Editor’s note: This three-part series explores what’s happening in the rental market, how the industry is connecting with online consumers and what technology is helping them stay in touch. (See Part 1 and Part 3.)
Now that housing markets in many areas are cooling, apartment sites are beefing up their offerings for prospects who can no longer afford to buy a house.
Rental rates have risen in metropolitan areas across the country, according to reports from ALN Systems, a provider of multifamily property data and research. And, of the 17 metro areas tracked by ALN, only one area has an occupancy level below 90 percent. Wannabe buyers thwarted by rising interest rates and higher home prices are behind this phenomenon, sources at apartment sites say, and they’re improving their services in response.
“Traffic on our site is currently three times higher than it was this time last year,” said Jeremy Bencken, CEO ApartmentRatings.com. “Last month we had 1.6 million unique visitors on our site. Between January 1 and February 1, renter traffic went up 50 percent. Normally, the seasonal increase would be 10 percent.”
Bencken’s site, which he and his wife Katie operate out of their Austin, Texas, home, currently has a database of 48,000 apartment communities, almost 370,000 apartment reviews and 10 to 12 million unique visitors a year, he said.
Bencken said more people are staying put now that mortgage interest rates have gone up.
“People tend to buy housing as a monthly expense, whether they’re buying a mortgage payment or paying for rent,” the CEO said. “What matters to them is their net monthly cost. As mortgage rates go up, that has an immediate effect on buying housing.
“Renters are going to see a tightening of the rental market and that should drive rents up,” Bencken said, adding that this will vary from market to market.
Bencken said prices for apartments are up about 1 percent in his neck of the woods, with a two-bedroom, two-bath home renting for $814 this year, compared to $805 in August 2005.
ApartmentRatings.com has done some improvements, including the addition of Google Maps, giving renters the ability to search for apartments by exploring city maps on the company’s site. A number of real estate-oriented Web sites have integrated Google Maps, but according to Bencken, ApartmentRatings is the first major apartment Web site to release an integration with Google Maps API.
Visitors to ApartmentRatings.com can browse apartment listings by ratings, narrow their search to a ZIP code, and now explore apartments within cities nationwide by clicking a Google Map.
Catherine England of eBay, owner of Rent.com, an online listing service in the apartment and rental-housing category that is one of the leading apartment service-oriented sites, said it’s “too early” to see if rising interest rates will keep renters renting instead of buying. Rent.com was purchased by eBay in 2004.
The company has a lot of improvements in the works, England said, including the launch of a new related company, GigaMoves.com.
GigaMoves.com is essentially a lead generation site for movers. “It helps connect moving companies with folks who use their services, whether it be someone who is actually moving or someone who bought a large item, like a piano, on eBay and needs to have it delivered,” she said. “People need moving help for a variety of reasons.”
Visitors to Rent.com who click on the “Moving Center” tab on the homepage find a moving checklist on the right and a form to fill out to have GigaMoves connect them with potential moving companies.
“The rental market is improving around the country,” said Kevin Doyle, general manager of Apartments.com, a division of Chicago-based Classified Ventures LLC that has more than 170 affiliates across the country, including the Chicago Tribune, The Washington Post and the Los Angeles Times.
Doyle said his site had 27 percent more unique visitors in the first five months of 2006 compared to the first five months of 2005.
Doyle’s site advertises 14,000 apartment buildings with more than 200 units, and added 1,300 customers in 2005, the general manager said.
“We’re trying to create different product offerings to the advertisers we have to give them more prominence,” Doyle said.
One such new offering is the “Featured Community” listings, which works just like the sponsored links in Google. For an additional price, advertisers’ ads show up above the organic search results, giving them additional exposure.
Also, it’s now possible for advertisers to sell targeted messages to consumers who opt into an e-mail program, Doyle said.
As rentals heat up, a number of new online apartment offerings are hitting the market. In early May, Homestore Inc. rolled out a new look for its Move.com home-search Web site, which features existing homes, new homes and properties for rent.
The new Move.com property-search site integrates several existing Move Inc.-operated Web sites, including RentNet.com, HomeBuilder.com and Realtor.com. The site also features a link to a home-valuation tool that lists the value of recent home sales located near a home address entered by a user.
The same week Move.com’s new look was announced, MyNewPlace, a new place to search for apartment listings on the Web, launched, with a promise by its creator that the site will offer one of the largest online collections of rental units – an estimated 6 million on launch day.
The new site represents a Web 2.0-inspired minimalist approach to rental listings: a simple, straightforward main page that allows consumers to enter in an address and city, state or ZIP code to view property listings. There is not a single ad on the page, and there is no selling of other services such as moving vans or rental insurance.
Apartments.com’s Doyle underscored the growing importance of online publications in the apartment world.
“Apartment owners are trying to get as much exposure on Internet services like ours because they know the audience is utilizing the Internet,” Doyle said. “Today apartment owners spend 15 to 25 percent of their marketing budget online, 60 percent on print. We fully expect there’s going to be that shift in advertising dollars you saw from print employment ads to online. We’re still in the first inning of that transformation.”
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