Rental/Real Estate Related Articles
LI rentals rise as housing market sputters
Local homeowners and real estate investors are putting more houses up for rent as they wait for a hoped-for rise in sale prices, according to brokers and online real estate listings. In addition, developers are finding it easier to get financing to build apartment buildings than co-ops or condos.
The total number of rental units on Long Island rose by nearly 27 percent from 2008 to 2011, to 187,089, according to census data compiled by the Regional Plan Association, a not-for-profit organization in Manhattan. Craigslist, sublet.com and many local brokers say the supply of rentals has continued to increase strongly this summer.
Meanwhile, the supply of for-sale homes is dwindling. In August, there were 20,088 homes for sale, 15 percent fewer than a year earlier, according to the Multiple Listing Service of Long Island.
“The housing crisis created the rise of the rental,” said Great Neck-based Wendy Sanders, who specializes in rentals for PrudentialDouglas Elliman. “People’s lack of ability to buy created a bigger rental market, and people’s lack of ability to sell gave us merchandise to put on the market.”
Affordable renting key
Long Island’s shortage of rentals has long made it difficult for young adults to settle here and senior citizens to stay, real estate experts said. Affordable rental housing is needed “to keep our young people; they’re obviously a critical part of the economy and the workforce,” said Richard Guardino, executive dean of the Wilbur F. Breslin Center for Real Estate Studies at HofstraUniversity.
However, the new supply of rentals isn’t sufficient to meet the demand. Long Island apartment buildings had a vacancy rate of 2.1 percent in the spring, one of the lowest in the nation and a drop from 3.6 percent in the second quarter of 2011, according to Carrollton, Texas-based RealPage Inc., which tracks apartment market trends.
The modest increase in rental housing “doesn’t solve the fundamental problem in the market. The mix is still heavily skewed toward single-family homes,” said Pearl Kamer, chief economist with the Long Island Association, the largest business organization here.
Plus, many of the new rentals do not come cheap.
The three- or four-bedroom waterfront houses that have hit the rental market since the 2008 financial crisis can fetch $3,000 to $8,000 a month, or even more, said Deborah Sande, of Daniel Gale Sotheby’s International Realty in Huntington. “The sky’s the limit,” she said.
Jennifer Cino, 27, and her fiance, Kevin Reilly, pay $2,600 in rent and fees for their one-bedroom apartment plus two parking spaces and other amenities at the AvalonBay rental complex in Rockville Centre, where construction finished this summer.
Less expensive apartments elsewhere were all inconvenient or cramped, including one where they couldn’t open the stove and the refrigerator at the same time, said Cino, a Rockville Centre math teacher.
It’s a common complaint. Jim Hegmann and his wife would like to move out of their three-bedroomHicksville ranch, rent it out and lease a modest apartment to cut costs. He feels confident he can find a family to rent his home for about $2,500, but the choices in his own $2,000 price range are “horrendous,” said Hegmann, 68, who lost his job as a compliance officer at a bank in 2010. Some of the bedrooms were so small there would not have been room to navigate around the couple’s medical equipment, he said.
Long Island’s supply of rentals is unusually low for the region, experts say. Roughly one in five of Long Island’s housing units are rentals, compared to about one in three in Westchester, southern Connecticut and northern New Jersey, according to the Rauch Foundation’s Long Island Index, which publishes reports on local housing and other issues. “The amount is increasing, that is absolutely sure,” said Ann Golob, director of the Long Island Index, but “we are still far below our suburban neighbors.”
Renting vs. selling
With so few homes and so many eager renters, it can take just a few days to rent out a house in good condition, brokers say. By contrast, this spring it took more than four months, on average, to sell a home on Long Island, excluding the East End, according to a report by the appraiser Miller Samuel and the brokerage Prudential Douglas Elliman.
Still, handing over one’s house keys to renters can be fraught with anxiety.
Beatrice Espinoza, 45, has been turning down renters for more than two years. A former secretary studying to become a nurse, Espinoza wants to rent out her four-bedroom home in Medford for $2,325 a month, sell her car and rent a studio in Queens to save money.
The rent would cover her $1,292 monthly mortgage plus the taxes, Espinoza said. However, she has rejected a dozen or so prospective renters, since they all flunked her background check.
“I love the home,” she said. “I don’t want to rent it out, but that’s my only choice at the moment.”
Espinoza owes about $425,000 on the home, which was recently appraised at $399,000. If she sold it now, she said, “I would literally walk away losing everything.”
If prices rise in the next three to five years, perhaps she can sell and make a small profit, she said.
Even in affluent areas such as Dix Hills, some struggling homeowners have gone to the trouble and expense of breaking up their homes into “mother-daughter” units and getting permits from their towns, said John Breslin, a real estate attorney and landlord in Huntington.
Others resort to renting out basements, which can be illegal. State regulations forbid many below-grade units for health and safety reasons, Breslin said.
For some investors, buying and renting out homes has been a better investment than stocks or bonds. James Klingel owns four single-family rental homes, which he said give him an annual return of about 10 percent to 12 percent after expenses. “This is pretty much my kids’ college fund,” said Klingel, 48, who lives in Miller Place with his wife, 15-year-old daughter and 11-year-old son.
Major developers, too, are responding to the popularity of rentals. The Engel Burman Group, which operates about 1,000 assisted-living units, hopes to build at least 2,000 rentals on the Island within five years, said Steven Krieger, a principal with the builder.
Other builders have decided to switch from condominiums to rentals. A nearly complete 90-unit condo development in Valley Stream that went into foreclosure in 2011 was recently taken over by a Greek real estate investment fund that plans to convert it to rentals, according to Torchlight Investors, the Manhattan-based real estate investment manager that provided $25 million in loans for the deal last month. In addition, of the 860 housing units in Glen Cove’s waterfront redevelopment, as much as 50 percent are expected to be rentals, compared with 21 percent in the 2009 plans, according to the developer, RXR-Glen Isle Partners. The switch was due to increased demand for rentals, according to a spokesman.
Lenders are more willing to finance rentals than for-sale units because rental demand is so high, said Mitchell Pally, chief executive of the Long Island Builders Institute, which represents developers.
However, community opposition has blocked many proposed rental complexes, and that is unlikely to change, real estate experts say.
Homeowners “are terrified of any change that they perceive as destroying their home values,” Golob, of the Long Island Index, said. But rentals, she said, “don’t have to look ugly. They can be beautiful, they can increase the value of our homes, they can increase our sense of community, our sense of place, and be gorgeous places to live.”
Originally published: September 20, 2012 8:07 PM
Updated: September 23, 2012 10:35 AM
By MAURA MCDERMOTT
Long Island home prices continued their steady downward march last month.Homes in Nassau County fetched a median price of $397,000 in April, a decline of 2 percent compared to the same period last year, the Multiple Listings Service of Long Island said in a report released Monday. The median is the midpoint in a series of numbers. The number of transactions was down by 2.3 percent, according to the listing service.
In Suffolk County, the median price of $285,000 was 1.4 percent lower than April 2011. The number of transactions was down by 3 percent.
Those numbers reflect sales that closed in April, and generally went into contract about two months before. Sales that went into contract in April reflect a somewhat stronger market. For contracts signed last month, Nassau County’s median price of $395,000 marked a 0.8 percent increase compared to the same period last year, according to the listing service. The number of pending sales in Nassau was up nearly 15 percent compared to the previous April.
In Suffolk County, the median price of sales that went into contract last month was $305,000, unchanged from the previous April. The number of pending sales was up nearly 21 percent compared to the previous April.
Maura McDermott-Newsday- 5/14/2012
Rent Study Finds NYC Cheaper Than Long Island, New Jersey
In what will be a surprise to many New Yorkers, the city isn’t the most expensive place in the country to rent a modest two-bedroom apartment, a new report released has found. In fact, it’s not even the most expensive rental market in the region.
San Francisco has the most costly rents for non-luxury two-bedrooms, followed by the Stamford-Norwalk area in Connecticut and Honolulu, according to the annual study released Tuesday by the National Low-Income Housing Coalition, a group that advocates for affordable housing. New York City ranked 14th on the list; Long Island’s fourth-place ranking among metropolitan areas made it the most expensive two-bedroom rental market in New York state.
The study tracks “fair market rents” for two-bedroom apartments, a measure defined by the federal government that seeks to estimate the cost of a non-luxury rental unit in each area’s current market.
The average New York City fair market rent for a two-bedroom was $1,424 a month, trailing Long Island at $1,682 a month and even the $1,302 statewide average price for New Jersey, according to the report.
San Francisco, in contrast, had a fair market rent of $1,905 a month. The national average is $949.
The report tracks two-bedrooms because they tend to move the most nationally, generating the freshest data, said Megan Bolton, a senior research analyst and the report’s co-author.
The rent data covers entire metropolitan areas and is not broken down to provide separate data on each of the five boroughs — a grouping that likely kept Manhattan from a higher ranking. Bolton also said New York’s relatively modest two-bedroom rental price is tied to the greater supply of rent-stabilized housing than other high-cost areas.
“California and Connecticut are always there in the top 10,” Bolton said. “They are the expensive markets where there isn’t as much rent control.” Honolulu also suffers from a limited supply of cheap rentals because of strong demand, she said.
As for statewide averages in the region, New Jersey was the most expensive at fourth, followed by New York at sixth and Connecticut at seventh.
“New Jersey has become less affordable,” said Diane Sterner, executive director of the Housing and Community Development Network of NJ, an affordable housing advocacy group, in a statement. “We need our leaders to invest in New Jersey’s future, and help create the homes our residents need.”
-March 14, 2012, 2:13 PM ET-The Wallstreet Journal-By Heather Haddon
Buying vs. Renting a Home
When Renting Instead of Buying Makes More Sense
Bad Credit Report
Does your credit report tank? If your FICO score is below 620, you’re not going to receive a good interest rate for a loan and, in fact, that kind of score could dump you into the hands of a predatory lender. Not a good sign.
If you want to buy with bad credit, you should work on fixing it before applying for a loan.
Four late payments is enough to disqualify you from obtaining a loan.
You can order your credit report
High Debt Ratios
Lenders consider two ratios: front-end and back-end. The front-end is your mortgage payment, plus taxes and insurance divided by your monthly salary. The back-end adds your monthly debt payments to your PITI payment before dividing that total figure by your salary. A 50% debt ratio is a high ratio. A high debt ratio means you may not qualify for the loan. If you should find an unscrupulous lender that is willing to fund such a loan, you may not be able to afford to feed yourself, even if you eat dirt.
Job Instability or Relocation
How secure is your job? A high-rolling Sacramento buyer purchased a home in Midtown. His mortgage payments were $3,500 a month, which was a lot for a 25-year-old. However, that payment was affordable while this guy was earning an annual $120,000 salary. But when he lost his job, he also lost his home to foreclosure.
Is Your Job in Jeopardy?
Is your company laying off? Could you be fired and, if so, how hard would it be to get another job right away? Unemployment compensation is rarely enough to cover mortgage payments.
Are you likely to be transferred to another city within the next two to three years? If you had to sell due to a job transfer, your property would need to appreciate at least 10% to cover the cost of selling; otherwise, you would lose money on the sale. When you buy a home, you should plan to stay put for a while.
All homes require upkeep and maintenance. Not everybody has the where-with-all, much less the desire, to tackle home repair projects. In addition, many first-time home buyers can not afford to hire a professional to fix things that break. Experts suggest you set aside 5% of the purchase price to cover maintenance and repairs when you buy a home.
When Renting Costs Considerably Less
If your mortgage payment would be triple the amount (or more) you would pay for rent, it might not make financial sense for you to buy. For example, if it would cost you $2,000 a month to rent what would cost you $6,000 per month to own, does it make sense to pay $48,000 a year more to own a home?
If you are in a 30% tax bracket, you might not come close to recouping the difference you paid. Say your deductible expenses are $5,000 a month; 30% of that is only $1,500, which would be your true tax savings per month. Would you spend $6,000 to save $1,500? For more information, please consult a tax accountant or CPA.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
Brandon Cusma is a licensed Real Estate Sales Agent in the State of New York. Currently his License is held with REALTY CONNECT USA- 175 Crossways Park West Woodbury NY 11797 with offices located in BELLMORE,LEVITTOWN,MASSAPEQUA,ROSLYN,QUEENS CEDERHURST AND MERRICK!