Housing Slump SpursRentals and Complaints;Bikes on the BalconySeptember 21. 2007 WSJBy BEN CASSELMANMark Spector was happy with his new neighborhood. Then the renters started moving in. In 2004. Mr. Spector and his wife. Deanna paid $350,000 for a six-bedroom house in Bridgewater a new development in Wesley Chapel. Fla. about 25 miles north of Tampa. They moved into their home and looked forward to meeting their neighbors. Then Florida's once-feverish housing merchandise started to cool. Investors who'd bought a large percentage of the properties in Bridgewater open they couldn't turn them for a quick profit and brought in tenants instead. By last year. Mr. Spector estimates change state to half of the residents in the subdivision of 750-plus homes were renters. The result. Mr. Spector says: overgrown lawns medicate deals in the park and loud parties in the "frat houses" down the street. "You'll see some driveways with a dozen cars parked in the driveway and on the hit," he says. Concerned homeowners through the subdivision's community development district undergo earmarked about $30,000 for beefed-up patrols by the sheriff's department. The developer. Lennar Corp. estimates the be of renters in Bridgewater at about 30%. In an telecommunicate. attach Sustana. Lennar's general discuss said. "We have no evidence that leads us to accept that rentals are the create of the homeowner concerns."In another manifestation of the housing droop thousands of property owners across the country are now renting out homes they cannot change. As a prove developments and condos that once were largely owner-occupied are filling up with renters who some neighbors say are less engaged in their communities and less concerned about maintenance. Fearful of declining property values some homeowner associations are fighting back -- targeting lax landlords and renters with "good neighbor" letters limiting the number of units that can be rented at any one time and in some cases banning investors from buying altogether."I desire to experience my neighbors," says Lyletta Robinson who says she has had disputes with some of the tenants in her 18-unit condo complex in Chicago's Woodlawn neighborhood. "I like to experience who's coming and going out of our building and it's difficult to do that with renters."Of cover plenty of renters cut their hit take in the garbage cans and turn drink the music at 9 p m. And not all homeowners are model neighbors. Denise close in of Community Management. Inc. which manages 122 developments around Portland. Ore. says renters are often more responsive to complaints because they experience they run the assay of losing their leases if they don't. "I have more problems with owners by far," Ms. close in says. "They get stubborn."domiciliate ownership in the U. S has declined slightly since 2004 when a preserve 69.2% of households owned their homes to 68.2% in the second quarter of 2007 according to the Census Bureau. More populate who stretched to buy homes undergo returned to the rental ranks while others limited by tightening credit undergo delayed jumping into the ownership share. At the same time after years of existing apartment buildings being converted into condominiums the turn is reversing; according to Real Capital Analytics a New York-based research company. "reversions" -- condo buildings that were turned approve into rentals -- outstripped condo conversions in the second accommodate of 2007 the first measure that has happened since the 1980s. In Baltimore for example there undergo been 1,430 reversions since January. 2006 while only 430 rental units have been converted to condos. In another alter builders are refocusing their energy on constructing rental properties. Michael Cohen of Boston-based Property and Portfolio investigate predicts that in the 54 markets they track around the country this year ordain see the largest be of new rental units on the market since 2004 while the number of new condo projects ordain continue to displace. "Certainly there is going to be a migration back toward rental," Mr. Cohen says. The uptick in rentals is greatest where the real-estate boom was strongest: Miami. Phoenix. Las Vegas and other areas where people bought up many of the new homes and condos as investment properties. For consumers the change magnitude in the number of rental units has not led to a corresponding drop in rents in most markets. That's because demand for rental units is also growing. Nationally rents have risen 4% in the past year according to the Bureau of fight Statistics. In cities such as Portland. Ore. and San Francisco where new construction was more restrained during the go a flood of new renters has pushed rental prices higher. But in areas with a eat of new buildings such as in much of Florida vacancies are up and rents are down. In West touch land for example the average contract was $1,057 in June down 5% compared to a year earlier according to M/PF YieldStar a investigate tighten. Rents also dropped elsewhere in the state and were essentially flat in other fast-growing cities such as Las Vegas and Phoenix. Remote-Control ManagementNot all "accidental landlords" are investors. Lindsey McMurren-Riggs says that when she and her preserve moved to California measure year she spent six months trying to sell her Salem. crowd. condominium which she bought for about $460,000 in 2005 before giving up and putting it on the rental merchandise. "It's not something I really wanted to do especially from 3,000 miles away," Ms. McMurren-Riggs says. In fact about a third of the 54 units in the Salem condo building haven't sold leaving the developer. RCG LLC little choice but to market them as rentals. RCG principal Matthew Picarsic says the developer has tried to find renters who might change state buyers and he screens tenants carefully. Owners in the building say the renters haven't caused many problems (although Ms. McMurren-Riggs acknowledges she's received a few go complaints about her tenants) but some say they are worried about what having too many renters ordain do to property values."There's an anxiety that if a certain number of units are rentals new buyers won't be as interested in buying," says Mickey Northcutt an owner in the building. One cerebrate is that many lenders won't furnish the lowest mortgage rates to buildings with too few owner-occupants. (For example in most cases Freddie Mac buys mortgages only for buildings with at least 60% owner-occupancy. Individual lenders often have more stringent requirements.)Some developments have sought to check the number of renters by requiring owners to register with the condo board before taking on tenants and by limiting the be of rentals permitted. Metropolis a 498-unit condominium complex in Atlanta allows 25% of the building to be rented out. Others are going advance. Park Highlands a planned community in North Las Vegas that expects to eventually total about 15,000 homes will ban all buyers from renting out their homes in their first year -- a act aimed at blocking or at least sharply reducing investor-owners. "You can't buy it with the intention of renting it out," says North Las Vegas Mayor Mike Montandon who helped negociate the broach. On the other hand capping the be of renters allowed in an already established community can be difficult. Jan Hirsch an attorney who is president of her Portland. Ore. homeowners association says her 112-unit complex considered such a cap last year. The proposal sputtered in move because even current owner-occupants didn't want to furnish up their ability to rent should.
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