Tough times for landlords
For years, the valley has been crying for more affordable housing for our workers and families especially those who need a leg up to get established in the valley.With the economy still slowly recovering and jobs and pay remaining painfully scarce nationwide, it would seem reassuring to see all the affordable housing that has popped up from Vail to Gypsum in recent years. But is it?While some would argue there is still not enough affordable housing not until everyone who needs a home or apartment can afford one, there are others who wonder if our zeal to provide affordable housing has outstripped the need. Indeed, some contend it may be harming the workers it was intended to help.Perhaps the answer to that debate depends on which side of the lease agreement you are on.Chris Anthony, who grew up in the Eagle River Valley and is now a property owner himself, has found a troubling trend in the rental pool this year. An owner of an apartment at the Seasons at Avon, his roommate of three years recently left."Usually, I lose a roommate every couple of years, since we are a transient community," he says. But in the past, whenever he advertised a vacancy, he would receive 10 or more inquiries a day. This year, after four months of actively searching, he has received only three serious inquiries, each of which had a wealth of rental options from which to choose. "It was like they were interviewing me, the selection was so very high of where they could live. They were trying to negotiate with me."And he is not alone. Anthony claims he has several acquaintances in the same boat, looking endlessly for roommates, and one who had to put her rental unit on the market after finding no success in renting it."There are la lot of empty apartments," says Anthony. "I grew up and watched the community go from impossible to find housing at reasonable rates to now where we have an over-supply. Now, being an apartment owner, I’ve felt the crunch of almost too much housing."Debbie Williams, in the property management department at McVey and Company Realtors, concurs that it is exceedingly competitive for landlords out there.Williams, who currently manages 95 units from East Vail to Gypsum, has found that the addition of new homes and townhomes at Miller Ranch in Edwards and the opening of Buffalo Ridge affordable housing project in Avon has caused many of her property owners to scramble to fill rentals. Would-be investors, too, are having second thoughts."It’s hard for an investor to buy a property today, even what they had before, and charge what they have in the past." Consequently, she adds, "rates are dropping."That may be good news for the renter, but bad news for landlords.When Buffalo Ridge came on the rental market, for instance, it offered not only lower rates, but also a month’s free rent and a $500 security deposit credit."Tenants out there are breaking leases to go over there for cheaper rent, and wouldn’t care because they wouldn’t lose a security deposit," Williams says. In the six years she’s been in the property management business, historically only one or two renters would break a lease each year; now, renters are breaking leases at the astonishing rate of one or two a month."I’m having to work twice as hard to keep properties rented."In order to be competitive, Williams advised many of her property owners to lower rates to draw tenants.Marybeth Walker, property manager with Vail Management, which manages 50 rental units from East Vail to Edwards, also feared the worst when the Buffalo Ridge apartments hit the market. "So many things arebeing built, like Buffalo Ridge and places in Edwards and Gypsum."Despite her fears, however, she has found her rentals going "quite well." But she, too, had to turn to aggressive and creative marketing tactics to combat the new competition. With a couple of units she had to offer a free month’s rent, while some other owners have lowered rents an average of $50 a month to fill properties. Now she has only a couple of units left to rent and is feeling "fairly optimistic."Still, Williams points out that the empty rental units around the valley are a symptom of more than just several new apartment buildings being built. She notes that the slow economy and low interest rates are also playing havoc with the rental market.For instance, many of the renters she works with are in the construction trade, and their wages have fallen dramatically in the past couple of years. Yet it is not just entry-level positions that are feeling the financial squeeze. Vail Resorts’ recent cuts have forced out workers, including some long-term, highly paid employees who have had to leave the valley. This, it seems, is just part of a national trend. Williams also had a tenant whose hours were cut so drastically by a well-known, national firm, he couldn’t afford to renew his lease."A lot of our tenants weren’t having jobs and it made it difficult for them to meet rental payments," Williams says.Williams says McVey and Company and her landlords aregoing out of their way to be understanding and accommodating to those who fall on hard times, however."We are totally willing to work with our tenants. If we know up front what is happening, we can work with it," says Williams, who adds that her boss, Jim McVey, has been exceptionally helpful. "We never want to lose a good tenant. People who have rented from you for five years and run into hardship should be rewarded for being such good tenants."A third factor affecting the rental market is still low interest rates, which are tempting renters out of their rental units and into mortgages. Williams says it was the interest rates, plus the new offering of homes at Miller Ranch, which lured several of her tenants away this past year.But should anyone shed tears for landlords struggling with plunging rents?Anthony and Williams contend that when landlords are hurting financially, it may well hurt us all.Anthony points out that in most other communities around the country a full-time career person, such ashimself, wouldn’t even need a roommate. But with the high cost of living in the Eagle Valley, it is all but unavoidable, and roommates and landlords become dependent on that money to live. Even when landlords lower rents, their fixed costs, such as utilities and association dues stay just as high as do mortgage payments. Williams has single-family homeowners, mostly year-round, valley workers, who bought their homes expecting to meet mortgage payments by renting former homes. "Those are the owners who can’t afford not to have their places rented."And if they can’t afford their mortgages, they may not be able to afford to stay, and the valley could lose valuable workers. In turn, that could also leave more houses on the market.In fact, Williams said the whole scenario is frightening her a bit. "It’s amazing how the rental market may affect the real estate sales market."Anthony worries, too, that vacant properties will result in the decline in quality of properties and neighborhoods. When landlords are desperate for renters, he points out, they are more likely to rent to renters who may not take good care of a property, or rentals may sit empty until they are forced to sell it altogether."I wonder, with all the rest of the housing going in, can we really afford to upkeep this much housing.”Yet Walker points to some positive developments she is seeing on the rental market scene, too. For instance, she says the Ritz-Carlton in Bachelor Gulch has "changed the dynamics a bit by opening up a new pool of workers. That has improved the market in Avon and Edwards with people who want to live close to work."The rental market, Walker insists, is actually pretty good in Avon right now, despite Buffalo Ridge. For landlords willing to be flexible and attentive, their units can still be rented."We pride ourselves on keeping our units up, maintaining them well and being responsive to our tenants and responding in a timely manner," says Walker, which is why the firm has been able to keep many tenants five or six years and attract others by word of mouth.Williams, too, has been able to finally fill most of her rental properties and is seeing a silver lining to the rental market. Although August and September were far slower than last year, she says October seems to be picking up a bit. This is, after all, historically the time when many workers think about relocating to the Vail Valley."We’re in pretty good shape now," Williams assures. "Most of our properties are rented." For now.