By T.H. A number of years ago, there was a joke going around about a man who built a house on top of Lake Caresaljo. He was now looking to buy a submarine so that he, too, could rent out his basement. However, with today’s market, this joke is not only not applicable, but many wouldn’t even get it.
Markets change and fluctuate, it’s just a fact of life. Sometimes they do better and other times they do worse, and for those invested in any market, this can be both a source of great benefit and loss. However, sometimes a market changes in unexpected ways that can have a major impact, not only on those invested in the traditional sense of the word, but on an entire community at large.
For years, many Lakewood residents purchased homes by taking out large mortgages. They relied on a steady, and even growing rental market for supplemental income. A unique factor of the Lakewood rental market is that whenever a new house is built, it generates a new rental because it has a basement, so a strong buyers-market creates an extremely weak rental-market. Many times, the basement rental generated income sufficient to cover half or more of the monthly mortgage payment. This trend allowed for young families to purchase homes that, while suited to their growing families, was sometimes a stretch on their means.
Currently, the rental market is the weakest we’ve ever seen. A strong buyer’s market generally translates in to a weak renter’s market. In the Lakewood market, this has definitely played into the current state of the market, but a unique factor of the Lakewood rental market is that each new construction home, comes along with a new apartment rental, creating a weaker renter’s market when the buyer’s market is hot. Naturally, we are left with is an outstanding amount of vacancies in Lakewood. Moshe Michel, founder of MyRentools.com, tells us that currently there is over 500 home available for rent. With around 100 of those being single family homes and over 400 apartments, with most of those basement apartments, every aspect of the rental market is being affected. Moshe gives a few examples of the market effecting all areas and tells us that in the general, yeshiva area has over 40 available spaces for rent (Forest Ave, Clifton, Lexington etc.) as well as over 90 in the Sqankum, Ridge, East County Line, Somerset, areas. There are over 50 in the New Central, Central, and Westgate area!
As Lakewood was further developed, and residents began seeking more affordable housing options beyond its boarders into Jackson, Toms River, and Brick, a seller’s market transformed into a buyer’s market. “We are seeing a drop in new construction home purchases by $50-100,000,” says Marc, a leading Lakewood real estate broker.”
These factors: the affordability of homes, the availability of homes, and over-development have, in part, led to hundreds of empty apartments and homes for rent. Just ask any of the myriad of frum families looking to rent out their basement, and they’ll tell you it’s a hard market. Landowners have trouble renting out their space, and the problem compounds as the availability of apartments has driven down prices.
Currently, there are about 450 buildable lots zoned for residential housing along the Oak Street corridor. Some of the builders and investors are trying to control the market by not building now, or by building very slowly so that the supply doesn’t further outgrow the demand. But this doesn’t seem to be enough. “And choosing whether or not to build is not always an option,” says one local expert, “as property values continue to go up, and properties get reassessed, property taxes go up to. Not every owner of land is able to swallow the hit on taxes and wait to build till the market readjusts.”
One renter we spoke with, Avi, tells us how he recently moved from a two bedroom apartment where he was paying $1100 a month to a brand new three bedroom apartment in a new development that he is only paying $850 a month rent. “While I feel bad for my previous landlord and I know my new landlord was hoping to get much more for their apartment, I am saving money and living in a bigger, nicer, and newer home. I guess for us renters this is a good thing.”
Marc, the real estate broker we spoke with, agrees that Avi, like many renters, may be benefitting, and of course it’s a good thing for them, but it is not a good thing for the market as a whole. “The real estate market will always be driven by home ownership, not rentals, that’s just the way it is.”
Let’s look at those landowners who purchased their homes with the hopes of renting out some of the space who are now having trouble paying their monthly mortgage, since those spaces remain empty. Young avreichim hoping to move near their yeshivos are confused as to how to make that happen. The market is a mess, the current listings are all over the place, and nobody seems to be able to take the situation in hand.
Moshe created MyRentools.com, an innovative website to ease the process of renting in Lakewood. Its benefits in today’s market are obvious. By being able to search for exactly what you’re looking for in an apartment or home by area as well as by features and amenities, you can save hours and hours of time. In today’s world, who has the patience to browse through a long list in no specific order, with very little information, requiring dozens and dozens of phone calls and apartment viewings? MyRentools easily provides the user with all the available homes within their criteria, displaying exactly what’s available. Moshe tells us that he’s been getting amazing feedback from those who have been using the site, they love how easy it is to find exactly what their looking for with ease. Besides for helping to locate the perfect home with ease, it’s also a great tool that provides the ultimate clarity into the Lakewood rental market.
Mendy, another local real estate professional, had an interesting perspective. He believes that in the past, people bought homes reliant on the rental income, but without necessarily relying on the home to be a long term home for their family. For example, Yanky who bought a townhouse in one neighborhood for $389,000 would have about $2500 in monthly payments, including mortgage and property taxes. A rental income of almost $1000 a month would make a big difference. But, as Yanky’s family grows, the townhouse will start to get tight. So, Yanky finds a nice home in a different area for $750,000 which would cost him about $4500 a month! Why not keep the smaller home and use the basement to accommodate a growing family? It can be a cheaper and more affordable option for many.
When asked to predict what the future holds, all of the experts we spoke to were in agreement that there are too many factors that determine real estate markets to be able to have a worthwhile opinion. But they were all optimistic about Lakewood’s future, believing that real estate markets always move in cycles and that there is no reason for alarm. So, will these apartments be rented out soon? Will the homeowner’s burden be eased? Will homes become more or less affordable? Only time will tell.
i feel the older homes in Lakewood got complacent changing a lot of money and now with alll the new homes why would someone pay 1000 for a 10 year old no frills basement if they can get a brand new fully loaded apt a little further away from yeshiva .
the reason why I went to buy a small size house was bec the mortgage and property tax was about the same price as my rent (two years ago) made no sense for me to spend so much on rent if I could get a small house for that. mayb if home owners weren’t charging such a high price two years ago, many people would have been happy to stay put and not look to buy
This is a huge problem, I’m hoping that there will not be a foreclosure issue in our community,from this bad rental market. This is scary for homeowners that count on this income. Sadly the new houses are still going up with no relief on the rentals market in sight. We all hope for you that this does not make the market worse.
There already have been numerous foreclosures
Good morning America
As a renter in Westgate, I find it amazing that it is an independent market not affected by the Lakewood, Jackson market at large. The owners of Westgate dictate the market and raise prices accordingly ( on a consistent basis).
The Jackson, Toms River issue is not effecting the market as much
as the overbuilding. Too many houses being slapped up. WHO is responsible for giving all these permits? It is being done without any seichel. Is someone getting rich from these permits??????
These developments are also ruining the whole flavor of Lakewood.
The beauty and suburban living.
never has there been so much built so fast…prospect square , prospect vines etc that’s 400 homes right there
This is a huge problem for now and in the near future. However, with over 500 weddings a year, BAY”H, K”Y, plus out of towners moving in, this rental matker will tighten up pretty soon. Hatzlacha to all !!
@CommandPost ur 100% right. This is a cyclical industry, the market fluctuates sporadically. But, for the next few months, you definitely can Not rely on a basement tenant to help defray ur housing expenses.
It’s not a problem at all for renter.
@RuchiGross – So now that you have ur house you want all the building to stop. I see. That makes a lot of sense. To say “who gave these permits” is silly. The current twsp zoning encourages plentiful housing, this is a good thing. In some towns, you need 2 or 3 acres per house; in Lakewood you dont – & that why we love it. Keep on building, guys !! You’re doing a great job.
I don’t live in one of these new slap ups. Bottom line – Lakewood is not the beautiful community it once was. Instead of letting people spread out – it has become city living. Shame.
This is part of the reason why most towns have different zones. Commercial, Residential and Industrial. While residential property has more value than industrial, a balanced portfolio is essential for the long term health of a town and it’s tax base.
But that’s not the way it has worked in Lakewood. Many industrial zoned properties have been allowed to build residential. that has resulted in a shortage of small warehouse spaces, and it is detrimental to the property tax base.
Its amazing. As soon as people have their own comfortable house ,then they say to stop building. Who cares about other people. I have a house and that’s all that counts.
To command post
Are you a real estate broker trying to sell houses to innocent people at ridiculous prices by telling them the market will tighten up?
As was written in this article the rent used to cover half or more of people’s mortgage…
At this point it doesn’t cover anything near that.
Time for the big people to stop squeezing the small people just to make a buck.
Prices need to come way down!
Got to agree with Zalman G. In the old days, when a house sold, the next one that went up for sale in the neighborhood would sell for a few thousand more, or in a hot neigborhood, $10-20K more.
Last summer, you were seeing houses jump $50 to $100k at a shot, with buyers being scared into it by the real estate agents telling them that if they don’t buy now, it will cost another $100k next year.
Many people were buying, not because the prices made sense from a supply and demand, or budgetary point of view, but because they were afraid of having to pay more later, a panic that was created by real estate agents.
Irrational increase in prices is what creates a market bubble. The fact that more and potentially unlimited markets are being opened up in surrounding towns, just confirms that the bubble and reasoning behind it were irrational.
the same thing happened to an extent in T.R. and Jackson. Certain neighborhoods that were “hot” spiked by $100k in a few months.
Seems like the consumer has wisened up and realized that they can always purchase a house later in a newer neighborhood for a lower price.
Unless you have the money (and relying on rental income means you don’t). there is no reason to a premium because you “need to buy it now”
How is this at ridiculousness prices? Name me a place where you get 5000 sq feet (includes basement and attic) of a brand new construction built for your needs for less than $575,000. No Such thing!! Although there is a shared wall, there are plenty of homes in very upscale cities as such). Lakewood homes include a local shul, mikva, public shopping, Friends for your children to play with, busing for your children’s schools, camps. Most of all you’re in a city which is affordable to live in,including tuition and food and you are in the heart of a beautiful makom kodesh. There are always reasons to complain in life but these positives supersede the negatives.
“but a unique factor of the Lakewood rental market is that each new construction home, comes along with a new apartment rental”
Correction: each home built creates 2 new available basements. One in the new house being built, and one where the homeowner is moving out of.
The prices are actually pretty low for what you get.over 5000 sq feet including 8 bedrooms 6 bathrooms an unfinished attic ,granite in the kitchen ,a second full kitchen in the basement,a deck etc etc for less than 575,000. You will not find so much house for the money in a desirable location ,anywhere else in a Yidishe neighborhood.
This is a very good situation for the kollel people. I pray the prices keep comming down. Ask any one with children in shiduchim. This is the best thing.
With so many houses going up why are the taxes going up as well instead of coming down, since much more ppl are paying into the pool the rates should be lowered
Kudos to Command Post who seems to have his head screwed on straight. I actually believe the number to be higher, more like 1000/year. There’s 5 wedding halls in Lakewood alone that are pretty much booked up almost every night.
This is a crude form of “Native advertising” (Google it) for this latest attempt to start a rental website in Lakewood, which to date has never worked. Why? There’s not enough $$ in it! Period. Ask the last 5 guys who tried it…Oh well good luck.
Oh, and by the way? Westgate, Washington Square, and all the other professional rentals were left out of the conversation for some odd reason, I wonder why? 🙂
Fact: The average newlywed prefers a brand new basement, and will rent one, if it’s priced within reason.
Attempts have been made to price fix, I.E all the guys in a given development on the “chat” decide to not rent below a certain #…Doesn’t work! Will always be one guy who is realistic and the market will correct itself. It never should have been this high in the first place, it’s tied to women’s salaries and what shvers give for suport monthly, I’d say 1000 should be the max across the board.
Traditionally it’s mostly been the opposite, with too few basements for rent, I’ll wager that in 6 months it will normalize.
Oh, and by the way Marc doesn’t sell any new construction, so where did he get the 50-100k drop? Didn’t know NJ legalized pot already. Lol!!!
Reading the comments, I learned that many people are apparently shocked that we live in a market economy, driven by the law of supply and demand, that people try to buy low and sell high, that real estate brokers apply marketing techniques in their trade, developers hope to realize large profits and that humans generally act in their own best interest as they understand it at any given time. I had no idea there was so little understanding of basic economics.
bo reason that a duplex should cost 600k.
Well written infomercial
Why didn’t you post my comment. Why was wrong with it? I was trying to bring out that even today there are still people that feel it’s wrong to own a house in LKWD