Priced out of town

Hasidic families quit boro for western N.Y.

BY JOTHAM SEDERSTROM
DAILY NEWS WRITER

The cost of living in Brooklyn has become so outrageous for some Hasidic families that a Williamsburg rabbi has carved a path of enlightenment - all the way to Scranton, in far western New York State.

As many as 100 families are expected to flee the borough of churches for the serenity of Scranton, in Erie County south of Buffalo, where rabbis Isaac and Altar Rosenbaum are opening a 900-seat private school.

"We are a very large group in Brooklyn and everything has become very expensive here - house payments, taxes, bills, everything," said Isaac Rosenbaum, 39. "It's too much."

Fifteen families from the Nitra and Nadvornah sects have already signed contracts on new homes, the most costly going for around $229,000, said a broker.

Real estate broker Terri Backus said a housing boom in The Hill section of Scranton and a drive by Mayor Chris Doherty to usher in new business has lured the families - some with eight children and counting.

"They do have large families, and to buy a large house in Brooklyn from what I understand is very tough," said Backus. "But in The Hill section the typical homes are older, larger and more affordable."

The exodus from Williamsburg and Borough Park started in June after Backus took out ads in a local Jewish paper and on a popular Hasidic phone line.

Those ads averaged 40 calls a day, she said.

The rabbis, who sermonize from the temple Mamer Mordachi on Bedford Ave., were the first to respond. After a Scranton developer bowed out, the rabbis purchased the shuttered intermediate school for $400,000, Isaac Rosenbaum said.

Since then, Brooklyn families have continued to tour the town of 76,400, which is in the midst of a building boom.

Rabbi Isaac Rosenbaum said he believes he can lure several hundred more families - enough to fill the entire school.

Rivky Gross, 23, said she and husband Abraham, 21, have already picked out their dream home - a four-unit apartment building with a ground floor storefront.

That building will cost her $130,000, said Backus.

"If I know there's going to be a Jewish settlement and they'll have everything we need, that's all I need to go there," said Rivky Gross, who currently rents an apartment in Williamsburg. "A lot of people are looking."

Luzi Friedman, whose family lives in Williamsburg, moved to Scranton last August. He plans to open a shoe store with the money he's saved on cheap lunches and cheaper parking.

"I actually have a friend who moved in yesterday from Brooklyn - another city guy," said Friedman, 32. "There are plenty of Jews here, but I'm the first so far to walk around with a shtrimel [hat]."

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Even Harlem has become pricey and it is FAR from safe
http://www.post-gazette.com/pg/06232/714273-37.stm

Commercial Rents Keep Rising
2nd-Quarter Vacancy Rates Tighten as Job Growth Continues

By Dana Hedgpeth
Washington Post Staff Writer
Monday, August 14, 2006

Vacancy rates dropped slightly and rents rose in the Washington area's commercial office market for the second quarter of this year, as one of the nation's strongest office markets continued to benefit from job growth in government contracting, law and service-related industries.

The area's vacancy rate for the quarter was 9.3 percent, down from 9.9 percent during the comparable period a year earlier, according to Bethesda-based research firm CoStar Group Inc. Asking rents were $31.11 a square foot, up from $29.98.

Most major markets around the country have had declining vacancy rates, but New York and the Washington region are among the tightest markets, researchers said. The vacancy rate in New York for the quarter was 6.7 percent, and rents were $45.42 a square foot. In Atlanta, which is more typical, the vacancy rate was 14.4 percent and rents were $18.95.

http://www.washingtonpost.com/wp-dyn/ ... 8/13/AR2006081300497.html

http://www.nytimes.com/2006/08/19/bus ... rents.html?ref=realestate

Rents Are Rising Rapidly After Long Lull
Nicole Bengiveno/The New York Times

Nicola Sylvester-Evans says she is surprised at how much higher rents were in New York than in London.

“We had been afraid to do that,” Mr. Gain said. “Over the years, we were actually reducing rents. But we increased rents by 3 to 5 percent and there were absolutely zero repercussions.”

This kind of shift is under way in many cities across the country, including Atlanta, where rents actually fell from 2003 through the first half of last year, as well as Cincinnati, Dallas and Phoenix. The only region of the country that is resisting the trend is the Midwest, where industrial job losses and other factors continue to hold rents down.

According to government data, in both June and July average rents across the country were 3.5 percent higher than a year earlier, the steepest gains in almost four years. And it is feeding into a broader rise in inflation.

The rise in apartment rents is in many ways a consequence of what has happened to home prices. As mortgage rates have begun to creep up and as home prices have soared out of reach of many Americans, many renters who a couple of years ago might have bought a home are staying put. This is tightening the rental market to the point where apartment owners now have more leverage to demand higher monthly payments.

In New York City, where a steady stream of young arrivals, limited space and rent controls limit the supply of available apartments, rents never fell as they did in many other cities. Now they are advancing at a much faster clip.

In the metropolitan area covering New York, Long Island and Northern New Jersey, annual increases in rent surpassed 5 percent in the second half of last year for the first time since 1990, according to government statistics. And brokers and landlords in the city speak of even sharper rises lately.

“There’s been a big change in the last three months,” said Laurie Zucker, vice chairwoman of Manhattan Skyline Management, which manages about 4,000 apartments up and down Manhattan. “We can barely keep up with how fast we need to raise rents.”

For example, a one-bedroom apartment in the Murray Hill area of Manhattan that six months ago went for $2,400 to $2,500 a month can now fetch $3,200 to $3,300, Ms. Zucker said.

Rents, which account, directly and indirectly, for almost 30 percent of the overall Consumer Price Index, are one of the main forces pushing prices up at a faster pace than the Federal Reserve is comfortable with.

In July, rising rents nationwide accounted for more than half of the 2.7 percent increase from a year earlier in so-called core prices, the Fed’s most closely watched gauge of underlying inflation, which excludes food and energy costs.

“The buoyancy of rental rates is a very big force determining the direction of core inflation,” said Richard DeKaser, chief economist at the National City Corporation, a large bank.

While most apartment dwellers have less money than the average homeowner, there is an intricate connection between the rental and home-buying markets.

In the early years of this decade, low interest rates and rising home prices prompted more Americans to buy, both because of the lure of a healthy profit and the fear of being left out of the game. As a consequence, demand for rental properties shrank — pushing up vacancy rates and pulling down rents.

By the fourth quarter of 2004, rental vacancy rates had risen to 10.4 percent, the highest level since the government started tracking them in 1960. Overall rent gains slowed to a modest 2.5 percent through early 2004, their slowest since the mid- 1990’s. And in the bigger rental complexes, according to the National Association of Realtors, rents fell nationally in 2002 and 2003 and inched up only marginally in 2004.

That was an era that landlords remember for the generous sweeteners needed to help attract renters to their properties.

“Owners were providing one month free rent, or no security deposit,” said David Kelley, who owns Apartment Guys of Chicago, a small rental agency serving downtown and the North Side. “Some were allowing pets. Some even gave a free DVD player.”

With costs rising and profits sparse, developers poured their money instead into condominiums, shunning investment in rental properties. Moreover, hundreds of thousands of former rental properties were bought and converted into condos for sale.

The research firm Real Capital Analytics found that 28,000 units were converted in September 2005 alone, compared with 2,600 in the same month two years earlier.

But as home prices rose and apartment dwellers found that they could not afford to buy, the demand for rental apartments quickly ran up against diminishing supply. By the second quarter of this year, vacancy rates had declined to 9.6 percent.
Multimedia

Interactive Graphic: Rents Up, Vacancies Down

And the market is much tighter than that in many growing cities.

“Right now, properties are reporting they are 98 percent full; they are turning away renters,” said Mike Wade, a broker at Atlanta Apartment Connection. “As apartment locators, we’re having to tell people, ‘We’re going to have a hard time finding you a place to live.’ “

By this June, with the returns to landlords improving, condo conversions fell to 3,400 units.

Prospective tenants are in for a shock. Take Manhattan, arguably the tightest rental market in the country. According to Citi Habitats, a big rental agency in town, the median rent for a two-bedroom apartment in Manhattan rose to $3,599 in July from $3,100 in June.

Vacancy rates have shrunk to 0.8 percent, it estimated, and as low as 0.5 percent in hot areas like the East Village. And the demand is spilling into adjacent boroughs, like Brooklyn and Queens.

Jeffrey Vogel, a Citi Habitats agent, said that new renters in New York are suffering a form of culture shock when their expectations meet the reality of the market.

“Even return clients who live in the city,” he said, “have a shock when they entertain moving to a larger apartment and compare what they would pay if they relocated against what they’ve been paying for in the past few years.”

Nicola Sylvester-Evans will not reveal the rent for her two-bedroom apartment in Battery Park in Lower Manhattan. But she admits that her expectations were way out of line when she came from London in April to look at prospective places to live after her husband, James, a trader at an investment bank, was transferred to New York.

“We were moving from a four-bedroom house with a garden in London; I was hoping for a three-bedroom apartment,” Ms. Sylvester-Evans said. “There was certainly a readjustment in size and budget.”

She says they increased their housing budget 40 to 50 percent.

And when she finally found the right apartment, she had to decide on the spot — making a firm commitment to take it the day she saw it and providing a signed application first thing the next morning.

“New York is so much faster-moving than London,” she said. “I never felt the pressure to make my decision by the end of the day.”

New York stands out, in part because of its rent control laws, which limit increases for hundreds of thousands of apartments across the city. That helps increase rents everywhere else by limiting the supply of market-priced housing. (Controlled units can be decontrolled when the monthly rent exceeds $2,000 and the tenant is either new or earns more than $175,000 a year.)

In many other areas of the country, rents have not yet recovered from the last few years. In places like Detroit, where the declining fortunes of the homegrown automobile industry devastated the local economy, rents are still falling as people continue to move out of town.

Still, nationally, most analysts expect the rental market to tighten further.

Rising home prices have pushed the cost of homeownership above what many Americans can afford. The National Association of Realtors estimates that the typical monthly mortgage payment for a single-family home reached $1,166 in the second quarter, 36 percent more than in the full year of 2003, eating up 23.6 percent of the typical family’s income. The numbers are much higher in New York, South Florida and the San Francisco area.

If buying a home no longer looks like the killer investment of a few years ago, more renters are likely to stay put until the market readjusts.

“Rents are a huge bargain relative to home prices,” said Chaz Mueller, chief financial officer of Archstone-Smith, a real estate investment trust that invests mainly in rental properties in New York, Southern California and Washington. “With the condo and single-family market cooling, we think people are deciding to take advantage of that bargain by renting.”

The upshot is that rents should continue rising. The Realtors’ association forecasts rents in the big apartment complexes it tracks will rise 5.1 percent this year. That will force renters to pay more, but it has landlords around the country perking up.
“Everybody in our region,” Mr. Gain, the Seattle apartment owner, said, “is feeling we are going to be able to ride an up market for three to five years.”