Is There an Apartment Rental Crisis in Lakewood?

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A number of year’s ago there was a joke going around about a man who built a house on top of Lake Carasaljo in Lakewood, NJ. He was now looking to buy a submarine so that he, too, could rent out his basement. However, with today’s market, this joke is not only not applicable, but many wouldn’t even get it.

Markets change and fluctuate, it’s just a fact of life. Sometimes they do better and other times they do worse, and for those invested in any market, this can be both a source of great benefit and loss. However, sometimes a market changes in unexpected ways that can have a major impact, not only on those invested in the traditional sense of the word, but on an entire community at large.

For years, many Lakewood residents purchased homes by taking out large mortgages. They relied on a steady, and even growing rental market for supplemental income. A unique factor of the Lakewood rental market is that whenever a new house is built, it generates a new rental because it has a basement, so a strong buyers-market creates an extremely weak rental-market. Many times, the basement rental generated income sufficient to cover half or more of the monthly mortgage payment. This trend allowed for young families to purchase homes that, while suited to their growing families, was sometimes a stretch on their means.

Currently, the rental market is the weakest we’ve ever seen. A strong buyer’s market generally translates in to a weak renter’s market. In the Lakewood market, this has definitely played into the current state of the market, but a unique factor of the Lakewood rental market is that each new construction home, comes along with a new apartment rental, creating a weaker renter’s market when the buyer’s market is hot. Naturally, we are left with is an outstanding amount of vacancies in Lakewood. Moshe Michel, founder  of MyRentools.com, tells us that currently there is over 500 home available for rent. With around 100 of those being single family homes and over 400 apartments, with most of those basement apartments, every aspect of the rental market is being affected. Moshe gives a few examples of the market effecting all areas and tells us that in the general, yeshiva area has over 40 available spaces for rent (Forest Ave, Clifton, Lexington etc.) as well as over 90 in the Sqankum, Ridge, East County Line, Somerset, areas. There are over 50 in the New Central, Central, and Westgate area!

As Lakewood was further developed, and residents began seeking more affordable housing options beyond its boarders into Jackson, Toms River, and Brick, a seller’s market transformed into a buyer’s market. “We are seeing a drop in new construction home purchases by $50-100,000,” says Marc, a leading Lakewood real estate broker.”

These factors: the affordability of homes, the availability of homes, and over-development have, in part, led to hundreds of empty apartments and homes for rent. Just ask any of the myriad of frum families looking to rent out their basement,and they’ll tell you it’s a hard market. Landowners have trouble renting out their space, and the problem compounds as the availability of apartments has driven down prices.

Currently, there are about 450 buildable lots zoned for residential housing along the Oak Street corridor. Some of the builders and investors are trying to control the market by not building now, or by building very slowly so that the supply doesn’t further outgrow the demand. But this doesn’t seem to be enough. “And choosing whether or not to build is not always an option,” says one local expert, “as property values continue to go up, and properties get reassessed, property taxes go up to. Not every owner of land is able to swallow the hit on taxes and wait to build till the market readjusts.”

One renter we spoke with, Avi, tells us how he recently moved from a two bedroom apartment where he was paying $1100 a month to a brand new three bedroom apartment in a new development that he is only paying $850 a month rent. “While I feel bad for my previous landlord and I know my new landlord was hoping to get much more for their apartment, I am saving money and living in a bigger, nicer, and newer home. I guess for us renters this is a good thing.”

Marc, the real estate broker we spoke with, agrees that Avi, like many renters, may be benefiting, and of course it’s a good thing for them, but it is not a good thing for the market as a whole. “The real estate market will always be driven by home ownership, not rentals, that’s just the way it is.”

Let’s look at those landowners who purchased their homes with the hopes of renting out some of the space who are now having trouble paying their monthly mortgage, since those spaces remain empty. Young avreichim hoping to move near their yeshivos are confused as to how to make that happen. The market is a mess, the current listings are all over the place, and nobody seems to be able to take the situation in hand.

Moshe created MyRentools.com, an innovative website to ease the process of renting in Lakewood. Its benefits in today’s market are obvious. By being able to search for exactly what you’re looking for in an apartment or home by area as well as by features and amenities, you can save hours and hours of time. In today’s world, who has the patience to browse through a long list in no specific order, with very little information, requiring dozens and dozens of phone calls and apartment viewings? MyRentools easily provides the user with all the available homes within their criteria, displaying exactly what’s available. Moshe tells us that he’s been getting amazing feedback from those who have been using the site, they love how easy it is to find exactly what their looking for with ease. Besides for helping to locate the perfect home with ease, it’s also a great tool that provides the ultimate clarity into the Lakewood rental market.

Mendy, another local real estate professional, had an interesting perspective. He believes that in the past, people bought homes reliant on the rental income, but without necessarily relying on the home to be a long term home for their family. For example, Yankywho bought a townhouse in one neighborhood for $389,000 would have about $2500 in monthly payments, including mortgage and property taxes. A rental income of almost $1000 a month would make a big difference. But, as Yanky’s family grows, the townhouse will start to get tight. So, Yanky finds a nice home in a different area for $750,000 which would cost him about $4500 a month! Why not keep the smaller home and use the basement to accommodate a growing family? It can be a cheaper and more affordable option for many.

When asked to predict what the future holds, all of the experts we spoke to were in agreement that there are too many factors that determine real estate markets to be able to have a worthwhile opinion. But they were all optimistic about Lakewood’s future, believing that real estate markets always move in cycles and that there is no reason for alarm. So, will these apartments be rented out soon? Will the homeowner’s burden be eased? Will homes become more or less affordable? Only time will tell.

24 COMMENTS

  1. No one ever stopped to weigh the impact basement apartments are having on the quality of life in Lakewood. Suddenly, there are no parking spaces in residential areas and the once suburban neighborhoods are overcrowded. With people staying in basements till they have as many as six children there are toddlers and older kids playing in the front yards and on the streets. Where once landscaping graced the front of new homes there are now worn down dirt plots littered with garbage and the detritus of broken toys and carriages.

    And in many places the super-sized homes have started to build TWO apartments per building!

    The current move away from basements is a bracha. The township should enforce zoning laws to stop new apartments from being built and to keep vacant apartments empty. Of course one must feel bad for the young families who only managed to afford their own home by including a rental apartment. Nevertheless, this income has come at the expense of the neighbors (who were never consulted and never granted permission). It is time to point out the truth! Maybe the traffic will become less of an issue as the families spread out to other areas…

    A happy Passover to all.

    • Well said. This can apply to so many other issues in building as well. It’s good you’re anonymous because pointing out the truth in Lakewood can get you in trouble from the powers that be (aka developers)

    • I have seen many large houses in nicer areas without tenants that are just as rundown as you’re describing. Coupling the fact that these houses tend to have driveways that can accommodate more than a single car and basement tenants tend to have only one, parking in these areas shouldn’t be such an issue either. I am also not sure why the neighbors need to grant permission as the township has an ordinance that provides for them. Maybe you just don’t like the growing population and should move.

  2. Why is this a “crisis’? It is called supply and demand. Eventually market forces will allow things to rebalance. Always does.

  3. Nonsense! You contradict yourself. Traffic will happen wherever people live, At least Bh there is affordable housing for some people not as fortunate as you.

  4. Glad to see the professionals are so optimistic, although I don’t share it. Lakewood has become uninhabitable and young couple are moving to surrounding towns. People want to live in the “in” neighborhoods, where there children will have friends their age.

    The neighborhoods that were hot a few years ago, are now “old” and less desirable. In the past people made an argument that Lakewood was mroe affordable then Jackson or TR, because in Lakewood you could rent the basement. That was the line developers and real estate agents were feeding people. But, not everyone wants to be a landlord, and rental income is no sure thing.

    The market is set to crash, if a $50 to 100k drop isn’t already a crash. Lets not forget about the fact that property taxes at some point are going to skyrocket (they are already high). The Sch0ol district is facing a $12 million deficit. Once Christie is out, and the 2% property tax cap is gone, people are going to be taxed out of their homes to cover the BOE budget.

  5. I don’t think the market will rebalance

    A very crucial point that was left out was that yungerleit who never thought they can afford a home are moving out of their basements into Jackson. There is unlimited space in Jackson and basements are becoming the 2-5 year thing not the 10 year plan

    The years of $1100-$1300 rents will never reappear its simply doesn’t make sense to pay that much and live in a basement

    This is not the first time that the rental market was down, but this is the largest amount of vacancies and the longest period ever!

    Lets be honest and stop covering things up

  6. no grass? where are you ! parking most houses being built have 2 spots, who decides whats called crowded? if you dont have a seat in shul thats crowded if its full and after borchu everyone is sitting thats nachas!! be a merachem al habriyos not a merachem al haaretz

  7. MyRentools.com sounds like a really great website. Prospective renters are very fortunate that this article happens to mention MyRentools.com. Landlords also may make good use of MyRentools.com.

    A more cynical person may suspect that this article, which mentions MyRentools.com several times, each tie linking to MyRentools.com, is nothing more than an advertisement for MyRentools.com couched as a news article. Fortunately MyRentools.com isn’t doing that; rather MyRentools.com simply happens to be mentioned as part of the story here. If MyRentools.com really wanted to get their name out they could simply have purchased an ad that said MyRentools.com MyRentools.com MyRentools.com MyRentools.com repeatedly. But MyRentools.com didn’t do that, so please don’t be choshed MyRentools.com.
    Thank you.

  8. The writing has been on the wall for a while….I don’t understand why a yungerman in yeshiva would borrow 50k to put down a down payment on a house thinking that he will find a renter…

  9. Here’s a fix: all those who have been on full support for three years or more and do not feel they could pass a test on Shas, enter the workforce now and when you’ve reached an income level where you can self sustain purchasing a house, go ahead and do so. This market problem is largely caused by a number of non-working father families using gifted money to purchase a home that they cannot otherwise sustain and have become overly reliant on renters to sustain bc they are not working and don’t have income. Just do what is poor working souls do, who have no tenants, we earn money each month and pay some toward our mortgage. This should just be taken as one more sign that our system is broken, not the market.

  10. There is no crisis I am paying less for rent today than before more houses means more rentals and you can bargain with the landlord he let me build a sukka.

  11. Not sure what the agenda is it’s definitely a crisis similar to all the other crisis which are in the vogue. reality however is that every bought in Jackson rooms river is one less apartment available, so we’re probably heading for a squeeze Not a glut. there are approximately 350 apartments and houses available for rent however many of the advertisers are advertising ahead of time so the actual number is a lot lower . Another thing to keep in mind is approximately 120 people get married and move to Lakewood each month give or take so there is only two month supply which is very very typical real estate standards .

  12. This article is missing the “Article of interest” or similar banner with the headline.
    Secondly it’s not a crisis. Many people bought houses willingly counting on rental income. The fact that it’s not getting rented out is something that doesnt come anywhere near the term crisis.

  13. Typical Matzav. You little kinderlach think that by blocking & censoring your viewers comments, you’re going to advance the conversation? Yeh, ok. Just keep sweeping the truth under the carpet in order to look oh so PC. Idiots.

  14. to: You know it in your heart

    Jackson is 4 times the size of Lakewood with half the population. Toms River is double the size of Lakewood, after that, there is an endless amount of less expensive towns spreading further south and west.

    Once the concept of living outside the town of Lakewood has become acceptable, there is plenty of room to spread out.

  15. JUST PURCHASED IN NEWER AREA IN TOMS RIVER- 46 YEARS OLD. EVERYONE ELSE IS IN THEIR LOW 30’S

    HAD NO CHOICE. LAKEWOOD SINGEL HOMES JUMPED IN 1.5 YEARS FROM 525 WITH A BASEMENT TO 700K. TAXES ARE HIGHER IN BOTH LAKEWOOD AND JACKSON.

    WENT TO A NEWER AREA IN TOMS RIVER AND WILL OPEN SHUL IN MY BASEMENT. THERE ARE ABOUT 50 FAMILIES IN THIS HOUSE DEVELOPMENT AREA AND ONE BASEMENT SHUL IS NOT SUFFICIENT,

    I WAITED ABOUT 6 MONTHS AND THE HOMES JUMPED UP IN THIS AREA FROM 525 TO 600. SOME HOMES WERE ASKING 625-645 BUT THEY ARE COMING DOWN AND BEING REALISTIC. A 600K HOME WITH 20% DOWN AND A RATE OF 4.45 WITH HOME INSURANCE IS GOING TO COST YOU ABOUT 3300-3500 A MONTH. TAXES IS UNDER 10K FOR NOW IN TOMS RIVER.

    IF I PURCHASED IN LAKEWOOD A TOWNHOME FOR 620 AND RELIED ON A BASEMENT RENTAL FOR $800 WITH THE HIGH TAXES I MAY HAVE PAID 3000-3200 A MONTH. NOW I HAVE MY OWN PLACE A HOME ON A NICE STREET AND DONT HAVE TO BE A LANDLORD.

    THERE ARE AREAS JUST NEARBYE LIKE WALDEN WOODS AND HOMES ARE GOING FOR 475-525. ALREADY 5-10 YIDDEN HAVE PURCHASED THERE AND ITS WALKING DISTANCE TO TALLYMAWR WHICH HAS 50 FAMILIES OUT OF 149 HOMES. IF A REAL ESTATE AGENT TRIES TO PUSH YOU HIGHER TELL THEM TOO BAD AND MAKE SURE THEY ACTUALLY SHOW YOUR WRITTEN PROPOSAL. ALSO MANY HOMES WERE FINISHED BASEMENTS, DECKS , SHEDS AND MORE WITHOUT PERMITS. BE SMART AND DEMAND THAT THE CURRENT OWNER GET AN APPROVED PERMIT PRIOR TO CLOSING. IT WILL BE AT THEIR COST AND THEY WOULD NEED TO FIX ANY ISSUES PRIOR TO CLOSING. I JUST LEARNED THAT THE HARD WAY.

    • Thank you for great common sense advice. I’ve been saying for years, don’t buckle under, pressure, from those greedy arrogant know it all real-estate “agents”. They destroyed Brooklyn and then they set their sights on Lakewood. You have the right to say NO I WILL NOT BE RIPPED OFF! Unfortunately there are enough gullible people out there that have this herd mentality “fear”, that if they don’t pay the way over inflated price, someone else will grab it up in 3 seconds. That terrible attitude just empowers those real-estate crooks.

    • just hope you left some room in your budget for when the properties are re-assessed. You are paying taxes based on a home value that is at least 30% less then what you bought the house for.

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