Apartment bargains peppered virtually every block during the throes of the recession, even in typically high-demand cities like New York and San Francisco. Not anymore.
More renters, feeling better about the economy and their jobs, are moving out of mom’s basement or ditching a roommate. Across the country, apartments are filling up and landlords are boosting rents.
The only discounts left are concentrated in cities still reeling from the housing collapse or high unemployment, or in areas with too many new developments.
In most of the country, landlords are gaining sway.
Rental activity recorded its best start to the year since 1999, despite a snowy winter and what’s traditionally a slow time for leasing, said real estate tracker Reis Inc. The vacancy rate dropped to levels not seen since mid-2008, and rents have increased for the past five quarters to $991 per month.
Concessions are also sliding. Landlords are back to offering typical inducements like one month free. A year ago, new tenants received three to four months rent-free to ink a lease. Gone, too, are the giveaways like new TVs or carpeting for existing tenants.
The outlook for renters is expensive. Analysts expect apartment vacancies to shrink and rents to rise all the way through 2013 as the economy recharges and the labor market improves.
The cities where renters have little haggling room are on the coasts, including New York, Washington, D.C., Boston, Los Angeles, San Francisco, Seattle and San Jose, Calif. New supply in these areas is low and the local economies are adding jobs.
Seattle landlord Andrew Davies put a townhouse up for rent in January and three weeks later signed a lease. Davies advertised for $1,600 a month, a little on the high side but he wanted to build in a $100 negotiating cushion. He ended up signing the lease for $1,500 a month, exactly what he expected to get.
“I had numerous calls on it and a good number of showings,” he said.
In New York, the apartment market’s quick turnaround is taking renters by surprise. The increase in rent in the Big Apple is double the national average and the vacancy rate is the lowest in the country.
Rachel Gigliotti’s landlord is hiking the rent on the Manhattan two-bedroom apartment she shares with her husband and 5-month-old son by $350, to $3,650 a month. The family has lived there just 13 months and the increase takes effect in June. The landlord won’t negotiate.
Gigliotti is looking for a similar apartment in the same neighborhood, but she is realizing they have been priced out in just over a year. Last March, she had “the pick of the litter” with landlords offering one or two months of rent-free.
Likely, the family will downsize or move to another, cheaper part of town, Gigliotti said. “It’s hard to come to terms with it.”
The sweetest deals are in cities where unemployment outpaces the national average and foreclosures dot the streets. Renters might have luck in Las Vegas, Tucson, Ariz., Phoenix and a handful of cities in Florida. Las Vegas was the only city to see its rents drop last year, Reis said.
Still, if you’re looking in a hot city there are a few ways to find a discount. For example, skip the west side of L.A. where everyone wants to rent and try downtown where developers put up too many new apartment towers, said Peggy Alford, president of online apartment listing site Rent.com. The vacancy rate there is twice what it is on the west side.
Otherwise, renters should brace for increasing rents over the next three years.
“If you’re in the market to move,” Alford said, “do it soon.”
Source: The Associated Press.