Apartment hunters feel squeeze of increased rent
By John Duchemin
Advertiser Staff Writer
Rising rents are putting the squeeze on O'ahu apartment hunters, who are increasingly finding themselves not only paying more, but getting fewer choices and facing fiercer competition from other renters.
Spurred by hot high-end markets like Hawai'i Kai, a housing shortage in Mililani and low vacancy rates islandwide, average rents are up 5 percent or more in some areas for 2001 compared to a year earlier, according to data compiled by local researchers.
That means the typical apartment seeker can expect to pay $930 to $950 per month for a two-bedroom apartment in neighborhoods such as Makiki and Salt Lake compared with $880 to $900 last year and the year before, according to data compiled by Ricky Cassiday, a real estate research consultant who works with Prudential Locations.
Prices are rising because demand, spurred by an improved economy, is also rising and inventory is dropping, say industry observers including trend watchers, property managers and rental search agents. The resulting surge has lifted the rental market out of a five-year slump in which prices bottomed out in most neighborhoods.
"In Hawai'i, a lot of families double or triple up when it comes to housing," said Michael Sklarz, a former Prudential researcher who has started an online property data service. "When times are good, more people will seek to rent their own places."
But a dearth of new construction means more people are chasing the same number of apartments and rental homes. Meanwhile, low mortgage rates mean more families are buying units they might previously just have rented, taking those homes out of the market, Cassiday said.
And other factors are at work in some areas of the island. In Central O'ahu, an Army housing crunch, caused by remodeling of barracks at Schofield Barracks, has pushed enlisted members and their families into the local housing market. Rental units in the area have filled up fast, said Shari First, a property manager with Veterans Realty Inc. in Mililani.
Veterans manages about 60 rental houses in Mililani. In recent years, about four or five have been vacant in any given month but this summer, only one or two houses have come available each month, First said.
And those are filling up quickly within a week, First said. Last year, homes would sit empty for four or more weeks.
"For people who own the properties, this is a positive trend," she said. "They were working in the negative before not able to rent for as much as their mortgage. But owners are breathing a little better, now that they know their places can be rented."
The hottest areas for rentals these days are in the higher-end neighborhoods like Kailua, Manoa and Hawai'i Kai.
In Hawai'i Kai, for example, average monthly rent for a two-bedroom apartment has risen 18 percent in the past four years from $1,440 in 1997 to $1,700 now.
Even in the slow summer months, demand in the area has been unusually strong, said Patti Saito, a property manager at Prudential.
When Daniel Chung, a property manager at Chaney Brooks, posted a Sunday classified ad for a $1,500-a-month three-bedroom Hawai'i Kai house in middling condition, he got more than 100 calls in one day. More than 30 people showed up for the viewing.
"This has become a landlord's market," said Chung, a property manager for 12 years. "A few years ago, you had to beg people to rent, and you'd end up dropping the price 50 to 100 bucks a month. Now, prices are back up to where they were in the early 1990s."
And this means landlords can be far more picky. Applicants should prepare for competition, said Donn Terada, who runs Rental Finders, a one-man rental search agency.
"If property managers have a good property out there, they'll have no problem filling it with a good tenant within a week," Terada said.
Would-be renters holding out for a market swing could be out of luck if the housing market continues its current trend, said Cassiday, adding that the only hope for bargain-seekers may be an economic slowdown that puts a damper on job creation and property values.
Otherwise, with scant building, more jobs being created and more people moving in, prices will continue their upward march, he said.
"What with the Mainland softening, the rental market may plateau here if people get uncertain about their income," he said. "But I don't think these prices will go away."