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MailTribune.com
  • Demand is high for rental units

    Increased demand for rentals may revive the building of multi-units
  • Apartments continue to do a brisk business, and rents continue to rise even as home sales begin to pick up.
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  • Apartments continue to do a brisk business, and rents continue to rise even as home sales begin to pick up.
    "Household formation is reviving, despite sluggish employment growth, and the recovery in demand is spreading from rental units to the owner-occupied sector," said economist Nigel Gault of IHS Global Insight in Lexington, Mass.
    Lending for multifamily construction totaled $110 billion in 2011, 60 percent more than in 2010, the Mortgage Bankers Association said last week.
    But the clamor for apartments is putting ever-greater financial pressure on those already on the edge. Affordable rental housing is even harder to find and pay for, as recently released U.S. Census data and studies by advocacy organizations show.
    Last month, the Census Bureau reported that about 20 million renter households across the United States, or 53 percent of the total number, faced a housing-cost burden in 2011.
    In other words, last year 600,000 more people paid 30 percent or more of their income toward rent and utility costs than did so in 2010.
    Syreeta Johnson of Glenside, Pa., left her post office job to go back to school to become a nurse. But because of a series of unfortunate circumstances, when she began her new career in December, she was woefully behind on her $960-a-month rent and working two jobs to make ends meet.
    "The utilities can be a killer," said Johnson, who has four children, ages 12 years to four months, and who has been paying a $90-a-month penalty because she can't pay the rent on time.
    Denise Parker of Penllyn, Pa., a single mother with four children from college to elementary-school age, lived in a shelter until three years ago, when she moved to Section 8 housing.
    After being unemployed, then hospitalized for back surgery, Parker found a job as a hospital receptionist, but she doesn't make enough to pay $962-a-month rent and meet other expenses.
    "Sometimes, you have to choose between heat and food for the kids," she said.
    Liz Hersh, executive director of the Housing Alliance of Pennsylvania, said, "It can be an invisible problem to many, although teachers will tell you that children sometimes just disappear in the middle of the year as their parents face unstable housing situations and they have to move, or kids get sick from housing-related conditions.
    "The basic issue is that wages have not kept pace with the cost of renting," Hersh said.
    "Jobs like day care teachers, cashiers, home health aides and practical nurses just don't pay enough to pay the rent on a lot of places."
    More prospective tenants appear to have credit issues these days, said Helen Aster, president of Harrison Richards Inc., a property-management firm in Ardmore, Pa.
    Still, Aster said, landlords are willing to compromise because many of these prospects end up being the kind of tenants they want to keep. "The key is retention," she said, noting, for example, that her firm was sanding floors in an apartment to which she is moving a tenant in order to keep him.
    As the for-sale housing market stumbles back to health, the outlook for the multifamily segment looks like more of a sure thing, industry observers said.
    And that, in itself, may spur development of more affordable housing and ease the burden of renters.
    The prolonged downturn could represent "a paradigm shift from single-family homes that people can no longer afford," said Ridge MacLaren, who specializes in the sale of multifamily investment properties in the Philadelphia region for commercial real estate brokerage Marcus & Millichap. "Apartments may be coming back."
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