Ghetto rents could fall next spring

A drop in the market value of Ghetto houses, such as the one pictured above, may save students’ money on rent.
A drop in the market value of Ghetto houses, such as the one pictured above, may save students’ money on rent.

Queen’s students may be paying less rent for their houses next spring as a result of a crowded housing market in the ghetto and surrounding area.

“I’d say there are more places available for students this year,” said David Wright, director of Queen’s Apartment and Housing Services.

“The misnomer is that the housing market is tight and that there is nothing available to students.”

The accommodation listing service run by Queen’s Apartment and Housing is recording more entries than usual, Wright said, especially for fall.

“We have more beds available after the [spring] rush,” he said.

“It’s up over previous years.”

Professor James Mackinnon, head of the economics department, said if the number of properties available is larger than the number of students wanting to rent them, a decrease in rental rates and an increase in the quality of rental properties could result.

“Any economist will tell you that those are good conditions for the consumer,” he said. “There will be downward pressure on rents and upward pressure on quality.”

Jenifer Wartman, a property manager for Panadew Holdings which owns several houses in and around the ghetto, said there is a glut in the rental market.

“I think the market is probably saturated right now,” she said.

“We do have more spaces than students in the market.”

Wartman does not anticipate a decrease in rental rates, but she said Panadew Holdings is not increasing their rents significantly.

“I don’t think [the rates] will go down,” she said.

“I don’t think that we have raised rents very much at all, we simply did marketing research and priced accordingly.”

Jay Abranski, president and general manager of Keystone Property Management which manages properties for several landlords in the ghetto area and elsewhere in Kingston, agreed there has been an increase in the number of properties available to students.

“I think we’re finding that there are more people in the business of leasing to students,” he said. “It has made for a competitive market.

“It’s important for landlords to upgrade and keep their units looking and feeling good.”

Abranski said Keystone is doing more renovations than usual, and although he is not sure whether or not rates will fall, the improvement in quality may be a response to a more crowded market.

“We’re doing more renovations then we’ve ever done,” he said. “I don’t know that it has to do with the price side ... it’s more about offering value.”

Wright said he thinks there will be a plateau in rental rates.

“The softness of the marketplace will hold rents down,” he said.

Mackinnon said if the market is indeed saturated, and if it has become that way over the summer, there may be some students who signed contracts in the spring who are paying more than the current market price for their accommodations.

“If both sides recognize that there’s an excess supply situation, things will presumably get really interesting next spring,” he said. “That’s when changes might start happening.”

One possible change resulting from a crowded market could be the altering of lease lengths in order to entice students, Mackinnon said.

“Landlords have been able to force [12-month contracts] because they were in control,” he said. “If there are more properties available the landlords might be inclined to go to a nine month lease.

“Certainly students would be more reluctant to take on a 12-month lease,” Mackinnon said.

It is difficult to say when landlords might choose to exit the market by selling off their properties, he said.

“I don’t know how much rents would have to decline before landlords felt that they needed to get out,” Mackinnon said. “Some reduction in rents because of low interest rates might not be such a problem, and it would be different for different landlords, depending on how much they borrowed and how much of their own money is in [the property].”

Wartman said Panadew Holdings has no plans to reduce the number of properties they own.

“We’re still growing,” she said. “We do still get student rentals.”

Abranski said landlords that don’t price according to market health could find themselves in trouble.

“It’s a free market economy and students will shop for accommodations and they’re going to go where the value is,” he said. “If a landlord chooses to price himself out of the market then that’s their own fault.”

Queen’s Apartment and Housing Services also manages properties the University rents to students. Wright said the rental rates for houses owned by the University are determined by how much it takes to maintain the property, but they are also influenced by market analysis.

“We operate at a cost recoverable ancillary ... the rents must pay all expenses for operating the property,” he said. “That’s the driver of our rent levels.

“We go through a lengthy process of trying to find out where the marketplace is and we have an independent property appraisal.”

Wright said the University aims to have their rental rates slightly below the market level.

Some student rental properties are currently undergoing or have recently undergone renovations, and many students said they found houses easily this year.

Rosie Moore, ArtSci ’05, said she had no trouble finding accommodation for this year.

“I think a lot of people used the [Queen’s Apartment and Housing Services] website and were successful, even late in the summer,” she said.

Anna-Marie Camillo, in her first year of teacher’s college, didn’t begin house hunting until well into the summer, but had little difficulty finding a place to live.

“We waited until the last minute,” Camillo said. “We spent one day [looking].”

Both Camillo’s and Moore’s properties are being, or have recently been, renovated.

“Right now they’re replacing the [outdoor] walkway,” Camillo said, adding that her landlord had also replaced some flooring in the house and bought new appliances.

Moore said her windows were reinforced to improve insulation.

Lara Cousins, ArtSci ’06, said it took a couple of weeks last spring to find the house she now lives in, and her landlord is currently renovating it.

“It’s under renovation right now—the basement’s being re-done,” she said. “I guess the rent will probably rise once it’s done.”

Other students had more difficulty finding accommodation.

Jordan Alley, Sci ’05, said it was difficult to find the two-person house she needed this year.

“I went from paying $341 a month to $412 a month,” she said.

There have been no recent renovations on the property, she said, and the basement room flooded during last week’s rainstorm.

David Lee, ArtSci ’05, also said there have been no renovations done to the house he is renting.

“[The landlords are] kind of bad with that stuff,” he said.

Lee said his rent has increased $10 per month this year.

Mackinnon said low interest rates during the last few years are triggers for any crowding of the housing market that might be occurring.

“That makes investing in rental housing attractive ... because people thought instead of investing in the stock market [where returns would be lower as a result of the interest rates], they would invest in houses,” he said. “A number of people might have thought that buying more houses in Kingston for students might be a good thing to do—it sounds like maybe they’ve overdone that a bit.”

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