Tuesday, February 01, 2011

Looking for Clues about Where Housing is Going

I really enjoyed the in depth breakdown of the sources of our Gross Domestic Product (also called Aggregate Expenditure) for Q4 2010. The number, which was reported before the weekend, was slightly below expectations, at 3.2% growth. But the good folks at Zacks provided a really great analysis. Take a look:

Where the Q4 Growth Came From - Zacks.com

In particular, the numbers on government investment and private investment told us that the private sector is starting to buy again even as government continues to taper off it's stimulus spending, a good sign that businesses anticipate more business. Most of the private investment came from building inventories, so businesses expect to sell.

Residential investment (specifically meaning the building of new housing units) was basically flat. That is good for now, as there is a lot of inventory out there across the country. But for New York, where there is generally a housing shortage, there isn't a lot of residential (or commercial) building going on. For now, that doesn't matter. If anything, it's keeping the market level. But if we experience a robust recovery (and 3.2% after a 1.7% in the previous quarter is a robust start), it could be a problem in 2-5 years. I'm not the only person saying that, either.

Sunday, January 30, 2011

2 Easy Extras to Keep Up with the Times

When I first moved to New York, I heard all the cliches about New York apartments. They can be small, dark, dingy, etc.  And they had no amenities at all. No air conditioning, no garbage disposal, and absolutely no dishwasher.

Fast forward a decade or so. Landlords now have plenty of very inexpensive options when it comes to two amenities: air conditioners and dishwashers. And, I have to wonder if it's not time that all landlords realized how easy it is to upgrade all units if possible to include those two amenities.

Permanently plumbed dishwashers come in sizes as narrow as 18", which is appropriate for a studio or 1 bedroom apartment. Permanently installed dishwashers are the lowest maintenance option (as opposed to countertop or portable dishwashers) because the hose and drain connections do not have to be touched by the tenants, thus cutting down the possibilities for leaks. Basic models are very affordable . Installation may require the removal of the current counter top and cabinet base, but the look is far more modern, and tenants who would have objected to a lack of cabinet space in general will be less likely when they realize they are giving it up for an amenity. Overall, landlords looking to add a sense of the upscale to their apartments can accomplish it fairly cheaply.

Air conditioning is another amenity I would love to see included. Tenants expect to be running in the summer. Window units are very affordable and much appreciated in each bedroom and living room if possible. Have them installed securely with brackets and good insulation by a super - in the top of the window frame if possible -  so tenants will not be tempted to remove them. Landlords who don't want A/C units hanging out of windows can consider Floor A/C units, which are more expensive but completely interior. The ultimate is installation of Mr Slim ductless A/C units.  Though it is more expensive, the unit lasts much longer, and energy efficiency rebates are available for many of the models.

When I was in college, I sublet a room for a summer share with two other female roommates. Fresh out of the dorms, I was amazed to find out this apartment had a rare commodity - a portable dishwasher. My new prospective roommate said the three girls had each agreed to pay an extra $10 a month - total $30 a month - for a dishwasher. The landlord had agreed and provided a roller-type dishwasher that fit in a corner when not in use but had to be positioned in front of and hooked up to the kitchen sink to operate. The landlord spent $300 on this, made it back in 10 months, and had an amenity that she could tout to future tenants for the next 5-8 years. If she had installed it under the counter, it could have lasted longer. So in the long run, dishwashers pay for themselves.

Certainly there are still many "budget" New York apartments out there, but as the high end gets pushed higher, little traces of luxury in less expensive apartments will raise the bar. Universal dishwashers and A/C are a great place to start. These are the sort of amenity that is still rare enough to be highlighted in the pay-by-the-line newspaper ads, and apartments equipped with these small concessions to modernity will rent faster and for more.