Wednesday, April 04, 2007
Units
I own an Uptown apartment building that offers a dozen furnished 1 bedroom units for $350/month and up.
Not such a bad deal in Post-Flood New Orleans. (Did I mention that the place is 1 block off St. Charles Avenue, and utilities and furnishings are
included?)
Sure, the sacred free market would allow me to dramatically raise rents on my tenants as their leases expire... but, frankly, I don't want to. The apartment is profitable as it is, there's low turnover and few vacancies. My tenants are working class native New Orleanians who get paid low wages for washing dishes, or hauling garbage, or keeping the casino pretty. Some are white, some are black, some are eccentrics, some are mysterious... and one has a Nint' Ward accent that is so gloriously thick I can barely understand the man. Because of their modest incomes and Post-K circumstances, they have very few affordable housing options right now. Yet the city desperately needs these folks to run its undiversified tourist economy.
Now, I'm not saying I'm some liberal saint of rent control-- not by any stretch-- but I do feel some civic responsibility as a landlord not to be a greedy douchebag while the city's affordable housing inventory is so depleted.
Which is why I was so heartened to see two large apartment buildings being built within a two block radius of my place. It's a good location for affordable apartments, and goodness knows there is enough demand. I didn't view the new apartments as "competition" (my rent rates would still be way lower), instead, I viewed them as a welcome addition to the N.O. housing market-- affordable housing for the working class is desperately needed for the city's recovery to continue.
You can imagine my disappointment, then, when construction was complete and I saw them put signs on the buildings reading "For Sale: 2 Bedroom Condos starting
in the 150's at $197,000".
Condos?!! I was pissed. The condo market is super-saturated with inventory right now, while affordable apartment units are in high demand. What a tremendous waste of resources! I expressed my frustration to a local architect who comforted me, saying that the condos would be so slow to sell, and that it was possible they would be "converted" back to rental units. I hope so.
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Note: The next few posts will be about New Orleans housing unless something unforeseen pisses me off.
Labels: R.E.
11 Comments:
For a blogger that is so focused on politics, you usually seem to have a pretty good grasp on economics. However, you really do sound like "some liberal saint of rent control" in this post.
What makes you think that these condos would be "affordable" apartments? It's well beyond bearing "some civic responsibility as a landlord" to expect new development that is affordable.
I think it's great that you have been so kind to your tenants, it's just that it is pretty unrealistic to expect charitable development of apartment buildings.
Of course, we could always subsidize those types of developments...
jz
"What makes you think that these condos would be 'affordable' apartments?"
They'd be affordable in the sense that a lower wage earner could afford to live in them. Lower-working class renters could get roommates to halve the rent and utilities, they wouldn't need to pay prop taxes, insurance and a $150k mortgage, they wouldn't need decent credit to qualify, they wouldn't need a down payment + transaction costs, as they would need to purchase a condo. There's a large universe of potential renters who would immediately fill those rooms if they were apartments, but who cannot "afford" to purchase a condo.
I'm siding with you on this one, Oyster. New Orleans needs affordable apartments. I daresay that any developer who built 1 or 2 bedroom apartments and priced the monthly rent at or near $500.00 a month wouldn't have any trouble getting quality renters.
Good for you, oyster. Kudos!
I might be coming down to volunteer some help next winter for a few months. I've checked some rents on Craig's and they are out of sight. I couldn't even consider it. Hope I can snag a room from ya' if I make it down. I would pay in advance for 2-3 months.
Can you put me on your waiting list when one opens up? I've got first and last months rent, no pets and plenty of eccentricity.
Now if we could just get you to run HANO (or whatever's left of it), it would be a much better planet all-around.
it was possible they would be "converted" back to rental units.
Nice of him to allow that it's possible. As if the owners would have a lot of choice in the matter. Damned right it's 'possible'.
Good on you, O.
Damn Oyster, you da man!!!
Oyster,
You have a point, but this doesn't really come across in your original post. Landlords face the same set of problems as the rest of us here with rising insurance costs and I still think you are stretching the definition of affordable if you do the math.
I agree that we have a need for affordable rental units in this city, but I just disagree that this is the developer's problem. They will find out the hard way if they are wrong about the condo market. It's their capital at risk.
There are lots of ways to encourage the type of development you are looking for, but maybe you will find it easier to organize a non-profit to buyout the developers and bring the apartments online yourself.
jz
"You have a point, but this doesn't really come across in your original post."
Sorry. Bad writing.
"They will find out the hard way if they are wrong about the condo market. It's their capital at risk."
Partially right. With GO ZONE and other tax incentives, the "risk" is relatively low compared to other places. The developers probably viewed condos as the easiest way for short term profit maximization (Get in, sell, and get out) without regard to the urgent affordable housing needs of the city.
Now, I like profits as much as the next guy, but I don't like ill-conceived, short sighted developments which *might* show profit in the short term, but actually could delay the city's economic recovery.
Just promise me that, the second that you hear that public or subsidized housing is available in Orleans (if, indeed, that ever happens again, not holding my breath), you'll holler at me, 'cause I wanna come home, dammit. I wasn't run out by Katrina, but I still wanna come the hell home.
