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Survey: Consumers Doubt Housing Market Recovery
Industry News
Kids Take In More Tobacco Smoke in Apartments Than in Houses
Moldy Apartment Class Action Rejected at Ill. Supreme Court
Apartment Construction Stalls in Canada
Q3 Losses Widen at Forest City
Associated Estates Declares Common Share Dividend
Palm Beach County (Fla.) Apartment Market Slowly Recovers
CBRE Refinances $166.7 Million Apartment Portfolio
Boston Market Soars as More Steer Clear of Homeownership
Marcus & Millichap: Seattle Vacancy Rate Drops
Post's New Stock Repurchase Program
Legislative/Legal News
If Nominated, N.C. Bank Chief Vows to Fix Fannie/Freddie
San Antonio Passes Residents Recycling Ordinance
Bedbugs Becoming a Bigger Threat in North Texas
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Survey: Consumers Doubt Housing Market Recovery
Digested From "Consumers Doubt Housing Market Is Turning Around, Survey Shows"
Denver Post (CO) (12/08/10) by Aldo Svaldi
Trulia.com and RealtyTrac recently polled U.S. consumers and found that 58 percent do not believe the housing market will rebound before 2013 and that 49 percent of mortgage borrowers would walk away from their home if their loan was underwater. Peter Flint of Trulia expects 2011 to be a volatile year with falling homes prices, more elusive financing, and higher mortgage rates. Meanwhile, Rick Sharga of RealtyTrac notes that foreclosure problems will have to be resolved before buyers purchase distressed properties.
Industry News
Kids Take In More Tobacco Smoke in Apartments Than in Houses
Digested From "Kids Take In More Tobacco Smoke in Apartments Than in Houses"
Bloomberg (12/13/10) by Elizabeth Lopatto
Children who lived in apartments with non-smokers had higher levels of a tobacco byproduct in their blood than children from smoke-free single-family homes, according to a new study that suggests multiunit housing is a significant source of second-hand smoke. The authors analyzed data from the 2001-2006 National Health and Nutrition Examination Survey. Eighty-five percent of children living in apartments had levels of cotinine that indicated recent tobacco exposure compared with 80 percent of children living in attached houses and 70 percent of children in single-family homes. Cotinine is a byproduct of nicotine found in the blood. The children may have been exposed to smoke outside their homes, at school, or day care, the authors say. Adults who smoke outside the home could also have brought back inside the house tobacco contaminants that cling to their clothes, a phenomenon called “third-hand smoke.'' “Banning smoking in multiunit dwellings by property owners or by regulation would be the obvious way to mitigate contamination,” wrote the scientists, who were led by Karen Wilson, a pediatrician at the University of Rochester Medical Center, in Rochester, New York. Adult nonsmokers in apartments may also be exposed to secondhand smoke, the authors said. Because tobacco fumes drift, the source of a person’s exposure may not be a dwelling unit immediately neighboring that individual’s home, according to the report. The researchers suspect that smoke seeps between walls or through common air ducts in apartment buildings.
Moldy Apartment Class Action Rejected at Ill. Supreme Court
Digested From "Moldy Apartment Class Action Rejected at Supreme Court"
Madison St. Clair Record (12/13/10) by Steve Korris
Owners and managers of Bissell Apartments in Venice, Ill., have finally put to rest a resident's class action claiming damage from mold on personal property. On Nov. 24, the Illinois Supreme Court denied Kesha Manning's petition to appeal the rejection of her claim by Fifth District appeals judges in Mount Vernon. Manning had alleged that mold damaged personal property in all 92 apartments at Bissell. Despite the fact that she never proved damage to her own property, her suit persisted for more than five years. Apartment owners and managers called for a list of moldy property, but Manning listed everything in her apartment without describing any damage. Circuit Judge Andy Matoesian granted summary judgment to owners and managers in 2007. "There is no question of fact, and she does not have any damages," he wrote. Fifth District judges Thomas Welch, Melissa Chapman, and Stephen Spomer affirmed Matoesian in July of this year, finding Manning couldn't prove she suffered mold related damage or that defendants caused damage. "A plaintiff alleging negligence must come forward with evidence sufficient for a trier of fact to reasonably conclude that he or she suffered an injury to her person or property sufficient to withstand a properly supported summary judgment motion," Welch wrote. "Further, the law has long been settled in Illinois that damagers cannot be awarded on the basis of conjecture or speculation," he wrote.
Apartment Construction Stalls in Canada
Digested From "Apartment-Building Construction Stalls "
Toronto Globe & Mail (Canada) (12/09/10) by Steve Ladurantaye
Throughout Canada, apartment vacancy rates are at near-record lows. However, pricey land and high construction costs are keeping developers from building new inventory. New apartments would likely fill quickly, most researchers say. For the most part, though, developers have opted to put up condos instead because they provide a better short-term return. Ugo Bizzarri, vice-president of acquisitions at Timbercreek Asset Management Inc., remarks, "Building an apartment building is a very niche thing. There's certainly a need. But until it's cheaper to build them than to buy them, construction just doesn’t make a lot of sense." In its latest rental market survey, Canada Mortgage and Housing Corp. (CMHC) said the national apartment vacancy rate decreased to 2.6 percent in October from 2.8 percent a year earlier. CMHC researchers cited immigration and improving economic conditions for the lower vacancy rate, saying household formation improves when the economy gets better. It should be noted that about 85 percent of Canada's 109,000 apartment communities are owned by small investors, such as small businesses or families. While these properties may not return as much to their investors as office buildings or shopping centers, they offer a lower-risk way to own income-generating real estate.
Q3 Losses Widen at Forest City
Digested From "Third-Quarter Losses Widen at Forest City"
Cleveland Plain Dealer (OH) (12/09/10) by Michelle Jarboe
Forest City Enterprises Inc. lost $46.8 million during this year's July-through-September period, even as the Cleveland-based company recorded higher occupancies at its apartment communities, retail properties, and office complexes. Net operating income for the firm's real estate portfolio rose 2.7 percent during the third quarter. Forest City went on to note that earnings before depreciation, amortization and deferred taxes -- a key metric used by the industry -- climbed 5.9 percent to $90.7 million from $85.6 million a year before. Finally, third-quarter revenues totaled $303.3 million, down slightly from the same period a year earlier.
Associated Estates Declares Common Share Dividend
Digested From "Associated Estates Declares Common Share Dividend"
PRNewswire (12/10/10)
Associated Estates Realty Corp. on Thursday declared a quarterly dividend of $0.17 per share, which will be payable Feb. 1 to shareholders of record as of Jan. 14. Associated Estates is an Ohio-based REIT whose portfolio consists of 51 apartment communities containing 13,198 units. These various communities are spread throughout eight states.
Palm Beach County (Fla.) Apartment Market Slowly Recovers
Digested From "Palm Beach Apartment Market Slowly Recovers"
GlobeSt.com (12/08/10) by Jennifer LeClaire
In Palm Beach County, Fla., Marcus & Millichap reports that pent-up demand for rental housing coupled with projected job growth are sparking a modest recovery in the local apartment market. According to the firm's Fourth Quarter 2010 ApartmentResearch Market Update, there was a significant resurgence in demand for Class A rental units through the first nine months of the year. By contrast, demand for Class B and Class C apartments was virtually flat from January through September. However, researchers say renewed hiring in trade sectors is a good start toward getting the lower-tier pool active again. Marcus & Millichap further predicts possible changes in the tax treatment of capital gains could generate more deals by the end of this year. Low interest rates and greater availability of acquisition financing should also prompt more investors to leave the sidelines and get active. Tal Frydman, vice president of investments at Marcus & Millichap, remarks, "There's a mixture of deals getting done. But we're seeing a lot of buyers picking up notes, making investments to rehab the properties, then selling them to end users."
CBRE Refinances $166.7 Million Apartment Portfolio
Digested From "CB Richard Ellis Refinances $166.7 Million Apartment Portfolio"
Housing Wire (12/07/10)
CB Richard Ellis Group this past week refinanced a multifamily housing portfolio that consists of seven apartment communities worth $166.7 million. Boston-based Eaton Vance Management managed the fund that facilitated the refinance. The various communities are located in such markets as Atlanta, Houston, and Phoenix and together contain more than 2,100 rental units. The seven loans were underwritten individually. Each is a 10-year, fixed-rate loan originated via Freddie Mac's Capital Markets Execution program, which is designed to offer lenders a fixed-rate product at the government-sponsored enterprise's lowest price.
Boston Market Soars as More Steer Clear of Homeownership
Digested From "Rentals Soar as More People Steer Clear of Homeownership"
Boston Globe (12/07/10) by Megan Woolhouse
Reis Inc. reports that home sales in Massachusetts have fallen sharply in recent months, while apartment occupancy rates in Boston have risen to nearly 95 percent -- their highest level in almost two years. Apartment communities that once struggled to lure residents with free rent and other incentives have waiting lists. As other construction stalls, a luxury apartment construction boom has taken hold in the Boston metro area. The Clarendon/One Back Bay, a luxury high-rise in downtown Boston, is a prime example of this trend. Since it opened last year, the building has leased all but one of its 178 apartments, which have monthly rents for $2,700 to $5,900. At the same time, fewer than half of the 102 condominiums on the top 19 floors have been sold. Three penthouses continue to sit vacant, too. Mark Zandi, chief economist at Moody’s Analytics, states, "Broader confidence is dark and the collective psyche is still incredibly morbid and fragile. Buying a home is the most important purchase of their life. Would you really do that when it looks like the unemployment rate is going to hit 10 percent again?"
Marcus & Millichap: Seattle Vacancy Rate Drops
Digested From "Seattle Apartment Vacancy Rate Drops"
Seattle Times (12/06/10)
Seattle-area job growth contributed to one of the largest apartment vacancy rate decreases in three years, according to a new Marcus & Millichap report. The overall apartment vacancy rate in the Puget Sound area fell to 6.3 percent in the third quarter, while the vacancy rate for Class A apartments dipped to 6.1 percent. Monthly rents in the area posted a slight rise to $917 in the quarter ended Sept. 30. Again looking at just the Class A sector, monthly rents increased to $1.152 per month. According to the study, developers will complete nearly 4,900 new apartments in 2010 versus 3,615 rental units a year ago. Marcus & Millichap researchers went on to estimate that employers will add 15,900 jobs this year, a 1 percent increase over 2009. In the Seattle area, the Edmonds/Lynnwood and University Place/Fircrest submarkets had the lowest apartment vacancy rates during the July-through-September period at 4.5 percent. The Lakewood submarket posted the area's highest vacancy rate at 11.2 percent.
Post's New Stock Repurchase Program
Digested From "Post's New Stock Repurchase Program"
Zacks Equity Research (12/06/10)
Post Properties Inc. recently took the wraps off a new stock and note repurchase program that would replace its existing share repurchase program in place until the end of this year. Under terms of the new program, the Atlanta-based REIT may repurchase up to $200 million worth of common stock or preferred shares or its operating partnership’s senior unsecured notes until Dec. 31, 2012. Post Properties has effectively managed its balance sheet by being prudent about investments in capital outlays and reducing the risks associated with condominium projects. The multifamily housing sector is also benefiting from the gradual economic recovery, along with such other factors as limited supply and a declining rate of homeownership. Post Properties develops and manages luxury apartment communities. It owns stakes in more than 20,200 apartments in 56 communities, including 1,747 apartment units in five communities held in unconsolidated entities.
Legislative/Legal News
If Nominated, N.C. Bank Chief Vows to Fix Fannie/Freddie
Digested From "N.C. Banking Chief Vows to Fix Fannie Mae and Freddie Mac"
Charlotte Observer (NC) (12/10/10) by Barbara Barrett
In Dec. 9 testimony before a Senate committee, Federal Housing Finance Agency nominee Joseph Smith Jr. pledged to manage as well as to lead Fannie Mae and Freddie Mac if sworn in. If confirmed by the full chamber, Smith -- currently North Carolina's banking commissioner -- would be largely responsible for carrying out the Obama administration's plan to reorganize the mortgage agencies.
San Antonio Passes Residents Recycling Ordinance
Digested From "San Antonio Offering Recycling Service for Apartment Dwellers"
San Antonio Business Journal (12/10/10)
Late last week, the San Antonio City Council passed an ordinance that requires multifamily housing to provide recycling collection for their residents. The new ordinance applies to apartments, condominiums, townhouses, high-rise condos and all San Antonio Housing Authority properties. The ordinance aims to give individuals and families in multifamily housing settings the same option for recycling. Recycling for such communities will be phased-in over a 16-month time period. Communities with 300 or more units will begin July 1, 2011. Those with 200 to 299 units will have service by Oct. 1. Properties with 100 to 199 units will be phased in by Jan. 1, 2012, and communities with 3 to 99 units will begin service by April 1, 2012. The city plans to provide up to 30,000 free, small recycling containers for residents to use. Apartment communities are required to make a formal request with the city's Solid Waste Management Department.
Bedbugs Becoming a Bigger Threat in North Texas
Digested From "More North Texans Finding Bedbugs in Their Bedrooms"
Fort Worth Star-Telegram (12/10/10) by Alex Branch
Pest control experts are seeing more and more bedbug infestations in Dallas-Fort Worth apartments, houses, and hotels since last year. In November, Fort Worth public health officials sent warnings about bedbugs to a number of apartment and hotel owners. In addition, they helped the Apartment Association of Tarrant County hold Webinar training for apartment managers. Mike Muncell, manager of a Terminex in Dallas-Fort Worth, remarks, "Calls for bedbugs have doubled since last year; we now get them daily. People think it's pretty creepy when they find out they're crawling around the bedroom." Bedbugs have proven to be excellent hitchhikers, traveling the country and the world in the suitcases of unsuspecting travelers. In the Dallas-Fort Worth area, they have already forced the closure of a Fort Worth Housing Authority property and been exterminated at the University of North Texas in Denton.
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