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Go figure: Landlords having trouble filling spaces in all those luxury apartment buildings
By adamg on Wed, 08/13/2014 - 3:12pm
Wait, so there might be a limit to how many luxury apartments Boston can support? Apparently so.
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The math doesnt make sense to
The math doesnt make sense to me.
Some of these places are charging $2,000+ for a studio. Rule of thumb says you need to make $72,000+ a year to pay for that.
If you're making $72,000+ a year, why the fuck would you ever even look at a studio?
Maybe it's just me, but sharing a room with a refrigerator (which constantly makes noise) is a deal-breaker on its own, and thats before essentially eliminating the opportunity to have people over.
A stainless steel front refirgerator
Not just any old fridge in these places!
Actually
The place referenced in the article (Radian) starts at $3,040 for a studio. That's crazy talk.
So you need an income over
So you need an income over $105,000 a year....
....to live in a studio.
loooooooooooooooooooooooooooooooooooooooooooooooooool
In a JP (former) school that
In a JP (former) school that is in the process of being converted to rental apartments the studios are going for more than I pay in mortgage+insurance+taxes for a 5 bedroom house directly across the street. And I have a driveway.
Matter of Preference
To answer your question with a question; I'd ask why anyone who can afford to live in the city would ever sit in traffic every day when they can walk to work?
I'd rather a 3,000 studio two blocks from my office downtown than a 2,000 mortgage on a 4 bed in Weymouth, a 90 minute door to door commute each way, 300/mo car payment, 300/mo parking spot, and 500/mo in gas.
But that's just me.
My family couldn't fit into a studio......
But could in a 4 bedroom in Weymouth. And they wouldn't need to be bussed around to school
Yes, one that's not mice
Yes, one that's not mice infested with a window air conditioning unit. 3K is definitely steep for a studio, but if the other amenities offered in the building appeals to you, then maybe. 2k I would DEFINITELY do if my only other option was roommates.
Oh please. Are you seriously
Oh please. Are you seriously trying to argue that those are the only two choices?
Seriously?
What about...
A $2k mortgage for a 4 bed in Dot and a $70 a month charlie-card payment?
Exactly - My wife and I have
Exactly - My wife and I have two pretty good incomes, and we got a 2 bedroom condo that we bought in 2004. 10 minute walk from Ashmont Station (you always get a seat on the Red Line), so we get by on one car - our mortgage payment is $1,040 a month. What we save goes right into retirement.
We also know other couples with kids who have bought similar property there too - but I guess people would rather pay through the nose rather than consider living in Dorchester, because ewwwwww - Dorchester?
I've lived in studios, and
I've lived in studios, and while I liked the privacy, I would not ever, ever, ever pay $2000 for one. To your point re driving to work-- I agree, but then again, if you can afford a $2000 studio, you can afford $1800 for a whole one bed in Fenway, $15-1800 for a one bed in Mission Hill, JP or Allston, or $12-1700 in Dorchester. And you could still be only a short subway ride to your job, and not eating dinner on your bed.
Also, I found that living 2 blocks from my job always ended up sucking-- eventually, your boss and co-workers will figure this out and you get to be the person to work late, come in on weekends for emergencies, be the only person there when snow has shut down the main arteries.
To each their own
Yeah to each their own.
I loved my studio in the SoEnd. I walk to everything, ride a quick train ride to work, and just zip car when I needed a car.
But I lucked out, I got the place on the cheap (~$1050 in 2005) and it was a two-room studio (or a TINY one bedroom with no oven!) AND had a full sized fridge. Oh and did I mention all utilities included (including electric!). It was a steal. I cried the day I had to move out of there. (landlord jacked the rent up to $1500 in 2010)
Sure it was a small but it was my own space, and honestly how much space do I need? I'm a single guy with a cat and no kids. The TINY bedroom was perfect, big enough for a queen bed and a dresser (a large walk-in closet was at on end w/ storage above). I called it my sleeping pod.
The main room was big with a small kitchen at one end. Big enough for a love seat and a chair, a tv at one end, and a small desk for my computer. (and a cabinet used as a pantry near the kitchenette).
The kitchenette and bathroom had almost new cabinets and bathroom (remodeled in 1999-2000ish), and new carpeting throughout the place. Yeah it wasn't the nice newly-remodeled penthouse studio with the deck and the skyline view ($1200 in 2005) I looked at, but for what I was paying, what was included, and the location, it was worth every penny.
So each their own. Everyone has visuals of the tiny studios, but if you shop around you can find some cute ones.
Now to the real question, would *I* pay that much to live in a new one. Absolutely not. Too much. Not when you can leave the city and get so much more for so much less.
Getting screwed costs more in Boston too!
FYI, Boston.com posted an article about the high cost of prostitution in Boston, per a much more detailed and tongue in cheek article in The Economist, More Bang for Your Buck. By major city, the article also details surcharges (ie spanking, swallowing) and rates vs. provider characteristics. So there, NYC, Boston tops you!
$$$
At $3000+ for a studio and approaching $6000 for a two-bedroom, there has to be a ceiling for demand.
This is a good thing and I
This is a good thing and I knew it was going to happen. Prices will come down and soon brand new places will be more affordable.
Unhappy tenants
People who signed leases at the highest rents will be unhappy when management drops prices.
What are they going to do,
What are they going to do, break their lease?
Yes, and no
If they like where they are, they will have leverage to negotiate reductions when their year is up.
They weren't necessarily overpaying at the time, either - supply went up, and demand was stable, so ...
Not sure about the official term Mark,
But if you buy a condo in a new development, you are often protected if the other units don't sell. basically if you buy a condo for 750K, and only 25% of the units sell at that price, the developer can't just drop the prices of the other units to fill them up.
Edit, not sure if rentals are the same way, but I assume there may be some protection to those who have the incentive to buy into developments earlier in the project
Apartment pricing
My guess:
The first step will no doubt be 1/2/3 months free to new tenants. This will happen before they drop the monthly number. That is the path of least resistance, because the new tenant gets a discount, the old tenant doesn't see new tenants with lower monthly rent, and the building isn't committing itself to lowering prices at least initially.
The knock on
Realtor friend of mine told me supply of a certain price range he tracks is up from less than 5 units last year to almost 75 this year in the Back Bay - won't just be these units - will hit the existing units as well.
Yes, exactly! And that's
Yes, exactly! And that's because those back bay units are not only older, but usually charge a hefty rental fee. Paying 2,400/mo for a run-down brownstone 1bed is really like 2600/mo if you pro-rate the fee (plus who wants to pay a fee upfront). Many of the luxury studios going for 2400-2600 in the Seaport/S.Boston (a little cheaper than Radian or Arlington or Exeter, which are closer to 3k for a studio). These buildings advertise vacancies and floor-plans, they are easy to find without an agent and if they waive the security deposit and give you your first month free, a 2600 studio is really a 2400/mo studio if you're staying a year.
Especially if you're moving to Boston to start school and don't have your student loans yet, or if you are moving to start a job and don't have your first pay check, a luxury studio for a year is a very reasonable choice compared to the frustrating, shafty, sub-par, real estate practices that have been going on for years in the Back Bay simply because of tight supply.
Start school? Start new job?
And how exactly is a full-time student going to afford $3K+ per month rent? Rich daddy, I assume? As for new job, would you please enlighten us all as to where one can land a job that pays $120K (standard rent x 40 realtor formula) straight out of college?
She did her math
The luxury place is cheaper than a dorm. Yes, financial aid won't cover it, but if you are not getting a good aid deal or are looking off campus to start with, it is a better deal.
The luxury place, assuming you are not getting the kind of jobs most people I know got after college, but rather one of those jobs you are recruited for, could be affordable in the short run while you are getting the lay of the land in Boston. After a year, you get the place that your budget can afford. Of course, if you are starting a job where you make enough to only get by with roommates, this does not apply to you.
I think it is weird, too, but the math is there.
More affordable at what cost?
I have a feeling if these places can't sell, they'll turn to a management company to rent them instead. They'll get close to top dollar rents and fill the space that way.
Top dollar rents?
The article is about rentals, not condos, and those high end rents are either going down or buildings will be semi-vacant.
So unsold condos going on the market won't get as high a top dollar rent because of the oversupply.
And if unsold condos are contributing more supply, static demand means price drops. These might result in lower rents in the next tier as well.
Where are the usual luxury tail waggers?
I've been harping on this to the point where many justifiably can't stand it.
Pandering to the affluent is no way to run an economy.
There will be bag holders, lots of them.
It will be financially disruptive depending on the sizes of the held bags.
If it triggers some crisis, the middle class stiffs will see taxes diverted to propping the pigs up for their dumb decisions, just like 2007.
At least the 401ks everyone was cheer led into parking their savings in have vaporized so that anguish won't be revisited.
Luxury market booming
Not just real estate. Everything. Sailing vessels, sports cars, hi-end stereo and home theater, and so on. It used to be that young enthusiasts could afford some of these goods, but now the sky is the limit for pricing.
Depends on what you mean by
Depends on what you mean by "booming". Boston isn't exactly representative of the economy as a whole, and dollars don't stop (or start) at the city line. As for the appetite for luxury goods, sure, I can believe there are many people whose eyes are bigger than their stomachs (or their paychecks). We've definitely become a culture in which young people of a certain social class expect to live large right out of college, instead of starting off more modestly and having to work their way up, as earlier generations did, and I'd really love to see that expectation corrected. But when you send mixed messages by using oxymorons like "luxury studio", that may be a lot to expect.
The new "more affordable" range
I'm wondering if the new "more affordable" range is going to be $2500-$2700.
Or will the developers go back to throwing in a few months rent free?
I don't think so. I think
I don't think so. I think they will hold them empty until they find tenants at close to these prices. When the school year starts and wealthy foreign students are looking for studios last minute, they will surely get a bump. Considering what Northeastern charges kids to SHARE a room in a dorm (1,600-1,800/mo) luxury studios seem less ridiculous.
Thread hijack
Stevil - (assuming you will read this article) you were very adamant that the BPS budget issues were not as bad as being presented at the beginning of the summer. Other posters were adamant that the end was nigh and their family schools were definitely getting the shaft.
We are nearing the school year - does anyone have hard info either supporting the idea that there were impactful cuts at BPS which affect many students (i.e. not just retiring some administrator) or the idea that this was all chicken little stuff and the BPS will be running business as usual this fall?
Biz as usual
I think at the end of the day about 140 positions of 8000 eliminated - mixed bag - teachers/administrators/nurses and more, but I think almost strictly attrition and mostly due for smaller student count than expected last year which they "over-hired" for.
Note - that's just the operating account.
Possibly a bit more in the "external funds" account - but that's a whole different discussion.
Average school will see a loss of less than one person - and very little to none in the classroom.
Trouble filling
Because some of these units don't come with parking
Source?
It would be interesting to see if you have a source of data to back that up. I keep hearing this or that about parking, and it is hard to sort it out without submission of actual information.
You live under a rock?
Developers are using the false assertion that people don't own cars and just because the housing is located near public transportation they don't need parking.
Supply is now exceeding
Supply is now exceeding demand so prices will come down.
A 10% vacancy rate from oversupply is the best form of rent control!
I wonder how many units....
I wonder how many units behind the city is in the low income housing these landlords are supposed to offer?
I know in Swampscott, they are like 400 units behind with the construction there.
Of course, that only matters when you apply the law.
I could probably google this...
But I feel like I read a few months ago during the start of this construction boom in Downtown Crossing.. that it was easier for some reason to get construction loans for residential projects rather than commercial.. and that was driving a lot of these projects.
That said.. it's been remarkable to me to see how quickly these new buildings in Kingston and Washington St in Downtown Crossing have gone up... while a project for low-income elders (who are primarily Chinese) on Essex Street.. has been in the works for more than seven years.
Ironically, they haven't had any problem filling the apartments...
Not surprising
Not sure where the market is for luxury rentals. Why would you throw away $6,000 a month on a rental when you could buy a million dollar property and still pay less?
A lot of developers are
A lot of developers are probably counting on this: http://www.bloomberg.com/news/2014-07-29/harvard-is-summer-mecca-as-chin...