In the past few years, throngs of apartment dwellers ditched their rental digs as subprime credit and loose lending standards allowed more Houstonians to buy homes. But now that the days of easy money have ended and the apartment market strengthens, renters are feeling the pain. "We're not nearly where New York or L.A. are, but we're going more and more in that direction," said Tim Brookover, a renter who had a hard time finding anything for less than $1,000 a month when he was looking at one- and two-bedroom apartments last spring.
Last year, renters were paying an average of $659 a month. As of October, the average rate was up to $681. At the same time that more renters are staying put because they're unable to qualify for a loan or are worried about buying a house in today's market, Houston companies are adding jobs, and older apartments are being torn down, fueling multifamily demand and allowing landlords to raise rents.
While overall occupancy is flat in Houston — influenced by more than 10,000 new units under construction — rental growth is strengthening, said Bruce McClenny, president of Apartment Data Services. "There's enough people looking for apartments right now, and absorption is strong enough to keep prospective renters coming in and renting, to give (landlords) the confidence to hold and move their rents," McClenny said.
Houston-based Camden Property Trust tracks the percentage of its renters that move out to buy homes. It's dropped to 17 percent from 24 percent 18 months ago. Alan Patton, president of the Morgan Group, a multifamily developer headquartered in Houston, said apartment dwellers may choose to rent longer because it's harder for people with spotty credit or no down payment to get a mortgage. "Some people may actually have a wait-and-see approach, hoping that housing prices may come down as a result of the mortgage problems," he said.
Big landlords aren't the only ones benefiting. In October, more single-family homes, high-rise units and townhomes listed on the Multiple Listing Service were leased than the same month last year, according to the Houston Association of Realtors. Some would-be home buyers are saying, " 'Gee, maybe a single-family home isn't the golden goose investment that everybody said it was a couple years ago,' " said Camden CEO Ric Campo. "They're not buying because they don't think it's a good deal."
Then there are the folks who want to buy a house, but can't. Lacey Abshire separated from her husband and moved into a rental house in the northwest Stonegate subdivision. She has had two foreclosures and has been told by three mortgage brokers that buying a house is out of the question. "I'm now stuck renting to the tune of $1,250 a month, which is a house note," said Abshire, an executive assistant at a real estate company. She lost the two homes — one of which was a rental property — several years ago after she couldn't sell them and was unable to keep paying both notes. One had a mold problem and the other was in a neighborhood with competitively priced new homes, she said, explaining why they didn't sell. Her credit score dropped from 680 to the low 500s.
"People with the banks and mortgage companies need to realize that things happen," said Abshire, 46. "They need to take a look at the whole picture." While the housing slowdown is helping the business of multifamily developers, new construction, some said, is largely fueled by job creation. Of the 16,500 units under construction, more than 5,000 will be delivered into the supply by the end of the year, according to Apartment Data Services.
Those numbers are high, McClenny said, but supply hasn't become a problem. And the seizure in the credit market could dampen the number of new apartments because
Source: Chron.com