ITHACA, N.Y. — We’ll call it a tale of two numbers. Both have to do with the rental vacancy rate.
The vacancy rate is the percent of available but unoccupied units at a given moment in time. A healthy rental market is generally defined to be about 3-5% vacancy, due to people moving, units that aren’t appropriately priced, and other factors. The natural churning of the market. Higher than 5%, you start to have excess supply, a renter’s market. Lower than 3%, and you tend to have a lack of supply, which can lead to affordability issues.
The vacancy rate changes based on what qualities you use to define it. In the county’s just-published housing study, real estate data firm The Danter Company split its analysis of rental units by large buildings and complexes, which have 24 units or more, and smaller apartment houses and properties, defined as 23 units and less.
Large Apartment Properties
Large apartment complexes and buildings are easier to identify – imagine the Danter study is like a wildlife snapshot, it’s easier to count elephants than flies.
There are 90 properties that have 24 units or more in Tompkins County. They total 5,727 built, market-rate units, 348 more units under construction, and 827 subsidized (low/moderate-income) units offered by organizations like INHS or Conifer. Apartments under construction and subsidized units don’t get counted in vacancy rates, because they’re not considered accurate gauges of the rental market. About two-thirds of the 5,727 units are one- and two-bedrooms.
Overall, the vacancy rate for large market-rate properties is 1.8%. That’s the first number to remember. The vacancy rate tends to be a little smaller with studios and one-bedrooms and a little higher with larger units like 3-bedroom apartments, because those bigger units are more likely to compete with for-sale housing. Older units were more likely to be vacant, and there was no strong trend in the price point of vacant properties. If you look at large properties defined as “non-student rentals”, which is unfortunately not defined in the report, the vacancy rate rises to 3.0%. Perhaps unsurprisingly, at the time of reporting in February 2016, every single last one of the 827 subsidized units were occupied – 0.00% vacancy, if you wanted one you were on a waiting list.
Small Apartment Properties
Small apartment houses are harder to identify. They may not be actively or widely marketed, they can switch back and forth between owner-occupied and renter-occupied, and they’re more difficult for the county to track. Danter had to use the Landlords’ Association, Craigslist, Journal classifieds and “analysts’ personal observations”. Out of 824 properties with 4,047 units (41.4% of total rentals), Danter was able to survey 182 properties, 22.1%. So it’s a good-sized sampling, but it may not be comprehensive coverage.
The vacancy rate for these market-rate small properties? 6.5%. That’s your second number. It’s healthier, maybe even a small amount of slack. As with the large properties, smaller units had lower vacancy rates. The two vacancy rates average out to 3.7%, the lower end of healthy. It may even be higher, since the smaller properties are a sampling and not a census.
So now we have a big juxtaposition – very low, 1.8% vacancy in large market-rate rental properties, and much higher 6.5% vacancy in smaller properties. Why may that be? We could throw out some theories. Smaller properties may vary more on condition and quality. Larger rental properties are mostly in denser, more settled areas of the county (city and inner suburbs), closer to major employers and the colleges. Occupied units are less likely to show up in recycled postings on Craigslist. It could be any number of reasons.
County planner Megan McDonald described the vacancy rate discussion as multi-faceted. “I think it will be helpful to have the vacancy rate discussion in context”. McDonald said the range of vacancy observations would be discussed at the public meeting at 6:30 tonight at the county library.
The numbers are quite a bit different from the 0.5% vacancy rate from Danter’s downtown Ithaca study in 2012, but they’re also in different context. The downtown Ithaca study covered just the core of the city. The county’s study covers Ithaca’s core, and the rest of the city, Ithaca town, Caroline, Groton and a dozen other municipalities. At least the the methodology was the same. According to Downtown Ithaca Alliance director Gary Ferguson, “The 2016 study [Ken Danter] did for the DIA was a 100% survey of all multi-family buildings in our urban market area with 24 or more units. In conjunction with the County needs assessment, they also got information on several thousand units in properties under 24. He used the same 24 unit methodology for 2012.” The DIA will also be presenting their own updated Danter study results at tonight’s meeting.
Conclusions
- There aren’t really definite answers here. It’s a broad study covering multiple communities.
- However, we can make smart inferences. For instance, knowing larger complexes are in more urban areas, we can deduce that their vacancy rates are a better proxy for the city of Ithaca than the village of Groton. The urban areas are more likely to have a lack of sufficient housing supply than the rural areas.
- We have to be careful about context. If a developer approaches the town of Lansing using Danter’s 0.5% figure, the town would rightfully be skeptical because that number is for a different locale, and the vacancy rate in downtown Ithaca probably isn’t a good gauge for Lansing.
- We clearly don’t have enough affordable rental housing. It’s yet another reason why it’s tough to live in Tompkins County on a modest income.
- The county and the DIA will have a lot more information to share tonight. We’ll find out if that 0.5% rate has gotten better or worse.
Correction: The number of small rental properties in Tompkins County is 824, not 182. 182 properties were sampled. The Voice regrets the error.