Apartment hunters are discovering discounted digs in many American cities. Landlords are slashing prices because vacancy rates are topping 11 percent. Thanks to low interest rates, many typical renters have bought homes. Or they've lost their jobs and now live with parents or friends. The real deals are available in cities like Denver, Houston and Dallas where a construction boom in the late 1990s has created even more of an apartment glut today.
In the Mile High City, rental prices have dropped to rock bottom. Giant signs flap in the wind outside complexes, proclaiming "Free Rent" and "$99 will move you in." Terri Boyle of Apartment Locators Plus says in the late 1990s, when the vacancy rate was one percent, it was hard for renters to find a place to live. Now, she says, the market has taken on a new consistency. "It's kind of like whipped cream, very soft," she said.
And some apartment managers are putting a cherry on top. They're offering free TVs and DVD players, supermarket gift certificates, no-cost Internet access, or a chance to win a trip to Mexico - just for signing a lease. But Terri Boyle says most renters don't come into her office seeking benefits like that. They want free rent. "What's the best deal is all they want to know," said Ms. Boyle. "That's it, bottom line. What's the best deal? It's a savvy renter that is out there most of the time."
These renters have realized that apartment owners would rather have less rent than no rent at all, even if they're losing money to get people in the door.
"This is the one bedroom, fully remodeled. As I say, all new everything, all new cabinets, all new appliances," said leasing manager Steve Steck, when he showed a plushly-carpeted and freshly-painted unit at a Denver complex called The Overlook.
He steps onto the balcony. The last glimmer of sunlight dances on the majestic Rocky Mountains.
"This one has a nice view of the mountains, I also have ones with nice view of downtown, of the stadium, actually have apartments where sit on the balcony and see the field of the stadium from the balcony," he continued. "So with a pair of binoculars and a radio, you're at the game."
A few years ago, apartments like this were renting for more than $900 a month. But it's now available for $690, reduced from an already discounted $810 . The Overlook management has also halved the security deposit, the first month's rent and the application fees. Mr. Steck, who lives in the complex, says new renters could win a new ride.
"Different complexes are giving away TVs or DVDs, which is great but it's different when you can potentially win a $12,000 Harley Davidson," he said.
Apartment owners hope these gimmicks will help them weather the financial downturn. But some leasing experts say that they're clouding their future, that when the economy improves, renters will balk at higher rents and either move to another apartment or buy their own home. According to Mary Gwyn, president of the North Carolina Apartment Association, owners would do better to invest in improvements, rather than incentives.
"You add crown molding to an apartment that was already existing because that's what the renter wants,' she said. "Or you paint walls nice colors. And that gives people the chance to make the apartment home really their own."
San Francisco, Boston and Philadelphia are also struggling with higher than average vacancy rates. Even in New York City, where people used to scan the obituaries for possible apartment openings, the vacancy rate is a higher than usual 4 percent.
"Coming out of the Lincoln Tunnels, I see one of those banners hanging off a building about units for rent," said Robert Sheehan, an economist for the National Apartment Association, who recently visited New York. "I'd NEVER seen that, NEVER."
But Mr. Sheehan doesn't expect to see that much longer. He says the market nationwide has probably bottomed out.
"Maybe in the fourth quarter vacancy rates will be up again but that's probably going to be the last quarter that that will happen, assuming that employment starts to turn around," he said. "We'll stop the bleeding but the healing will take several quarters."
That means, until the second half of 2005, landlords in some parts of the country will probably be keeping their doors open and doing whatever they can to lure renters in.