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How to choose an apartment
Omkar, a loyal MR reader, asks:
I'm looking for an apartment (Fremont), and it's my first one. Do you think that most people over or underinvest in the quality of their accommodations? On one hand, it's where you spend the most time (especially if you're like me and have in-house hobbies). On the other, I think it's probably easy to overestimate the impact an additional unit of luxury housing will have on everyday life.
The standard results from the happiness literature are that people grow accustomed to lots of living space but that we undervalue the hassle of a lengthy or stressful commute. Kahneman's work also suggests you should spend more time with your friends, so maybe that means living near them as well. I don't know if these results are true at all margins. Moving from a mid-sized mansion to a large mansion probably doesn't make you happier, but the switch from a one- to two-bedroom apartment might.
Personally, I'll stress the benefits of rooming with someone who is both compatible and intelligent, but that isn't exactly the question that was asked. Your apartment should also be a gateway to new experiences, so perhaps you should live near the highway. or other effective modes of transport.
So, readers, when we are looking for an apartment, what is the bias we are most likely to have?
Posted by Tyler Cowen on April 26, 2008 at 07:39 AM in Education | Permalink
Comments
Priorities for me would be:
1. Affordable.
2. Close to work & places I like to go (parks, shops, restaurants)
Posted by: Luke G. at Apr 26, 2008 8:48:06 AM
Personally price and level of independence was always important for me, but for certain commuting is the one thing I always looked at. During college I always looked for a location off-campus that was near school. It really does make all the difference I think.
Posted by: Dan K. at Apr 26, 2008 9:08:26 AM
Try to live walking distance from places. You'll get out more.
Posted by: josh at Apr 26, 2008 9:17:11 AM
Classic case of someone confusing "satisfying their own subjective tastes and preferences" with "satisfying their economics professor" (or, alternatively, "solving the equations of economic theory while disregarding the reality-defying assumptions underlying them").
Here's the only correct (i.e., rational) answer: If it feels good, do it.
Posted by: KipEsquire at Apr 26, 2008 9:30:41 AM
Agree with the comments but from reoccurring personal experience. I have moved all of the country about once every 1.5 years for the last 9 years. One year when moving to San Diego about 6 years ago, where all apartments were about the same high expense, I created a database that weighed all aspects of an apartment (square feet, amenities, distance from work, quality of interior, rent, etc) based on the value the aspect had to me. Next I multiplied the weight by a quantitative representation for that aspect. I ended up choosing the one that ranked second :) When I was faced with the first ranking apartment, my gut decided that was not the right one for no obvious reason. I truly enjoyed the apartment I choose... well for the 11 months before moving to Minnesota.
When I returned to San Diego about one year later, I knew the area better and wanted to live in Little Italy. The strategy I took there was to walk the streets looking for "for rent" signs in the windows. This was tedious and frustrating at times but what I learned is that people that put signs in the window do not usually take the time to study the market or look at what other people are offering in the area. They also usually have very desirable locations that go quickly. They typically do not want to be bothered by administrative procedure. The result was the best apartment and landlords I have ever had and rent almost $1,000/mo less then the market would have allowed.
When I moved to the DC area last October, I took a different approach with the goal to go without a car. I learned quickly (having only 3 days to find a place) that the apartments near metro stops were on average about 300-400 more a month. Since I would have to buy a car if I lived away from the metro, there was really no cost savings. I stayed on-foot during my search which helped me get a feel for the area. Have a great apartment right off the metro at a discount rate (Hint: new construction always have discounts for the "inconvenience") and do not own a car. May actually get to stay here for three years :)
Good luck!
Posted by: Kelly Dietrich at Apr 26, 2008 9:36:25 AM
The last two places I've lived I've not only underestimated how noisy they would be but also how much I want the quiet.
Posted by: Sam at Apr 26, 2008 10:01:04 AM
Men do (and should) look at an apartment in terms of how it will impress a new girl. Will she WANT to stay over here, in terms of comfort and location?
Posted by: FungibleFun at Apr 26, 2008 10:05:10 AM
I've lived all over the U.S. and abroad. I have a visceral hatred of driving, and an independent dislike of the blandness of suburbia. I came to NYC for professional reasons, but I'm staying (bought a building in Brooklyn) because of the not-driving and, believe it or not, the friendly neighbors It's ridiculously expensive, but worth it.
Posted by: Salguod at Apr 26, 2008 10:35:19 AM
If you're generally not home during the day, is there an office that can accept your packages? If renting from a company rather than an individual, google it and see if there are horror stories. Proximity to a grocery store and decent places to eat (preferably a couple on foot) is important unless you plan your meals carefully.
The floorplan is more important than you think relative to sq ft. Perhaps unlike an extra room, you will contiune to regret renting an apartment that doesn't have the following: clean/well-lit common areas, decent carpet, a kitchen you'd want to use, central air/heat rather than a wall unit, thick walls, and paint that's not flaking.
Posted by: anon at Apr 26, 2008 10:40:21 AM
In NYC, figure out how much space you'd like, the price, and the neighborhood -- then be satisfied to get two of of the three.
Posted by: John at Apr 26, 2008 11:17:37 AM
A number of studies point to the high/hidden cost of commuting (click on my name for a post with a couple links). As noted by several commenters, look for places that are close to work and where you can walk to dinners, friends' houses, etc.
Posted by: Geoff at Apr 26, 2008 11:19:02 AM
Men do (and should) look at an apartment in terms of how it will impress a new girl. Will she WANT to stay over here, in terms of comfort and location?
Just a few days ago, pick-up artist extraordinaire Roissy came out with a list of things a man should have in his apartment to impress the ladies
Posted by: Peter at Apr 26, 2008 11:22:42 AM
For years and years I chose my apartments and later my condo because of its proximity to my favorite bar and night clubs. I could walk to all. I felt like this was worthwhile because at that time in my life I drank quite a bit and this prevented me from getting into trouble for drunken driving.
Posted by: severin at Apr 26, 2008 11:31:17 AM
neccessary conditions: walking distrance to restaurants, coffee shops, bookshops, convenient stores, and public transportation. sufficient conditions: walking distance to work, school, library, theaters, barbars, doctors, boyfriend and fortune-tellers.
Posted by: Yan Li at Apr 26, 2008 12:13:22 PM
I just moved into my first apartment last year.
I took the advice of the happiness researchers and moved into a clean, safe, affordable but tiny apartment close to friends and other fun stuff.
I can't stand it. Maybe I'm just use to a larger living space. I'm about to bolt for the suburbs for a complex with a pool,central air, etc....
Posted by: thehova at Apr 26, 2008 12:34:09 PM
Two Words....Air Conditioning
Posted by: Adam at Apr 26, 2008 12:41:50 PM
I don't like commuting, my current 30 minute drive is the maximum I could handle, but I still prefer to live closer to places/things I enjoy than work. My reasoning is that I will go to work, but if driving to a restaurant or friends house seems like too much of a hassle I'll probably stay home.
Posted by: Brett at Apr 26, 2008 12:48:54 PM
Cost and commute are both very important, but first I would rank safety and security. This has a lot more to do with neighborhood than apartment. Be sure you can be happy in the neighborhood. Cost is important, but often the cost differential is so great, commuting pays for itself in cash terms although not in time terms. Overall, I would recommend somewhere you enjoy when not working as opposed to close to work; somewhere you may eventually want to buy and live long term. Jobs come and go and while you can move with each job, it quickly becomes expensive and time consuming. The cost differential between a bad place and a good one in a locale is often incredibly small as the bad ones are all the poor can afford, so you will probably be much better off paying slightly more than average.
Posted by: Lord at Apr 26, 2008 1:00:51 PM
Air conditioning, definitely, and, north of Florida, a parking garage. If I had to go out and scrape snow off of my windows before driving to work in the morning, I'd probably call in sick a lot during the winter.
Posted by: Jamie at Apr 26, 2008 1:17:58 PM
Very good advice from most IMO.
I definitely think comute and proximity to activities within walking distance of the apt (coffes shops, bars, parks, libraries, grocery stores etc) are biggies.
When my wife and I first moved to DC (just out of grad school) we didn't know where we wanted to live she worked in Silver Spring and I worked near the World Bank. We ended up taking a cheap place north of Silver Spring for 6-mo. I ended up commuting (1.5 hours a day) It was awful.
After our six months were up we moved to the Courthouse area of Arlington. It was only 10 min to work by Metro we dropped down to one car which saved us almost as much as the increase in rent.
Within walking distance were numerous bars, coffee shops, and restraunts pus a movie theater, whole foods two book stores and two farmers markets. Even though when we first moved there we shared a 1 bedroom 700 sqft apt, it was one of the happiest times of my life (although I am also pretty happy now).
When we left DC (because we wanted to have children) we took the lessons we learned there to our new city and bought a small house close to the city center (where our jobs were) with lots of parks and places to walk to around. For us it was also a great move.
To me the commute thing is huge. I can wake up a 7:30 and be showered an to work by 8:00 and can be home by 5:10 if leave at 5:00 from work. When looking at that larger apt cheaper apt farther away from work consider all extra "Work" time you will have to spend in your car to get it. Of course if you like to drive that is a different story. But also even though I am in a city now with no real public transit I find that I can get by with much cheaper crappy used cars because I don't spend much time in the car.
Posted by: eccdogg at Apr 26, 2008 1:21:57 PM
* Location.
* Relatively quiet, especially in terms of traffic noise.
* Offers somewhere secure, covered, and convenient to store a bike.
* Well laid out, particularly in terms of offering a good space for parties, as well as space for a few guests to stay over.
* Large enough that two people could conceivably live there indefinitely, without driving one another crazy.
* Good water pressure.
* Ideally, well insulated and otherwise energy efficient.
* Hardwood floors and laundry gear are an advantage.
Posted by: Milan at Apr 26, 2008 1:26:37 PM
It will certainly differ for each person. For me, given my current situation, I am much happier to have a place that I really like - great view, balcony, good size for just me - even though my commute to work is nearly an hour. I take the metro, and I get a lot of reading done during the commute, so the commute is almost a plus.
Earlier in life, I tried living with roommates or alone in all parts of Brooklyn and Harlem, which was never truly satisfying. It is very cool to now have a laundromat in the basement and a manager's office for any issues and to hold packages, and so on - instead of having drug dealers downstairs and a landlord who doesn't answer his phone. The fact the I could walk to hip bars and night clubs from those places really didn't make them worth it.
Posted by: liberty at Apr 26, 2008 1:47:38 PM
That it's in Rome. For academic year 2008-09.
Anyone got a lead?
Posted by: Michael Tinkler at Apr 26, 2008 2:28:17 PM
A lot of good advice above. However, you should also consider the management: How long has the staff been there? Is there a lot of turnover? What is their reputation? Do they live on site? Is there a management company or is it essentially run by the owner? How many maintenance personnel are there? Is there a standard lease and can you read it before putting in your application? Who should you call if there is a problem in the middle of the night?
The nice lady in the office controls who your neighbors are, how easy it is to get things fixed, and how receptive they are going to be to any problems you may experience. She is ultimately in charge of whether that multi-million dollar property will be a place you or anybody else wants to live in a year. She is also the lady who will decide how much (if any) of your security deposit you get back at the end. And frankly, she should be delighted to tell you all this stuff. I'm not sure there are any "wrong" answers -- there might be a perfectly good reason for a new staff -- listen to the way she answers and make your own decisions.
Posted by: Bridget Magnus at Apr 26, 2008 2:31:20 PM
I think this one has been solved for us by those with the best incentives to figure out the question (real-estate agents): "Location. Location. Location."
Posted by: AndyG at Apr 26, 2008 2:44:20 PM
We tend to put too much emphasis on living near people like us and don't branch out enough. Fremont, CA? Try to be close enough to BART to make that easy, but live further from the Yuppies and closer to people who aren't very like you. People who don't read economics blogs.
Posted by: Mitch at Apr 26, 2008 2:56:18 PM
We tend to put too much emphasis on living near people like us and don't branch out enough. Fremont, CA? Try to be close enough to BART to make that easy, but live further from the Yuppies and closer to people who aren't very like you. People who don't read economics blogs.
Posted by: Mitch at Apr 26, 2008 2:56:38 PM
Be sure to visit the area around the apartment at night, and also try to talk to the random new neighbors you will have. Are there undergraduates across the street throwing loud parties on Tuesday nights? Do the car alarms go off at a frustrating rate?
Posted by: Amanda at Apr 26, 2008 3:40:59 PM
I'm sure that having a dog door and a fenced back yard for the dogs so you don't have to worry about them "holding it" all day is a big improvement in happiness!
That said, I'm amazed how much time & treasure you spend cleaning a big house compared to a small apartment. It isn't worth it to me!
Posted by: Mr. Econotarian at Apr 26, 2008 4:01:43 PM
People often look for locations that recreate the neighborhoods they grew up in. I've always lived in urbanized suburbs nearby larger downtown areas. Currently living in Bethesda, MD.
Posted by: MattF at Apr 26, 2008 4:12:50 PM
I second Ms. Magnus' comment on management. I've noticed that my gut reaction on viewing the apartment and meeting the manager gives me a good idea of how trustworthy and responsive the office will be. This makes a big difference.
Posted by: Ned at Apr 26, 2008 6:30:22 PM
After making sure it is in good condition, keeping a short-commute is key. Ideally, being close to public transportation and walking distance to eating and shopping is superb. I moved to Arlington about 10 months ago and live a block from the metro and walking distance from school and a ton of shopping. The Smithsonian is about 20 minutes away by metro. I love it! I walk much more than before and drive only once a week or so. I enjoy this location better than anywhere else I've lived. I have certainly had more space in the past, but vastly prefer access to so much.
Viewing the surrounding area as part of my amenities really makes me appreciate this location and the lifestyle it supports much more. Particularly for people without children, I think the trade-off between better location in exchange for less living space is well worth it.
I am a big fan of renting and have quite a few posts explaining why. Also, here are my posts on living in small spaces and simplicity.
Posted by: Brian Hollar at Apr 26, 2008 7:03:20 PM
for those of you who have had apartments with and without dishwashers, you'll probably all agree that it is one luxury worth paying a little extra for. as far as the other amenities go, take 'em or leave 'em.
Posted by: CG at Apr 27, 2008 2:51:24 AM
In no particular order
Ensuite washer/dryer. It's amazing how fast you get really annoyed by having to share eight machines with 60 apartments full of people who always seem to be doing laundry when you are, especially if finding that the machines are busy requires lugging two loads of laundry down 3 flights of stairs.
Professional management. If a pipe goes ping in the middle of the night and water starts seeping through your ceiling, there should be someone you can call who knows how to make it fixed fast.
Related to that, talk to your neighbors and find out what kind of problems the buildings have. When was the last power failure? The last water outage? Sounds paranoid, but some complexes have decaying infrastructure and just plain suck to be in (my last complex had the water off at least 2-3 days a month, and one month, 5 days straight). In more extreme climates, it might be worth asking about utility bills while you're at it.
Location. What that means to you, only you know; other commenters have all brought up good points.
Neighbors are a lot less important than you'd think. There's a lot of turnover in apartment complexes, so the quiet but friendly woman next door who teaches you to cook curry may well be replaced in three months by college kids who host loud parties, or vice versa. You can filter out a lot of the party crowd (if that's your preference) by going for a more expensive place.
To the original questioner's question about over-investment, I'd say most people underestimate the value paying a bit extra for a place you want to live. The people I know who are stable renters are in "luxury" complexes; everyone else seems to move whenever their lease comes up for renewal hoping to find a "better" place.
Posted by: MouseJunior at Apr 27, 2008 8:03:27 AM
one criterion should be safety. If your deciding between two apartments in Fremont, looking at crime data might be helpful in making a decision. Spotcrime just recently added Fremont as a city.
http://spotcrime.com/ca/fremont
Posted by: Colin Drane at Apr 27, 2008 9:51:16 AM
It is certainly worthwhile to live in a cool place versus a cheaper-but-not-so-cool-place if you are in the dating market. Apartment location works as a signaling mechanism — you're more likely to have success if you've indicated you're serious. In Los Angeles, this would equate to moving to Santa Monica or parts of West Hollywood (I chose West Hollywood - now, ten years later, I have three kids and live in the exurbs).
Posted by: Peripatetic Entrepreneur at Apr 27, 2008 11:39:06 AM
I chose the place I'm living in now because it was located close to several bus routes and had stores (and a library) within short walking distances and very cheap ($400/mo). At the time I moved, I was jobless (and looking) and expected that I'd be needing public transportation because the car'd get repoed. The place is cheap. The carless situation ended up happening, and I was able to commute to work via bus for more than a year.
The security situation here has deteriorated significantly in the last year (I've been here 4 years). If that doesn't change, then I'll be looking for a new place.
On one hand, it's where you spend the most time (especially if you're like me and have in-house hobbies)
I'm a software developer, so I ended up moving to a 2br apt, in the same building becaues I found that I was unable to do work at home without getting distracted to the point where I couldn't get stuff done. Oh look, I'm browsing on the internet, see how well that plan turned out?
On the other, I think it's probably easy to overestimate the impact an additional unit of luxury housing will have on everyday life.
When I was younger, I spent too much on "luxury" apartments. I see the younger guys at the office doing the same.
Do you think that most people over or underinvest in the quality of their accommodations?
It is an apartment. If these are the only 2 choices, then "underinvest." A living space is a tool to keep you dry, warm and safe along with your stuff.
Posted by: Tangurena at Apr 27, 2008 6:37:00 PM
If you are, like me, married to an IT geek, an important feature is either a cupboard or somewhere to put a box into which you can stash away cables, chargers, etc.
Posted by: Tracy W at Apr 28, 2008 6:12:11 AM
- quiet (street and building)
- safe neighbourhood
- close to public transport (if you must drive, a commute of less than 60 minutes)
- air con that works (in most climates)
- friends within reasonable distance (say 45 mins or so, or both 45 mins to 'downtown')
Older buildings but with 'luxury' features in their day, are often full of older couples and singles who make less noise and are generally less hassle.
New developments are potentially quite dangerous: you get transients, and noisy young people (even when I was one, I found their all night parties tiresome).
Someone once advised me to 'overpay' for accomodation in London, and this has always turned out to be good advice: it basically boils down to living in too small a place, in a very convenient (but quiet and safe) location. Maybe this is a major financial centre thing?
Posted by: Valuethinker at Apr 28, 2008 10:55:44 AM
Last year I lived in Edinburgh's old town, right in the middle of everything. It was nice being able to walk places, but I never really felt part of a neighbourhood - my immediate area was mostly hostels, clubs and big public buildings. The noise was awful. There were a lot of brawls outside my window at night. Tourists urinated in our driveway.
Now that I'm back in Toronto, I live about a 20 minutes on transit or bike from campus. It's not nearly suburban, but well outside the student bubble. The commute hasn't bothered me a bit - I've enjoyed living in a real neighbourhood with green space, peace and quiet, neighbours I can say hello to, and a concrete postage stamp backyard.
Look for the happy medium.
Posted by: Allison at Apr 28, 2008 11:33:18 AM
Last year I lived in Edinburgh's old town, right in the middle of everything. It was nice being able to walk places, but I never really felt part of a neighbourhood - my immediate area was mostly hostels, clubs and big public buildings. The noise was awful. There were a lot of brawls outside my window at night. Tourists urinated in our driveway.
Now that I'm back in Toronto, I live about a 20 minutes on transit or bike from campus. It's not nearly suburban, but well outside the student bubble. The commute hasn't bothered me a bit - I've enjoyed living in a real neighbourhood with green space, peace and quiet, neighbours I can say hello to, and a concrete postage stamp backyard.
Look for the happy medium.
Posted by: Allison at Apr 28, 2008 11:33:23 AM
I believe the following to be a common bias: the systematic failure to take future fit into account in the cost-benefit analysis. There are ALWAYS transaction costs from moving. Thus an apartment which you expect to suit you for three years might not, in fact, be preferable to a slightly inferior apartment that will suit your expected needs for, say, five years. Not to mention ten, or twenty years. Suppose you own you apartment, and move every three years at a 2.5% transaction cost. All else being equal you could end up spending about 50% of the value of your home just on transaction costs.
Posted by: Johan Almenberg at Apr 28, 2008 4:28:06 PM
When living in an area with a lot of foot traffic, I've found it important that the complex have locked gates. I once lived in a small complex that was fairly easy to walk through, and the result was a lot of strange people walking through the complex. A locked gate keeps most of the casual walkthroughs away (however if someone is motivated they're getting in) and helps stop crimes of opportunity. We had quite a few petty thefts at that complex (no breakins though) I think mainly due to people walking through.
Posted by: JordanT at Apr 28, 2008 5:12:02 PM
I think most people overinvest. How else do you explain so many people buying houses they couldn't afford in recent years? One should really look at their budget and their priorities in finding a place. What can you afford? From the choices that you can afford, what do you really want (or alternatively, what are you willing to give up)? This will differ from person to person. Some want their own bathroom, others want an extra bedroom as an office, some want easy access to public transportation or a 5 minute walk to work, etc.
Posted by: RZ at Apr 28, 2008 7:36:05 PM
BTW, priorities will change with time. 5 years ago, I specifically looked to share an apartment with roommates, and that was the right decision. I enjoyed the social aspect. But if I were to look for a place today, I'd get my own. I really need my a place to myself for a few months just for sanity's sake.
Posted by: RZ at Apr 28, 2008 7:39:51 PM
