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Rental market heats up
by Leslie Wright
Free Press Staff Writer

Interest rates have crept up. Houses continue to appreciate. Rental apartments are getting harder to find.

Is there a relationship? Sarah Carpenter thinks so.

"Those people on the margin who might have been able to can't" buy a home, said Carpenter, executive director of Vermont Housing Finance Agency.

The result is that more people are renting, units are getting hard to find and prices are starting to rise.

This is a hard fact for people like Juls Rozhon, a single, 30-something woman and accounts payable clerk from Burlington.

Rozhon regrets not becoming serious about buying a home five years ago, before prices seemed to skyrocket. Since then, any hope of getting a mortgage has slipped away as prices have continued to climb, particularly in so-called "entry-level" housing like condominiums, which are still in short supply.

"I'm personally looking at my rent or my mortgage probably doubling from what it is now in order to own something," Rozhon said, "and that's just not even feasible."

Thursday, the interest rate for a 30-year mortgage was 6.49 percent. A year ago, the rate was 5.91 percent, according to Freddie Mac, the shareholder-owned mortgage broker and buyer.

Home prices have also gone up.

In Chittenden County, prices are up 11 percent compared with this time last year, said Tom Heney, vice president of operations at Lang Associates in South Burlington. Sales are down 9 percent.

There might be another factor at work in the marketplace. Prospective home buyers might be sitting on the sidelines, choosing to rent for a while to see if prices will cool off.

Not coincidentally, real estate experts said, the rental market seems to be heating up again. Real estate analyst Mark Brooks has seen early signs in recent weeks. Brooks and Carpenter spoke at a forum on residential real estate trends in Chittenden County last week presented by Allen & Brooks, the South Burlington real estate analysis firm where Brooks is a principal.

"People are not having trouble filling vacancies. Anything that is vacant is spoken for," Brooks said.

That's the case with the 300 units rented by Coburn & Feeley Property Management in Burlington, where just one unit was open Tuesday afternoon. Barbara Sweeney has noticed a change in the past three weeks. The phones have been ringing off the hook with prospective tenants, and it's not just the usual student turnover, Sweeney said.

Out-of-staters moving into the area experience sticker shock when they see home prices, she said.

"I just met with a gentleman yesterday, and he's going to purchase, but he's waiting for the prices to go down," Sweeney said.

The increased demand marks a changeover as recently as last year when landlords were making concessions to rent apartments and having to advertise to find tenants.

For the past three years, the rental vacancy rate has been fairly steady at about 2.5 percent, but those numbers are through the end of last year and likely are not reflective of what analysts are seeing now.

Similarly, rents in Chittenden County remained relatively flat in 2005 as they have for the past two years. The average rent for a one-bedroom apartment without utilities was $660; for a two-bedroom, $860; and for a three-bedroom, $1,213, according to Allen & Brooks.

The exception is college-student rents in high-demand areas close to the University of Vermont and Champlain College. Students typically pay rent by the bedroom, and the per-bedroom rent is $525 to $550 but can go as high as $600 for a bedroom. About two years ago, bedroom rents typically came in at $475 to $525, Brooks said.

"Landlords have been able to increase asking rents and are getting them," Brooks said.

Contact Leslie Wright at (802) 660-1841 or lwright@bfp.burlingtonfreepress.com