MyNewPlace Blog

Each week, MyNewPlace provides a compendium of news articles on apartments for rent, the rental market and interesting apartment features. We also track legislation that affects the rental market, highlighting new features for apartment owners and renters, and taking a look at notable apartment trends.

Political Corner

A plethora of legislative actions are affecting the multifamily industry this week at both the state and federal levels.

We've been covering a proposed federal bailout of banks and homeowners and featured summaries on the roundups from April 21^st and April 28^th. On May 5th, H.R. 5830, the FHA Housing Stabilization and Homeownership Retention Act of 2008 was placed on the Union Calendar, means that it will be considered by the Committee of the Whole, a parliamentary tactic used to expedite legislation. This haste is due to the perceived timeliness of bill's legislative remedy, as well its authorship by the Chair of the House Finance Committee.

In California, we have highlighted two political issues in previous blog posts whose upshots may affect the apartment rental industry.

The first is a bill that has just passed the State Senate's Judiciary Committee, which would protect apartment owners who seek to make their apartments smoke free. Since there has not been any lawsuits filed against apartment owners on the grounds preserving a tenant's right to smoke, the bill has been criticized as not going far enough by some smoke free advocates who would like to see an outright ban, as exists in two California towns.

Also in California, two competing statewide ballot initiatives will be decided by voters on June 3^rd. Both initiatives seek to reform eminent domain, but one, Proposition 98 is tackling another property rights issue, rent control. Proposition 98 would phase out rent control in California and make it more difficult for governments to seize property under eminent domain.

Green Apartments

A column in LA Weekly suggests that renting an apartment is much more ecologically friendly than owning a home. We have touched upon this issue, exploring how living density is integral to a green lifestyle. By living in apartments people can share resources as well as preserve existing open spaces.

Of course, these effects are only optimized when an apartment building undertakes to become more sustainable by conserving power and water.

To that end, Thomas Scali of the U.S Energy Group offers some insightful commentary on being a proactive ‘building efficiency driver." A property manager should not only react to emergencies or tenant complaints, but be intimately acquainted with the energy mechanisms of each apartment building. This attentiveness will reduce emissions and costs.

A Creative Renting Strategy

And finally, we leave you this week with an article from the LA Times that offers a creative approach to finding renters. Would you rent your home out as a ‘crashpad' to airline crews? To offset living expenses, one homeowner rented out four bunk beds in an extra bedroom for $250 a month per person each month.

Check back with us each week to get the latest from the apartment rental industry.

As always, feel free to send us links to stories that you find interesting.

Over the next few weeks, we'll be featuring snippets from an article authored by the National Apartment Association (NAA) and the National Multi Housing Council (NMHC) entitled Don't Buy the Myths: Renting Can Be a Smart Decision. The Rent vs. Buy article focuses on 9 widespread misconceptions regarding the benefits of homeownership over rental apartments.

MYTH# 3: My mortgage payment will be less than my rent.

Your mortgage payment is just the beginning. The “hidden costs" of ownership can add up to thousands of dollars each year.

Do not expect to be able to afford a $1,000 a month mortgage because you can afford $1,000 for apartment rent. According to Suze Orman, your annual budget for additional homeownership costs should be around 40-45 percent of your mortgage. That means you'll need to budget more than $1,400 per month for housing costs, not $1,000.

What makes hidden costs drive up monthly housing expenditures?

• Property taxes: If you own a $200,000 home and your property taxes are 1.25 percent (the U.S. average is 1.38 percent, with a high of 2.21 in New Hampshire and a low of .40 in Hawaii) then you'll need to budget around $200 each month just for property taxes.
• Maintenance costs: Now that you are financially responsible for the upkeep of your home, you'll need to budget about 1 percent of the cost of your home for repairs and maintenance. For a $200,000 house, this will be more than $150 a month.
• Private Mortgage Insurance: If you make a down payment of less than 20 percent, you are also going to need to pay around $100 a month in PMI costs.

So, in this example, you would be paying around $1,450 per month for housing costs, a substantial jump up from $1,000 rent. Be sure to factor in these costs, as well as homeowner's insurance, before you make the decision to buy a home.

For more information, check out the full Rent vs Buy article, which can be found at the MyNewPlace Apartment Guide.

Check back next week when we will feature Myth #4, “The Myth of the Constancy of Housing Costs."

On the next statewide California ballot, the June 3^rd legislative primaries, Propositions 98 and 99 will be battling to set new regulations on eminent domain. Since the landmark eminent domain case, Kelo v. the City of New London was decided by the Supreme Court in 2005, states have rushed to clarify the circumstances under which the government may condemn and seize private property for public use.

Although eminent domain is an important issue to all property owners, one of the proposed initiatives, Proposition 98, is of especial interest to apartment owners and renters as it includes language that would phase out rent control in California.

Currently, in California there are 12 cities that have rent control ordinances. West Hollywood, Santa Monica, Berkeley, East Palo Alto and Cotati have 'strong rent-control laws,' which establish permanently regulated rent control regardless of the turnover of tenants. This is different from San Francisco's rent stabilization, which sets caps on increases once a tenant has moved in.

Rent control is a contentious issue. Cities whose populations are comprised mainly of renters cite the need to maintain a stable rental market and protect low income families from tumultuous rental markets. The economy as a whole would be vulnerable if renters from each demographic were not able to contribute to a locality.

Arguments against rent control maintain that regulations are counterproductive to their own goals and end up creating housing shortages and reducing quality. When rents are artificially low for long term tenants, landlords must charge inflated prices for newly vacated apartments to make up for lost revenue from rent controlled apartments.

Another adverse effect of rent control is that nullifies one of the main advantages of renting, mobility. The Section 8 Housing Program, which grants housing vouchers, is commonly referred to as being a widely effective affordable housing program. Cities that impose rent control may in fact be making it more difficult for tenants to find affordable apartments for rent.

The Public Policy Institute of California polled likely voters and found that 53 percent believe rent control is a good thing and 39 percent think it is bad.

How do you feel about rent control? Have you benefited from rent control policies?

Oh my god, we were totally right about the keyword “Hillside Villas" going through the roof yesterday! I mean, it was so obvious that it was going to happen. You would have to live in a cave under a rock at the bottom of the Mariana Trench to not see it coming. Or the valley. ZING!

So, we made the prediction last week that following Monday night's new episode of The Hills, MyNewPlace would again be hit by a wave of Google searches for the super trendy apartment of Lauren Conrad and Audrina Patridge, the Hillside Villas. Oh and Earth to me, if you are going to write about the Hills, make sure you've got your facts straight, her name is Audrina, not Adriana Patridge.

Look at the graph below, it has more crazy ups and downs than Scott Baio's career:

Keyword Search Traffic

Last Monday night's episode was particularly entertaining as the situation between Lauren and Audrina and the new BF, Justin Bobby unfolded. The situation is later escalated when Lauren begins discussing her roommates with Lo. So when Audrina eventually joins them, Lauren brings up renewing their lease at Hillside Villas. Lauren hinted at looking for a new apartment for rent. As if the situation couldn't become any more awkward it does when Audrina indecisively says she would be interested in moving into the house if welcomed.

Are viewers looking to possible move in with Lauren if Audrina moves out or if their Hillside Villas apartment becomes available?

Until next Monday's show the theme song had it right in saying “the rest is still “Unwritten“

Smoking in rental apartments is a controversial topic. On one hand, it seems reasonable that one should be free to do all legal activities within their own home, rented or not. On the other hand, when does this right to privacy infringe upon the rights of others?

The State of California may soon be intervening on the side of non-smokers.

Senate Bill 1598, authored by Senator Alex Padilla (D-San Fernando Valley) and passed by the Senate Judiciary Committee on April 29^th, would provide legal protection for apartment owners who want to ban smoking in their apartment complexes.

The bill does not seek an outright ban on smoking in apartments, an action that some anti-smoking groups have pushed for, who claim that the bill does not change the status quo. This middle of the road approach protects private apartment owners who want to ban smoking in their apartments from lawsuits.

Apartment owners, however, already implicitly have the right to enact regulations and prohibitions in their apartment buildings, including any those pertaining to smoking. So, what does the bill actually accomplish?

All court cases that we have seen have involved non-smokers filing suit to force apartment owners to take action to prevent second hand smoke under the Fair Housing Act, or suits between neighbors not apartment owners facing legal recourse on the grounds of rights to privacy or a ‘right to smoke.'

Many apartment owners have already ‘cleared the air;' by prohibiting smoking in their apartment buildings, they can command higher rents as well as slow depreciation and mitigate the risk of fires.

The law may have the effect of creating publicity about the benefits that apartment owners may reap by going smoke free; smokers that rent apartments in buildings that change policies will face the decision of whether to move out or to take it outside.

Be on the lookout for tips in our apartment guide on the topic of settling disputes between apartment neighbors.

Have renters had problems with a neighbor who smokes? Would you pay more to live in a non-smoking apartment building?

Should MyNewPlace add a Smoke Free search filter?

Over the next few weeks, we'll be featuring snippets from an article authored by the National Apartment (NAA) and the National Multi Housing Council (NMHC) entitled Don't Buy the Myths: Renting Can Be a Smart Decision. The article focuses on 9 widespread misconceptions regarding the benefits of homeownership over apartment rentals.

MYTH# 2: Paying rent is throwing away money. I could be building equity.

During the first five years, more than 80% of your monthly mortgage payment goes directly to interest. Furthermore, since nearly one third of all homeowners move within five years, they never have a chance to start building any real equity. Also, if you take into account the money spent during that time on maintenance, taxes, insurance and the costs to buy and sell their house, most would have saved money by renting.

If you were to buy a $200,000 house with a 5% down payment at a 6% interest rate, you will have paid $55,152 in interest and only $13,196 in principal, after five years of mortgage payments. In addition, you will likely have paid between $10,000 and $20,000 in maintenance and repair to earn that equity.

Chances are you could earn more than this in a number of investments that are more diversified and less risky than putting all of your eggs in one basket. For more information on Diversifying Your Portfolio by Renting, see that blog post, which discusses the rent vs own debate from an investment perspective.

For more information, check out the full Rent vs Buy article, which can be found at the MyNewPlace Apartment Guide.

Check back next week when we will feature Myth #3, “My Mortgage Will Be Less than My Rent."

Each week, MyNewPlace provides a compendium of news articles on apartments for rent, the rental market and interesting apartment features. We also track legislation that affects the rental market, highlighting new features for apartment owners and renters, and taking a look at notable apartment trends.

Apartment Rental Market News

To follow up on a story from last week's Apartment Rental News Roundup, the Financial Times reports that House Financial Services Committee Chairman Barney Frank continues to urge for legislative action on the housing crisis front. Republicans and Democrats are divided on what legislation is necessary to complement efforts by the Treasury Department and Federal Reserve to stem foreclosures; the bipartisan cooperation that drove the passage of the Economic Stimulus Act is not expected to be present when Mr. Frank's legislation leaves committee.

The Wall Street Journal examines a compromise that many renters usually encounter when looking for an apartment location. Discussed is a new website from a think tank in Chicago that will help you decide whether to rent a more expensive apartment close to your job, or to find a cheap rental further away, with a longer and more expensive commute.

A Southern California city has sued the apartment owners of the Villa Azusa Senior Apartments for not honoring a 15 year old agreement to provide low-income units for seniors. Developers were granted a $500,000 city bond in exchange for providing 30 low income apartments. Apparently, since the new owners, Century Quality Management, bought complex several years ago rents have skyrocketed.

An article from MSBC summarizes apartment rental data from a study done by Investment Instruments Corporation, whose data gives a geographically dependent view of rental costs. According the report and article, rent increases vary greatly by city.

An interesting trend is visible in Phoenix, where an oversupply of single-family homes caused by the housing crisis has deflated the amount apartments ask for rent&.the trend to rent single-family homes comes with caveats, as some renters, such as the Stoneback family in Stockton, California, have been forced out of their rental homes after the owners of the house failed to pay the mortgage.

Green Apartments

In news about green apartments, an article from Affordable Housing Finance Newsletter draws distinctions between green standards available to developers. The catalyst for the article was the introduction of a new standard, The National Green Building Standard, which is being submitted to the American National Standards Institute this spring.

The new standard has significance for apartment developers because it was developed by the International Code Council and National Association of Home Builders, along with input from the National Apartment Association and the National Multi Housing Council; the goal with the new standard is to facilitate green standards into apartment and home building, as current standards were designed for large commercial buildings.

Check back with us each week to get the latest from the apartment rental industry.

As always, feel free to send us links to stories that you find interesting.

Recently, MyNewPlace noticed that a new keyword, “Hillside Villas" had popped up on our analytics report and had been driving a noticeable amount of organic traffic to our detailed rental listing page that featured that property. “Hillside Villas" was, by far, the most searched of all rental property specific keywords.

It took us about one Google search for “Hillside Villas" to figure out what was driving all the traffic. Apparently, that apartment complex is home to Lauren Conrad and Adriana Partridge, stars of MTV's popular Los Angeles based show The Hills.

Since the show reveals the actual location of where each scene takes place, restaurants, bars and apartment buildings, get a lot of (free?) publicity. Thus, when a scene occurs at Lauren and Adriana's apartment, “Hillside Villas" is displayed at the bottom of the screen. We believe this to be directly responsible for the recent upsurge in organic traffic.

Traffic from typed-Keyword phrase “Hillside Villas"

It is not very often that one is able to actually visualize the connection between people at home in front of their computers and how that directly leads to patterns in a search traffic report.

We can tell when episodes are, without even consulting the TV Guide. From the graph, it appears that the season started on Monday, March 24^th, that new episodes air on Monday nights and that there have been 5 new episodes. When we checked our facts at TV.com, there had, in fact, been 7 shows, but all had indeed aired on dates where traffic spiked on our Keyword Phrase Line Graph.

We are confidently predicting that Monday night and Tuesday morning we will again see a barrage of hits on our Hillside Villas detailed listing page.

Stay tuned in to our ongoing “Hills Watch" as we make predictions on traffic volume based on how the show unfolds. Will an increase of drama on the show discourage potential neighbors from looking for an apartment for rent at the Hillside Villas and therefore slacken traffic? If more stars from the show move in, will “Hillside Villas" searches go through the roof?

Only time and analytics reports will tell.

We were perusing Sara Gebhardt's Apartment Life column in the Washington Post and ran across a subscriber's question about paying their rent with a credit card. This sounds like a great way to earn rewards from your credit card company…free flight to Vegas, here I come!

Housing is usually one's largest monthly expense, be it a rent or mortgage payment. Typically, tenants pay their rent by check each month. Instead, consider paying your landlord by credit card.

Your landlord should be happy with this arrangement; landlords will enjoy having scheduled monthly payments and not having to worry about getting late apartment rent checks.

You should be happy about this arrangement because you will be able to take advantage of all those rewards that many credit cards offer. You can sign up for credit cards that offer rewards on gas, flights, and a host of other things. For the average renter, you'll be able to put between $6,000-12,000 worth of payments towards a new vacation or to help you pay for gas.

If your landlord doesn't offer this service, get a group of fellow tenants together and jointly request that they accept credit card payments. They can use services such as Property Solutions in order to offer this service.

Of course, you will need to be careful about putting such a large expenditure on your credit card bill. Interest and fees resulting from late payments on credit cards are usually higher than your landlord would charge. Also, not paying your credit card bills can hurt your credit much more quickly than late rent payments to your landlord.

As long as you pay your credit card bill on time, however, it seems like this could be a great idea for both you and your landlord. Imagine receiving a free flight each year just for paying your rent!

Have you had problems convincing your landlord or property manager not accept credit card payments?

Let us know how you have taken advantage of reaping rewards by putting your rent on a credit card.

As an addendum to our weekly Apartment Rental News Roundup, we wanted to give special focus to a current court case that may affect apartment rentals.

We saw an article over at apartmentmarketingblog.com that should be of significant interest to apartment owners, builders and architects. If the 9^th U.S. Circuit Court of Appeals sides with the plaintiffs, apartment owners, builders and architects would be held liable for an indefinite amount of time for violations of the Fair Housing Act.

The facts of the case are as follows:

A disabled “tester" from the Disabled Rights Action Committee (DRAC) found that a North Las Vegas apartment complex built in 1997 lacked some requirements, such as curb cut-outs, that are mandated by the Fair Housing Act. DRAC thereupon sued the developers, architect and all current and past owners for faulty design and sought retrofits and monetary damages.

The case was originally thrown out by a District Court over the matter now being reviewed by the 9^th Circuit, namely the interpretation of the statute of limitations. At issue is whether the statute of limitations, (2 years under the Fair Housing Act) goes into effect when the building is first occupied or when the violation is first discovered.

DRAC maintains that the statute of limitations should go into effect when the faulty design is discovered, whereas the defendants claim that if that precedent were to take effect, then apartment builders, owners and architects would be held liable for their properties for an indefinite amount of time, even if they are not the current owner.

The case is expected to proceed to the U.S. Supreme Court, notwithstanding the decision of the 9^th Circuit, whose en banc hearing on March 25^th was described my lawyers as acrimonious.