Tuesday, July 4, 2017

Healthy Housing Rental Vacancy Rate Prevails in Burlington

July 4, 2017

Healthy Housing Rental Vacancy Rate Prevails in Burlington

...the rental vacancy rate continues upward and may already be in “glut” territory of 6 to 7 percent

A July snapshot count of online available Burlington housing rentals totaled 344, more than double a similar July 2016 survey finding of 129 vacant available rentals. This 344 July number alone represents a rental vacancy rate of 3.5% using the base of 2010 rentals, well within a “healthy” rental housing market range of 3-5%.

The latest snapshot survey reveals apartment prices fairly stable over the past year while all bedroom sizes except studio (they increased from 14 to 24) available vacancies more than doubled (Table 1) in the past 12 months. While median rents increased somewhat over the past year, the number of units available today below the 2016 median rents increased substantially. The 344 survey units represent only part of the available rentals which may easily exceed 500 or 600 with an actual rental vacancy rate of 6% to 7%. Larger apartment complexes, particularly those which are now opening—like the former orphanage Liberty House of 65 units on North Avenue—are tabulated with as little as one or two vacancies. The overall project of Cambrian Rise development of 733 mostly apartments, including Liberty House, on lands once owned by the Vermont Catholic Archdiocese is equal to about 7% of the entire Burlington 2010 rental inventory of 9,800.

The January private comprehensive survey by Allen Brooks found Chittenden County's rental vacancy rate of 4.4%, well within the range of “healthy,” 3-5%. The July snapshot survey indicates the current Burlington vacancy rate may be above of the “healthy” maximum which places financial strains on landlord, especially those with a few rentals. The Allen and Brooks January survey predicted a stabilization of rental prices and increasing vacancies in 2017, and the new snapshot survey supports those comments. With a healthy vacancy rate those seeking to rent obtain a reasonable choice and landlords do have to consider the market when pricing apartments. A “glut” occurs when a surplus supply of apartments force landlords to reduce rents below what it costs to operate and maintain, thereby leading to a decline in the condition and quality of the rental inventory.

With Burlington built or well into development about 2,500 apartments since 2013, a glut of vacant apartments--6% or more if the July data is any indicator--becomes a surprising problem after over two decades when vacancy rates seldom rose over 2.5% and rarely reached the healthy 3-5% vacancy level—and never a rental glut. (Note the 2,500 number does not include 274 housing units proposed in Burlington Town Center [BTC] re-development.)

The snapshot survey data is tabulated directly from Craigslist and other online services. From the 2010 Census, Burlington rental inventory totaled 9,800, 12% of the State rental housing. One major project renting this summer is the Cambrian Rise “Liberty House” with 65 studio and one-bedroom apartments in the former Catholic orphanage building on North Avenue. Clearly the June and July period is a very busy rental season and a firmer picture can be provided in a similar survey done in October when student rentals are fully reflected and apartment turnovers are relatively low.

Table 1

Comparison of July 2016 and July 2017 Burlington Snapshot Surveys
of Online Listings of Rental Apartments and Homes

Bedrooms    Number for Rent    Price Range   Median (Middle) Price
                        2016 2017               2017          2016 2017 % Change

0 (studio)         14    24              $725-$1,285          $968   $962    -0.6

1                      38   102              $700-$2,200         $1,050  $1,150  9.5

2                     43    135              $895-$3,350         $1,350  $1,450  6.9

3                     26     53               $600-$3,333         $1,825  $1,975  8.2

4 or more         8     30               $1,900-$3,900       $2,400  $2,633  9.7

Total 129 344
.
The April to July snapshot survey comparison, Table 2, confirms a pattern of stable median rents when increasing numbers of rentals considered. Four snapshot rental surveys—July and October 2016, and April and July 2017—show a continuing increase in online listings.

Table 2

    Comparison of April 2017 and July 2017 Burlington Snapshot Surveys
    of Online Listings of Rental Apartments: Numbers and Median Rents
    By Bedroom Size

Bedrooms      For Rent Number       Median (Middle) Price
                        April    July                      April     July
 
0 (studio)            13    24                        $1,100  $962

1                         81  102                        $1,140   $1,150

2                        86   135                        $1,495   $1,450

3                       42     53                          $2,175   $1,975 

4 or more         28     30                           $2,650   $2,633

Total 250 344

The snapshot surveys began in conjunction with the Coalition for a Livable City efforts to reduce and re-imagine the BTC re-development, questioning both the need for a large slug of downtown housing and the myth that BTC $1,000 one-bedroom apartments responded either to market need or were, as promoted, “affordable” much less providing “livable rents” or “shelter security.”

Several factors can account for increases Burlington and Chittenden County rental vacancies. The impact of a net increase of 300 students being housed this fall at the new UVM dormitory and 300 Champlain College students to be housed at Eagles Landing housing on St. Paul Street in fall 2018 both reduce student rental market demand. Also, there are questions about possible declines in student resident numbers at all area colleges because of either the demographic decline in college age populations and/or free tuition for college educations sudden starts this fall throughout the public universities in New York State and in the City of Boston.

While there is population growth in Chittenden County, the composition of that growth radically differs the past when under-65 age population naturally increased in the County and the State. Since 2010, ten of fourteen Vermont counties actually lost population. But as important, State official population projections, averaged, predict a doubling of senior population while residents under 65 decline—even in Chittenden County. Since 2010 the County growth of about 800 residents yearly mirrors the State average official population projections for 2010-2030. But the official predictions show the current growth composed of about 1,000 seniors and a decline of 200 under-age 65 residents. If this is currently taking place, then the demand surely mounts for not only small apartments—studios and one-bedroom housing units—but also a surge in demand for senior housing along the continuum which house independent residents, assisted living facilities, and finally nursing homes.

Finally, there is a complete lack of housing planning and policy development in Vermont as well as needed housing assistance. Vermont has no state housing plan while regularly producing an update to comprehensive transportation and energy plans. Further while about 13% of all Vermont renters are low income households benefiting from “livable rents” paying a maximum of 30% of income for rent--mostly from federal housing programs like Section 8—those programs stopped expanding early in the last decade as the federal government a abandoned efforts to provide housing assistance to all those of low and moderate income. In addition, today in an age where most Vermonters in their working lives will experience several job changes with the ups and downs of income, “shelter security” may well be as important as regular housing assistance--”shelter security” being assured a reduction in housing costs with dips in income from illness, unemployment, etc. “Shelter security” is also provided by Section 8 type units with rental amount decreased (and increased) as tenant incomes change.

The response to the federal government abandoning housing assistance has resulted in well intentioned but fragmented responses at the state and local levels. Hospitals, the corrections system and mental health field has resorted using non-housing streams of government funding to pay for housing as a far cheaper and far more beneficial to client needs than holding these individuals in institutional conditions. These often creative effort do in fact provide a context for formal, focused state and local housing assistance programs. For sure, there are today plenty of apartments ready to house the homeless and those in need of shelter.

Burlington housing market rental websites:

Craigslist
https://vermont.craigslist.org/search/apa?search_distance=15&postal=05401&availabilityMode=0

Apartments.com
https://www.apartments.com/apartments/burlington-vt/?bb=g4ott092gIhk7r7gzG

Bissonette Properties:

Zillow
https://www.zillow.com/homes/for_rent/Burlington-VT/condo,apartment_duplex_type/37662_rid/44.81107,-72.779618,44.064893,-73.768387_rect/9_zm/





Tony Redington

Blog: TonyRVT.blogspot.com
Twitter: @TonyRVT60