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Archive for Sunday, April 19, 2009

Economy, new units not driving rent down

Though some places offer incentives, prices hold steady

From left, Kansas University sophomores Matt Johnson, Salina; Chris Lou, Chicago; and Tucker Allred, Salina, far right, tour Sunrise Village on Friday, looking at apartments with manager Amber Allen. With Lawrence full of apartment and townhouse complexes, the rental market is competitive. Many are offering move-in incentives, but overall rent is not going down here.

From left, Kansas University sophomores Matt Johnson, Salina; Chris Lou, Chicago; and Tucker Allred, Salina, far right, tour Sunrise Village on Friday, looking at apartments with manager Amber Allen. With Lawrence full of apartment and townhouse complexes, the rental market is competitive. Many are offering move-in incentives, but overall rent is not going down here.

April 19, 2009

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Before signing a lease, be sure to read the fine print — all of the fine print. Here are some areas to watch out for before sealing the deal.

• Automatic renewal

Many leases have clauses requiring tenants to notify their landlord if they aren’t going to renew their lease. The automatic renewal clause sometimes kicks in six or more months before the lease is up. Bill Larzalere, with KU’s Legal Services for Students, said many landlords provide plenty of notice about when to renew, but sometimes that detail is hidden in fine print in the lease.

• Late fees

Make sure you know your landlord’s policy for charges on late rent. Robert Baker, with Housing and Credit Counseling Inc., said along with charging a fee for every day the rent is late, some landlords apply the payment first to the late fees and then to the owed rent. For tenants who just have enough to cover late rent and not extra fees, they could see a ballooning amount of unpaid bills.

• Agreements with roommates

Longtime landlord James Dunn advises prospective tenants to know their housemates well. One test he has for just how well the renters know one another is whether they can give their roommates’ middle names when filling out an application.

Housemate relations aren’t just a matter of making sure personalities mesh. If one of the roommates leaves, the others are on the hook for that portion of the rent, Dunn said. He used to advise housemates to sign an agreement that settles matters such as who will put the utilities in their name and who will buy the tissue paper.

• Getting your deposit back

When it’s time to move out, find out whether the landlords have a preset schedule on how much it costs to fix certain items, such as replacing burned-out light bulbs. If tenants know what is being charged, they can often go ahead and fix something for much cheaper, Larzalere said.

Dunn also advises renters to remember that damages assessed to renters can often run higher than a deposit. When that is the case, the renter will get a bill after he or she leaves.

Amber Allen, manager of Sunrise Village 660 Gateway Ct., foreground right, takes a group of KU sophomores on a tour of the townhouse complex  Friday, April 17, 2009. From left are students and prospective renters Chris Lou, Chicago, Matt Johnson, Salina, and Tucker Allred, Salina. With Lawrence full of apartment and townhouse complexes, the rental market is competitive. Many are offering move-in incentives.

Amber Allen, manager of Sunrise Village 660 Gateway Ct., foreground right, takes a group of KU sophomores on a tour of the townhouse complex Friday, April 17, 2009. From left are students and prospective renters Chris Lou, Chicago, Matt Johnson, Salina, and Tucker Allred, Salina. With Lawrence full of apartment and townhouse complexes, the rental market is competitive. Many are offering move-in incentives.

When Kansas University junior Stephanie Reaves was looking to move from an apartment complex to a house closer to campus, she anticipated the economy working in her favor.

“There’s not a lot of difference,” Reaves said. “We thought there’d be a few better deals, but we never came across any.”

Nationally, the cost of rent is down. The Wall Street Journal recently reported that among the country’s 79 largest markets, vacancies jumped to an average of 7.2 percent and asking rents fell 0.6 percent.

But in Lawrence, buffered by record student enrollment at KU, rents are steady. In fact, some students last week said their rent had gone up anywhere from $180 to $600 a year.

After seeing her monthly rent go from $380 to $400, KU sophomore Katie Meyer is looking elsewhere.

“That’s way too expensive,” she said.

But some think it’s about to become a renter’s market.

“If we aren’t at a tipping point, we very possibly will be very soon,” said Robert Baker, with Housing and Credit Counseling Inc.

Baker is among those who have noticed an onslaught of apartment specials, offering lower deposits or reduction in rent for those who sign leases early or have good credit.

Late winter to early spring is when KU students scramble to line up housing for the next school year — months ahead of when the massive apartment migration takes place at the end of July.

Each year, Bill Larzalere, with KU’s Legal Services for Students, reviews students’ prospective leases. So far, he said, the rent prices haven’t escalated, but the specials have.

“It seems to me like there’s more this year,” he said.

Rentals in foreclosure

Larzalere also noticed another trend.

Last year for the first time, Larzalere counseled students who were living in properties that were in the foreclosure process. None of the tenants was evicted, but they were uncertain of how long they could live in their unit.

Records from the Douglas County Sheriff’s Office show that several apartment complexes and units have been auctioned off at sheriff’s sales in the past year. In most instances of foreclosure auctions, ownership is passed to the bank.

Tenants who’ve received foreclosure warnings on their doorsteps have come into Housing and Credit Counseling Inc. asking for help.

“We had to come up with a foreclosure timeline because there were so many people calling us about Jane or John Doe notices. And they had found out later that it’s (up) for sheriff sale,” Baker said.

James Dunn, president of Landlords of Lawrence Inc., said he hasn’t seen the foreclosure crisis affect rental prices. Neither has appraiser Tim Keller, who for several years has tracked vacancy rates in Lawrence.

“Last year was a pretty good year for apartment owners,” said Keller, who is president of Keller & Associates.

New units

What Dunn and Keller point to as a market changer are the more than 700 new units that are expected to come onto the market this fall. Three new projects will account for around 4 percent of the more than 16,000 rental units in Lawrence.

This fall, The Exchange, which is under construction at 31st Street and Ousdahl Road, plans to lease 60 percent of the 324 units its building.

At Remington Square, which is just off of Clinton Parkway and Crossgate Drive, 224 studio and one-bedroom apartments will come on the market starting at $500 a month. And, just across the street on 24th Place, The Grove is expected to start leasing 60 percent of its 500 units.

In 1996, Lawrence saw a comparable jump in rental housing, which had existing property companies and landlords fearful of rent prices dropping and vacancies soaring.

Vacancies did go up slightly and landlords had to be willing to grant more concessions.

“But the sky didn’t fall,” Keller said. He predicts a similar outcome this time around.

Dunn has a slightly bleaker take. “I think we are going to have lots of vacancies. We don’t need new complexes. We already have a glut,” he said.

Dunn — whose properties are near downtown and don’t offer the basketball courts, lounge areas and swimming pools found at the bigger apartment complexes — doesn’t see the added units as competing for his renters. But he does think they will draw renters from the aging complexes closer to campus and the university’s dormitory housing.

Special promotions

Mary Gage, owner of Gage Management, sees the new complexes as targeting a clientele looking for luxury apartments that come with higher rent prices, which is different than the renters her company does business with. Still, she expects to see a difference in the market.

“You can’t have so many extra apartments and the same basic student population without spreading it too thin,” she said.

Dunn said that vacancies aren’t going to lead to lower rents, but he said that landlords might become more lenient on pets, smoking or how many people can occupy a unit.

Brittany Snow, a leasing agent at Gage Management, said specials for one month’s free rent or lower deposits are a year-round staple. Right now, two of the company’s properties, Sunrise Village and Sunrise Place, are advertising short-term leases and half-off deposits.

The property management company, which oversees about 600 units in everything from homes to apartment complexes, started receiving inquiries as early as February for leases that begin in August.

While the cost of rent has crept up slowly over the past 15 years, Gage said the trend of offering special promotions took hold a little less than a decade ago with the housing market.

“More people started buying homes for their students instead of paying rent,” she said.

This year, rent for most of the company’s properties has stayed the same. A few have gone up, but with those increases come specials and discounts.

“The owners are feeling the economy as much as the renters are,” O’Donnell said.

Comments

Green_Trees_Brown_Dirt 5 years, 8 months ago

I mean...gee whiz...maybe it's not so complicated. Maybe rent is not going down because it's fixed. I know, I know, we like to think we live in a competitive marketplace, we like to make ourselves feel good about our monetary environment, and all that...but what if the management companies actually have a hold on the pricing scheme? Nah...couldn't be.

Lori Nation 5 years, 8 months ago

We have crappy wages in this area compared to Topeka,and Overland Park. And the housing rental market is lower in both locations! Lower the rent management.

jumpin_catfish 5 years, 8 months ago

If we were a socialist country we wouldn't have these problems. The government would own and maintain all the housing. Problem solved just like in the old USSR, right?

commuter 5 years, 8 months ago

There are two reasons the rent isn't going down.

  1. The number of KU students who are renting

  2. The other rentals. Why should I lower my rental price if others are charging the same or more?

A new reason will be coming soon. As the economy worsens or continues at the same pace, people will have a hard time buying a house or continuing to live in their house, so an apartment becomes an option.

Godot 5 years, 8 months ago

It won't be long before the government does own (but not maintain - government is known for deferring maintenance) much of the housing stock. As the guarantor of 90% of all mortgages, it would not be difficult for the government to take over the properties as the economy collapses and defaults continue.

Richard Heckler 5 years, 8 months ago

Is there a glass house hanging over Lawrence that is pretending Lawrence will not be affected by the depression?

Is Lawrence so special that renters feel a need to pay more just to live here?

The USA distribution of wealth is likened to that of Brazil,Russia and Mexico and maybe Lawrence,Kansas. In other words the middle and lower class are getting further and further behind the upper 10%.

People paying higher rents just to live somewhere cool merely help expand that gap while having less left over for themselves.

notajayhawk 5 years, 8 months ago

merrill (Anonymous) says…

"Is there a glass house hanging over Lawrence that is pretending Lawrence will not be affected by the depression?"

Um, why yes, merrill. Perhaps you're reading-impaired, but the story did say something about the record number of KU students? I would think if they can afford to come to KU, they can probably afford the rent.


ocean (Anonymous) says…

"Republicans chant mantra N O W:..."

No need, ocean, since apparently even you seem to have figured it out. Just like the whining about gas prices, food prices, etc., the price is set by what people are willing to pay. As long as someone's willing to pony up the going rate, just why in heck should rents come down?

What is it about the whiny liberals in Larrytown that they think merchants, landlords, corporations, or whatever have some kind of obligation to make things affordable? Just what kind of business are you in that you think the pricing of your product or service doesn't have more to do with what the consumer will pay rather than on costs?

George Lippencott 5 years, 8 months ago

Aha, property taxes are not getting passed on - are they!

unelectable 5 years, 8 months ago

notajayhawk -
As for your "obligation to make things affordable" - that has to do with morality and fairness and caring for others. But we know that those things have nothing to do business, don't we. That where we get the phrase: "Sorry, it's just business." Isn't it?

so there IS a glass house?

glad you're not a jayhawk.

notajayhawk 5 years, 8 months ago

unelectable, I'll ask you the same question I posed to ocean - just what business are you in that you meet that 'obligation' of keeping things affordable instead of making money?

You're absolutely correct that there's a difference between business and what's moral, fair, and caring. If there wasn't, there would BE no business, and nobody would have a place to rent because all the landlords went under.

Oh, and by the way - if being one of the whiny liberal Larrytowners chock full of class jealousy and a monstrous sense of entitlement is what makes one a jayhawk, then I'm glad I'm not one, too.

jafs 5 years, 8 months ago

If business has no obligation to be moral, I guess that would explain the current economic mess we're in.

When unchecked greed and self-interest run our economy, then we get exactly what just happened - doesn't seem like a great idea to me.

And, under the law, contracts that are blatantly unfair can be voided by a judge - there is in fact an underlying principle that both sides should receive somewhat balanced benefits.

And, again, the economy's bad and we have numerous vacancies - the general concept of a free market economy would suggest that prices should come down - supply is high and people don't have as much disposable income.

So, why again are prices not falling much, either in the real estate market or the rental one?

janejim76 5 years, 7 months ago

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