Thursday, January 04, 2007

Apartment Hunt: Let the Chase Begin

Around the middle of last month, the bombshell dropped. We were slapped with a 25% increase in the apartment rent should we continue with the status quo, i.e., staying in the same apartment unit, the same fate that has befallen our Korean neighbor as blogged here. After a couple of “negotiations” with the management, they are willing to budge by only about 5% less.

Obviously, we feel that the quantum of increase, even at a reduced rate of 20%, is excessive from our perspective. With the average rate of salary increase barely outstripping the rate of inflation, it will translate to a net salary decrease, and a big one at that. By our reckoning, this also runs counter to the general depressing housing market that started last year which you think would entice more renters to own homes instead, hence, the oft-touted description of a buyer’s market being bandied around. That would surely put a dent in the market for rented homes. Or not.

The other argument proffered is that we had been enjoying the low rent in the past few years, as if now is pay-back time. Note that I’m not against a reasonable rent hike as managing an apartment complex is just like any business operation, and subsidizing any cost increase is definitely too altruistic a notion to be entertained.

Sometimes, you would think that perhaps being a relatively long-term (I hesitant to use loyal because that would be taxing the system too much) tenant, one with an impeccable record of timely rent payment, and with the barest of maintenance requests, would count for something, something akin to a quantity discount being offered in a purchase. OK, I’m being naïve.

So after more than three years of enjoyable stay in one of the prime apartment complexes in South Tampa, during which we went through our “formative” years of getting used to the life in Tampa, we have to uproot ourselves, succumbing to the reality of life.

However, personal feelings really have no place in a laissez-faire economy. There are only economic choices, dictated by the supply and demand of market forces. The apartment management has every right to set the rent structure, except when it becomes price gouging whence it can be countermanded by law (as purportedly happened during the height of the hurricane season when some room rates shot through the roof). On the other hand, the consumer can always exercise his/her right to walk away and try his/her luck elsewhere.

That’s exactly what I’m going to do, not that I relish doing it. Moving house is a big hassle: the logistics, changing the address, getting used to a new environment, etc. But when push comes to shove, metaphorically speaking, one just has to endure the fact that reality bites, sometimes.

So these past few days, we have been on the lookout for potential new homes, albeit a rented one, to move to. Even while I’m driving, my eyes will be sweeping both sides of the road for the proverbial “to rent” sign. We also picked up a few apartment guides freely available in SweetBay and BlockBuster Video as night-time study material. Then there is the online listing, e.g., here, to browse or plow through, depending on one’ state of mind.

A question that naturally comes to mind is why rent? Why not own, especially when it’s a buyer’s market as some would like to characterize the prevailing sentimet? I’m sure many a renter has debated the relative merits of renting vis-à-vis owning a home, which calls in a whole slew of other considerations not pertinent to finding a apartment to rent.

Firstly and foremost is affordability. Typically a 20% down is a pre-requisite. Now there are advertisements boasting “no money down” but invariably the “20%” is paid for on a second mortgage, which can be several percentage points above that charged for the first mortgage. Then there is the property tax, the recent hike of which in Hillsborough County has met with a chorus of protest. The best argument for owning one is building up equity, unless one is unfortunate enough to pick a home where market slump is the order of the day. Also coming in on the plus side is the income tax exemption on the housing loan interest paid.

Secondly, the issue of location. Unlike renting a home, owning a home makes one relatively immobile. Neither is one in a position to abandon ship when situation becomes dire, say in the event of a hurricane-induced storm surge. So the mantra "location, location, location" is germane to both buying a home for life or buying one for investment.

Last but not the least, there is the question of changing demographics, either one is part of it such as changing office location, or is affected by it, say a high density redevelopment of the neighborhood. This would require having a keen eye for development trend into the foreseeable future.

Suffice to say that at least for now, it makes more sense, both economically and otherwise, for us to continue to rent, which means let the apartment chase begin. Yeah, I’m feeling better already.


CY said...

Ah, moving... I have moved many times in the last three years... Ugh!!! I can't wait to finally settle down in a house/condo that is ours. But I realize that would be a whole new journey in itself (as you said, development of the area, etc)... But anyway. That won't be for several more years.

Good luck! (And choose a place that is in Zone E...)

Say Lee said...

We will do one better by getting out of Zone E altogether. But I guess Zone E is livable even for owning a home.