Landlords Fear Economic Trouble In Rental Industry
Landlords Say Layoffs Could Take Toll On Industry
Updated: 1:05 pm CST January 9, 2009
MADISON, Wis. -- While residents struggle with the meltdown of the housing market, the local rental industry has seen occupancy rates go up. But some landlords fear it's the calm before the storm for the rental industry.
VIDEO: Watch The ReportThings have been going strong for the rental market locally.The vacancy rate is about 3.5 percent for the Madison area, according to Madison Gas and Electric, which tracks gas and electric service. Experts said it's a conservative number and a "true" rate. That rate is the lowest since 2002.But some are worried the good times could be undermined by something this market's never really seen before: significant layoffs in the public sector."We may see another further regression in the whole thing that really affects the rental industry almost as heavily as it's affecting the homeowners," Gregg Shimanski, owner of Shimanski Realty Inc.Some local home owners have been hit hard by the national housing crisis. But real estate experts said south-central Wisconsin landlords are bracing for a crisis that could rival that."Although the downturn in the economy has affected us all, I think layoffs will really effect the housing industry and, in particular, the rental housing industry," Shimanski said.He said he's working harder than ever now to retain his tenants because he fears big state government and university layoffs are down the road. Shimanski owns 400 rental Madison-area units. He said nearly all are rented and tenants are paying their rent on time.But the landlord said he believes high vacancies could be ahead because of the state's projected $5.4 billion budget deficit.Shimanski said the budget deficit could trigger widespread layoffs in a workforce that's been stable -- and renting."If that cannot be resolved and there are layoffs in Madison, that's going to make a huge difference in people's ability to pay rent and a number of other things," Shimanski said.The local rental industry is vulnerable because more than half of Dane County residents rent, WISC-TV reported. In Madison, 65 percent of residents rent.Landlords said they've weathered plenty of rough patches before but worry this next one could be the worst.Experts said the top landlord concern for renters is, "Do you have a stable job?" rather than, "Do you have good credit?""It's really not a discussion of a credit crunch. It's more a discussion of employment and do they have the monthly income," said Nancy Jensen, director of the Apartment Association of South Central Wisconsin.Jensen said landlord reports have just started to surface about people not being able to pay rent due to job reductions or layoffs. There have also been a number of apartment building foreclosures.The apartment group said it is continuing to work with banks -- and tenants -- to avoid both foreclosure and evictions.
VIDEO: Watch The ReportThings have been going strong for the rental market locally.The vacancy rate is about 3.5 percent for the Madison area, according to Madison Gas and Electric, which tracks gas and electric service. Experts said it's a conservative number and a "true" rate. That rate is the lowest since 2002.But some are worried the good times could be undermined by something this market's never really seen before: significant layoffs in the public sector."We may see another further regression in the whole thing that really affects the rental industry almost as heavily as it's affecting the homeowners," Gregg Shimanski, owner of Shimanski Realty Inc.Some local home owners have been hit hard by the national housing crisis. But real estate experts said south-central Wisconsin landlords are bracing for a crisis that could rival that."Although the downturn in the economy has affected us all, I think layoffs will really effect the housing industry and, in particular, the rental housing industry," Shimanski said.He said he's working harder than ever now to retain his tenants because he fears big state government and university layoffs are down the road. Shimanski owns 400 rental Madison-area units. He said nearly all are rented and tenants are paying their rent on time.But the landlord said he believes high vacancies could be ahead because of the state's projected $5.4 billion budget deficit.Shimanski said the budget deficit could trigger widespread layoffs in a workforce that's been stable -- and renting."If that cannot be resolved and there are layoffs in Madison, that's going to make a huge difference in people's ability to pay rent and a number of other things," Shimanski said.The local rental industry is vulnerable because more than half of Dane County residents rent, WISC-TV reported. In Madison, 65 percent of residents rent.Landlords said they've weathered plenty of rough patches before but worry this next one could be the worst.Experts said the top landlord concern for renters is, "Do you have a stable job?" rather than, "Do you have good credit?""It's really not a discussion of a credit crunch. It's more a discussion of employment and do they have the monthly income," said Nancy Jensen, director of the Apartment Association of South Central Wisconsin.Jensen said landlord reports have just started to surface about people not being able to pay rent due to job reductions or layoffs. There have also been a number of apartment building foreclosures.The apartment group said it is continuing to work with banks -- and tenants -- to avoid both foreclosure and evictions. Copyright 2009 by Channel 3000. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
