Manhattan Renter Concludes the White House Plays Favorites to Wealthy
President George W Bush has once again saved the day, this time for some home owners. In the final week of August 2007, the president pledged his powers to rescue mortgage lenders and roughly 500,000 over-extended homeowners through programs meant to empower first-time homeowners.
"What this means is if I still owe $426,000 on a house that I couldn't afford in the first place, and the interest rate is going up on my loan in 2008, the government is a'coming to my aid," said Tracy Walman of Manhattan. "But those of us who did not extend ourselves, and cannot afford to buy in the first place, are simply out of luck," she said.
As of press time Walman had not lost her Manhattan apartment, but her lease is up 31 December 2007 and her "new" rent will nearly match her take home monthly pay in January 2008.
"When they slipped the new lease under the door [in mid-August,] I read it and thought they'd made a mistake -- again." She said they had made a $557 per month mistake in preparing the 2007 lease, and it took the landlord two months to correct the rental hike error before she renewed. "They only handle correspondences through the mail -- there is no other way to reach them," she said.
Through written correspondences in past 10 days, beginning in 2008 Walman's monthly rent is set to rise 9 percent, or by $3,156 for the year, and there is nothing she can do -- except move. "There are no raises in publishing, only layoffs, so all we can do is lower our expenses to keep above water," she said.
Since tenants can be blacklisted within Manhattan's broker and landlord circles Think & Ask changed the tenant's name to protect her identity and decided not to name the small "Management LLC" company, which owns and operates her six-floor walk-up building on East 74th Street, at this time.
Attempts to reach the landlord for comment were not successful; the company appears to be a shell, and the only phone number available goes into voice mail. Tenants mail monthly checks to a post office box in New Rochelle, NY. Our letters sent to the address seeking comment were not answered.
Walman, 48, works in publishing and earns high $50,000s, which she said is a very good salary after 20 years as a business editor. Technically, Walman qualifies for a rent of about $1,100 a month, more than half her current rate, but with steady annual rent increases in Manhattan -- her rent, which began at $1,200, has steadily approached her current take home pay. Her salary is actually lower now than it was when she rented the apartment due to one job loss during the time she's leased the apartment.
The difference in her 2008 lease is that the landlord hiked the rent 3 percent based upon the "legal rent" not the "lower rent," which was not the case in 2006 and in 2007. New York City's rent stabilization board confirmed to Think & Ask that such a move was legal under city stablization guidelines.
The apartment, which is defined as a studio, is 20-feet long by 11-feet wide or 220 square feet and has one poster-board size window. The bathroom ceiling has leaked for years, "the former [building] owners tried to fix it, but never really did," soft-spoken Walman said. The wood floors have been munched-on by termites, so one has to walk gingerly in her apartment as Think & Ask observed. While Walman keeps her pad tidy, the building's lobby and stairwell is filthy. "The new owners, who bought this building in 2006, have not cleaned the shared space once," she said. But there are no roaches she said, "At least none that I've seen, but that is due to the tenants here being respectable renters, not due to the landlord," she added.
Despite the issues with the building the hassles of moving in Manhattan can overwhelm even the bravest of men or women. But other legal twists will narrow Walman's hunt for a new apartment.
First, the landlord demands Walman renew or end the lease by 1 October 2007, three full months before it is due.
"Screw them. They can wait, they don't give a-fuck about me," she said and then paused. "Sorry, I normally don't swear, but I am really, really angry."
Walman figures that if she finds an apartment in late October or early November, she would be able to pay the fees, plus November's and December's rent on two apartments. "With best case, I figure I find a place around December 1 and then only have to pay on two apartments for one month," she added.
For planning her budget though in fourth quarter, just for renting on two apartments (holding one) in November and December, plus broker finder's fees and a security deposit the total comes to about $6,730 at best. "That is all the money I have saved at the moment," she said. "That doesn't even touch moving expenses," she added.
Walman, a petite woman of about 5-foot 5-inches, said she would move most of her belongings herself, and pay movers for the larger items by charging those fees on her credit card. "And hope the landlord refunds my original security deposit that has been earning the owners interest for the past 10 years to pay for the movers," she said.
As a matter of interest, renters declare the (relatively small) interest earned and distributed to their landlords on security deposits, but renters are not entitled to those earnings when they hand in the apartment key. In Walman's case the interest earned is actually $312 through December 2007.
Second, a rule of thumb for monthly rent qualification in Manhattan is to multiply the rent 48 times -- and the figure should match the annual salary. So, Walman's top target rent would be about $1,230 a month, but with some luck and a nice landlord, if one exists, she could be allowed to pay up to $1,300 a month. "It just translates into more up front and a higher security deposit," she said. Walman added that she has no debt or major expenses (other than rent.)
What Experts Say About the Market
Marcus & Millichap Real Estate Investment services expect vacancy rates of about 1.2 percent in fourth quarter in Manhattan. That figure is actually twice as high as other firms state, so figure a vacancy rate of anywhere from 0.5 percent to 1.5 percent, either way it is the lowest in the nation.
Edward Jordan, regional manager of Marcus & Millichapís Manhattan office, said that strong demand will support a 7 percent rise in asking rents in Manhattan to $3,673 per month, and a 7.2 percent increase in effective rents to $3,575 per month. The figures include all sizes of apartments however.
Citi-Habitats New York reported that the average price of a studio apartment crossed $2,000 per month in May 2007, with a vacancy rate of 0.8 percent. Citi's COO Gary Malin suggested that the market favors property owners, and prospective tenants need to think and act fast.
As of press time, there were two different readings on apartments available in Manhattan. The New York Times' real estate section lists 495 available single apartments with monthly rent below $1,400, some 362 available for less than $1,300, and 268 available for less than $1,200. The much less reliable craigslist.org lists 1,700 available apartments below the $1,400 mark, but indeed many of these are repeats, scams, and some warnings of scum brokers and landlords by anonymous posters.
Walman felt as though craigslist might be helpful in her research just to note comments on "the scum out there," she said.
Since Walman is only seeking one apartment the number of available apartments give her "some hope" for when that moment comes to meet brokers, which she figures to be in a month's time at the earliest, she said. The majority of apartments available are in the upper west finger of Manhattan or the neighborhoods of Inwood and Washington Heights. Walman will visit the area in coming weeks to check which neighborhoods haven't fallen into disrepair for targeting her search.
For the long term, Walman could make out okay if she secures an apartment that within the range of $1,200-$1,400. Depending upon the difference in monthly rent, she could experience a wash, meaning she'd have recovered all costs associated with an apartment switch, in eight to 12 months.
"I'm just not in that wealthy class our government decides to bail out," she said. "That is what angers me most of all -- either let everyone sink and fend for themselves or help everyone through these little housing crisisís. It simply proves how [President George W] Bush plays favoritism to the wealthy classes," she said.
Walman agreed that Think & Ask can follow her story, so stay tuned for a follow-up at the appropriate time.
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