A good time to be a renter
Looking back on my renting days, I can’t recall any of my landlords ever cutting my rent or offering any incentives for me to stay.
The closest thing to a perk I ever encountered was during my waning days as a bachelor back in the late 1990s. After much pressure, I finally convinced the landlord of my Quincy apartment to replace my dorm-sized fridge with a used, full-sized model.
Anyway, with the economy still in a ditch and joblessness at 1970s levels, some landlords have decided it makes more sense to get you to stay, even at a discount, according to new survey by Reis Inc.
They are even throwing in flat-screen TVs, according to a study, detailed in yesterday’s Wall Street Journal.
Flat screen TVs aside, if you have a job and are in the rental market, you clearly have some clout you didn’t have before.
Landlords, especially the big players in the residential market that own vast empires of tens of thousands, seem the most likely to ante up.
If you are already renting in a large apartment complex, it might be worth checking to see what some of your new neighbors are getting for rental deals.
Both Avalon Bay and Equity Residential reported a drop in the 10 percent range in the rent paid by new tenants, the survey finds. Both own a number of apartment complexes ranging from downtown Boston out into the suburbs.
And, if anything, your choices of where to live are only likely to increase over the next few years as developers, looking for a relatively safe niche, start to put up new apartment projects.
Just take a look over at the Fenway, where John Rosenthal is pushing ahead with plans to build a pair of 100 unit apartment buildings near Fenway Park.
While would-be condo tower developers are sitting on their plans until better days turn up, Rosenthal is on his way to securing the backing of a powerhouse union investment fund.
And that’s not counting all the new condo projects out there that have converted their units to rentals after failing to find buyers.
For landlords, especially small ones, it can be a different picture. Check on Rona's post this afternoon for a different perspective on this.
Still, if you are looking to upgrade or get some concessions, now clearly is the time.
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I don't buy this at all. I have seen my rent and others who rent, go up, just because of the economy. Landlords are struggling too, and need the extra money to pay in taxes and other increasing bills. Many have resorted to selling other properties, reluctantly, to get more money just to get by. I don't see too many cheap places to rent either in this state. If I lose my job, I will be leaving this state for the south. Rents are cheaper there. I know the job market is no better, but I have friends & family to help me, and I will help them too. Good luck to us renters, we will need it.
I agree with Laurie. And while not explicitly stated by Scott this trend clearly seems to apply to the already grossly inflated "luxury" rental market. A lot of people in Boston metro don't rent there and don't make that kind of money. And there landlord is some guy from Somerville not a multinational corporation. My wife and I are looking to move to another apartment right now and it's very hard to find anything close to/in the city and immediate area for less than $1500 that's not a total POS. Imagine a young couple fresh out of college with loans to pay and mediocre job prospects. Unless at least one of them scores a really good job well over a third of their expenses will be eaten up by rent. That's just wrong. How is anybody supposed to save for their future whether it be retirement, vacations, or, god forbid a small place to call their own?
If rents are coming down, that means that housing has further to go down... At the peak of the bubble, the purchase price to rent ratio was astronomical. Even now, it is well above historical highs in most parts of the country (including Boston)... Rents going down and the government trying to prop up the price of houses only keeps this ratio high, which will undercut any sustainable, natural, long-term recovery.
It was a good time to buy until about 2002 and if you did, you probably haven't put a dent in the mortgage with a 30 yr note. Renters have the freedom to leave without having the stress of selling. Even a lease penalty isn't as much as paying C21 5%, lawyers, tax, etc. Rents in places like Cambridge continue to rise while the 5 mile out suburbs have cooled. Ownership is a still desired by many and they see friends who bought 10 years ago for half of what today's prices are.
Yep. As oft expressed, I've been a renter since 2005 when I sold out of real estate. Landlords in luxury rentals are getting noticeably hungrier. And I'm even getting "first month free" postcards, haven't seen those in a while.
Granted the luxury market is going to have more of this - $1500 for an apartment in Boston is dirt cheap if you think of how much the landlord has to pay - on an economic basis, they are losing their shirts, though many small landlords don't know enough math to understand that, so the apts do exist.
renting is absolutely the way to go in this market. Save your money and give yourself another year or two before even thinking about buying.
The last 5+ years have been a good time to be a renter as the cost to own was 1 to 3 times the cost to rent. While the gap has narrowed, homes in general are still overvalued and set to fall further. It will continue to be a good time to be a renter for the next few years.
Average rents may be falling, but that doesn't mean that landlords are lowering rents for existing tenants around here. In boston, with Craigslist being free, RE agents charging the buyer, rather than the seller, and many apartments being filled months ahead of the move date, the cost to the tenant of changing apartments is much higher than the cost to the landlord of changing tenants. This puts landlords in a superior negotiating position when it comes time to renegotiate the lease. One dynamic I've seen in many places is raising the rent on a unit every year while the same tenant lives there, and then lowering the price to attract a new tenant if the old one leaves. Once the landlord lands a new tenant (especially if it's someone with a job, rather than a student), he knows there's a good chance the tenant will put up with small annual rent hikes, regardless of what the market is doing.
I've experienced the same phenomena that James describes. Small incremental rental increases in the rent, which was already too high for an apartment that's falling apart. We tried working with the company on the second round increase, but they refused to budge and finally stopped even returning our calls. I asked why they wouldn't consider cutting a break to multi-year tenants with dual incomes who always pay their rent on time, rather than risk filling the unit with a question mark new tenant. No answer to that one.
Reduced rents at luxury properties benefit tenants at every step on the ladder. When a Class A property lowers its rent, suddenly a Class B complex is a little less competitive, and has to lower its rent, too. And so on down the line.
This chatter that the rental market is still hot, hot, hot in Cambridge is ludicrous. I know personally how worried some of the biggest management companies in the area are about their sky-high vacancies. They are certainly not raising rents on existing tenants--in fact, some of them have become remarkably tolerant of tenants in arrears.
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