There’s good news of late for people looking to rent an apartment in Toledo, and not-so-good news for apartment landlords.
After a solid first half of the year that saw average apartment rental rates slowly rising in the Toledo market, those same rental rates have been heading downward since June, according to a database firm that tracks apartment rental trends.
In September, apartment rents in the Toledo market declined 0.4 percent. It marked the third straight month that rates had decreased, according to San Francisco-based Apartment List, an internet platform that connects renters with apartment listings through an online marketplace.
Overall, the rental rate for 2019 is steady at a 0.2 percent increase year-over-year. But even that figure lags behind the Ohio rate of a 1.2 percent increase, and a national rate that has increased 1.4 percent, Apartment List said in its report for September.
Currently, the median rent in Toledo for a one-bedroom apartment is $589, while the rent for a two-bedroom is $770. The median rent for a three-bedroom is $1,055 and the median for a four-bedroom is $1,153. The median for a studio apartment is $490.
While the decreasing rents since June are slight and there is an overall increase of 0.2 percent for the year, Apartment List indicated that what is happening in the Toledo rental market differs significantly from what is happening with apartment rents everywhere else in Ohio, except Youngstown.
“Throughout the past year, rents have remained steady in the city of Toledo, but other cities across the entire state have seen rents increase,” Apartment List said. “Of the largest 10 cities that we have data for in Ohio, nine of them have seen prices rise.”
Youngstown’s rental rates fell 0.7 percent year-over-year.
There is some doubt as to whether rental rates in Toledo are decreasing or just holding steady.
Apartment List states that it begins with median rent statistics from the Census Bureau, then extrapolates them forward to the current month using a growth rate calculated from its listing data.
But it admits that data from private listing sites, including its own, tends to skew toward luxury apartments. That creates a sample bias.
Cindy Kerr, vice president of ConnecToledo, the downtown development corporation, watches the downtown apartment market and said she has not discerned any noticeable decline in rents.
“I have not heard of any of our property owners decreasing their rents. The apartment market seems to be holding firm at this point,” Ms. Kerr said.
“I’m not sure how [Apartment List] calculates their data,” she added. “It could slant more toward the apartment mix and not the price. But without knowing their formula, there’s no way to tell.”
Tony Plath, a vice president and apartment specialist with the Reichle Klein Group commercial real estate firm, said he hasn’t detected a drop in rental rates and isn’t sure why they would be dropping.
“If it’s dropping, I’m not hearing it or feeling it in the marketplace. Are we behind other parts of the state? Yes, we generally are,” Mr. Plath said. “But it’s not like it’s a big drop.”
Still, he added, there could be leveling off.
Interest rates, Mr. Plath said, are down around their lowest point in a while. According to Bankrate.com, a 30-year fixed rate in the Toledo area is now between 3.97 percent and 4.29 percent.
“I can’t believe where they are right now,” Mr. Plath said. “They’re building a lot of new villa-style [apartments] now and these new villas go for $1,500 a month rent. You could buy a ... house for $1,500 a month.”
If more people are moving from apartments into houses, that could be spurring some downward pressure on rents, he said.
In its mid-year Toledo Apartments MarketView report, Reichle Klein said the overall vacancy rate for apartments in the market was 5.5 percent, down from 5.9 percent at the end of 2018.
However, the average rental rate for all classes of apartments was $751 as of June, up from $686 at the end of 2018.
Reichle Klein CEO Harlan Reichle said he won’t know if rates were steady or declining in the second half of 2019 until the year ends.
“We are getting new deliveries of [apartment units]. The question becomes: How much can the market absorb?” Mr. Reichle said. “This makes you wonder how readily all this new product will be absorbed and how deep is the market that will need to absorb it all.”
Even if rents are dropping, Mr. Plath said there is no shortage of investors wanting to be landlords in the Toledo market.
Overall, the number of sales of apartment buildings and complexes is down from its peak in 2017, but that is because of a lack of product for sale rather than demand.
Mr. Plath said he now spends more time trying to convince owners to sell their properties to eager buyers than he does convincing buyers to purchase apartment properties.
For the most recent property sold by Mr. Plath — the $29.5 million sale of the R.J. Lloyd Co. four complex, 888-unit portfolio — there were 11 purchase offers.
“It’s easy to gather data from far away, but if you don’t know the market or how that data applies, it doesn’t really mean anything,” Mr. Plath said.
“But I can tell you how hot this market is. I have a legal pad with two pages of people looking for this, looking for that. And we don’t have the product to show them,” he said. “It feels like I spend nearly all my time talking to owners just to see if they’d be willing to sell.”
First Published October 5, 2019, 3:00 p.m.
