Weekly Housing Trends

The big story

imageBROKER/Andy Dean

Not long ago, renting was “just a phase,” like going goth or getting bangs. But no more: The average American renter is now 42 years old. Only one in four renters aged 18 to 34 expect to buy a home in five years, the lowest level recorded since Gallup first asked in 2013.

It’s not that renters don’t want to buy; many just can’t afford to. According to Harvard’s Joint Center for Housing Studies, home prices have climbed to five times the median household income, up from a price-to-income ratio of 3.2 in the 1990s.

Generation Rent has raised alarm bells among housing advocates, but landlords aren’t surprised. They’ve watched their tenants age in place for years, and know it comes with real consequences for their business.

“One family has been in my house for eight years,” says Los Angeles landlord Aaron Bae. “Their kids have grown up there. They don’t want to move because they like the neighborhood and schools. It’s a good stable situation for me; no turnover costs, no vacancy.”

But these benefits come with trade-offs: It’s really hard to raise rent. “I can raise it only a tiny bit each year, or I risk them leaving, and finding a new tenant is a pain, so I feel stuck,” Bae explains. “I’m also more careful about buying [other properties], since I want to make sure the numbers work with current rental rates rather than what I hope it could be in a few years.” And rather than stick with single-family homes, Bae has diversified into apartments, which have higher turnover and room for rent increases.

Another challenge of forever renters is that they leave little wiggle room to renovate or make repairs. Mike Plactere learned this after acquiring a house on New York’s Long Island with a tenant who’d been there 15 years and still is. When the property’s only bathroom sprung a leak, he had to foot her hotel bill until he repaired it. “That’s real money on a modest rental,” Plactere says. “Long tenancies are stable, but deferred work piles up behind them.” One way he mitigates this is through quarterly inspections “so we find problems before they get out of hand.”

Bae also allows his forever tenants to make home improvements that suit their tastes. “One family asked to paint the walls and put in a garden, and I said go for it,” he recalls. “It made them happier, and they treat the place better.”

“I would gladly raise rent less to have a tenant who cares: It’s less maintenance, fewer headaches, and fewer calls,” agrees Jonathan Greene of the real estate brokerage Streamline in Madison, NJ. Plus, he points out, “Forever renters are not always those priced out of the market. Your modern-day forever renter is often just a smart consumer who can see that they can rent a nicer place than they can buy for the same money.”

Learn more about what forever renters mean for landlords.

      

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What's up this week

Realty check

Left to right: Terraxplorer/Getty Images; cmart7327/Getty Images.

🏙️ It’s been 25 years since the terrorist attacks of 9/11, and real estate in downtown Manhattan hasn’t just bounced back: New York’s Financial District has transformed from a 9-to-5 work zone into a 24/7 neighborhood with triple the population. Check out how much has changed, and what other metros are trying to emulate.

💪 Adjustable-rate mortgages have a bad rap. Here’s one number that’ll convince you that borrowers who dare to go there are doing better than you’d think.

😡 HOA boards across the country are catching heat for approving huge special assessments—with some homeowners facing bills as high as $49,000.

🎤 Dolly Parton’s former California home has hit the market for $2 million, and this three-unit property isn’t just a fan’s dream, but a smart investment—wig room, windmill, and all.

🤑 Hate high real estate agent fees? These 9 startups help buyers and sellers avoid them (and one is giving Craigslist vibes).

📦 Renters are moving to “try out” cities before they buy. Here’s where rental demand is spiking hardest (the top market has awesome wings).

🗝️ Forget yachts: On Martha’s Vineyard, the biggest flex is a $400,000 beach key.

😱 A home inspection doesn’t mean you’re home-free. Here are five things inspectors often miss.

🪛 America’s hottest market has a median home price of $270,000 and a nickname you couldn’t make up: “Screw Capital of the World.”

🍁 We get it: You’re excited that it’s autumn. But please try to avoid these three tacky fall decor fails.

You asked, we answered

Q: How do landlords weather a rent freeze?

Anadolu/Contributor/Getty Images

Rent freezes are supposed to help tenants, but they can backfire if landlords can’t afford to keep the lights on. New York City is grappling with this question amid plans to freeze rent for two years on 1 million rent-stabilized apartments (about 40% of the city’s housing). Landlords are fighting the decision, with their lawyer Randy Mastro arguing that it “left landlords to drown.”

Still, not all landlords will feel the pain equally. Research by Moody’s found that even a five-year rent freeze in NYC would put only 8% of securitized loans on rent-stabilized buildings at risk of default. The rest could offset the freeze by raising rents on their market-rate apartments. Landlords could also try converting rent-stabilized units into condos, as happened in San Francisco after rent control expanded in 1994. This led affected landlords to sell, slashing rental housing supply by 15% and, in turn, pushing market rents up citywide by 5%.

Bottom line: There is no such thing as free rent. Eventually, someone must pay up to balance the books. A diversified mix of rent-stabilized and market-rate units can provide landlords with a financial cushion, whatever happens with the rent freeze, in NYC and beyond.

Got a question about real estate? Ask it here, and we’ll answer it in a future issue.

Real talk

Dorothy Weise/Chapter Renovation

Interior designer Dorothy Weise at Chapter Renovation has tackled tricky floor plans, but skinny homes as narrow as 10 feet are a whole different puzzle. Here’s how she makes these homes feel spacious and even nicer than wider layouts.

Q: What’s the skinniest home you’ve worked on? “In New York City, it’s common to work on apartments with narrow footprints. Railroad-style apartments can be just 10 feet wide; for townhouses, 13 to 15 feet is not unusual.”

Q: Are skinny homes hard to love? “A skinny home can be easy to dismiss if it hasn’t been renovated thoughtfully. Empty or poorly laid-out narrow rooms can feel awkward, dark, or difficult to furnish, so people tend to focus on what they’re giving up. But a well-designed skinny home can completely change that perception. Once the layout is working, the spaces can feel intimate and connected, and the constraints often lead to creative design decisions. When every inch has a purpose, a skinny home can feel incredibly efficient and comfortable, and you start appreciating what makes it distinctive.”

Q: What are the biggest challenges of renovating a skinny house? “Every inch really matters, so the layout needed to be incredibly intentional. With one townhouse, we had to think carefully about how people move through the space and keep those pathways as clear as possible. Keeping sightlines open and allowing natural light to travel through the house can also make a narrow space feel much larger than its footprint.”

Q: What advice do you have to make a narrow room feel spacious? “One mistake is lining every wall with furniture or storage. It can be tempting because you want to maximize every inch, but that can exaggerate the narrowness and make a house feel like a corridor. Giving the eye and the walls a little breathing room is important. Embrace the proportions instead of fighting them. Built-ins, custom storage, pocket or sliding doors, and furniture with a smaller footprint can make a difference. It’s also important to think vertically. When you don’t have a lot of width, height for storage, shelving, and cabinetry become valuable while creating a dramatic architectural statement.”

Click here to see more pics of skinny spaces that’ll make you want to put your home on a diet.

      

Housing market of the week

Ben Chester

Ben Chester came to the Big Apple as a penniless grad student, then quietly built a portfolio of eight properties—three in NYC, and even Billy Joel’s upstate house. Here’s the sneaky way he pulled it off, with his advice on how to size up a co-op board and more.

Average home price: $832,934 (up 3.5% YoY, per Zillow)
Homes that sell over list price: 21.3%
Homes that sell under list price: 66.4%
Average rent: $4,170/month (up 5.5% YoY)

How he got started: Chester’s first “investment” was more a loophole than a purchase: Working at a sleep clinic, he realized nobody would question why he was always there—so he moved in and listed his apartment on Craigslist in 2012. “I was blown away by the demand,” he says. He bunked at the office for two years while expanding his sublet scheme to hundreds of apartments. In 2019, he bought a one-bedroom co-op in Hell’s Kitchen for $480,000, which he split with his girlfriend and brother, adding a loft bed and pullout couch to make the tight space work.

His market’s pros: Everyone just keeps coming to NYC. “There’s an insatiable appetite for apartments,” he says. Even with today’s high mortgage rates and even if the day-one numbers look ugly, rents tend to catch up to mortgage payments in a year or two. “New York City is a safe place to store money.”

The cons: Chester doesn’t sugarcoat it. “It’s much easier to invest in just about any other city in the country,” he warns. In his experience, the math in NYC works only if you plan to live there yourself and house hack, designing “pods” where you cram in every friend you can stand as a roommate. In addition to sky-high prices and a ban on short-term rentals, about 70% of NYC’s housing stock is co-ops, which require buyer interviews and can refuse an application—no explanation required. Although condos typically lack these restrictions, you’ll pay around 10% more. Chester chose co-ops requiring just two years as a resident; after that, he moved out, rented out his unit, then rinsed and repeated his way to three properties.

His advice: Even if a co-op board says it allows rentals, scrutinize board minutes to see how they really feel. “It will give you a sense of how annoying they’re going to be,” Chester explains, adding that restrictions on pets are often a sign they’ll micromanage other aspects of a property. If renting out your co-op is a priority, don’t just check house rules; be upfront about it during your board interview, too. “It can be an uncomfortable question, but it’s better than getting stuck,” he points out. He also encourages investors to get creative when carving up a small space. “I once moved into a walk-in closet—with a roommate,” Chester admits. “That allowed us to rent out the main living area so we were basically able to live there for free. Once that first place is paid down, buying can accelerate.”

Got a home or housing market you want to highlight in The Playbook? Tell us more about it here, and we’ll consider featuring it in an upcoming issue.