Renters Pay More For 'Sense of Community'

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom - Silicon Valley apartment renters pay as much as $447 extra a month to get satisfaction from a sense of community.

Westlake Village, CA-based goods and service rater J.D. Power and Associates, earlier this year, conducted it's first Apartment Resident Satisfaction Study and Novato, CA-based RealFacts.com checked its database against the findings to discover renters will pay from $37 to $447 above average rents for the right kind of satisfaction.

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J.D. Power took renters' pulses in four communities: Denver, CO; Las Vegas, NV; Orlando, FL; and San Jose, CA to determine what satisfies renters most about large apartment management companies.

The rating company measured apartment resident satisfaction six ways: amenities; condition of unit at move-in; rent/value; safety/security; sense of community; and service staff. Renters also rated management companies in terms of overall satisfaction.

Sense of community was the most important factor in determining satisfaction with apartment management companies, and residents who associated a strong sense of community with their apartment complex were considerably more satisfied than those who did not.

"Satisfying residents isn't necessarily about providing resort-like amenities, but rather about offering a lifestyle and a sense of home that resonates with tenants and creates feelings of pride, connection and identity," said Michael Drago, a senior account manager for real estate and construction studies at J.D. Power.

When renters chose management companies based on overall satisfaction, the top rated companies were also shown to collect rents higher than the market average.

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Rental market monitor RealFacts put a spin on the Power study and checked the rents for two-bedroom/two-bath units offered by top-rated apartment management companies. It then compared those rents against the average rent for the area.

In the San Jose area, renters choose Irvine, CA-based Irvine Company Apartment Communities as the most satisfying management company. It collects an average $2,328 a month in rents for two-bedroom/two-bath units. That's a whopping $447 more than the Metropolitan Statistical Area's (MSA) average rent of $1,881 a month, according to RealFacts.

Most Irvine-managed apartment complexes in the area are clustered in the North Park development in north San Jose between N. 1st Street and Zanker Road and include The Pines, The Redwoods, The Sycamores, The Laurels, The Cypress and The Oaks. The company also manages a complex each in Cupertino (The Hamptons) and Sunnyvale (Cherry Orchard).

RealFacts only checked rents for the top-rated apartment management company in each city. However, in the Power study, other management companies for area apartment communities were also rated higher than the average market rating for overall apartment resident satisfaction.

They were Washington, D.C.-based Avalon Bay Communities with 15 apartment communities in Santa Clara County; San Mateo-based Prometheus Real Estate Group, Inc., with 30 communities; and Woodmont Real Estate Services with 14 communities.

As for the other three cities in the Power study:

• In Las Vegas, top rated Houston, TX-based Camden Property Trust collects average rents of $994, $37 more than the MSA's average of $957. The company does not manage in the San Jose area.

• In Denver, renters were most satisfied with Foster City, CA-based Legacy Partners, which collects an average $1,087 in monthly rents, compared to the $1,029 MSA average -- a $58 difference. The company also manages five communities in Santa Clara County.

• Renters in Orlando gave the nod to Orlando-based ZOM Residential Services which came in with an average $1,101 rent, $110 more than the MSA's $991 average. ZOM doesn't manage properties in Santa Clara County.

• More Rental News That Really Hits Home
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© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Renters Get A Breather

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Renters who signed contracts in the third quarter may have made out better than those who moved in earlier this year.

The National Multihousing Council's Quarterly Survey's Market Tightness Index slipped to 46 in October, the first sub-50 reading in 17 quarters. Last year at this time, the index was 70.

The council said the slippage was due to apartment demand falling somewhat when compared with demand three months ago. If conditions persist, renters could enjoy slower rising rents, even some negotiating room for better deals.

A Market Tightness Index reading above 50 indicates that, on balance, apartment markets around the country are getting tighter (higher occupancy rates and or higher rents) a reading below 50 indicates that market conditions are getting looser (more vacancies and or lower rents) and a reading of 50 indicates that market conditions are unchanged.

However, even with the quarter-to-quarter demand slip, most (56 percent) of the 90 apartment industry representatives that responded to the survey reported no change in their markets. Eighteen percent saw tighter conditions (higher occupancy rates and/or higher rents), while 25 percent noted looser conditions (lower rates and rents).

The slippage could be due to some renter backlash over rising rents.

The Novato, CA-based RealFacts recently reported third quarter occupancy rates were at or above 90.5 for all the 32 Metropolitan Statistical Areas (MSAs) it tracks, but most MSAs revealed slight occupancy decreases from the second to the third quarter and from year to year.

Rents, however, were up in everyone of the 32 MSAs from the third quarter last year to the same period this year.

The cost of rental housing as been on the rise for more than a year, due in part to owner-occupied housing market turmoil generated by tight mortgage money. That trend is causing more people to switch to rental housing, which has been squeezing the rental supply and pushing up rents.

Asked about the impact of the "subprime mortgage meltdown" on the flow of renters leaving to become homeowners, 22 percent of the respondents said that there has been a big decrease in renters departing (compared with 18 percent in July). Fifty-three percent indicated that there was a small decrease (compared with 37 percent in July), and only 24 percent saw no impact (compared with 46 percent in July).

Rents are likely to continue a general upward trend, if at a slower pace, because the same tight money market that's affecting the owner-occupied market is squeezing the rental supply from the acquisitions and development end.

The survey's Debt Financing Index edged down further in October to 17, from 26 in July. A Debt Financing Index reading below 50 indicates that borrowing conditions are worsening.

Without adequate financing it's tough to acquire new properties and that's why the survey's Sales Volume Index fell to 12, the lowest level in the eight-and-a-half year history of the survey. A Sales Volume Index reading below 50 indicates that sales volume is decreasing. It was the eighth consecutive sub-50 reading, meaning that more markets saw sales volume falling than rising compared with three months earlier.

A reduction in condo conversions accounted for some of the reduced number of acquisitions but "dislocations in the financial markets," was the primary growing factor, the survey said. Eighty percent of those responding to the survey said sales volume was down, compared with only 6 percent who reported higher sales and 13 percent who reported sales unchanged.

The council said additional data suggests that while most markets have seen sales volume decreases, the decrease hasn't been large.

The Equity Financing Index was also down, dropping to 22, the lowest figure on record, again due to the tight financial market. A reading below 50 indicates that equity finance is less available.

More than half (56 percent) of those responding to the survey said equity finance was less available in the third quarter than it was three months ago. Almost a third (31 percent) indicated equity financing was unchanged, while a scant 2 percent saw some improvement in its availability.

• Rents Inflated By Owner-Occupied Slowdown
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• Renters Retain Room To Ruminate
• More Rental Market Uncertainty
• How To Develop A 'Rental Career' In New Landlords' Market

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Rents Inflated By Soft Owner-Occupied Market

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Don't expect any quarter from the rental sector.

As hundreds of thousands of homeowners enter some stage of foreclosure each month, it's not surprising rents are up in each of the 32 Metropolitan Statistical Areas (MSA) tracked by Novato, CA-based RealFacts.

From the Orlando-Kissimmee, FL MSA, where rents were flat but considered up slightly from a year ago, to the 11.9 percent year-to-year increase in Silicon Valley, homeowners are trading in the centerpiece of the American Dream for an apartment, according to RealFacts' third quarter 2007 numbers.

The trend is squeezing the supply and that's pushing up rents.

RealFacts keeps tabs on more than 12,000 rental communities of 100 units or more in MSAs in 15 states, most of them west of the Mississippi River, but also in Florida and Illinois. The firm also keeps tabs on rental units by category, from studios, one-, two- and three-bedroom apartments to three- and four-bedroom town homes.

Only average, rents in Los Angeles, at $1,630 a month, were the only locating with higher rents than the hot San Jose-Sunnyvale-Santa Clara MSA (Silicon Valley) market, where rents averaged $1,622 in the third quarter.

The other high-rent districts were San Francisco-Oakland-Fremont, at $1,551 a month; Oxnard-Thousand Oaks-Ventura, at $1,548; San Diego-Carlsbad-San Marcos, $1,363; Miami-Ft Lauderdale-Miami Beach, $1,224; Riverside-San Bernardino-Ontario, $1,159; Vallejo-Fairfield, $1,141 and Seattle-Tacoma-Bellevue, where the average rent in the third quarter was $1,057.

Revealing current market pressures, quarter-to-quarter rent increases were up 4.1 percent in Salt Lake City and 3.3 percent for both the San Francisco and San Jose MSAs, according to RealFacts.

The increases translate to monthly average rent increases of $30, $49, and $52 respectively.

At the current pace, Salt Lake City will see a 16.4 percent annual rent growth, while San Francisco and San Jose will both post a 13.2 rental growth rate.

Home price growth in owner-occupied housing has stopped or slid in many markets, but home prices, still packed with nearly a decade of appreciation, remain unaffordable for many, especially those who can't find financing in the current hard money market.

Revealing swarming tenant demand, occupancy rates were at or above 95 percent for one third of the MSAs in the data base, with all MSAs reporting occupancy rates of 90.5 or more.

Salt Lake City posted the strongest occupancy of any MSA at 97.2 percent, followed by San Jose at 96.4 percent, Fresno at 96.2 percent, San Francisco at 96 percent, both the Boise City-Nampa MSA and the San Diego MSA at 95.7 percent and Tulsa, OK at 95.6 percent.

The worst news in the rental market was year-over-year occupancy rate declines in the third quarter involving 24 MSAs.

Leading the losses were Orlando and Phoenix, both down more than 4 percent, with three other MSAs recording losses of over 3 percent.

It wasn't enough, however, to keep rents from rising.

• Landlords Loving It, Renters Rueing It
• Wanted To Rent: Tech-Friendly Apartments
• Renters Have More Time To Ruminate
• More Rental Market Uncertainty
• How To Emulate A 'Career Renter'…Even If You Aren't

© 2007 DeadlineNews.Com

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Of Intellectual Property Is A Federal Crime

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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DeadlineNews.Com's Editorial Content Is Intellectual Property - Unauthorized Use Of Intellectual Property Is A Federal Crime

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