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Apartments Benefit From Housing Slump
Industry News
Austin Apartment Sector Remains Healthy
Luxury Apartments Are Brewing in Baltimore
Salem, Ore., Has Low Apartment Vacancy Rate
Oregon Apartment Market Booms Amid Mortgage Mess
Edmond, Okla., Apartment Sector Gets Stronger
Colonial Properties Reports Decline in Quarterly Results
Legislative/Legal News
California Bill Looks to Ban Smoking in Apartments
Affordable Housing Up for Debate in Coral Gables, Fla.
Bill to Address New Hampshire's Lack of Affordable Housing
Texas Housing Program Accused of Perpetuating Segregation
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Apartments Benefit From Housing Slump
Digested From "Renters Can't Escape Housing Foreclosure Crisis"
USA Today (04/22/08) by Stephanie Armour
The U.S. rental housing market is booming in spite of a broader property slump, as foreclosed homeowners move into apartments and existing apartment residents stay put because of tougher lending criteria or the hope that prices will fall further. "The rental market is now very, very strong," according to Allison Atsiknoudas, CEO of Investment Instruments, which follows rental market rates. "It's stable. The increasing number of foreclosures in the market has definitely increased demand for rentals." The demand is reflected in lower rental vacancies--which had fallen to 9.6 percent in the 2007 fourth quarter from 10.2 percent four years earlier--and higher rent, which the National Association of Realtors expects to rise on average by 5.3 percent this year following a hike of 3.1 percent in 2007. Some hot markets, like San Francisco and Seattle, are even seeing double-digit rent gains. The state of the rental market is key because the heightened demand can trigger construction of new apartment communities.
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Austin Apartment Sector Remains Healthy
Digested From "Apartment Rates Shooting Up"
KVUE.com (04/26/2008) by Jessica Vess
In Texas, Austin property brokers say apartment residents' options are shrinking as available units are quickly snatched off the market. Susan Albertson of Citywide Realty states, "The good listings will go right away. The bad listings will be out there for a month, but there's nothing much that sits out there for a week or two." She adds that many people are "scared" to buy in the current climate. However, with the growing competition for rental apartments, rents are on the rise. Albertson observes, "Prices are skyrocketing. It's crazy what these places are leasing for compared to what they used to lease for." Six years ago, for instance, residents had the advantage as most communities offered incentives such as free rent and lower monthly rates. Analysts predict more competition in the rental market through at least this year, although there is typically a lull period after the summer months.
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Luxury Apartments Are Brewing in Baltimore
Digested From "Luxury Housing Plans Revealed"
Baltimore Sun (04/24/08) P. 1D; by Lorraine Mirabella
Up to 485 new luxury apartments will be built on a couple of blocks of the Brewers Hill neighborhood in Baltimore, as part of the mixed-use reconstruction of two shuttered breweries. Hanover Co. of Houston has a location under contract and intends to erect two four- to five-level structures that would include parking and street-level stores. In addition, Hanover is constructing Brewers Hill's first new housing element, a 180-unit apartment community that is due to be finished in around one year. Four important buildings in Brewers Hill have been remade into offices and stores by Struever Bros. Eccles & Rouse and Obrecht Commercial Real Estate Inc., part of a $120-million, multi-stage initiative. Hanover intends to remove a warehouse in order to build the two structures, one with housing and parking, the second with housing and stores. The facilities would be divided by a "mews" street, with construction to start by 2009's first quarter and last around three years.
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Salem, Ore., Has Low Apartment Vacancy Rate
Digested From "Salem Area Has Low Apartment Vacancy Rate; Rents Increase"
Statesman Journal (Salem, Oregon) (04/22/08) P. 34; by Michael Rose
Low vacancy rates in apartment communities in Salem, Ore., have enabled owners to slowly increase rents over the past few years. The move-in offers that owners sometimes provide to draw residents, including rent discounts, are becoming tougher to get. An apartment community in Salem constructed after 1990 that has two bedrooms and one bathroom is around $590 a month. Units in new structures frequently charge over $650 a month. Less costly apartments are often situated in the city's older buildings. The typical price range for a two-bedroom, single-bathroom apartment in buildings erected before 1990 is around $560 a month. Apartment owners are not having a lot of trouble keeping their communities full because Salem is not overbuilt with apartments, and the credit crisis has kept certain potential single-family home purchasers from buying houses. The total apartment vacancy rate in Salem, according to SMI Commercial Real Estate's most recent survey, was under 3 percent .
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Oregon Apartment Market Booms Amid Mortgage Mess
Digested From "Rental Market Booms Amid Mortgage Mess"
Oregonian (04/20/08) by Gail Dana
For apartment owners in the Portland metro area, 2008 is on pace to be a terrific year. Throughout the region, apartments are either 100 percent occupied or turning over quickly. Area rents continue to rise, as new units remain in demand and resident turnover is slow. According to RealFacts, the average Portland apartment rented for $934 a month during last year's fourth quarter, a one-year increase of 8.4 percent. Meanwhile, the occupancy rate for apartments locally was 95 percent. With home buying stalled by the subprime mortgage boom going bust, the number of potential apartment residents continues to increase. Larry Grant, who owns close-in units throughout Portland, states, "My theory is that people who would be buying houses are in rentals still. That makes it easier to rent and provides better tenants." Bluestone & Hockley Real Estate Services President Clifford Hockley says the vacancy rate for the 1,600 rental apartment he manages locally is a scant 2 percent. Among lingering concerns is that ongoing rent hikes will make apartment rents unaffordable for the area's low-income population.
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Edmond, Okla., Apartment Sector Gets Stronger
Digested From "Multifamily Housing Is Booming"
Oklahoman (04/15/08) by Micah Gamino
Plans for several new apartment and condominium projects in the Edmond, Okla., area this year have local elected leaders and property firms singing the praises of the town's multifamily housing market. Among them is William Forrest, first vice president of CB Richard Ellis-Oklahoma. He believes that 2008 will be the biggest year the market has seen, explaining, "It's a very active year for new construction. It's the most units coming online in any year that affects the Edmond market." Apartment developers have become increasingly attracted to the Edmond area, located just north of Oklahoma City, because of its impressive occupancy rate--around 95 percent occupied for more than a decade. Janet Yowell, director of the Edmond Economic Development Authority, reports that the new apartment communities will help the city fill a strong need. She remarks, "Whether it is the Bryant Place apartments filling a large demand for student housing, or The Enclave, included in a larger planned unit development, Edmond is seeing an increased demand for and interest in this living choice."
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Colonial Properties Reports Decline in Quarterly Results
Digested From "Colonial Properties Posts Dip in 1Q Results, Beats Estimates"
CNBC.com (04/24/08)
Colonial Properties Trust confirms that its first-quarter funds from operations dipped 25 percent to $33.1 million on lower gains from property sales, but still managed to top Wall Street analysts' consensus estimates. The Alabama-based apartment REIT attributed the decrease to office and retail joint venture deals last year, the sales of several retail assets and a reduction in gains from for-sale condos. Quarterly revenue, meanwhile, fell 29 percent to $86.7 million from $122.8 million in the year-earlier period. Colonial Properties also reiterated its 2008 FFO guidance of $2.15 per share to $2.25 per share.
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Legislative/Legal News
California Bill Looks to Ban Smoking in Apartments
Digested From "Bill Opens Door to Smoke-Free Apartments"
Daily Breeze (04/27/08) by Steve Lawrence
Under legislation that is scheduled to be considered this week by a California Senate committee, apartment communities throughout the Golden State could be declared smoke-free zones. Sen. Alex Padilla says his bill would ensure that owners of rental housing have the option to ban smoking. He remarks, "The way the law is [currently] written . . . it's not explicit for [owners] to declare smoke-free housing units without being sued. We're trying to make the law a little more clear, a little more explicit." The bill, scheduled to be heard April 29 by the Senate Judiciary Committee, would allow apartment owners to ban smoking on all or a portion of their property, including in any building on the site. Residents could continue to smoke inside their apartments until their pre-smoking ban rental accords expired. A violation would be considered a breach of the agreement and could result in eviction. Debra Carlton, a spokeswoman for the California Apartment Association, says her group supports the bill. She also notes that apartment owners can face lawsuits no matter which way they go on the smoking issue.
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Affordable Housing Up for Debate in Coral Gables, Fla.
Digested From "Gables Commission OK's Affordable Housing Project"
Miami Herald (04/24/08) P. 4; by Elaine De Valle
Florida law requires Coral Gables to produce 437 affordable housing units during the next decade, which is proving to be a challenge for a city with high property values. State guidelines base affordable housing rates on neighborhood median income, meaning that the 35 affordable units slated for construction near the upscale Village of Merrick Park shopping complex will have monthly rents of $1,500 for one-bedroom units and close to $1,800 for two-bedroom units. However, local real estate consultant David Dabby and others are concerned that these rents do not differ much from market rates, coming in at about $1.67 per square foot for the one-bedroom units. Dabby states, "In today's market, for a brand new rental apartment, developers will try to average like $1.90 or $2 per square-foot, so in that sense it's a little below market. But in any building, the range is going to be $1.70 to $2.30." Meanwhile, Coral Gables planner Javier Betancourt says an affordable housing ordinance is in the works that would require developers to set aside low-cost units or pay for affordable units to be erected in other locales.
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Bill to Address New Hampshire's Lack of Affordable Housing
Digested From "State Has Serious Shortage of Affordable Housing"
Concord Monitor (NH) (04/23/08) by Ed Barnwell; Mary DeVeau
Ed Barnwell, president of the United Way of Merrimack County's (N.H.) board of governors, and Community Provider Network of Central New Hampshire Chairwoman Mary DeVeau write that their organizations are asking the state Senate to approve HB 1472. The legislation invokes the Britton v. Chester court ruling from 1991, which obliges municipalities to permit fair and realistic opportunities for the creation of workforce housing. Barnwell and DeVeau say that since 1991, area officials throughout New Hampshire have had little advice on how to fulfill the law's mandates. HB 1472, they contend, offers important instruction to towns by offering precise definitions on terms like "affordable" and "workforce housing" and by providing a statutory guideline for municipalities to comply with their legal duties for workforce-housing development. "The need for affordable workforce housing in our state is clear," Barnwell and DeVeau write. A recently published study by the National Low Income Housing Coalition reports that the fair market rent for a two-bedroom apartment in the state is $1,012. The study calculates that a household would have to pull in $40,464 per year to pay for that amount of rent and utilities. "This 'housing wage'--what a household has to earn to afford rent and utilities--places New Hampshire ninth on the list of the most expensive places to live in the country," Barnwell and DeVeau note. As such, they contend that the New Hampshire Senate needs to approve HB 1472.
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Texas Housing Program Accused of Perpetuating Segregation
Digested From "Group Sues, Says Housing Program Perpetuates Segregation"
Dallas Morning News (04/24/08) by Kim Horner
The Inclusive Communities Project Inc., a Dallas-based civil-rights group, recently filed a federal lawsuit against the Texas Department of Housing and Community Affairs and its governing board. The suit claims that the agency fosters racial segregation by permitting a majority of apartment communities built with housing tax credits to be erected in urban, minority neighborhoods plagued with blight, poverty and high crime rates. The group wants a court ruling mandating that the agency approve an equal number of tax-credit projects in both minority and non-minority census tracts. According to Mike Daniel, the group's attorney, "Like all the other affordable housing programs, it is still marked by racial segregation, which reduces its value to many of the people it's supposed to serve by subjecting them to conditions of slums and blight in order to get the housing." A study by the Inclusive Communities Project found that of the 383 apartment communities in the predominantly white suburbs of Dallas, only 70 permitted Section 8 vouchers. Of these, only 26 were projects funded by tax credits. The study also revealed that minority census tracts account for 51 percent of Dallas' rental units and 85 percent of the area's tax-credit projects, while non-minority census tracts account for 19 percent of the area's rental units and 3 percent of its tax-credit projects.
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