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Archive for Tuesday, October 3, 2006

Census: More residences vacant, rental costs stay high

Vacancy numbers grow significantly since last count in 2000

October 3, 2006

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More Lawrence homes and apartments are sitting vacant, but rent rates in the city continue to be among the highest in the state, according to a new survey released Monday.

A new report from the Census Bureau's American Community Survey concluded that vacancy rates have increased significantly in Lawrence since they were last measured in 2000, and the number of people living in each home or apartment also has been declining since the turn of the decade.

But that has done nothing to lower rent prices. Average rent increased to $690 per month, up from $555 in 2000, according to the report. And among the six Kansas cities surveyed, Lawrence had the second-highest rates, trailing only Overland Park. It also was well above the Kansas average rent of $588.

Shedding light

The new study may shed light on why the U.S. Census Bureau believes the city's population is growing much slower than it has in the past.

"If these numbers are right, it tells us that our housing market has went downhill," said Xan Wedel, a researcher and Census expert at Kansas University's Institute for Policy and Social Research. "But there should be a big question about whether the numbers are right."

Wedel said she has concerns because this is the first year for this type of Census survey and it may be unwise to put too much stock in the numbers until three or four years of data have been collected.

But the Census numbers are important now. Hanging in the balance is whether Lawrence continues to be one of the state's few stars at adding new population, or whether the Census Bureau is correct in its assertion that Lawrence's growth is waning. Tied to the federal numbers is federal aid for a variety of programs.

Prospective homebuyers Bill Kimbel, left, and his wife, Joyce, right, leave a condominium with Realtor Susan Bonham, center, near 31st and Kasold streets.  "We're trying to find something we can afford," Joyce Kimbel said on Monday while looking for condos. A new U.S. Census Bureau report says more residences in Lawrence are vacant and that rental prices remain high.

Prospective homebuyers Bill Kimbel, left, and his wife, Joyce, right, leave a condominium with Realtor Susan Bonham, center, near 31st and Kasold streets. "We're trying to find something we can afford," Joyce Kimbel said on Monday while looking for condos. A new U.S. Census Bureau report says more residences in Lawrence are vacant and that rental prices remain high.

Growing vacancy rate

According to the new survey, the vacancy rate in the city has increased to 6.9 percent, up from 4.2 percent when it was measured by the Census in 2000. The number of people living in each unit - an apartment or house - decreased from 2.30 in 2000 to 2.18 in 2005.

Both the vacancy rate and the average household size are key figures the city uses to create its own population projections. The city has been using the 2000 numbers to estimate that the city had a 2005 population of 88,541. Using the new Census numbers, though, the city's population would be 81,816.

That would mean that for the last five years the city has been growing at a rate less than half its historical average.

The population numbers have been in dispute ever since the Census Bureau in June released estimates that showed Lawrence's population from 2004 to 2005 declined by 26 people - the first recorded drop in a century.

Monday's report, however, is the first time the Census Bureau provided information why it has calculated the Lawrence population as declining. City commissioners in August agreed to challenge the Census' population estimate for Douglas County.

One bedroom

Some landlords said they had seen more vacancies, but they couldn't produce solid numbers. A formal vacancy rate study by apartment owners hasn't been done for several years.

Apartment managers said they had seen more significant signs that the number of people living in each unit had declined.

"We're starting to see a lot of people who want one-bedroom apartments," said Linda Maas, with Lawrence-based Midwest Property Management. "We sold out of the one bedrooms this year. It used to be a lot more common to get three or four people wanting to live together. I think people just want their privacy these days."

City planners, though, question the Census' latest findings. Amy Miller, a long-range planner in the Lawrence-Douglas County Planning Department, said she thought the survey the Census Bureau used to determine the new numbers was flawed.

"The margins of error on these survey results are really high," Miller said.

For example, the margin of error for the vacancy rate is about plus or minus 4 percentage points, meaning the vacancy rate could be as low as 3 percent or as high as 12 percent.

Ken Bryson, the senior program analyst for the American Community Survey Project, said the margins of error were high in some cases because the size survey was relatively small compared to previous Census efforts.

900 addresses

Throughout 2005, the Census surveyed 900 Douglas County addresses to come up with the results. For comparison purposes, the Census in 2000 surveyed about 6,500 Douglas County addresses to come up with its findings.

The new report examined other housing issues, too. Among the other findings:

¢ Lawrence's median home value is $161,700, which ranked it as the third highest among the state's largest cities.

¢ The average median monthly mortgage in Lawrence was $1,290, almost the exact average of the entire country.

¢ Fifty-seven percent of Lawrence homeowners had house payments less than 25 percent of their total monthly income, which is generally considered by economists to be a healthy level of home debt. Nationally, only 52 percent of homeowners were below the 25-percent threshold. In Kansas, 62 percent of homeowners were below the threshold.

Comments

lunacydetector 8 years, 2 months ago

..so lawrence shrunk or grew minimally in the past 6 years? that is exactly what the Progressives wanted isn't it? growth never pays blah, blah, blah. the rents went up because the property taxes went up. the property taxes will never go down. smart growth = no growth. now the Progressives go to Washington DC to lobby for a government handout because they question the US Census? this lobbying effort is a disingenuous attempt to confuse the populus since the population decrease is exactly what they wanted. remember, they didn't want lawrence to lose its character.

jafs 8 years, 2 months ago

If Lawrence is in fact growing more slowly, I am glad of it. It is a little confusing though that rents remain high when there are more vacant apartments. Why isn't supply/demand working to lower rent?

newsreader 8 years, 2 months ago

Because when 2 people own 80% of the apartments, supply and demand does not matter because people are left with no choice.

sourpuss 8 years, 2 months ago

"Some landlords said they had seen more vacancies, but they couldn't produce solid numbers."

Wow, so there are landlords that do not know of their units, how many are being rented at any given time? How can they possibly run their business? How in the world could you not produce fairly solid numbers and even be a landlord? Granted, I am not a landlord, but I just assumed they all knew what they owned and which ones were bringing in money, then advertising those units that were empty. After all, an empty unit just costs you money if you're a landlord. So can this statement be true, or are they just lying?

gccs14r 8 years, 2 months ago

There are so few builders and property managers in this town that it wouldn't surprise me to learn that they collude.

Luxor 8 years, 2 months ago

I am happy to see growth slowing and I'd like to see it stop. The traffic and congestion are getting unbearable. Lawrence's rapid growth is having a negative impact on the quality of life here.

Kat Christian 8 years, 2 months ago

So why can't the city put a FREEZE on rent increases until wages or the economy catches up? The state of Maryland did this and it helped for a while.

This is even more proof there needs to be wage increases so people can afford to pay these rents. By comparison with the wages most are paying in this town I am making a little above that and STILL having a heck of a time paying rent and utils and having enough over to eat and buy gas - and health insurance is a luxary for me that I cannot afford. My rent takes 40% of my monthly income and my rent is lower than most.

I don't understand the mentality of all this except that people are greedy and if it doesn't change these greedy people are going to run people out of homes into the streets and poverty will be what will fly off the charts. And you can take that to the census bureau.

javery 8 years, 2 months ago

One thing that doesn't seem to be mentioned is additional appartments. I've noticed numerous new apartments in the last couple of years. So if you get a large influx of apartments, you don't necessarily have a sudden population boom to immediately fill those apartments. So the result is low occupancy despite population potentially continuing to rise.

Confrontation 8 years, 2 months ago

sunshine_noise: Didn't you get the memo?! Lawrence is just the most wonderful place in the world to live! You get the constant homeless begging on Mass St., very few recreational activities, giant potholes, people freaking out because overpriced downtown stores are closing, oldtimers wanting to revert to the 50's, the highest gas prices, highest rent costs, highest sales taxes, and very little quality of life to show for it. If you want a better life, then you're going to have to pack up and move. Other than KU Men's Basketball, there's really nothing here. You can always watch the games on cable.

Kat Christian 8 years, 2 months ago

Hey confrontation: If I could I'd move back home (east)in a minute - unfortunately circumstances beyond my control keep me here and it's depressing the heck out of me. Not to mention I can't earn enough money to move back there because I spend it all on rent. This town is made for students and high income makers - it is definately not a place to live for the middle-class or lower middle-class. BUT the homeless fair better then the mid to lower class people do. But that's always been the way the burden has always been on the middle class.

Confrontation 8 years, 2 months ago

sunshine_noise: I completely understand your situation. I've been stuck here for a while. These year-long leases really suck. I just convinced my property manager to switch to a month-to-month situation, and my spouse and I are finally at the stage where we will move as soon as we find jobs elsewhere. I figure that the debt to move is much more worthwhile than continuing to live in this town. I don't like Lawrence, so I'm getting out. That's all you can do, since this town will never change. Johnson County West.

KsTwister 8 years, 2 months ago

Would it not be ironic if since the census was taken that more people have permanently left Lawrence? I am counting on it because there are three families I know that moved and their homes are still on the market even after kicking the prices to bargains. Property owners are tired of watching their investment losses in taxes. Even my son has changed his mind opting for taking his new business to Overland Park(a good possibility for us too). Every time property taxes go up so does your rent you can bet on it most of that blame is on the city. I let a niece who wanted to buy a three bdrm rental I had live in it for year just paying the 15 year mortgage,taxes and insurance and as much as they wanted to buy the house here--they still moved out of town after getting a taste of what to expect. Thank you greedy city hall.

Godot 8 years, 2 months ago

"If Lawrence is in fact growing more slowly, I am glad of it. It is a little confusing though that rents remain high when there are more vacant apartments. Why isn't supply/demand working to lower rent?"

One of the contributing factors to the average rent being high is because of the above-average and luxury type townhomes and houses that are being rented to three and four college students.

I checked out Compton's new condos at Sixth and Folks - a three bedroom was over $1100, and a studio was still close to $800, as I recall. But they are luxurious, after all, and they are oh, so "new urbanism."

prioress 8 years, 2 months ago

Two words: East Lawrence. Want a nice house for a reasonable price? Check it out.

Godot 8 years, 2 months ago

"i think their might be a tax break for apt owners for empty units, not sure,"

It is called "losing money."

Lawrence rent matches the nationwide average, and is lower than in the nearest large city and job market. What is the problem with that?

Becca 8 years, 2 months ago

I have a good job, but I still can't afford to live on my own. And if I stay here, I don't think I ever will.

jafs 8 years, 2 months ago

Actually, the idea of maximum wages is an interesting one to me. With greed and corruption running rampant in our society and the top 1% being worth more than the bottom 90% combined, it may be the only way to bring some balance into the picture. I agree with those who believe some income would be better than none for landlords, so they should be lowering prices to attract tenants. Also, it is true that a lot of new apartment construction has been done recently - that certainly would affect average prices. Thanks for your thoughts.

Godot 8 years, 2 months ago

There is a nice 3 BR. 2 BA, 2 car garage house with a really lovely yard on the market in Indian Hills, I just saw it yesterday.

The county appraised it for $128,000 in 2004, $142,000 in 2005, and $155,000 in 2006.

The asking price for the home? $139,000.

Yes, taxes are driving up the cost of living in Lawrence, via inflated values assigned by the appraiser's office.

jcantspell 8 years, 2 months ago

It's all motivated by greed. If you can afford to keep empty apartments and not lower your rent you most have a lot of money and time. Time for what? Time to wait for all the poor people to live! If you are middle class or lower middle class or poor The cost of living in this town should have you angry and out in the streets protesting and boycotting

jonas 8 years, 2 months ago

"The number of people living in each unit - an apartment or house - decreased from 2.30 in 2000 to 2.18 in 2005."

Well, yeah, I finally chucked that extra leg. It was decomposing.

avoice 8 years, 2 months ago

"If these numbers are right, it tells us that our housing market has went downhill," said Xan Wedel

This is over the top! Everyone who criticizes the grammar police, take a good hard look at this one. Editors and grammarians who have the courage to speak out are the only hope to save us from a future filled with this type of "verbal" abuse.

Richard Heckler 8 years, 2 months ago

There is a new house in Brookcreek which is not cookie cutter by any means and built rock solid. 1400 block of Prospect which is east of Haskell off 15th. The builder is John Craft.

For low income buyers Tenants to Homeowner builds very solid energy efficient house.

just_another_bozo_on_this_bus 8 years, 2 months ago

I heard a report this morning that nationwide since 2000, housing costs have increased 21% and real incomes have dropped 3%, both adjusted for inflation.

So, yea, things are more expensive here, but that's the case nearly everywhere.

just_another_bozo_on_this_bus 8 years, 2 months ago

"Average rent increased to $690 per month, up from $555 in 2000"

That's a 24% increase. If it's been adjusted for inflation, Lawrence has gone up slightly more than the national average. If it hasn't been adjusted for inflation, the increase is below the national average increase.

Also, if it hasn't been adjusted for inflation, a 24% increase is more or less the amount of inflation over 6 years, anyway.

BOE 8 years, 2 months ago

Marion on October 3, 2006 at 7:58 a.m. :

I ate some Peyote buttons once a long time ago and...

had come "visions" as well!

=====

Has all the qualities of the kind of juicy (and offensive) tidbit that sells books.

The niche market awaits you, sir.

Sigmund 8 years, 2 months ago

Lawrence has been a particularly tight housing market for decades. The increased vacancies do work to lower prices (prices would be even higher without the vacancies), but vacancy rates are not the sole market force on price. Lawrence has a incredibly high turnover rate compared to other markets and college kids tend to be rough on properties. Both of these mean added expenses (compared to non-college towns) and higher costs for landlords and rents for tenants. Higher prices for rentals puts upward pressures on all single family properties. Afterall, you can owner occupy or rent the property so valuations tend to reflect both possible uses.

As to a "tax break" for empty apartments, that is bogus. Sure, if you don't earn income or lose money you don't pay taxes, but ask most any landlord (or most anyone for that matter) they would rather earn income and pay a percentage in taxes than to lose money, or have no income, and not owe taxes. Real estate taxes and insurance are owed even if the property is empty and producing no income. There are termendous pressures to keep a property occupied and providing income, especially if the cost basis is so low that if it were sold virtually the entire sales price is taxable.

As to the lower number of residents per property, there is more than just changing preferences of living arangements going on here. The new ordinance limiting the number of unrelated residents for certain properties has had a impact. Further, a number of students have told me that even if it costs a bit more for a one bedroom or studio they don't mind the added expense to avoid the hassles of dealing with roommates. They appear to be willing to limit other expenses and/or work longer hours to get a place of their own.

Fighting the census numbers without any articulated basis I have heard (except saying "this can't be right"), seems a little like whistling past the graveyard. The City can limit Lawrence's growth a number of ways. It can make the town so unattractive that no one wants to live here (homeless and drug mecca). They can raise the cost of living by limiting competition for goods and services driving up prices (Bozo Business Czarism), raising sales and property taxes (City Kommissionism), and enact voluminous new rules and regulations limiting personal freedoms of citizens and businesses (PLC'ism). Is it really such a great suprise that Lawrence either lost population or didn't grow?

roger_o_thornhill 8 years, 2 months ago

Purveyor of unbiased information or interested party...you decide!

just_another_bozo_on_this_bus 8 years, 2 months ago

"especially if the cost basis is so low that if it were sold virtually the entire sales price is taxable."

But in the same paragraph, you say that the owners would rather have some income and pay taxes on it. Which is it?

not_dolph 8 years, 2 months ago

Posted by prioress (anonymous) on October 3, 2006 at 11:53 a.m. (Suggest removal)

Two words: East Lawrence. Want a nice house for a reasonable price? Check it out.


Two words: I don't think so. Oh, wait, that was four words (five if you count the contraction separately).

Sigmund 8 years, 2 months ago

It is simple. Taxes, insurance, and other expense are due as long as it is owned therefore income is prefered, strongly prefered.

There are alternative uses for the capital but still there are strong incentives not to sell. One could sell the property and invest in stocks, bonds, blah, blah. However, after capital gains taxes (if the property has been nearly completely depreciated, ie held a long time) the alternative investment must have a much larger return on the after tax capital without additional risk to be comparable to the property alone. A rare case.

Another use would be to do a tax free exchange, but if the new property is in Lawrence that is problematic because you have to find a buyer who wants to sell and you still own property. Another is to pass it on to heirs who get the property at current value and would owe no taxes if sold.

Tax policy does distort "free markets", for better or worse, but still even while waiting to pass it on, or to do an exchange, there are very strong incentives to keep it rented, even if you have to accept less.

Sigmund 8 years, 2 months ago

Another "solution" would be to FREEZE how much money you can earn in Lawrence. Landlords would not be able to raise rents because people would not be able to afford higher rents. I can't think of a single case where wage and price controls ever worked. Nixon tried it to keep gas prices low and it failed miserably. I also can't think of a single person who would want the government to limit how much they can earn, why should landlord be singled out? Why not teachers, doctors, plumbers, waitresses, etc? It is fundementally unfair.

Godot 8 years, 2 months ago

Sigmund, excellent response to Bozo's "But in the same paragraph, you say that the owners would rather have some income and pay taxes on it. Which is it?"

I am afraid it might have been too advanced for him to understand, though.

Simpler version:

Property rented out brings in more money than property not rented out. Expenses do not stop (actually they increase) when a property is vacant. So landlords want their property rented.

If you sell the property, you end up with cash, but lose anywhere from 5% to 25% of it to capital gains tax, and 6% or more in sales costs. Now that your asset is reduced in value, you have to figure out a way to earn interest on that smaller sum of money to replace the income you were earning from the rental property.

That is why all landlords would rather keep properties rented than empty, and many choose to hold rather hold than sell.

Godot 8 years, 2 months ago

When, and if, mortgage interest rates climb again above 8 or 9%, the rentals will fill up as young adults discover they are unable to afford a mortgage and have no option but to rent.

just_another_bozo_on_this_bus 8 years, 2 months ago

"If you sell the property, you end up with cash, but lose anywhere from 5% to 25% of it to capital gains tax, and 6% or more in sales costs. Now that your asset is reduced in value, "

What you're saying is that the actual value of the asset isn't as big as the bank or the county says it is. Sounds like you are trying to operate on a limited grasp of reality, to me.

"you have to figure out a way to earn interest on that smaller sum of money to replace the income you were earning from the rental property."

Hmm-- if the property isn't rented, then there is no income to replace, is there?

"When, and if, mortgage interest rates climb again above 8 or 9%, the rentals will fill up as young adults discover they are unable to afford a mortgage and have no option but to rent."

I agree with you. But what's the solution? Should we demand that the city commission lower these rates?

just_another_bozo_on_this_bus 8 years, 2 months ago

Correction-- I meant to say "Should we demand that the city commission RAISE these rates?"

Godot 8 years, 2 months ago

Bozo, the city commission, as grand as you might imagine their powers to be, cannot raise mortgage interest rates. That is what banks do in response to actions by the Federal Reserve Board.

I am beginning to believe you do not even live in this country.

Godot 8 years, 2 months ago

"What you're saying is that the actual value of the asset isn't as big as the bank or the county says it is."

You make a great point. The city and county should value properties based on their NET VALUE, AFTER SALE, rather than "market value."

Excellent idea! (even though I do not believe you have any comprehension of the concept of owning and selling property, and paying taxes on the result)

jafs 8 years, 2 months ago

It's interesting that one can sell an owner-occupied home and not have to pay capital gains tax, but not a rental property. Also, although the net gain may be less than the value of the property, if invested in the stock market, there are no mortgage, tax, insurance or maintenance costs. So it might be better to sell and invest elsewhere. A straight 10% annual return without the costs, paperwork, and hassles of being a landlord sounds pretty good to me, especially given the current real estate market.

Emily Hadley 8 years, 2 months ago

I remember when Colony Woods (now a.k.a. Felony Hoods) was the nicest complex I knew of in Lawrence, and it wasn't that long ago.

In addition to the many, many, many new "luxury" excessively-funded-college student-geared apartment cities, many property owners have improved older properties that have idled for years in Lawrence. I have seen a strong trend of the city cracking down on messy and dilapidated properties as well as rental owners remodeling, painting, or landscaping. Whether or not it is in response to the availability of brand new, IT-ready complexes with gyms and pools, it works to increase value for everyone in Lawrence, which raises everyone's property taxes, which means even the unimproved properties have to charge a bit more.

You can still always find great deals if you avoid those big complexes like the plague. Those insulated neighborhoods they create seem to evolve like Watts districts: cheaply built, full of decaying dead ends with no life, no commerce, no through traffic to discourage whatever goes on there. Watts was the unfortunate victim of a US highway project discriminating against poor people, but builders here are building brand new dead-end streets on purpose! Seems crazy to me.

Remember, your dollar is your vote.

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