Where’s the “Deal†In Renting?
By Silver Springer • Jun 25th, 2006 • Category: Uncategorized
From what the media has been telling us, apartment rents have remained flat or not on the same level as the increase in home prices. They spin it as a good deal over home buying; apparently not in downtown, better yet, how about the whole county, region and country. Contrary to what the media has been spewing, from what can be seen apartment rents have been rising just as much as house values. Over the years the apartment rents have crept upwards in downtown Silver Spring at significant levels. To see just how bad it’s gotten let’s take a look at pricing of four apartment buildings; The Blairs, the Bennington, the Lenox and the Georgian Towers.
The Blairs pricing is deceiving. You might think you will be moving into the new Blair Town apartments for the initial pricing but for those “luxury†units, the lowest one-bedroom starts at a whopping $1,458 for 703 square feet (around $1,300 a year ago), this does not include utilities but you do get a parking space, lovely. The initial pricing at the “real†Blairs starts at $1029 for an efficiency that is 400 square feet; this doesn’t make it any better.
The Bennington is the most insane of all; they think that since they’re the newest kid on the block they can charge the most. An efficiency touches $1,305 just to start off (it was about $1,200 a year ago), add parking (which is like $100 per month) and utilities and prepare to pay about $1,500 per month for an efficiency. Pets get to pay too at $35 per month with a $250 deposit. Even if you didn’t use a car in this pedestrian\mass transit oriented downtown, the price doesn’t make sense.
The Lenox is an interesting case; it isn’t as new as the other two places but feels that it can charge just as much if not more. The 14+ year old building has one-bedrooms starting from $1369 plus about $100 for parking and no utilities paid, it was about $1100 a year ago. Get ready to pay over $1,500 for a building that has not aged gracefully.
The Georgian Towers seems to have the same syndrome as the Lenox but has progressed at a much faster rate. You can claim your piece of this 1960s era building for the initial price of $1,325 for a junior one-bedroom and $1,110 for an efficiency (about $900 a year ago); but why does the junior one-bedroom with a balcony cost less than the junior one-bedroom ($1,350) without a balcony? Some utilities are paid but not parking, there is no washer and dryer in each unit, unlike the Lenox and Bennington; just remember as well that this one is the furthest from the metro station.
The average rent is over $1,000 for a one bedroom\studio in the county (most likely worst by now). The demographics for these units are young adults, many who are just out of college, but most of these units require a minimum income of $50,000 (where are they finding these people?). It is hard to understand how they justify the costs, all these buildings DO NOT have all utilities paid, so what costs the management could be incurring to justify the price increases is questionable, I’m sure Lenox and Georgian Towers have made a profit 5 times over since they are over 14 years old and 40 years old respectively.
If you want a “deal”, expect to find yourself in an ill-maintained 40+ year old building, sharing a laundry room with your neighbors and with the roaches as your concierge. Even then you will probably be paying over a G.
Correction: The Blairs (with the exception of the Blair Town apartments) includes utilities within the rental price.
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I live in in Parkside East, awesome location (Roeder and Spring behind the liqour store and hilton) and for a ~900+ sqft 1-bd I pay $1300/mo which INCLUDES all utlities and parking at that price. Granted it’s older and I have to use the laundry facility across the hall, but with garage parking, individually controlled AC and a 13th floor balcony overlooking the future site of the Ellsworth condos not bad at all. Now tell me how much an equivalent condo in the same location would cost, atleast $400,000 using Crescent Condos as a guide? Granted it would be brand new and for the first few years the builidng would be considered “luxury” but when you add up the mortgage, condo fees, taxes, parking, etc you are easily getting close to if not exceding $3,000/month.
Don’t get me wrong I’d love to own, but not at those insane cost… I don’t really understand how anyone can. So in my opinion, for the time being atleast, renting definitely beats out buying for someone in my situation. Interest rates are going up but prices are definitely falling in SS. Just check out the days on market and price decreases for even new condos in SS (http://www.ziprealty.com/buy_a_home/logged_in/search/results/detailed.jsp?msg=&page=1&cKey=6xz742gl)
Now imagine whats going to happen when all the planned and under construction high-rises hit the market. That’s a ton of additonal inventory in an already weakening market.
That’s why I am saving as much as I can while I rent at a relatively low cost and wait for all the new inventory to hit the market. Just my $0.02.
Speaking of the Silver Spring housing market, I’m trying to get people together that have signed contracts at Mica Condos in downtown Silver Spring (I did). We can then share information on the construction progress, the neighborhood, and work collectively to protect our interests in this changing real-estate market.
You can e-mail me via the DC Craigslist page, just type “Mica” under “Housing”. If you contact me with your name, and the unit number on which you have a contract, I’ll try and create an e-mail listserv . Thanks !!
The apartment market is very tight in this area, which explains the high rental prices:
“The vacancy rate for apartments is 2.3 percent. That’s down from 3.1 percent two years ago and among the lowest rates since World War II”
http://www.washingtonpost.com/wp-dyn/content/article/2006/06/15/AR2006061501963.html
The Alexander House, as an HOC property, has lower rents. My 2 bed 2 bath with wash/dryer, dishwasher and an excellent balcony view is lilke $1400. It’s 750 square feet. A lot, but not super crazy.
Not to say that the home prices aren’t ridiculous as well but you can get a 2 bedroom unit at the 8045 Newell\Crescent\ or Aurora condos for $400k which is still crazy. To get a 1 bedroom unit in a new condo building in this area you will have to pay between $300k and $350k. Taking the high end of $350k and using a quick mortgage calculator, if the person has good credit and takes a 30yr fixed interest rate loan at 5.75%, they should expect to pay around $2,000 a month. Add a condo fee of around $200 and utilities of $100 and you’re looking at $2,300 a month. For around $300k you can pay as low as $1,750 per month plus fees and utilities. I’m reluctant to add taxes because that is a benefit to home ownership and it would seem to favor that renting. I just don’t see how an apartment is that much better considering most of the buildings are really old and you have to share laundry facilities.
Conclusion: neither buying nor renting is a good deal.
Median income has not kept up with these price increases; we have had virtually the same amount of apartment units in this area for the last 10 years so what has changed to spur the price increases? Demand yes but they seem to be jumping the gun, they even added the Blair towns and Bennington to the supply. Rumor has it that Silver Spring Gateway will be all apartment units instead of condos, JBG may be realizing that an oversupply in this market is on the way. If all condo units planned for downtown are built their will be a glut of housing. Overpriced conversions like the MICA will be hit the hardest; you can already see signs in some buildings.
$200 condo fee? That seems cheap compared to what I’ve seen at a lot of places.
The best deal is still at Summit Hills. $1300 a month for a two bedroom / one bath. It may not be luxurious, but it is cheap.
I take offense to your comments about Georgian Towers. I grew up in that building (moved out in 1998) and it was considerably worse than it is now. That doesn’t justify all of the rent increases (my family’s first apartment in the building was in 1991, a one bedroom at $685 a month!) but the complex still compares well to others in Downtown, especially following the lengthy renovation.
You need to watch your mouth. The roaches, living rent-free, can put themselves up in any Downtown high-rise they want.
I don’t think anything said was inappropriate. It’s nice that you have a nostalgic attachment to the place since you grew up there but no one is going to deem Georgian Towers historic. No matter how they “renovated†the place, it isn’t going to be on the same level as a brand new building constructed from the ground up (and with far more roaches
).
As you can see the rents have more than doubled since you moved there and the increases have grown rapidly only recently, quite frankly I don’t think it’s justified.
urbannomad — Renting sucks, period. You’re writing a check for $1,300 every month and instead of investing it, it’s going into your landlord’s pockets. You spend over $15,000 per year when you could be INVESTING, say $2,500 * 12 = $30,000 towards your next home. Unless you simply cannot afford home ownership, there is no benefit to renting. Even if you sell a condo for the price of the condo + closing costs + taxes, you’re breaking even (all of which is reasonable, given at least 3-5 years).
And, the interest is tax-deductible. You’re trying to convince yourself instead of looking at the true facts.
Actually my point was that I can afford $1300/month, it sucks you’re right, but I can write the check each month. However, for a decent sized condo I cannot afford over $3000/month or $2500/month for that matter. It makes more sense for me to rent (even though it’s not an investment) and save what I can, than it does for me to live beyond my means in a condo I can’t afford in the first place.
I’m definitely pro home-ownership and understand all the benefits but sinply cannot, like most people, afford it in the current market. And despite what some people want to believe there is a risk in buying at the peak of the market, especially a condo in the suburbs. Just a risk like any investment, I’m not being all end of the word or anything.
I moved to Silver Spring years ago because the rent was cheap. That’s no longer the case. But when I originally moved, there was no Discovery Channel, no AFI and no large selection of good eats.
Rents and home values have gone up, as they have everywhere in the DC metro area.
We need Montgomery County to keep affordable housing policies intact, and possibly make them stronger, to preserve Silver Spring’s diverse community we’ve all grown to love.
I don’t know how people afford the new condos in SS. I make about 55,000/year (nonprofit pay - woohoo!?!) which is more than enough to live comfortably on (without owning). Everyone in the DC cannot make 200,000 a year.
Paying upwards of 2,500/month for a one bedroom is not only ridiculous, but also not the best investment choice!
FYI: You made an error on the utilities in the Blairs. Utilities ARE included in the rent as well as parking, the pool, and the gym.
Thanks for the heads up, I will make the correction but I’m positive the Blair Towns doesn’t include utilities since I called them and asked.
The Blair Plaza, Blair House, Blair East, and Blair Towers all include utilities with the rent. I am a resident at the Blairs and know this for sure.
I have lived in Summit Hills since 2001. My rent in 2001 for a one-bedroom 780 sq. foot apartment was $863 including all utilities. Parking was free. This was an unbelieveable bargain!!!!
Fast forward to 2006. My rent is now $1,200 per month plus utilities. I can still afford the place but I have student loans and other bills to pay.
I will either move out of Silver Spring and find another one-bedroom apartment. I am giving the Hyattsville area a serious look. Hyattsville reminds me of Silver Spring circa 1999 (not a terribly safe and fun place but the rents are cheap as hell).
Or I will go on Craigslist and find someone who is looking for a roommate in the Silver Spring area.
The gentrification of Silver Spring has begun with full force. The landlords and real estate property companies are getting way too greedy. They think that 10-20 percent rent increases are justified because of the downtown redevelopment. You can have so many high-income yuppie lawyers, doctors, engineers, company execs. in the entire Washington, DC area. Silver Spring is not Bethesda-Chevy Chase where the median income is in the six figures.
I liken Silver Spring to New York and Bethesda to Boston.
I encourage everyone interested in this discussion to pay close attention to who they vote for on the Montgomery County Council this year. Housing costs are a critical issue and you should express your views with your vote.
I take issue with the original post’s comments about Lenox Park.
I have lived there for 3 years now in an 800 sq ft 1 bedroom. My rent 3 years ago was about 1,250 and now is about 1,350, not including parking. That is still an increase, but I doubt that 1 bedrooms went for 1,100 a year ago, if they were 1,250 three years ago. I do live on a higher floor which raises rent some, but I still doubt the high rate increases you state.
Parking is expensive at Lenox though. Unreserved in garage is 95 and dedicated spot is 150. This change was recent and I surely did not like it, but it did allow them to get rid of a long wait list for parking. And, this at least only affects those residents which have a car.
Also, I don’t agree that Lenox has not aged well. In the 3 years I have lived there, they have replaced most of the gym equipment, completely refurbished the common areas (new wall paper, carpets, furniture, lighting, etc), and the exterior of the building is being refurbished now (steam cleaning the concrete, painting balconies, etc.). Also, I believe that as tenants vacate, they are upgrading the apartments as well. In fact, I have even been told I could move to a renovated unit. I just did not want to deal with pains of a move.
I’ve lived in Summit Hills since 1999. Thank goodness for the County cap on increases (5% per year). If someone tried to rent my same apartment today, it would cost them in the range of $500 more per month than I pay. Summit Hills is a bit expensive (cheaper than the Blairs or other downtown complexes), but I can walk to Metro and wide range of nice restaurants, movies, shops, and so forth.
I love Silver Spring (both old and new). This rental “bubble” needs to balance out somehow, though.