permanent address" (never mind I signed a lease 'n' stuff)? :grr:

[MsKandice01]

Yes, actually they are!

We just renewed our lease for $250 less a month than we were paying before. Now instead of paying $2008/month for a 2-bedroom, we're paying $1762/month. Still entirely too expensive but less expensive than before.

[2Design]

10. How can you pay that much in rent? I don't make that much a month

I knew I wasn't doing well but when I see rents at that price, I wonder how can any SINGLE person pay that

[Liberal_in_LA]

18. That's why avg salaries are higher in NY, LA and a few other cities. Cost of living is HIGH

[quakerboy]

23. How does a burgerflipper make it?

I don't guess that Tacobell pays much over minimum no matter what city they are located in, and I havn't noticed any lack of fast food in the city. So how does your average fast food worker make it in the big city

[Liberal_in_LA]

25. You can rent a room for $500 to $800 (drop in prices from prior years). Share an apt.

spend most of your salary on rent (a lot of people do).

[quakerboy]

26. Hectic

figure a 20 hour week, minimum in Cali is 8.00, that's 160 a week, after tax 512 a month, after paying half of a $500 room leaves 262. That's 65 a week for food, transport, clothing, etc. How does one keep going on that?

[Liberal_in_LA]

29. becoming working homeless, move out of LA, go into even cheaper rent - garages, shared room

[closeupready]

34. What may not be obvious to an outsider is that there is a black market economy

to serve low-income people and immigrants - illegal conversions (from, say, three-family home to 5- or 6-family), basements, attics, three and four immigrants per unit, etc.

[WriteDown]

36. My neighborhood is majority Hispanic....

and the amount of people they fit in 2 bedroom homes is staggering. Although my neighborhood is starting to change. Gentrification is starting to seep in.

[No Elephants]

48. Poor people do that, not only people with a Hispanic background.

When you have no other choice, you have no other choice. It's about poverty, not about skin color or ethnicity. You know, like saying "youse" is based on region, not on being Italian (unless maybe you were an early Irish immigrant. Then "youse" may have been a sign of your ethnicity. Or so some linguists think, but it was never a sign of being Italian.)

Keep those RW style stereotypes coming, though! Calling you on them is a lot of fun. :-)

Hey, at least it's an improvement over the time you referred to the bodies of Mexicans who died of thirst while trying to get to the US "litter." You're making progress.

[Liberal_in_LA]

51. +1

[WriteDown]

52. Like eating watermelon, eating fried chicken and wearing overalls

for Black peopel isn't stereotypical, it's regional :eyes:. Spoken like the true White majority. Even the poster admitted that he was poking fun at Italians, but somehow you know his own mind better than he does.

Let's look at the actual word:

www.urbandictionary.com/define.php?term=youze -

But this is wrong too right?

I have a feeling you're a white female from suburbia who thinks that looking and acting poor is cool or "hip." Am I right?

[NeoConsSuck]

39. Easy!

Moonlighting on a second (and perhaps third) job.

In my previous life, I worked at a factory, one of the guys who worked there had two part-time jobs also, one in the evening, one at night. The poor guy got about 4 hours sleep a night.

[quakerboy]

40. Ive been priveledged

not everything in my life has been easy, but Ive always had a margin. I have a hard time getting, gut level, what keeps a person going in that kind of situation. Especially right now, when it sure dosn't look to me like anything will be changing for the better anytime soon.

[No Elephants]

46. That's why God made slums, furnished rooms, people living six to a one bedroom and single

room occupancy "hotels" (SROs) in bad areas of town. The rich get coops on Park Avenue. The poor sleep six to a furnished room, no cooking privileges and shared bathroom in the common area of a run down building in an dicey neighborhood. And that's the way we like it, we like it.

You must have lived a sheltered life.

[kestrel91316]

3. Three of the 6 units in my section of my building are vacant, one since last March.

On the up side, I just renegotiated my lease with a $100 rent reduction. Unfortunately, it's still what I consider high, at $1155 for a 800 sf 1-BR without central heat or AC (just inefficient wall units).

[intheflow]

4. I'm thinking there's only a glut of high-end apartments,

or apartments in traditionally tight markets. Because surely there are plenty of people who can't afford their $1800-2500/mo. mortgage that have been foreclosed on that have snatched up all the apartments in the $500-800/mo. range. (Unless, of course, they can't come up with the first/last/security ridiculousness demanded by 99% of all rental properties. Which could certainly be the case.)

[Myrina]

6. I was thinking the same thing ...

... all those folks who lost their houses ... are they living on the beach?
Or more likely, are they in apartments?

I can't, for the life of me, think why there'd be a glut of moderately-priced apartment units anywhere, except of course that developers over-built in urban and college areas? :shrug:

[EmeraldCityGrl]

7. Many of these foreclosed homes are being bought up

by rent lords. I'm wondering if one reason apartments are vacant isn't because people who use to own homes are renting ones now.

[No Elephants]

47. )verbuilding and/or unaffordable rents. People are homeless, moving in with friends and relatives,

sharing with "roommates," staying in shelters or "hotels" with low, low rates.

[wickerwoman]

8. Or they moved in with family members.

If you lost your home (because of a lost job or medical bills) you probably can't afford an apartment either. Aren't mortgage payments typically cheaper than rent in most places?

[WestSeattle2]

11. Maybe not cheaper per month, but with the mortgage

interest deduction the per-month cost of buying a house is drastically reduced on an annualized basis. I guess an easier way to say it is with the interest deduction you could receive say a $6,000 tax refund, instead of a $1,000 refund a renter may receive. The $5,000 difference effectively reduces the buyer's housing costs by about $450 per month.

[Grinchie]

14. Ah yes, the Tax Writeoff Propaganda arises from the ashes of 9% Unemployment

I'm amazed how many time the Tax Writeoff goodness bubbles up to the top of Rent versus Buy comments.

First of all, the tax breaks aren't that great. Secondly, you are tied like a slave to the Rat Race paying for a mortgage, insurance, interest, utilities, maintenance and upkeep, Association fees, appliances, furniture, etc. Unless you have one of those unique properties that has five acres of producing orchard, plentiful water, and a good climate, you are losing money.

The last time I checked, you need to spend 100 bucks on Mortgage to get a 1 dollar reduction in taxes. Whoopee. Lets go buy!

I've been through fabulous Tax Writeoff phase, and now I value saving my money, and keeping it out of Uncle Sam's hands and the Military Industrial complex, which is impossible if you rent a house from the Bank for the next 30 years. With an apartment, I can move to where work is, and not be subjected to the whims of the Real Estate market and all the shisters that prey upon people.

I plan on preying upon them soon, which is why I won't be buying until the Third wave crashes upon the beach and drag's away the remaining hermit crabs clinging for dear life upon their homes.

I see daily the people trying to rent. People are is bad shape, and the rental market is indeed crashing. If anyone thinks that landlords that bought at the peak of the bubble, who pay nearly 10,000 a year in taxes alone on a duplex are going to survive, then you need to go back to school and take a class in Microsft Excel and start using it to run the numbers.

You think the bankruptcy of General Growth Properties wasn't a big Canary in the Coal Mine dropping dead? It was, but the Mainstream Media didn't think it was worthy news, especially with all the "Green Shoots".

In closing, the Mortgage Interest Tax Deduction is a sham. It's just another method Uncle Sam uses to force people to file a 1040 to get their own money back.

[WriteDown]

16. The idea is to own something....

If you rent, you are still under the landlords rule. A house also enables you to modify your environment. I've got a huge backyard which I've planted bamboo and put a pond in . I also just knocked out a wall to open up the kitchen. If I want to turn up Neil Diamond and blow the speakers in my house, then I'm welcome to do so. I was a renter for a very long time, but its been far more enjoyable to be a home owner. Of course, I made the decision to buy exactly half of what I could qualify for.

[Grinchie]

30. Not everyone has the skill or the need to own a home.

It is a myth foisted upon us that everyone needs to own a home, and it's just plain wrong.

It is also a myth that everyone needs to own a car, but the fact of the matter is that the Corporation have seen to it that Mass Transit is innefective, underfunded, and unpleasant, simply to provide stimulus for more car sales.

While you are able to turn up Neil Diamond and blow your speakers, just try asking yourself why you would want or need to do that? Try asking yourself what you will do when the roof leaks, the pipes break, or you can no longer afford to have any free time to spend in your back yard because of your mortgage coupled with Job cuts and wage decreses.

Thirdly, whether you recognize it or not, you are virtually trapped in the property. You cannot travel around the world for a year without paying someone to watch your real property and maintaining it in case of problems.

Of course, this is only my perspective on Rent vs Buy, and it's driven buy fundeamentals and not by the Emotional ego driven desire to "Own" something. I have my ownership fix, and that is Farm acreage that actually pays for itself, and not a money pit that keeps me trapped in the rat race. With all the money I save by renting, I can pick and choose any property that I so desire, and believe me, their are remarkable homes available for rent right now for a song.

I have no need to knock out walls, play music loudly, and I have hundreds of acres of land to grow food, trees, medicines, fiber, timber, pigs, chickens, or just enjoy my own 25 acres of native forest.

All of that for most likely 1/10th of what you paid for your "Home". The other 9/10th's that I saved are totally liquid, and are available to me immediately and allows me to snap up the bargains of a lifetime when it comes to items of value that are being liquidated by the current batch of desperate debt slaves, struggling to pay their mortgage, simply because the banks are not lending them any more money and forcing them into insolvency.

You and I disagree on many things Writedown, and I think it's because you have not gone through the suffering and hardship caused by your career disappearing virtually overnight like I have. I get the impression that you think that it can't happen to you, but you are mistaken. Nobody is immune from economic hardship when the game is rigged, people are told what is Socially Acceptable in terms of success, while not being taught basic fundamental facts about Money.

Just a side note, your comment "If you rent, you are still under the landlords rule." is very weak. Whats wrong with Landlord rules? The only problem I see with rules of the house is with stupid, uneducated rednecks that like to keep unworking cars in the driveway, and change their own oil by dumping it on the ground. Nothing ever stopped me from painting, putting up shelves, or modifying the back yard of any home or apartment that I've rented. After all, it's _MY_ home, regardless of whether I own it or Rent it. All the landlord is interested in is being able to pay the Taxes, Insurance, Maintenance and repairs, while also retaining a tiny bit of compensation for the hassles of finding good, honest tenants that are reliable, trustworthy and capable.

I'm glad you are happy owning your home. I hope you remain happy as well, but my main point is that one size does not fit all, and people need to look at Rent vs Buy with the true fundamentals understood and reviewed.

[WriteDown]

31. Why own a dog?

I cannot travel around the world for a year due to owning two dogs (and a cat, various lizards, snakes and frogs), let alone a house. Do I need two dogs? No. I went out for a giant bacon cheese burger last night. Did I need to eat a bacon cheese burger? No. I could have just had a TV dinner, I suppose.

I enjoy having the skills and developing the skills to repair a home. I'm putting in new hardwood flooring this weekend. I look forward to the adventure and probably the coarse language.

If you haven't blasted Neil Diamond at 3AM, then you haven't lived.

I didn't say owning a home was for everybody, but there are distinct advantages that a lot of people like.

For the record, I have been unemployed several times for long periods. I tend to only spend half of what I make though and the rest goes to savings which has enabled me to get through the hard times. I am close to retirement so the chances of my career disappearing are getting slimmer.

[Liberal_in_LA]

19. Yeah, but nothing beats living in your own home. I hated life as a renter

[quakerboy]

27. I agree about the write off

overblown. The Real agents tried to sell me on that big, not realizing I do my own amortization tables, and that I run ALL the numbers. It was enough to consider, but not enough to make me spend more than I want to

At the same time, if you can afford to own for a similar price as rent, why not. If you want to move for work, that's a good reason. I am pretty sure that I am stable where I am for long enough to pay off a home. So if I can own for the same price (or lower, at the moment) as rent, I figure why not?

I do not get your comments about keeping it out of the hands of uncle sam/MIcomplex. You pay the rent, the same money, and the taxes still get paid. Its filtered through someone else, but it was still money in your possession that ends in the governments possession. How is it any different from owning to renting?

[Grinchie]

33. Good question, and you are correct, it ultimately goes to uncle sam through the landlord

But, and this is the important difference, I am not forced to file a 1040 to get my money back.

If one works for a company, your Gross Wages are automatically deducted and the money supposedly goes to Uncle Sam by cooperation of your employer. Annually, this turns out to be a considerable sum, and this is money that has not earned you any interest, or enabled you to purchase food or water. Now, considering that Uncle Sam err's to his benefit, if you don't file a 1040, you will never see this money that was taken from you. This is the Negative Feedback Loop designed into the taxation system used by America in order to convince it's Citizens that it is mandatory to file a 1040. It is not mandatory, as their is no law on the books that outlines indirect taxes on an individuals labor, it's just that it make good economic sense to get the money back at Tax time.

You'd be stupid not to file a 1040 to get back $18,000 in wages that were witheld during the year, so people file a 1040, which describes in excruciating detail how your money worked for you during the year. Then you sign under penalty of law that all the information is 100% accurate, giving the IRS and the Government a review of your economic situation for the past year, used for analysis and policy.

So what, you may say. Well, you have just triggered the filing of a State Tax Return, which is now required due to the fact that you filed a Federal Return. Catch-22.

Now consider the fact that the Military in 2001 was found to have lost track of 2 Trillion dollars. The DoD was found to be "Unauditable". Furthermore, when was the last time you saw the expenses and outlays of the U.S. Goverment, similar to what you provide to them in a 1040? You haven't, you won't, and this is where I break company with the Government tax system.

I am a Veteran, and at this point, I see that the Military is a Corporate entity much like GM, forcing us to feed it for no real purpose. I will not pay for War machines, when a pointed stick or a machete are just as deadly. I choose to work for myself, and I have all my money in cash. I spend very little by avoiding the Rat Race. I do not have to file taxes as a renter, that's the Landlords obligation. If I was the landlord, I'd be obligated as well, but I'm not, and I can focus on living my life without being forced to pay for wars, bailouts, health care industry giveaways or corrupted government policies.

That's my choice, and others are not as fortunate as I am in this regard.

When one takes the time to look at how Corporations pay taxes after they spend money on expenses, while we pay taxes on earnings in exchange for our labor, you can see how totally fucked up our tax system is.

[WestSeattle2]

37. Exactly. The interest deduction is a nice perk but its not

something that "seals the deal", when deciding to own or rent. Owning is a personal decision, in many cases it's more cost-effective to rent. I just prefer to own my own piece of land. If others wish to condemn or belittle my preference, I quite frankly could care less. They weren't asked their opinion.

[mbperrin]

53. Now I feel like a fool! I bought a 12 unit apartment complex with payments

of $500 per month for 20 years 24 years ago. Each unit rents for $450/month, and so I thought I was actually grossing $65,000 per year, but I'd have been much better off renting instead.

Shucks. Now I'll have to give my wife the bad news. Going home to the three bedroom house we made $220 a month payments on for 10 years starting in 1988 and now own free and clear.

I felt okay, but now I see I've been a fool....

[WriteDown]

54. Now that you've accepted it, you can move on...

Awesome.

[intheflow]

15. Really depends on what you bought, when and where.

If you bought a new McMansion in the trendy part of town during the boom, your mortgage is waaaay more than rent in a slightly less trendy part of town, or even a mortgage in that part of town. It was much more true when the average home price was under $100K, but if you bought in the last decade, in most metropolitan areas, you probably paid $100-150K for a house in a pretty bad neighborhood, and upwards of $300K and more for better parts of town. My landlord paid $230,000 for a circa 1956 house in 2006 here in Denver, her mortgage is something crazy like $1400 a month! (I live with roommates to divide the rent.) Meanwhile, now the house is worth probably in the $200K range. I would never have paid more than $150K for the place, myself. Which I suppose is why I'm renting instead of owning these days.

[XemaSab]

9. My best friend lives with his boyfriend

and his boyfriend's daughter in the living room of his boyfriend's dad's house.

Along with the dad and like, 5 other people. x(

[WestSeattle2]

12. Jeez, not a whole lot of getting the freak on in that house!

[quakerboy]

28. Thats when you bring back the sock system...

[WestSeattle2]

38. The sock system?...dare I ask?....lol

[quakerboy]

41. The sock goes on the doorknob

when you wish to remain undisturbed. "Classic" Dorm strategy. Never had opportunity to make use of it myself.

[WestSeattle2]

44. Oh, so much neater than lube on the knob. Wait, let me

rephrase that.

[quakerboy]

24. Seems like a lot of people I know

are back with the parents, when possible. Others are doubling or tripling when they might otherwise have gone solo. And I have been hearing that there is a slowing of incoming non-natives taking apartments.

[Captain Hilts]

5. Except in Bethesda MD, where my landlord treats us all like crap and raises the rent. nt

[PfcHammer]

13. WSJ stories under Murdoch tend not to apply to most people

[Mari333]

17. wow I cannot imagine paying over 1000 a month for rent

not even over 500. I live in Michigan, where the average wage is minimum. or none. apts in my town go for 200/300 month. houses rent for 500 month. and most of them go unrented. The B&Bs here had their worst yr ever.

[Liberal_in_LA]

20. wow.. Car insurance in LA approaches $200 per month. can't imagine low rents like that

[du_grad]

43. Michigan and Toledo are hurting

Detroit is the number 1 poorest city in the country. Fully 33.3% of the people of Detroit are living below the poverty line. Toledo is number 8. We are 60 miles south. Both cities are auto industry dependent and have been for decades.

http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20091001/NEWS16/910010326 - (Fresno is the only California city on the list - it is number 6).

Unemployment here is probably about 15%. I don't know what rents are running here, but that doesn't surprise me that rents in Michigan are that low. They had a near riot in Detroit today for federal money that is available to bail out 3500 soon-to-be homeless people. Approximately 35,000 (!) showed up.

http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20091007/NEWS24/910079977

It will just get worse. Perhaps there are signs the recession is getting better, but in this part of the country, it's still bad. They did say, though, that real estate sales were up 5% in Toledo, but prices are still way down.

One pays car insurance by zip code. It depends on claims in your area. We pay about $87/month for two older cars in suburban Toledo (2001 Buick Century and 2003 Mini Cooper). We are both 55+ years old. If we moved totally out of Toledo to a small town, we'd pay way less.

[closeupready]

32. In New York (including the five boroughs), anything under 1000 is a steal.

But wages are higher to compensate.

[No Elephants]

49. The cheaper NYC neighborhoods of the old days got gentrified.

[closeupready]

50. Yes, all of them - the Bronx, Washington Heights, Crown Heights, East Village

These aren't going to be the most expensive areas, but crime has fallen to such historically low levels all over the city, that newcomers feel safe just about everywhere.

[jasi2006]

21. They won't lower rates much and remove the automatic disqualifier

for bad credit which in a lot of cases resulted from foreclosures on predatory mortgages and people losing jobs. So you lose your house and no one will rent to you because you lost your house. Great!

[Sin]

35. Holy hell

I pay 1140$ for my mortgage a month 2543 Square feet central air and thats with taxes. How could any one pay that much for rent with out thinking about just hell even walking to some place different.

[Rex]

42. Oh no! Just another tiny blip in our recovering not anymore recession economy.

[fujiyama]

45. Many renters are young

and in their 20 and 30s.

But many my age (mid twenties) have been laid off and/or can't find a job, so renting, especially in the most expensive real estate markets is very unrealistic. Many of us have moved back in with parents.

Those markets mentioned in the article are extreme cases but people in those places have longer commutes, and generally just make do with having less. It is amazing how many people will fit in a room or how many jobs someone will take (2 or 3 working 80+ hours a week). This is usually the case with immigrants with families.

Plus, with many unable to actually sell their homes, many are are renting out an entire home - especially in depressed markets. I know some renting homes for a great price, without having to deal with an actual mortgage, maintenance, down payment, or any other risk involved. Why rent an apartment, when you can rent a home for the same price? This is primarily in places like MI where people can't sell the home but left for work elsewhere.

It's going to be a while before apartment vacancies fill up. For that we'll need unemployment to fall. It's pretty scary, considering so many have been foreclosed as well. It leads me to believe many are moving in with better off relatives - or are homeless...