When Tadi Betancourt moved into a new apartment in Harrisburg four years ago, the rent was $300 per month.
It’s a starter place for the 23-year-old, but after the pandemic hit, Bentancourt was stunned to see the small apartment’s rent rise to $500 per month.
The landlord cited increasing property values and costs for the $200 per month spike, and with an expired lease and paying month-to-month, there wasn’t much Betancourt could do about it.
“This is a pretty good $300 apartment, but a bad $500 apartment,” said Betancourt, who is planning to get out of the rental market as soon as possible.
But as anyone who has been on Zillow in the last year and a half can tell you, hotcakes aren’t selling as fast as houses. And as difficult as it is to find a home to buy, it’s perhaps just as difficult to find an apartment to rent.
And it’s getting to be pretty expensive, too.
Rent for most sizes of apartments across central Pennsylvania has increased more than 40 percent since 2017. Nationwide, the sharpest spike has come in the last year, increasing an average of 10 percent between August 2020 and now.
And if you want to rent a house instead of an apartment, good luck.
Landlords who own single-family houses are selling them off at record rates, said Rita Dallago of the Capital Area Rental Property Owners Association.
It comes down to lots of demand and a limited supply.
Most years, rent increases an average of 5 percent per year, Dallago said.
But according to ApartmentList.com, those numbers have taken a sharp, upward curve over the past five years, particularly over the last year, marking a more than 40 percent increase over 2017, affecting everything from efficiencies to luxury apartments.
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There are a few reasons this is happening.
For one, many landlords have sold their rental properties in this seller’s market, turning them into owner-occupied homes.
“That puts more pressure on the rental market,” said Darrell Bartholomew, assistant professor of marketing at Penn State Harrisburg.
And when a house that was selling for $250,000 goes for $350,000, the effect trickles down, keeping potential homebuyers in the rental market.
“If you had trouble getting a loan before, it will be even harder now, and people will continue renting,” he said. And those renters may not be able to upgrade.
“If a family is trying to find a three-bedroom place, good luck. There’s not a lot of inventory for certain sized apartments,” Bartholomew added.
What’s putting even more pressure on central Pennsylvania’s real estate market is that more people are moving to the area for work. They may be relocating from a bigger city to a more affordable location because they can now work from home, or they could be moving here for a new job in one of the expanding industries in the growing Harrisburg region.
Either way, “You don’t see housing on the market now to meet the demand,” Bartholomew added.
In many ways, the rental market is mirroring what is being seen in the home-sale market, said Christopher Raad, president of the Pennsylvania Association of Realtors. When a rental property becomes available, landlords and property management companies are seeing multiple applications.
Larger apartment complexes that once worried about vacancies now have waiting lists, and from one-bedroom apartments to three-bedroom townhouses, it’s all in high demand.
“That’s the norm right now,” Raad said. “A lot of factors are at play in driving the rental market up with demand and also up with pricing.”
Along with more people moving to the area and more of them working from home, Raad said there’s a new kind of renter entering the market right now: Former homeowners.
“We’re seeing many folks who are selling their homes to take advantage of the market,” he said. “Then, they need a rental for a period of time.”
And those former homeowners could be in those apartments for quite some time as they navigate the tight real estate market.
More people are moving to the area, more are working from home and more are renting instead of buying. Brad Jones is seeing all three scenarios play out.
Brad Jones, CEO of Harristown Enterprises. Behind him is construction of the 11-story Harrisburg University Health Science Education Center at Chestnut and Third streets in Harrisburg. May 20, 2021. Dan Gleiter | dgleiter@pennlive.com
“We’re getting well over 100 inquiries a week for whatever units we have posted,” said Jones, president and CEO of Harristown Enterprises. That’s about triple the number of calls they would get for an available apartment in the recent past. “It’s a very, very active market right now.”
Harristown has a portfolio of about 250 apartment units in Harrisburg, mainly in the downtown area, ranging from about $700 to $1,500 per month.
And they’re all in demand.
“We’re seeing a lot of people moving into town from other parts of the country. That’s common,” Jones said. “As much as two-thirds of our tenants are from another city. That’s not unusual now. There’s a lot of job growth, that’s exciting, and a lot of people want to live in the city.”
He’s also seeing former homeowners who took advantage of the market, sold their homes and are now renting, but he’s also seeing younger people who grew up watching HGTV who want a stylish apartment and have no interest in buying a home right now.
While Harristown will be adding new apartments to its roster soon, and the city has hundreds of millions of dollars worth of projects in the pipeline that include some apartments, the demand remains high. And Jones said it is getting harder to build these new projects because of the supply chain and pricing issues brought about by the pandemic.
One of the leading indicators of increased housing costs is construction, and with construction materials, particularly lumber, being so expensive right now, coupled with the logistical challenges in shipping, Bartholomew said he doesn’t see relief anytime soon.
But it’s not just materials. Property owners are seeing other increased costs that are driving up rents.
“Insurance premiums have gone up, taxes have gone up. It’s the same with some of the inspection fees, registration fees and fees of that nature that are increasing,” Dalago said. “Although they are the cost of doing business, they are factored down to the rent, and all too often, people don’t understand that these costs affect what rental housing providers have to charge.”
Many landlords who are choosing to hold onto their properties are putting more money into them, Raad added.
“They’re investing more into their properties, knowing they can command a higher rental price, and renters are getting a better product,” he said.
And that’s good for many renters who want to upgrade, but it’s not so good for those who are having trouble making ends meet.
“Nationally, we’re seeing an increase of about 10 percent from August of last year,” Rent.com senior managing editor Brian Carberry told PennLive about the average cost of rent. “There are a lot of different factors behind it, but supply and demand is the biggest one.”
Many of the trends seen in central Pennsylvania are being repeated around the country. The housing market in the Southwest, for example, is heating up as people move out of bigger cities and into rural areas to live and work in a more affordable environment, he said.
And in Manhattan, rents that took a nosedive during the pandemic are once again rising as the city and all of its amenities reopen.
Luxury units are becoming more of a trend for rentals around the country, which is a good thing for some renters.
But others are still struggling.
According to the National Equity Atlas, 6.4 million renters – about 15 percent of all renters – fell behind on rent payments during the first week of July.
“Those who have fallen behind in their rent are among the most vulnerable members of society: more likely to be unemployed, with less income and less education,” stated a Moody’s Analytics report in January 2021. “Only one in four still has the sources of income they used prior to the pandemic to cover their rent payment and other expenses.”
More than half of renters surveyed by Rent.com have faced a career disruption during the pandemic, and 51.2 percent are planning to look for new jobs in the next year, with housing costs being a driving factor.
Some relief came with a federal eviction freeze put in place during the pandemic, but that ended July 31. The state Supreme Court extended the moratorium in some cases, but in most counties, that extension came to an end on Oct. 3.
Betancourt is looking for a new place after getting slapped with a $200 increase in one month.
Betancourt has friends who are sharing an apartment, which is a growing trend among younger people. Others have been charged $75 applications fees on top of the first and last month’s rent and security deposit. And that’s if they’re lucky enough to find a place.
That makes it difficult when you’re just starting off in life.
“There are barriers upon barriers,” Betancourt said. “It’s like you’re pushing a boulder up a hill.”
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It’s not just people who are renting their first apartments who are running into problems.
Peggy Drasher has worked for years as a pre-school teacher in Harrisburg, and she recently got a new job in Gettysburg.
It took her two months to find a place to live there.
“It’s disheartening,” she said.
During her search, the handful of apartments she did find were already off the market by the time she submitted her rental application, she said.
Drasher was living in Enola, where she paid $625 per month. Moving to Gettysburg would cut down on her commute, but the similar apartments she found there were all going for about $1,000.
She kept looking and finally found one last week. She started moving in over the weekend.
“I’m relieved and so excited to move in,” she said.
While she is paying $200 more per month, it is a bigger place, and it’s more affordable than some of the other options she saw during her search.
Angappa Gunasekaran is the new director of Penn State Harrisburg’s School of Business Administration, and even he has found it difficult to land a new apartment.
Angappa Gunasekaran at the home he rents in Derry Township. October 7, 2021. Dan Gleiter | dgleiter@pennlive.com
When he and his wife left their house in Bakersfield, California, to come to the area, they had to stay in a hotel for about a week.
While they found an apartment rather quickly – comparatively – it was not quite what he wanted.
“We found a single-bedroom apartment at Hershey Heights,” he said. “I thought we would be able to manage a nice, three-bedroom house for an affordable price.”
Nothing like that existed. He couldn’t even find a first-floor, two-bedroom apartment.
He signed a six-month lease and is looking around the area for a home to buy, which he believes he can do in that time. But he worries about the younger generation.
“We are OK, but for many younger families, I’m not sure how they can manage to pay for rentals, even single-bedroom apartments,” he said.
While it’s tough for new people moving to Harrisburg, it’s perhaps even tougher for some longtime residents.
Ernestine Crankfield has been renting in the Harrisburg and Steelton areas since 2007. She’s happy with the home she has now on Boas Street, but before she found that house, she had been through some difficult situations with some difficult landlords.
Ernestine Crankfield, at her Harrisburg home. October 8, 2021. Dan Gleiter | dgleiter@pennlive.com
Her new home ended up costing her $250 more per month, and it took her six months to find it.
But still, “I call it a blessing,” she said.
She’s relieved to be in her home, but in Harrisburg, where many renters have been battling a slumlord problem, Crankfield has had to learn her rights as a tenant over the years, fighting against wrongful fees, substandard housing and tenant-rights violations, she said.
“I feel like landlords are focusing on their bad-tenant experiences and are making all tenants pay for that,” she said. “The majority of tenants are good, but we’re losing laws that protect us.”
It remains an issue in Harrisburg.
“Rents have increased, but the quality of housing hasn’t changed,” she said. “Rent is increasing to point where people are struggling to afford it. If you want a good home in Harrisburg, you’re probably going to pay $2,400 a month for it, whereas the income level doesn’t meet that.”
It’s hard to tell when the rental market will ease, but Bartholomew noted that materials prices are a leading indicator.
When the costs of lumber and construction start to come down, housing prices should stabilize a bit. But then again, there are inflationary costs, so the market may stabilize, but he said it is unlikely rents will drop to pre-pandemic levels.
“If we experience more inflation, you’ll see these higher prices are here to stay,” he said. “That could mean more pressure on renters.”
It’s a tough market in which to rent and to buy, but Raad has the same advice for those who are looking to do either.
“Be as prepared as possible,” he said. “Have an application ready to go, have a credit report ready and reference letters – anything that you think will help you say, ‘This is all of my information, I’m interested.’ In my experience, if you have someone walking in the door who is that prepared, that’s a good sign that they’re ready and they’re definitely serious.”
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Looking for a place to rent in central Pa.? Expect higher costs, and a long search - PennLive
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