Headlines
Top Story
Freddie Mac May Sell Bonds to Bolster Apartments
Industry News
Fed Widens Effort to Back Real Estate Loans
Homebuilders Pitch Harder to Those Who Rent
Fla. Apartment Sector in Distress
Texas Apartment Association Program to Reduce Heat-Related Injuries
Colorado Apartment Vacancy Rate Highest Since '05
Apartment Seekers Find California Stuffed With Bargains
Calgary Apartment Vacancy Rate to Rise
Legislative/Legal News
New Law Mandating Pool Drains Affects Apartments 
Program Aims to Help Calif. Apartments Reduce Crime
Calif. City Health Officials Tackle Smoking in Apartments
Plano Targets Apartments With Tighter Consumption Law
Texas Neighborhood Watch Effort Expanding to Apartments
Wisconsin County Discusses Updated Apartment Discrimination Ordinance
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Freddie Mac May Sell Bonds to Bolster Apartments
Digested From "Freddie May Sell New Bonds"
Wall Street Journal (05/23/09) by Prabha Natarajan
In an effort to bolster the nation's apartment sector, Freddie Mac is expected to sell nearly $1 billion of commercial-mortgage bonds backed by multifamily housing loans. This would not only be the first time a commercial-mortgage bond is sold with the backing of a government-sponsored enterprise, it also would be the first large commercial-mortgage bond deal in almost a year. Furthermore, the transaction is expected to open up a new way for Freddie Mac to support lending in the nation's multifamily housing market. Apartment communities and condominium developments have been among the most troubled in the property sector. Speculative developers erected apartments and condos at the peak of the housing bubble, particularly in such states as Arizona, Florida and California. RBS research shows that delinquency rates on loans secured by apartments and condos hit 5.12 percent in April. Researchers add that the loss severity on multifamily housing is more than 25 percent, as more than 754 loans have been liquidated. Both Freddie Mac and Fannie Mae have held multifamily loans on their books without securitizing them. By packaging them into tradable bonds, the former will free up capital so that it can invest in additional multifamily housing loans.
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Industry News
Fed Widens Effort to Back Real Estate Loans
Digested From "Fed Widens Effort to Back Commercial Real Estate Loans"
Washington Post (05/20/09) P. A15; by Neil Irwin
The Federal Reserve is stepping up its efforts to stabilize the nation's financial system by expanding a key lending program to support more commercial real estate loans. Beginning in July, the Fed will allow investors participating in its Term Asset-Backed Securities Loan Facility (TALF) to buy existing securities backed by loans for apartment communities, shopping centers and other commercial property. It is the Fed's first attempt to use its unlimited lending capacity to try and support markets for "legacy securities," many of which are weighing down lenders' balance sheets. Previously, it supported only new commercial real estate lending.
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Homebuilders Pitch Harder to Those Who Rent
Digested From "Homebuilders Pitch Harder to Renters"
Wall Street Journal (05/20/09) P. B5A; by Dawn Wotapka
Home builders increasingly are contacting renters with incentives, and many are using their Web sites to emphasize low interest rates and more affordable prices to make homeownership more attractive than renting. Builders view apartment residents and others who rent as crucial to the housing market's rebound, as they do not have to sell an existing dwelling to make a purchase. Metrostudy says the approximately 89 million Americans in rental housing nationwide present an opportunity to unload the 340,000 single-family homes slated for construction this year.
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Fla. Apartment Sector in Distress
Digested From "Broward Multifamily Sector in Distress"
GlobeSt.com (05/21/09) by Carl Cronan
A new Marcus & Millichap report forecasts that declining unemployment in Broward County, Fla., over the next several months will push apartment vacancy over the 8 percent mark by the end of the fourth quarter. Property fundamentals weakened through the first three months of the year, with mass layoffs blamed for pushing residents out of rental units. The Florida Agency for Workforce Innovation reports that Broward's unemployment rate hit 8.5 percent in March, nearly double from 4.3 percent a year ago. Greg Matus, regional manager of Marcus & Millichap's Fort Lauderdale office, states, "Rents are under pressure as property owners attempt to stem occupancy losses and quickly fill newly vacated units. Competition for a diminished pool of prospective renters will increase this year due to an uptick in completions and the continuing presence of lower-priced shadow stock." Monthly asking rents for Broward apartments are projected to decline 3.6 percent this year to $1,075, while effective rents are on pace to decrease almost 4 percent to $1,009 per month. Marcus & Millichap's research shows that local monthly rental rates ranged from approximately $950 in Pompano Beach and West Hollywood to about $1,200 in Miramar and Pembroke Pines. While only 240 new apartments were added countywide in 2008, two new communities totaling 500 units are set to open this year in Fort Lauderdale. The most significant supply pressure, though, will come from unsold condominiums converted to rental units.
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Texas Apartment Association Program to Reduce Heat-Related Injuries
Digested From "TAA's 'Neighbors CARE' Program Helps Prevent Heat-related Injuries to Residents"
Business Wire (05/20/09)
The Texas Apartment Association (TAA) is urging its more than 10,000 members to tout its "Neighbors CARE" program to their residents. TAA members represent more than 1.7 million rental housing units throughout the Lone Star State. Created 11 years ago, the "Neighbors CARE" program stresses greater awareness of heat stress symptoms and encourages apartment residents to keep an eye out for their neighbors to help minimize the potential for someone suffering heat-related trauma. George B. Allen, a TAA executive vice president, states, "Apartment communities offer the advantage of neighbors living in close proximity to each other. Experts tell us one of the best ways to prevent heat-related tragedies is for neighbors to look out for each other and check on each other regularly. That's what we're asking our members to encourage their residents to do." TAA is joining with all 25 of its local affiliated apartment associations statewide to promote the "Neighbors CARE" program. Materials ranging from tip sheets for apartment owners and managers to tip sheets for residents to a list of heat-stress precautions from the Texas Department of State Health Services are posted on the TAA website.
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Colorado Apartment Vacancy Rate Highest Since '05
Digested From "State Vacancy Rates Hit '05 High"
Denver Post (05/22/09) by Margaret Jackson
In Colorado, the statewide apartment vacancy rate for the first three months of this year rose to its highest level since 2005. The Colorado Division of Housing confirms that the rate rose from 6.1 percent in 2008's first quarter to 8.5 percent. Gordon Von Stroh, management professor at the University of Denver's Daniels College of Business, comments, "I think you can correlate it strongly with the unemployment rate." Indeed, more and more unemployed people are moving back home with their parents or doubling up with roommates. Other industry watchers do not find the rising vacancy rate all that alarming. Ryan McMaken of the Housing Division notes, "There's not a lot of new construction, and the population is still growing." Only four of the 22 areas surveyed -- Fort Collins, southeastern Colorado, Steamboat Springs and Summit County -- reported declining vacancies. On the Front Range, Colorado Springs posted the highest vacancy rate, at 11.7 percent.
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Apartment Seekers Find California Stuffed With Bargains
Digested From "REAL ESTATE: Renters Find Market Stuffed With Bargains"
North County Times (CA) (05/20/09) by Chris Bagley
In California, renting a house is sometimes an attractive option for those who do not want to be subjected to apartment communities' credit checks, which traditionally have penalized short sales and foreclosures. Jared Hazelaar, owner of Dedicated Credit Repair in Temecula, reports that the state's large number of foreclosures has made many apartment managers more forgiving as long as the applicant's credit history is otherwise clean. In the meantime, apartment owners and managers are dealing with other equally pressing issues. For instance, the average apartment vacancy rate has climbed above the 6 percent mark in San Diego County and is now past 8 percent in Riverside County. To entice new residents, owners have put the brakes on monthly rent hikes in the former and have slashed rents by an average of 5 percent in the latter. Others are having to sweeten the deal with one or two months free rent or additional amenities. As this trend is occurring, monthly rents in single-family homes have dropped between 5 percent and 10 percent based on interviews with owners and property managers. Residents, in turn, are discovering bargains that were not available just two years ago.
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Calgary Apartment Vacancy Rate to Rise
Digested From "Housing Market to Bottom in '09"
CHCA News (05/19/09) by Mario Toneguzzi
Canada Mortgage and Housing Corp. (CMHC) expects Calgary's residential property market to bottom this year and pick up in 2010. In its Spring Calgary Housing Market Outlook released this past week, the agency forecasts that total housing starts in the Calgary metro area will plummet by almost 68 percent from a year ago to 3,700 units. In 2010, though, CMHC researchers are forecasting that total starts will increase 13.5 percent to 4,200 units "as economic conditions improve and job creation increases demand for housing." Calgary's average apartment vacancy rate is projected to rise to 4 percent by October 2009, nearly doubling the rate recorded in October 2008. In turn, the rising vacancy rate is expected to reduce the average two-bedroom rent to C$1,075 a month from C$1,148 -- the first such decrease since the early 1990s. The CMHC report concludes: "In 2010, an expanding economy and job growth will support increased household formation, and this is expected to lower the vacancy rate to 3.5 percent. As the vacancy rate begins to tighten, rental rates will move up with the average two-bedroom rent forecasted to rise to $1,100 per month."
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Legislative/Legal News
New Law Mandating Pool Drains Affects Apartments
Digested From "A Federal Law Mandates New Pool Drains"
WCTV-6 (FL) (05/21/2009) by Candace Sweat
A new federal law mandates that public pools, apartment communities and hotels must install a child-safe drain. The law was named after seven-year-old Virginia Graeme Baker, who drowned after being trapped by the suction in a spa drain. The new drain covers have been designed to keep small kids from being sucked into a drain hole. Because of the demand this law has created, however, many national pool suppliers are having a difficult time meeting the needs in some markets. Jackson County, Fla., appeared to be one of the markets ahead of the curve heading into the Memorial Day weekend.
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Program Aims to Help Calif. Apartments Reduce Crime
Digested From "Crime Free Program for Apartment Workers Slated in Oxnard"
Ventura County Star (CA) (05/19/09)
In California, the Oxnard Police Department is inviting employees of local apartment communities to a special program designed to help them reduce crime. The first class of the Crime Free Multi-Housing Program is set for May 27 at the Oxnard Performing Arts Center. It is intended for everyone from apartment owners and on-site managers to leasing agents and maintenance staffers. Oxnard police say many of the apartment communities that have taken part in the program have realized a decrease in on-site crime of more than 70 percent.
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Calif. City Health Officials Tackle Smoking in Apartments
Digested From "Health Dept. Holding Forum on Smoking in Apartment Buildings"
Long Beach Press-Telegram (05/19/09) by John Canalis
In Long Beach, Calif., apartment residents often complain to the city Health Department about smoke wafting into their units from common areas. The agency held a public forum on May 19 to examine what apartment owners and residents can do besides shut their windows. According to the Long Beach Department of Health and Human Services, owners can legally ban smoking in their apartment communities if they include appropriate language in rental contracts. Peggy Preacely, coordinator for the Health Department's Tobacco Control Programs, stated, "Many [owners] have decided that they will include in their lease addendums or policy addendums that this is . . . a smoke-free building. More and more people are wishing they could live in places where they wish that smoke would not drift into their apartments." She added that more and more owners are seeing the economic benefits of banning smoking at their apartment communities, including lower fire insurance rates and easier-to-clean apartment interiors when units turn over.
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Plano Targets Apartments With Tighter Consumption Law
Digested From "City Tightens Alcohol Consumption Law"
Plano Courier Star (05/13/09) by Stephanie Flemmons
In Texas, the Plano City Council recently adopted a revision to an alcohol ordinance that will reduce the areas of the city where beverages can legally be consumed. The revision makes it illegal for alcohol to be consumed in public and private parking lots, with a special focus on apartment communities. Plano Police spokesman Rick McDonald commented, "This is a way to clean up our apartment [community] parking lots to maintain a safe environment for residents." He added that the consumption of alcoholic beverages in public areas often results in such violations as public intoxication, public urination, littering, noise disturbances, assaults and property damage. Plano's Neighborhood Police Officer Unit has become especially concerned with such abuses within apartment communities and in other public and private parking lots. McDonald concluded, "When you have individuals consuming alcohol around motor vehicles, there is a higher likelihood these individuals will enter vehicles, drive intoxicated and possibly injure someone. Also, we don't want to have kids playing in areas in apartment [communities] around those consuming alcohol and displaying behavior that causes issues."
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Texas Neighborhood Watch Effort Expanding to Apartments
Digested From "Neighborhood Watch Effort Expanding"
Abilene Reporter News (05/19/09) by Daralyn Schoenewald
In Texas, many Abilene neighborhoods already have crime watch programs in place. Now, a number of local apartment communities are following suit. The Abilene Police Department has been working with eager apartment owners and managers throughout the area to establish such programs. Kathy Holland, assistant manager of the Willow Crest apartment community, comments, "So far, it has been a good source of information for us to find out any happening on our properties that involve the Police Department. We're waiting to get to the point where we have on-site meetings with residents to get everybody involved." The program was brought to the city by Abilene Police Sgt. Keith Shackleford after he attended a class on neighborhood watch programs as they pertain to multifamily housing last summer. Officers then sat in on a meeting of the Big Country Apartment Association to see which communities and their owners would be interested in participating. Everyone in attendance expressed interest. A crime prevention survey was then done on each Abilene-area community, and managers were briefed on the importance of lighting for safety reasons. Additional information followed on everything from evictions to barbecuing near buildings to pool safety. Abilene apartment managers have also learned how youth laws pertain to area apartment communities, and narcotics agents have taken the time to discuss what to look for when a drug crime is suspected.
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Wisconsin County Discusses Updated Apartment Discrimination Ordinance
Digested From "County Board to Discuss Update to Housing Discrimination Ordinance"
Wisconsin State Journal (05/19/09) by Matthew DeFour
Changes to Dane County's housing discrimination ordinance are back on the agenda of the County Board. However, a controversial clause regarding criminal history has been removed. Since 2006, Dane has been working on updating its Fair Housing Ordinance to align with the state's. Suburban apartment owners, though, have long been worried because state law prohibits them from discriminating against criminals if their record is more than two years old. Sup. Paul Rusk of Madison, chairman of the Public Protection and Judiciary Committee, states, "We have new language that's designed to clarify for landlords that they can discriminate based on criminal background." Indeed, the latest draft stipulates that owners can screen out residents based on criminal records if the crime they committed was related to housing, and if the crime means "a reasonable person would have a justifiable fear for the safety" of the community or other residents. In addition, the proposal would bar owners from asking for a prospective resident's social security number. The Apartment Association of South Central Wisconsin states that some landlords previously voiced concern about obtaining a credit report without a social security number, but it is possible. The changes would apply to all of the county's cities and towns.
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