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"1993 New Construction and Lease vs. Own"

Originally appeared inAlbuquerque Apartment Report Vol. 1.1 - Q194
A recent survey performed by Lewinger Hamilton, Inc. in the far Northeast heights of Albuquerque, the (87111 Zip code) indicates that market rents for grade A apartments are currently $.90 per square foot with expectations that these rents will peak out at just over $1.00 per square foot per month, later this year. For a potential tenant/house buyer to distinguish between renting an apartment and purchasing a house, they could lease a 1,200 sq. ft. apartment for $1,200 or they could purchase a new home (1,200 sf x $80 per sf = 96,000 with a 30 year mortgage, 7.5% interest) with 5% down and monthly payments of $637.68. So why do tenants rent rather than purchase? Unfortunately, there is not just one answer but several: 1. Lack of available housing for sale in Albuquerque. 2. Short supply of new inventory of houses due to lack of new subdivision developments 3. Leasing does not require the large down payment or financing costs associated with purchasing a home. 4. Flexibility offered without long-term commitment or exposure in resell market and finally 5. Lack of responsibility for maintenance of property. Currently Albuquerque has only 300 apartment units under construction, but we can anticipate over 1500 units starting construction this year alone, followed most likely by an additional 2,000 units in 1995. Although this appears to be significant construction as compared to previous years of less than 100 units, the current numbers pale in comparison to construction from the mid 1970s to the mid 1980s when annual unit construction topped over 5,000 units annually. According to the City of Albuquerque, the 318 units that were permitted in 1993 as follows: Quadrant # of Permits NE 314 *82 units were additions/remodels NW 4 SE 0 SW 0


Article by
by Todd Clarke CCIM (www.nmcomreal.com/nmcomreal)
 
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