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America becoming a ‘Rentership Society’

August 8, 2011 by in Apartments, Rental Market Info
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Since the housing bubble burst in 2008, millions of homes have gone through foreclosure. But what happens to all the families caught up in the financial chaos? Apparently, millions of them have become renters. The trend towards renting has been so strong in the past few years that analysts from Morgan Stanley recently reported that the United states is quickly becoming a nation of renters.

Graph of US Home Ownership Rates 1965 to 2010

Graph of US Home Ownership Rates 1965 to 2010

In the August 5th CNN Money article, “Home ownership hits lowest level since 1965” Les Christie describes how the US home ownership rate has dropped from 69.2% in 2004 to only 59.2%. While the official numbers show the home ownership rate at 65.9%, the number drops to 59.2% when you factor in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point).

Since Rochester has been fortunate to evade the worst of the housing crisis, and in the process rack up a number of top 10 placements for real estate investing and home ownership, our home ownership rates are quite a bit more steady. The rest of the nation’s real estate has not been so lucky. In fact, the average home price has declined 32% nationally. Despite the ridiculously low interest rates on mortgages, the market just can’t seem to generate buyers fast enough. The two biggest factors being the much more stringent lending practices and the overall decrease in employed people, ready to make a home purchase.

This bubble, and the consequent burst, were surprises to no one with a fundamental knowledge of economics (regardless of what the talking heads on the news have been saying for the past few years). Having been in a position where I could see this disaster coming, I have to confess that I don’t see anyone making the decisions at a national level that are necessary for us to turn this crisis around.

Perhaps the analysts at Morgan Stanley are right, America will be a much more mobile, renter-centric, society for the foreseeable future.

Erie Harbor Apartment Plans Unveiled at Community Meeting

November 9, 2010 by in New Construction, Rental Market Info, South Wedge
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Erie Harbor - Rochester, NY

Residents of Rochester’s South Wedge neighborhood spent roughly 30 years waiting to see the old housing projects come down along Mt. Hope Ave and the Genesee River. About two years ago residents let out a collective sigh of relief as the wrecking ball erased the former soviet-style cement complex from the skyline. After a series of community meetings which left residents anywhere from horrified to disappointed, Conifer met with community stakeholders one more time last week to show off their final plans in the community room of the Hamilton Apartment tower next to the proposed building site.

Conifer’s building project manager presented a series of 3D illustrations which included some small design compromises like toning down the color palate. No one was surprised to see that the final designs were so similar to the ones which several weeks ago prompted neighbors to start a petition which raised nearly 600 signatures in protest. One of the biggest hurdles to incorporating public feedback on the design is that most local residents wish they could start with a clean slate. They feel that the design of this building is the antithesis of what the waterfront location and the community call for. While they are right on both accounts, in my humble opinion, the project will still be an economic boon for the community.

My wife and I own and live in a home less than a block from the proposed Erie Harbor Apartment project site. So as you can imagine, this project has a huge impact on us. One of the biggest positive changes resulting from this redevelopment is the introduction of market rate apartments on the South Wedge neighborhood’s waterfront. The previous 3-story low rise building had roughly 200 low income housing projects. Erie Harbor will be an 80/20 market rate and affordable housing hybrid with 131 units in total. The best part (for local property owners) is that Conifer will be defying the local apartment market by increasing the neighborhood’s rent ceiling by about 100%.

Erie Harbor apartments will be available as flats or two story floor plans with off street parking, water-view balconies, washer and dryer connections in unit and access to a common roof deck. With one bedrooms at $925-1100, two bedrooms at $1250-1850 and 3 bedrooms at $2000-2250 it will be interesting to see how quickly these apartments are filled after completion. Since the current average rent in the South Wedge neighborhood is closer to $800/mo for a two bedroom apartment, we sure hope they get it!  If you’re ‘lucky enough’ to qualify for the new affordable housing units, the rents are a much more approachable $625, $750 and $826 for the 1,2 and 3 bedroom apartments respectively.

Ground breaking should take place this winter with a possible completion date of Fall 2011.