“We have never felt such a demand as today.” Why rent is hard to find in Likhai Valley – Morning Bell
Alyssa Kaiser was looking to start a new chapter in her life that required finding housing.
She found it in a new complex in Allentown, a two-bedroom apartment with two bathrooms for her and her children. It was a short way to her work, and the complex had a gym and a washing machine and dryer in each unit.
Like many in the Lehigh Valley looking for rent these days, it wasn’t the easiest search. Kaiser believes she was lucky to find her place in just two months.
“My God, yes,” she said. “Because it could be months. However, until I could find a place if I liked something, it could be unavailable. ”
It was an added stress for Kaiser who is going through a divorce.
“I definitely didn’t want to stay in my house anymore,” she said. “So how long will it take? Then, of course, there are the approval and verification processes and all that. So if you don’t get approved, you’ll have to start the process again somewhere else. “
Kaiser is far from alone.
Rents are hard to find, leasing agents say, as population growth and the influx of newcomers to the valley have made competition for housing very intense.
New apartments are being built. City center in Allentown there are currently two buildings with 365 units under construction in the city center, and two more buildings with 182 units under construction. Jaindl Enterprises is building them along the Liha River in Embankment project. The area on the boulevard was recently opened in Allentown by Scully Co. with 160 units.
And this is still not enough.
[ Most renters looking to enter or exit the Lehigh Valley are coming from one specific area, new report says ]
Simply put, in the Lichai Valley there is a problem of supply and demand with rental real estate, and it does not look like it will improve any time soon.
“I’ve been in the housing business since the late ’80s,” he said. B. Reilly, president and co-founder of City Center. “We have never felt such a demand as today. Period. The occupancy rate is at an all-time high in all property segments across the valley. There’s just not much availability. “
One realtor says that potential tenants offer to pay higher rents just to get into any apartment.
“Right now, no matter what we have in our lease, we have a waiting list for everything we have now, and unfortunately nothing should be,” said Tim Tepes, a realtor from Assist-2-Sell to buyers and sellers of real estate in Northampton. “We get calls from people who are willing to pay a summer rent in advance and are willing to pay $ 100 to $ 200, and sometimes $ 300 more than rent to get an apartment.”
Kaiser said she needed to hand over the equivalent of a three-month rent to get to her place.
“My ex-husband is a real estate investor, so I’m very knowledgeable about the real estate market now,” she said.
Rooms with Lihai Valley Planning Commission show that tenants make up nearly 86,000, about 33%, of households in the Lichai Valley. This is an increase of 7% compared to 2005 and an increase of 2% only in the period from 2018 to 2019.
In addition, rents are in growing demand because many are closing off home ownership due to sharp increases in selling prices and difficulties with saving money or claiming a mortgage. This group is primarily young people, and the demographic age of 18 to 34 years in the Lehigh Valley has increased by more than 10%.
Competition for single-family homes is also fierce. The Realtors Greater Lehigh Valley reported an inventory of 486 homes in March, a drop of more than 27% over the previous year and a drop of 87% over 2012.
Reilly, whose City Center has built nearly 1,000 apartments in downtown Allentown, said shortages exist in many types of housing.
[ Lehigh Valley renters struggle to find, keep affordable housing as prices spike ]
“There is a significant increase in demand for housing, and the supply of housing is not in time,” – said Reilly. “And I think it’s happening in all the different types of housing that are buying homes or apartments for the first time or moving into luxury. There is a shortage on all these lines in the Likhai Valley. “
One of the ways in which society changed during the COVID pandemic was the ability of workers to do their work at home. Without daily trips to downtown, such as Manhattan, many believed they could easily do their work at a table in a larger apartment in the Lehigh Valley with a lower cost of living than in a smaller and more expensive location closer to New York City. . According to Fr. CBRE According to the survey, the number of people from the New York subway moving to the valley increased by 13.7% in 2020.
“There must have been a general migration during the pandemic,” Reilly said. “When you think of the Lehigh Valley, you look at our proximity, especially to the New York City subway market. Many people discovered the Lichai Valley during the pandemic because people could work remotely. People have moved to the Likhai Valley to get out of more expensive travel situations. ”
People learned about the subway area 75 miles from Manhattan with much lower tax rates in terms of income tax and property taxes than New York or New Jersey, which is still convenient for these markets.
Jack Gross, realtor with Cassidon Property ManagementBethlehem said the location of the valley between several metropolitan areas makes it a desirable place.
“It’s a matter of supply and demand,” Gross said. “There is a lack of supply and increased demand. Why increased demand? My opinion is based on the fact that we are geographically located between several metropolitan markets. There are still people leaving New York, northern New Jersey. Our values are still lower than their markets. So while we’re for them Walmart and a lot of people work remotely – maybe they only need to go to town once a week or once a week. In this way, they can maintain their usual level of wages and come here for a much higher cost of living.
Tepes said not only young people are looking for a rental market. Many are older people who may be looking to reduce their size.
“It’s everywhere,” Tepesh said. “And I have more and more elderly people who just want to find an apartment on the ground floor, they don’t want to go to an auxiliary life or to a nursing home yet. You can’t find them.
“I probably have about four or five older couples who are now looking for ground floor apartments that they can find or even ranch houses that want to rent that they can find. Then you have people who can’t find a house that they’re trying to rent, and can’t even find a place to rent, which obviously raises prices. ”
According to LVPC figures, the Valley rental market has grown steadily since the mid-2000s, adding an average of 460 new leases annually. In 2020, 866 apartments were approved, which is almost twice the average.
But just adding new apartments is easier said than done. In addition to the usual board meetings for planning and obtaining the permits needed for construction, the cost of construction is also rising along with delays due to supply chains and labor issues.
“Over the past two years, costs have risen by more than 20%, and now interest rates are starting to rise,” said Reilly, who is completing construction of two more buildings in Allentown. “Suddenly, when we consider a project for construction, our costs are 20% higher than they were a couple of years ago. And our cost of capital has now grown significantly if we could borrow money at 3.5% or 4%. Now we will be at 5%.
[ Rents rise dramatically in Allentown, new report shows; a studio apartment now averages about $1,600 a month ]
“So these two factors have added a significant challenge to be able to bring the project to 3.5 percent, you need an economical way, even though the rent is higher, which definitely helps the financial model, but also operating costs are also higher ”.
Gross added that even the cost of basic maintenance is rising and will take into account rent.
“Landlord costs have risen,” Gross said. “It used to cost me $ 900 for a heater. It now costs $ 1,500. It used to cost $ 225 outside the window. It now costs $ 350. Relocation costs have risen. It is very difficult. Problems with supply chains have hurt us badly. ”
Gross said it is also becoming increasingly difficult to convert old single-family homes into apartments.
“Many municipalities with old housing do not want you to turn into an apartment building,” said Gross. “They want you to deconvert. The single-family market is where it is now. The regulations on the conduct of units are very strict. And this slows down the ability of developers to at least replenish the housing stock in one family. But the cost of materials went crazy. There are more apartment buildings being built there than I have ever seen, because the demand is very high. “
These higher costs are passed on to the tenant, which pushes the rent even higher.
The latest rental figures from the LVPC show that 57% of apartments in the region cost $ 1,000 or more per month compared to 43% of apartments in previous years. About 25% of them are one-bedroom apartments, which is declining compared to 2015.
“Most of the new apartments that are being added are two- or three-bedroom apartments, which explains the overall increase in the average monthly cost and the decline in market share of one-bedroom apartments,” the report said.
“You had a renewed rent for $ 1,500,” Tsepesh said. “Like maybe last year at this time this rent and this market was about $ 1,200. Now it’s $ 1,500. People come in and say I’ll give you $ 1,700. Sometimes it’s a little crazy. “
Collaborative research The University of the Atlantic of Florida, the University of the Gulf Coast and the University of Alabama found that the Lichai Valley is the 20th most inflated rental market in the U.S. and the largest in the Northeast.
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The study used past lease data from the Zillow Observed Lease Index to statistically model historical trends from 2014 and determine where rent should be, and compare them with current rents. The difference between them is that they pay premium tenants. The higher the premium, the more inflated the market.
It was found that the average rate in the valley of $ 1,770 should be $ 1,578.25, which is more than 12%. The top five were from Florida, where there was an influx of transplants from outside the state during COVID with high demand. The Miami region was number 1 with an average rent of $ 2,832 with a premium of 21%.
“Increased rents will continue until inflation is under control and we build enough units,” said Shelton Weeks of Alabama. “Meanwhile, people will have to make difficult choices.”
Despite the frustration in the market, Gross said the worst thing a potential tenant could do is cancel the search.
“Don’t give up,” Gross said. “Our agents will come to me and say, well, this buyer is leaving the market because they put up 10 offers that they didn’t get. I tell the agent to convince them to stay in the market and keep trying, because what they think they’re overpaying today may actually feel like they stole it two years later.
“Same with the tenants. Don’t stop looking. Because what you pay for today, a year later, I can tell you is growing again. I know that we are facing a recession, and everything, except supply and demand, is still wrong, ”he said.
Morning reporter Evan Jones can be reached at firstname.lastname@example.org.