Wednesday, September 4, 2013

Renting Madison Park

As we reported earlier this year, Madison Park has a surprisingly high proportion of rental properties, fully 42% of the total housing units in the neighborhood.  This statistic comes from the most recent U.S. Census, which unfortunately does not provide any breakout showing the various proportions of houses, condos, and apartments that make up this rental inventory. So we decided to do some research on the kinds of rentals that are available in the neighborhood.

To evaluate the rental market we took at look at the listings that have appeared over the last 60 days on Zillow and on Ewing & Clark’s websites (using information from the Northwest Multiple Listing Service), as well as Craig’s List. At this point there are at least eight rentals available in Madison Park, with monthly rents ranging from $7,500 (for a 5,400 sq. ft. house in Washington Park) to $1,200 (for a 915 sq. ft. apartment in three-story building on 42nd Avenue E.). There are two Washington Park homes currently available for rent at $7,000 per month, as well as one 3,400 sq. ft. home at $5,750 per month.  Filling out the neighborhood’s current rental inventory are three modestly priced ($1,250 to $1,850 per month) apartments.

There are many apartment buildings located in the neighborhood, most of them clustered in the area north of Madison in the area bordered by 41st Avenue on the west and Lake Washington on the east. This is the result of the city’s zoning laws, which for Madison Park generally limit multi-family structures to the blocks bordering the water, north of E. Garfield St.  Washington Park, although devoid of multi-family buildings, is certainly not lacking in single-family rental units, though rentals in Broadmoor appear to be few and far between (or perhaps just not publicly listed). The biggest apartment complex is the 1930s-vintage Edgewater Apartments, located on the water just north of E. McGilvra Street.

By our count there have been 11 houses and 27 apartments listed for rent in Madison Park during the last two months. Eight of the 11 single family residences were located in Washington Park, with the remaining three located in the area north of Madison Street. The least expensive of these was a $1,370 per month cottage with 2,950 sq. ft. of living space. The average size of houses for rent during the period was 3,418 sq. ft., with an average lease payment of $5,540, which works out to be $1.62 per sq. ft. on average. Homes in Washington Park, which were more elegant in addition to being larger, commanded leases equivalent to $1.78 per sq. ft. In general, the terms for renting houses in Madison Park are a one-year minimum term lease and a damage deposit equal to one month’s lease payment.

There were 27 apartments listed for rent in the 60-day period, the most expensive unit being a 930 sq. ft. condo unit at $3,400 per month. Apartments in exclusive buildings on Lake Washington (or with a good view of the Lake) have the highest rents.  Overall, apartments were listed at an average rent of $1,612 per month, with an average of just 950 sq. ft.  There was much greater variability of multi-family rentals than home rentals during the period, which we would expect is typical of the market.  There are really very few cheap rentals to be had in the Park (a studio near Madison Valley with 375 sq. ft. rented for $875 per month and there was one $500 per month listing, but these were very much the exceptions). There was also one mother-in-law apartment offered for rent during the period at $1,150. The average rental cost per square foot per month for apartments was $1.70.  The three waterfront units, meanwhile, were listed at $3.14 per sq. ft.

Some of the rental property available in the neighborhood at any point is the result of short-term situations, such as when people relocate temporarily to another city or overseas but expect to ultimately return. Additionally, there are cases where investors intend to develop a property but the timing is not right to do so, so the house is temporarily rented while development financing is arranged or design and approval work is completed. Since the housing market tanked, there were many such cases in Madison Park of properties held for development.  And there were also several cases, which we noted, of developers being unable to sell houses they had built. Some of these also entered the rental pool.

With the market in recovery, however, it is likely that there will be fewer homes available for rent in Madison Park in future periods. Properties are being developed all over the neighborhood, with cottages coming down and mega houses going up. An additional factor leading to a decline in rental inventory is the decision of some sellers to place their houses on the market in cases where they had rented out their homes because the market was in decline and they could afford to hold until prices increased. All of these factors will move single-family residences off the rental market and into the listed-for-sale pool.

By the way, if you are interested in knowing what your property might rent for if you decide to go that route, Zillow offers a “Rent Zestimate” that takes into account your property’s square footage and other variables (constituting a “proprietary formula” says Zillow). It is listed for your home if you type in your address on the website. A word of caution, however: there was no case of a house listed in Madison Park over the past two months where the Zestimate was in line with the actual rental price (sometimes off by more than $1,000 per month). For luxury properties in particular, especially those with views, Zillow’s formula does not apply.

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