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Obama Names Donovan New HUD Chief
Industry News
Fannie Mae to Allow Those Who Rent to Stay in Foreclosures
Study Shows 3.6 Percent Apartment Vacancy Rate for San Diego
Colorado Apartment Vacancies Increase
Zacks.com Says AvalonBay Has a Favorable Outlook
UDR Engages Prospects in the Apartment Selection Process
Orlando Apartment Market Soft, but Rents to Rise
As Demand Slows, More Fairbanks Apartments Are Vacant
Integra Land Opens 2nd Apartment Community in Florida
Windsor Has Highest Apartment Vacancy Rate in Canada
Former Post Properties Board Member Dies at 73
Legislative/Legal News
Former HUD Chiefs Call for New Agency to Combat Housing Discrimination
New National Swimming Pool Law Affects Apartments
NJ Apartment Owners Look to Conserve Water
Indiana City Considering Apartment Registration
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Obama Names Donovan New HUD Chief
Digested From "Obama Picks Department Chief"
Financial Times (12/15/08) by Krishna Guha
President-elect Barack Obama has announced Shaun Donovan as his choice to head the Department of Housing and Urban Development (HUD). Donovan oversaw one of the largest affordable housing programs in the country as commissioner of New York's housing department since 2004. Educated at Harvard University, he previously worked at Prudential Mortgage Capital and served as HUD deputy assistant secretary during the Clinton administration.
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Fannie Mae to Allow Those Who Rent to Stay in Foreclosures
Digested From "Fannie to Let Renters Remain in Foreclosures"
Washington Post (12/15/08) P. A2; by Zachary A. Goldfarb
Fannie Mae will institute a moratorium on evictions until Jan. 9 to assist residents living in foreclosed rental properties. After that date, the company either will present residents with a new lease agreement or provide relocation help. The decision came after New Haven Legal Assistance Association threatened to sue Fannie Mae to help those who rent, particularly those making on-time payments while owners entered foreclosure. New Haven Legal Assistance Association litigation director Shelley White hopes "this new policy by Fannie Mae will serve as a model to private lenders and state legislators considering actions to assist renters who are being immensely burdened by the foreclosure crisis." An estimated 4,000 people reside in rental homes foreclosed on by Fannie Mae.
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Study Shows 3.6 Percent Apartment Vacancy Rate for San Diego
Digested From "Survey Shows 3.6 Percent Apartment Vacancy Rate, Average Rent of $1,188"
San Diego Business Journal (12/12/08)
According to the San Diego County Apartment Association's Fall 2008 Vacancy and Rental Rate Survey, apartment rents are falling even as the supply of available units contracts. Researchers say this trend suggests that the recession is depressing the local market. Linda Morris, president of Cambridge Management and the 2008 association board president, remarks, "We're all feeling the effects of the economy. Costs for water, sewer and trash services continue to rise, but it's hard for property owners to recover these costs as household budgets tighten.” Countywide, the apartment vacancy rate this fall fell to 3.6 percent, down 1.2 percent from the spring. Average weighted rent for all apartment types fell to $1,188 this fall, a decline from $1,201 in the spring. The Apartment Availability Index, which measures vacant units and apartments with notices to vacate, has decreased from 10.25 percent last spring to 5.98 percent. According to association researchers, lower vacancies suggest that there is not a mass exodus of apartment residents buying foreclosed houses as some predicted. The apartment association's Fall 2008 Vacancy and Rental Rate Survey was sent to over 6,000 owners and managers across San Diego County during September. Its findings are based on responses from more than 37,000 rental units.
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Colorado Apartment Vacancies Increase
Digested From "Colo. Apartment Vacancies Increase"
Denver Business Journal (12/11/08)
Apartment vacancies in Colorado rose to 6.6 percent in the third quarter and are expected to continue rising in the last three months of this year, according to a new study by the Colorado Division of Housing. Up from 5.7 percent in 2007's third quarter, the statewide vacancy increase was driven largely by higher vacancies in Colorado Springs, metro Denver and Pueblo. Rents in the Colorado Springs and Pueblo areas stayed fairly flat for the period, but climbed in the Denver area. Average rents in the tight Grand Junction market jumped $60 year over year to an all-time high of $670.24 a month. Such northern Colorado cities as Fort Collins, Fort Morgan, Greeley and Loveland witnessed "substantial" vacancy decreases, according to the report, with accompanying boosts in rent. Gordon Von Stroh, University of Denver business professor and report author, states, "The third quarter was a good quarter for rental housing in northern Colorado [regarding vacancies], due to some new job growth and other factors. But due to the softening in the economy since Oct. 1, I expect to see more rising vacancy rates during the fourth quarter."
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Zacks.com Says AvalonBay Has a Favorable Outlook
Digested From "Avalon Bay's Attractive Entry Point"
Zacks Equity Research (12/10/08) by Greg Sukenik
Zacks.com analyst Greg Sukenik expects AvalonBay Communities to outperform its peers in 2009, although multifamily housing fundamentals will likely slow in the coming quarters because of worsening unemployment trends and stagnant job growth. Due to a general sector sell-off, AvalonBay's shares are off more than 35 percent since October. Sukenik writes: "We are changing our recommendation to 'Buy' due to valuation. While the next few months could be volatile, we think now is an attractive entry point for the best positioned multifamily operator. The company has plenty of liquidity and is in no danger of near-term debt defaults."
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UDR Engages Prospects in the Apartment Selection Process
Digested From "UDR Engages Prospects in the Apartment Selection Process with New Web-Based Capabilities"
Centre Daily Times (PA) (12/08/08)
UDR Inc. recently launched a trio of new Web-based applications that make finding and leasing an apartment faster and easier for the online searcher. The three applications include a new Apartment Selector program, a proprietary Media Center capability and a "Special Views" application. Jerry Davis, UDR's senior vice president of operations, states, "Since nearly 50 percent of our customers use the Internet to search for an apartment, we work hard to provide apartment information in a simple, easy to use format, while providing all the information prospects need to make a leasing decision in real time." The new Apartment Selector program enables apartment searchers to view each floor of a multi-story building at selected apartment communities. In addition, it presents full-color floor plans and allows prospects to reserve a rental unit online. The Denver-based apartment REIT's Media Center includes an online photo gallery, furniture arranger program, virtual tours and a printable brochure for each of the Company’s apartment communities listed. Finally, UDR's "Special Views" application allows prospects to see unique views from selected individual apartments online. Davis remarks, "Our new 'Special Views' capability enables us to highlight unique views from select apartment homes and actively promote them to customers and prospects."
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Orlando Apartment Market Soft, but Rents to Rise
Digested From "Orlando Apartment Market Soft but Rents to Rise"
Orlando Sentinel (FL) (12/08/08) by Jerry W. Jackson
According to the latest forecast by Marcus & Millichap, the Orlando metro area's apartment sector remains soft, with rising vacancy rates that likely will end the year at 9.6 percent. Researchers predict that apartment rents will still show an increase for the year, despite a rising number of vacant units locally. The main reason for the rent increase, the research notes, is that the average rental rate in the Orlando market is being pushed up by new rental units entering the market. The average asking rent for an area apartment is projected to end this month up 1.4 percent to $888 a month. Because of such discounts as "first-month free" rent, the "effective" rental rate is on pace to rise only 0.4 percent to $821 a month. The study notes: "With fewer prospective [residents] in the market as a result of soft job growth, concessions are rising as owners compete to fill units." Southeast Orlando ranks as the city's weakest submarket, with a 10.5 percent vacancy rate and an effective monthly rent of $857 in the third quarter. The tightest submarket was in and around Lake Buena Vista near the Walt Disney World resort. It currently has a 5.5 percent vacancy rate and effective rents averaging $961 per month.
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As Demand Slows, More Fairbanks Apartments Are Vacant
Digested From "As Demand Slows, More Fairbanks Apartments Are Vacant"
Fairbanks Daily News-Miner (12/08/08) by Christopher Eshleman
According to reports from property management firms collected by the Fairbanks North Star Borough, the number of vacant apartments in the Fairbanks metropolitan area is more than 30 percent greater than in the fall of 2007. Local apartment owners speculate that the changing rental market could be due to a number of factors. For one, thousands of troops from nearby Fort Wainwright were deployed to the Middle East this fall. Other apartment residents could be taking advantage of a dip in home prices by buying instead of renting. At the same time, frustrated homeowners unable to sell their residences might be looking testing the rental market instead. Regardless of the cause, there were more vacant rental apartments available for apartment residents to choose from in September than in any September since 2004. The estimated number of empty one-bedroom apartments rose from 180 last fall to 277 in September, states the most recent issue of the Community Research Quarterly. The increased vacancies comes as the military ends a project in which it directly leased rental units from private owners as it strived to cope with a housing shortage on government property. The U.S. Army only has about 20 leases currently active with private owners, a decrease from approximately 150 a year ago.
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Integra Land Opens 2nd Apartment Community in Florida
Digested From "Lap of Luxury Beckoning"
Daytona Beach News-Journal (FL) (12/07/08) by Bob Koslow
Integra Land Co. has opened the second of three planned luxury apartment communities in the Daytona Beach, Fla., area at a time when local apartment occupancy rates are down as much as 15 percent. Dubbed Integra Shores, the new community opened last week and will feature 288 rental units located close to a new hospital. Earlier this summer, Integra Landings at Ivey's Lake opened with 277 apartments. Traditional apartments throughout the region are seeing increased competition from foreclosed homes being turned into rentals, condominiums that cannot be sold being rented out, and some former apartment communities that went condo earlier in the decade that are now being converted back to apartments. That said, with the slowdown in new apartment construction, Integra may be in an excellent position when Daytona's economy rebounds, apartment residents return to the market and baby boomers begin retiring in greater numbers and do not want the hassles of keeping up a house. Ron Witten, a Dallas-based apartment development consultant, concludes, "Money to build is hard to get. We are seeing 35 [percent] to 40 percent fewer units started than last year and this is just the beginning."
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Windsor Has Highest Apartment Vacancy Rate in Canada
Digested From "Windsor, Ont., Has Highest Apartment Vacancy Rate in Canada: CMHC"
CANOE Money (12/11/08)
New data from Canada Mortgage and Housing Corp. (CMHC) confirms that Windsor, Ont., had the highest apartment vacancy rate in Canada during October. The average vacancy rate in Canada's 34 biggest cities fell from 2.6 percent in October 2007 to 2.2 percent. CMHC researchers say demand is growing because of such factors as youth job growth, high migration levels and a large gap between the cost of owning a home and renting an apartment. However, CMHC Chief Economist Bob Dugan says rental apartment construction and competition from the condominium market could not offset growing rental demand. On a provincial basis, New Brunswick posted the highest apartment vacancy rate in October at 3.6 percent, while Manitoba had the lowest vacancy rate at 0.9 percent.
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Former Post Properties Board Member Dies at 73
Digested From "Former Barnett Banks CEO Dies at 73"
Jacksonville Business Journal (FL) (12/10/08) by Rachel Witkowski
Former Post Properties Inc. board member Charles Rice died Dec. 8 at his Florida home after drowning in his pool. He was 73. Rice was a renowned banker, having served as chairman and CEO of Jacksonville-based Barnett Banks Inc. before it became Bank of America Corp. He ran Barnett for almost two decades. Within the first five years as chief executive of Barnett, Rice was the driving force behind more than 90 mergers and acquisitions, which grew the bank from $3.7 billion in assets to $41.2 billion. His son, Daniel, remarked, "He was ahead of the curve in realizing that it all one day would be consolidated."
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Legislative/Legal News
Former HUD Chiefs Call for New Agency to Combat Housing Discrimination
Digested From "This Week's Real Estate Stories"
MarketWatch (12/12/08)
A six-month, multicity investigation has found flaws in how fair housing rules are being enforced. Consequently, a couple of former secretaries of the Department of Housing and Urban Development (HUD)--Jack Kemp and Henry Cisneros--has called for the creation of an independent agency to do a better job combating housing discrimination. Kemp, who co-chairs the National Commission on Fair Housing and Equal Opportunity, states, "The federal government needs to be in the business of getting things done, and right now, fair housing enforcement is not getting done. That's why we need a new, independent agency that won't get mired in politics." Cisneros, another co-chair of the commission, agrees with Kemp's appraisal. Hearings on fair housing practices have been held in five major cities--Atlanta, Boston, Chicago, Houston and Los Angeles--and drew a myriad of housing experts and residents. The report's executive summary read: "The hearings exposed the fact that despite strong legislation, past and ongoing discriminatory practices in the nation's housing and lending markets continue to produce extreme levels of residential segregation that result in significant disparities between minority and non-minority households, in access to good jobs, quality education, homeownership attainment and asset accumulation. This fact has led many to question whether the federal government is doing all it can to combat housing discrimination. Worse, some fear that rather than combating segregation, HUD and other federal agencies are promoting it through the administration of their housing, lending and tax programs."
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New National Swimming Pool Law Affects Apartments
Digested From "9 Children Have Died From Injuries"
2theAdvocate (Baton Rouge, La.) (12/12/08)
A new federal law regulating drains in public swimming pools goes into effect this week. Dubbed the Virginia Graeme Baker Pool and Spa Safety Act of 2007, it was adopted to prevent the deadly underwater entrapment of children caused by suction from pool drains. The law, which was named after a 7-year-old girl who died after the suction of a drain entrapped her under water, will be enforced by the U.S. Consumer Product Safety Commission. Failure to comply with the new law--which is directed at public pools in apartment communities, hotels, spas, health clubs, public parks--could result in the immediate closure of the pools. Buddy Amoroso, president of the Apartment Association of Greater New Orleans and Louisiana, said most owners in the Baton Rouge metro area are aware of the law and have either complied or are working to modify apartment pool drains. Amoroso, a member of the Baton Rouge Apartment Association's board of directors, adds, "We have passed the word down and most major properties here are taking care of it. Now, property owners with smaller units or ones who are not active members of the organization may not know about the new law."
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NJ Apartment Owners Look to Conserve Water
Digested From "Water Saver, or Burden for Tenants?"
NorthJersey.com (12/14/08) by Donna Rolando
In New Jersey, apartment owners are pushing legislation they believe will be a boon to water conservation. The Water Conservation and Metering Act is being touted as having the potential to save 2 billion to 4.5 billion gallons of water annually by encouraging owners to install low-flow showerheads and toilets. The bill provides for metering of individual apartments to determine usage. In addition, it would enable owners to bill residents separately for their actual use. Except in rent-controlled communities, there would be no reduction in rent to compensate for the extra charges. Assemblyman John McKeon (D-Essex), a prime sponsor of the legislation, notes that the vast majority of states already have some form of sub-metering legislation on the books. Resident groups, though, are opposed to the bill on the grounds that it would make water and sewer bills suddenly their members' responsibility. Conor Fennessy, vice president of government affairs for the New Jersey Apartment Association, counters that the legislation would actually reward those residents who take pains to conserve by lowering their water and sewer bills and punish wasteful residents with higher bills. He states, "Right now there's no way to find out if Mrs. Smith is frugal with water and her neighbor is not."
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Indiana City Considering Apartment Registration
Digested From "Valpo Mulls Apartment Registration"
Northwest Indiana Times (12/14/08) by Phil Wieland
Valparaiso, Ind., is considering a rental registration program to keep track of its local apartment stock. Commenting on the city's code enforcement program, Valparaiso Building Commissioner Vicki Thrasher said about 36 percent of the local code violations involved rental units. Estimates of the number of rental units in the city range from 40 percent to 60 percent. The lack of specific numbers is one of the main reasons city officials are considering the rental registration program. According to Thrasher, the program would allow the city to do a better job of making sure rental apartments are subjected to regular inspections to make sure they meet the basic life safety standards, ranging from running water and proper wiring to heat and smoke detectors. The focus would be on multifamily housing communities, but no decision has been made on whether to include single-family home rentals in the inspection process. Thrasher notes that the city has the authority to enforce the building codes for apartments, but lacks the manpower to set up inspections or even a fee schedule to pay for them. How much additional manpower would be needed and the initial costs of launching such a program have yet to be disclosed.
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