The 109 is a prime location and mortgage rates are low, but people looking to live in the area are following national and regional trends and choosing to lease apartments or houses rather than buy a home.
Carrollton-based apartment analysts MPF Research has reported that national apartment occupancy is up to 93.9 percent in the third quarter, an improvement of 0.5 percent from the previous quarter. The report also said stated that occupancy has increased 2.1 percent since bottoming out at the end of 2009.
The price of rents increased 1.2 percent since the middle of 2010, which MPF attributes to suppliers not being able to meet the demand for apartments.
Greg Willett, MPF Research’s vice president of research and analysis, said in the report he looks for this trend to continue.
“While sluggish employment growth has triggered only mild new household formation, apartments are capturing a disproportionately large share of total housing demand,” Willett wrote. “That pattern is likely to be sustained for a while, in part because current mortgage qualifications standards have made it tougher to buy a home. Expansion of the country’s population of young adults, who tend to favor renting over ownership, also is working in the apartment sector’s favor.”
Von Sutten, a broker for the 109’s Ready Real Estate, said that although the Fort Worth job market has stayed relatively stable in comparison to other cities, new qualification standards for home loans have resulted in a drop in home buyers for his real estate agency.
“We used to be able to offer programs three or four years ago like zero percent financing and roll-in closing costs, but those programs are long gone,” Sutten said.
“It’s taking a pull at potential buyers that we had before in our area and putting them off. We have a lot of six-month leases from people waiting for the market conditions to change a bit.”
Increased credit standards, as well as increases in down payments and closing costs, have resulted in the highest number of leasing leads Sutten’s company has seen in years.
Sutten said homes in the 109 are typically in high demand because of the “character and charm” of the neighborhoods surrounding TCU that can’t be found in newer areas like Keller and Southlake. However, he said even potential homeowners in the area who would qualify for a loan have likely been put off as a result of the downturn in the economy.
“It’s typically a little more affluent area,” Sutten said. “Credit is typically not as big of a problem, but [buyers in the 109] are a savvy group and they’re very well aware of the economic conditions and they’re typically not as quick to move right now as they would have been a few years back. Everybody’s just taking a bit more time to make those types of decisions trying to figure out where this economy is going to fall.”
Graduating TCU students wanting to live in the area might also find difficulty finding a home in the 109.
“Think about a college graduate coming out today, maybe 22 or 23,” Sutten said. “You’ve got a college loan and you’re starting your first job and you want to buy a starter house and someone tells you and someone tells you you’ve got to come up with almost $10,000 at the beginning so you’re going to go off to rent probably.”
Stefanie Farmer, community manager for the Orion at Oak Hill apartments, 2450 Oak Hill Circle, said the apartment complex has occupancy of 95 percent right now despite the current housing market being a “buyer’s market.”
“I think some people have been more apprehensive about buying a home just because they don’t know what the job market would be like,” Farmer said. “People are fearful of buying a home and then they could get laid off tomorrow and be stuck into a mortgage, which is harder to get out of than a lease.”
People might also be savvy to the “hidden costs” of owning a home and like the fact that they don’t have to pay for the overhead of buying a home, she said.
Alexander Landman, an agent with Apartment Rents Rebate, an apartment locator service in Fort Worth, said a lot of the apartment market in the 109 is dictated by the coming and going of students but he expects the trend of apartment leasing to continue to grow.
“Many people will continue to rent, I believe, until the situation stabilizes for a longer period of time to give people their faith back.”
Sutten said he believes this might happen sooner rather than later.
“As we move closer toward a new year and [with a new] political climate in Washington, I think we’re going to see some things change,” Sutten said. “Also, if the mortgage rates can creep up, those people that were sitting on the fence waiting for those rates to bottom out are going to have missed that opportunity. I think the rates rising may actually help get a lot of those people off the fence and may help our economy and help the housing market come back.”