It really isn’t fair, tossing out a puzzling question, then not turning over every possible stone in search of an answer.
In last Sunday’s Mercury, a story outlined what officials said appears to be a significant drop in apartment occupancies around Manhattan.
Riley County Appraiser Greg McHenry, who conducts surveys each summer and tabulates them after door-to-door, follow-up checking, guessed that the “usual rate of 92 to 95 percent” occupancy might drop to the neighborhood of 80 percent for 2014 when everything has been tabulated by October.
Considering that Manhattan has roughly 7,000 apartment units for rent, the drop could represent close to a thousand individuals or families.
So where have they gone?
The obvious question is whether a large chunk of these people walking away from normally full apartment complexes now might be buying instead of renting.
To find out if that’s the answer, we pinned down Loren Pepperd of G & A Real Estate, longtime Manhattan Realtor and the city’s former mayor.
Are customers suddenly buying homes instead of renting apartments?
“No, I don’t think that’s it at all,” Pepperd said. “In fact, that theory might be upside down.”
“Well, I just feel like renters now have a lot more options than just the usual apartment buildings,” he said.
“And I suspect that’s come about because more homeowners, for various reasons, are renting out their houses.”
What Pepperd is suggesting, obviously, is that the demand hasn’t slipped at all — but that rental property supply has been boosted dramatically by single-family homes that have appeared on the market.
It should be noted here that anyone renting, say, a private home or a duplex isn’t counted in McHenry’s annual survey.
“We have no way to keep track of those properties,” the appraiser said. “The home or condo or whatever already has an established value, which is what we’re addressing.
“We do the apartment occupancy survey to help determine valuation of the property.
“But if you have a home in the county and decide to rent it out, it won’t turn up in our apartment occupancy figures.”
And that’s exactly what Pepperd believes is happening.
Options for renters now, he insisted, aren’t just limited to a few older homes downtown or chopped-up houses near the K-State campus.
“We’ve gotten to a point where you can find a nice house for rent at almost any price level,” Pepperd said.
“Look around out at Grand Mere. I think originally everyone had the idea that was all going to be very high-end, luxury property. But if you go check out there now, you see all sorts of duplexes and town homes — and they’re not just for sale.
“There are rentals and leases available in most neighborhoods, and in different sizes.”
Pepperd suspects that a lot of people balance renting something like a three-bedroom, two-bath apartment against a duplex or single-family home of roughly the same size — and decide against the big complex.
“Maybe it’s the space, the yard, the feeling of privacy living in a home instead of an apartment,” he said, “but that’s a decision a lot of people seem to be making.”
Fair enough, but where have all these available homes sprung from, with a reasonably quiet construction market in and around Manhattan?
“There are a lot of uncertainties for homeowners here right now,” Pepperd said. “No one is quite sure how all the flood mapping and insurance issues will work out, so they can’t get what they feel is fair value for their house at the moment.
“There are a lot of reasons — like uncertainty with the military market going forward — but in any case, if you feel trapped in your home right now, one obvious option is renting it. There are quite a few neighborhoods in town where you’ll see a lot of ‘For Rent’ signs if you drive around.”
Pepperd makes it clear, though, that this tendency to hold onto homes and rent them out hasn’t really affected the real estate sales business.
“We’re still selling the same number of homes,” he said, “but for the moment, they’re in a different category than what we normally see. I call it a vertical market, which means one (owner) leaves and another moves in.
“But it’s very obvious that a lot of people who would like to sell can’t get the price they want right now. One option for them in this town is to rent those houses.
“The result is a long list of rentals available, and not just in apartment complexes. You can find almost anything for rent.”
With renters spoiled for choice, it’s almost a certainty that occupancy rates in established apartment complexes will take a hit.
Pepperd feels fairly sure about one thing.
“Except perhaps for the downtown area,” he said, “I don’t think we’ll see any major apartment construction for awhile. That’s why the apartment development numbers have dropped off.
“There is plenty of supply available at every size, every price — and lots of the availabilities are houses or duplexes that seem pretty attractive.
“We still have lots of renters, but now they have a really wide range of places to consider.”