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Bargains For Apartment Seekers

Written by Dorothy G. Macdonald    Friday, 23 December 2011

If there is an upside to the economic downturn, Pam Lunning found it recently in a Denver newspaper's "for rent" ads: "Three months free rent!" "No lease required!" "Zero deposit!" Overwhelmed with choices, she settled on a one bedroom apartment in a luxury complex just 15 minutes from work a far cry from her previous hour plus drive. The rent on the apartment, which had been freshly painted and recently remodeled with new appliances and carpets, had just been reduced by almost a third to $629 a month, including access to a health club featuring a gym, pool, spa, and even a tanning salon. "I was like, `Excuse me? This is included in the rent?' " says Lunning. "There was no application fee, no first and last month's deposit. They even allowed pets!" Reeling from an 11.7 percent vacancy rate the highest in more than a decade Denver's landlords aren't the only ones rolling out the red carpet for renters. As low mortgage interest rates continue to convert former tenants into homeowners, high unemployment in once tight rental markets like San Francisco, Atlanta, and even New York have further dried up demand and forced landlords to lower the rent. "It's a bad time to be a landlord but a very good time to be a tenant," says David Shulman, managing director at New York based Lehman Brothers. The hard economic times have come amid climbing marriage rates and dropping divorce rates. "Divorce is the apartment owner's best friend," says Shulman, who notes that the biggest boom years for apartments came amid skyrocketing divorce rates in the 1970s. "But when people get married, they usually go from two apartments to one, and eventually to none because they end up buying." And while more affordable borrowing has sucked tenants out of the rental market, low interest rate loans have enticed developers into overbuilding. In Atlanta, builders are expected to add 15,100 rental apartments over the next 18 months, while Denver's will add 11,500 units. "That would be a very aggressive pace even if the economy were doing well," says Greg Willett, research director at M/PF Research. Willett is more optimistic about the long run prospects. Thanks largely to the maturing of so called echo boom children whose baby boomer parents began having kids about 25 years ago demographers expect a decade long surge of about 4 million people turning 20 years old each year. "We certainly expect them to look for their own places once they find jobs," says Willett. "And most will start out renting." A renter since she graduated from college, Charlyn Hart knows the drill all too well. At least she thought she did. "The last time I rented a place, they wanted me to put down four months' rent just to get in," says the 29 year old technical writer in Austin. "This time I only had to put down $250." Marked down from $750, the one bedroom she leased last month cost her only $625. When she arrived, however, she found scratches on the floors. "So I told them I wanted them redone," she recalls. Instead, the manager upgraded her to a new two bedroom for the same price. She moved in a week later. "By then, they'd lowered the price on the one bedroom again," she says, "so they gave me another $10 a month off."

Last Updated ( Friday, 23 December 2011 )