Thursday, November 15, 2007

The Real Rental Economy

I received the following from Common'Tator a few days ago and decided that his thoughts deserved highlighting. My comments following pertain mainly to the economic impact.

“Nice website, I like the idea. I live in York neighborhood and think that some sort of enforcement would be nice.

I should point out though that this issue is backed up against a ton of money. As most owners own more than one or two properties, at least in our neighborhood and they fight tooth and nail and in force against anything they see as hurting their bottom line. Just look at the re-zone in York last year, sheesh, slum-lords versus people who live in the n'hood.

I would be interested in enforcement of this code, more or less as a tool to keep renters in college housing neighborhoods in check. I really like the idea of a rental house permit, as for the love of goodness it is an income source and should be regulated...

I also would be interested to see if you could make an economic argument for the increase in rentals if this code was enforced. I.E. a correlation in the demand increase as houses can have less occupants, thus more rentals on market.

Anyway nice site, nice topic. Will be back.”

Enforcement of the city codes regarding illegal rooming houses is bound to have an economic effect, as well it should. Over the past several decades, the city has, either by omission or commission, allowed renters of single family homes to form groups to reduce the per capita cost of renting. This created a hidden subsidy of renters to the detriment of the neighborhoods. Instead of paying 1/3 of the rent for a single family home (based on a maximum of three renters), the three lessees would seek out additional, sub-rosa renters whose participation then lowered the cost to all the home’s residents.

This provided a tremendous advantage to the owner leasing his property. The owner could maintain a relatively substantial rental rate since he knew that that rental rate would be “affordable” once the three individuals (legal maximum) on the lease found other “renters” to lower their individual costs. This is a distortion of the real demands of the rental market where the sub-rosa renters represent a large number of illegally housed individuals thus falsifying the actual number of individuals requiring affordable housing.

The city tells us, somewhat naively, that it is dealing with growth by attempting to manage the influx of some 1,500 individuals per year (growth estimates) when there is already an existing backlog of illegally and, likely, unsafely housed individuals among the 8,000 or more students who are not in dormitories on-campus. Code enforcement will bring reality to the rental market and a pressure to build sufficient affordable housing for low-income and student renters.

Unfortunately, it is the owner-occupied, single family home residents who have had to pick up the cost of non-enforcement which allows illegal rooming houses on their streets and thus changes the very character of the neighborhood that the city is charged to protect through proper zoning.

4 comments:

Common'Tator said...

Common'Tator-

Nice analysis. Going to throw you a heads up to check the Whatcom Indy article by the "Hamster".

http://www.whatcomindy.com/oped_story.php?subaction=showfull&id=1195151426&archive=&start_from=&ucat=22&

In a nutshell he/she is complaining about police enforcement of laws regarding crimes in his/her rentals. The best part is how one could infer from his article, that he is violating the 3 per house, but I guess two of the tenants could be married, brothers, cousins etc...

But the biggest laugh I get is that he wants to blame the police for his "excellent" selection of tenants. Three drug dealers/tenants arrested on a Friday, and then one tenant who wasn't arrested later runs off and leaves the dog to make a mess in the house till animal control shoes up on Sunday. Then he/she also complains about another violation in another building.

This is what irks me the most is the fact that some property owners refuse to take responsibility for the mess they make...Renting a house is a business deal, risk vs. reward. If you take a little time to care for you property and who you put in it while realizing your structure is a component of the micro-community in the neighborhood the net gains should be larger than just sticking folks in willy nilly and grabbing your cash as you let your building fall apart.

For example a landlord who lets their house get run down to the point where they need to petition to demolish it due to rats, mold, etc, which are all preventable maintence issues. Then what truly kills me is as owners (both occupied and rented) who take care of their houses in a neighborhood lead to appreciation of the properties, in that neighborhood, But ultimatly the "slummy" houses slwo the appreciation down. Additionally the craptastic landlords get a free ride on value appreciaion due to the hard work of the neighbors who take care of their places and rent/lease to responsible tenants. Those looking for the quick dollar, don't screen their tenants and shove more than they should into it and then complain when stuff goes wrong...Ackkk Enough for today.

Anonymous said...

I am a 24 year old Graduate Student finishing my Master's Thesis. I rent a nice one bedroom apartment in an old Vic that has been converted into apartments in the York neighborhood. I'm currently paying 625/month for rent and gas. My boyfriend lives on Young street in a house with 3-4 other people (some months its 3, others its 4) and he pays 230 a month for rent. Needless to say, the knowledge that I am paying over 2 times as much for rent as he urks the heck out of me and has caused considerable strain on our relationship, as I'm not ready to move in together and am also unwilling to live with 3 or more other people at this point in my life. I also don't feel like I should have to live with a buch of people in order to pay a decent rent -- so if its true that these illegal rooming situations are driving up my rent I encourage you to continue to emphasize that angle and fight not only for those who own their omn homes but for young renters like myself who are crippled by high rents in this stagnate economy.

zonemaven said...

Dear Anonymous,

I would encourage you to write to our city leaders and to the city council members. I have stated before in my blog that students are not being treated well by either the university or the city. You can find email addresses for these individuals on my blog (earlier entries) or at the city website at www.cob.org.

Terry said...

Zonemaven said:

"This created a hidden subsidy of renters to the detriment of the neighborhoods. Instead of paying 1/3 of the rent for a single family home (based on a maximum of three renters), the three lessees would seek out additional, sub-rosa renters whose participation then lowered the cost to all the home’s residents."


I always thought free markets and contracts should determine how many people live in a house orhow much they pay.

So now if I rent with four others - and thus pay 'only' 47 percent of my income for rent (rather than the 79 percent I would pay if renting with two others), I am being subsidized???

p.s. I previously lived in a state where rentals were subject to a school property tax rate four times the rate levied on owner-occupied primary residences. Did I subsidize homeowners while I rented there?

p.p.s. It is my understanding that in Washington state, apartments are subject to a property tax rate much higher than the rate at which single-family homes are taxed. Are apartment renters subsidizing home owners?