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Wall Street Takes Credit for Multifamily Housing Swoon
Industry News
Salt Lake, Provo Top List of Biggest Apartment Rent Increases
Phoenix Apartment Occupancy Continues Its Decline
Overbuilding Keeps Lid on Sacramento-Area Apartment Rents
Reno-Sparks, Nev., Apartment Occupancy Rate Falls by 3.2 Percent
Aimco Announces Special Dividend
Multifamily Housing Is Housing More of Minnesota's Rising Population
San Diego Average Apartment Rent Rises
D.C. Apartment Market Still Attractive to Investors
UDR Provides Solid Dividend
Legislative/Legal News
Virginia Suburb OKs Residents Creating Apartments in Their Homes
Apartment Owner Cited Over Lead Paint Dangers
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Wall Street Takes Credit for Multifamily Housing Swoon
Digested From "Wall Street Takes Credit for Multifamily Swoon"
Oklahoman (07/19/08) by Richard Mize
Although the apartment sales boom is over in the Oklahoma City metro area, some unusually high-dollar purchases are still being made. CB Richard Ellis-Oklahoma tracked nine sales of communities with more than 50 apartments during the first six months of 2008. That was a 50-percent decline compared with the first half a year earlier. Average prices, though, continued to surge: $31,379 per unit for stable, 1970s-era communities in good locations and $43,572 per unit 1980s-era communities. William T. Forrest and Eva M. Wills wrote in the CB Richard Ellis report: "The decrease in transactions is entirely attributed to problems in the mortgage industry. The average prices . . . are above last year's averages, but so is the quality of the individual transactions that have taken place with the exception of [lender] sales." Sperry Van Ness tracked 13 apartment sales in the first half of this year, half the number completed during the same period in 2007. Sperry Van Ness, which tracks apartment communities with 15 or more rental units, recorded a lower average price--$36,387, a decrease of 10 percent from the end of June a year earlier. Sperry Van Ness' Andy and David Burnett concluded: "With conduit financing now a thing of the past, local banks, Fannie Me and Freddie Mac have become the main source of liquidity. As the financial markets continue to tighten their underwriting standards, pro-forma transactions are becoming more difficult to finance.”
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Salt Lake, Provo Top List of Biggest Apartment Rent Increases
Digested From "Rental Hikes -- Salt Lake, Provo Top List of Biggest Increases in Nation"
Deseret Morning News (UT) (07/19/08) by Jasen Lee
A new RealFacts report shows that Salt Lake City recorded the biggest apartment-rent increase in the country during this year's first half, with rents soaring 10.4 percent over a year ago. The Provo/Orem area was a close second, with apartment rents increasing 10.1 percent on average. Among the four Western states that RealFacts termed the country's "desert" region, Utah placed second in terms of average rents at $799 a month. Nevada ranked No. 1 at $882. Additionally, Utah registered the highest average occupancy rates for apartment residents at 95.3 percent. Wells Fargo economist Kelly Matthews blames the housing market's woes for driving Utah apartment rents up. She reasons, "Everybody was moving out of rentals and getting mortgages and buying homes. That process has reversed now, and many people can't get mortgages or don't want to get into houses, so the demand for rentals is definitely stronger now."
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Phoenix Apartment Occupancy Continues Its Decline
Digested From "MF Occupancy Continues Its Decline"
GlobeSt.com (07/20/08) by Amy Wolff Sorter
MPF/YieldStar reports that the decline in Phoenix-area multifamily housing occupancy continued during this year's April-through-June period, ending between 88 percent and 90 percent. Adding to the situation are 11,000 apartments now under construction throughout the market. Greg Willett, vice president of research with MPF/YieldStar, notes, "We had eight properties starting construction just in the past quarter. [Consequently], occupancy is down three points for the market overall in the past year." He adds that Phoenix and its surroundings can expect more of the same well into next year. RealFacts' Market Overview for the second quarter shows overall occupancy at 88.9 percent, a decline of 3.4 percent from a year earlier. Despite the turmoil, there has not been much movement with regards to concessions. Willett remarks, "It doesn't mean they're discounting the product, but they're probably taking the concession from the quoted rates, as opposed to pushing up concessions."
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Overbuilding Keeps Lid on Sacramento-Area Apartment Rents
Digested From "Overbuilding Keeps Lid on Sacramento-Area Apartment Rents"
Sacramento Bee (CA) (07/19/08) P. D4; by Jim Wasserman
A new Colliers International report shows that Sacramento remains one of California's best markets for apartment residents, with average rents up only 1.7 percent in the last year. This is due to the fact that the region has an excess of housing resulting from boom-era overbuilding. In the second quarter, residents of large apartment communities again saw some of the country's smallest rent hikes. According to RealFacts' research, average rents increased just 0.5 percent at 76,000 apartments in El Dorado, Placer, Sacramento and Yolo counties. Regionally, the cost of renting has barely budged since the first of the year. Monthly rent at communities with more than 50 units averaged $971 as of June 30, only $9 a month more than at the end of last year. Locally, rent increases vary by city, ranging from 0.7 percent in suburban Elk Grove to 3 percent in Davis. Bill Berdan, who heads a Sacramento residential management group for Colliers, states, "The market out there is just not accepting the rent increases just yet."
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Reno-Sparks, Nev., Apartment Occupancy Rate Falls by 3.2 Percent
Digested From "Apartment Occupancy Rate Falls by 3.2 Percent"
Reno Gazette-Journal (07/18/08) by Bill O'Driscoll
RealFacts reports that apartment occupancy growth in the Reno-Sparks, Nev., area declined 3.2 percent in the second quarter from the same period a year ago. The sector was possibly pulled down by an influx of condominiums into the housing market, researchers theorized. Brian Kaiser, housing/real estate analyst at the Center for Regional Studies at the University of Nevada, adds, "Since the Reno-Sparks area did not have many of these types of units in the past, their recent inclusion in the rental mix can have a negative impact on the occupancy rate if they are not immediately absorbed into the market." The study showed the region's overall apartment rental market was softer than that of the Las Vegas metro area. Overall, Nevada had the highest second-quarter average apartment rents among the four desert-region states, yet lagged in occupancy and rent growth from a year earlier. Nevada's statewide average rent was $882 a month, well ahead of second-place Utah ($799), Arizona ($783) and New Mexico ($730). Kaiser said this was to be expected, considering rents in the state have been rising for the last several years.
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Aimco Announces Special Dividend
Digested From "Apartment Investment and Management Company Announces Special Dividend"
PRNewswire (07/18/08)
Apartment Investment and Management Company's (Aimco's) board of directors has declared a special dividend of $3.00 per share payable to holders of its Class A common stock. The dividend is payable Aug. 29 in a combination of cash and additional Class A stock to shareholders of record as of July 28. Aimco management expects the special dividend to be a taxable one to its shareholders. Aimco is a Denver-based multifamily REIT that ranks as the nation's largest owner and manager of apartment communities, boasting a total portfolio of 1,163 communities containing 202,337 rental units. Aimco's properties are spread throughout 46 states, the nation's capital and Puerto Rico.
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Multifamily Housing Is Housing More of Minnesota's Rising Population
Digested From "Minnesota's Population Is Rising"
Minnesota Public Radio (07/17/08) by Dan Olson
Recent population estimates show Minnesota's Twin Cities region is growing by nearly 30,000 people a year, with suburban Blaine and Shakopee ranking as the fastest growing cities. Most of the population growth has been in the outer-ring suburbs. Unlike a decade ago, however, single-family homes are no longer the dominant housing choice. Metropolitan Council forecaster Todd Graham remarks, "I don't think people think of the new developing edge suburbs as places for apartments or townhomes, but the truth is in many of those communities the majority of housing that is going in is attached or multifamily housing, condos or townhomes."
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San Diego Average Apartment Rent Rises
Digested From "Average Apartment Rent Rises"
San Diego Union-Tribune (07/18/08) by Emmet Pierce
A new RealFacts survey of apartment communities containing 100 units or more shows that the cost of renting an apartment in San Diego County rose slightly during this year's April-through-June period. Researchers found the average rent in the county to be $1,393, 1.1 percent more than the previous quarter and a 3.5 percent increase from the second quarter a year earlier. The occupancy rate for the second quarter was 95.5 percent, a gain of 0.6 percent from the first quarter and up 0.3 percent from 2007's second quarter. RealFacts CEO Caroline Latham notes that San Diego County has emerged as one of Southern California's strongest rental markets. She adds, "Southern California was leading rent growth through much of the decade, but San Diego was one of the weakest markets, behind the Inland Empire, Los Angeles and Ventura. [The region] is now neck-and-neck in year-over-year rent growth with Los Angeles and Orange County and way ahead of the Inland Empire." The Riverside/San Bernardino metro area had a second-quarter decline of 0.3 percent and an annual growth rate of just 0.7 percent, confirms the RealFacts report. Latham reasons that is because the Inland Empire lacks a wealth of employment centers, whereas San Diego County is "a center of job growth."
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D.C. Apartment Market Still Attractive to Investors
Digested From "Despite Slowdown, DC Region Remains Tops for Investors"
GlobeSt.com (07/18/08) by Sule Aygoren Carranza
Strong job growth and a generally healthy economy are helping to fuel Washington, D.C.'s apartment market. Though the expansion in employment is almost 50 percent the levels recorded during the boom period of the past few years, Delta Associates researchers say it remains healthy enough to sustain the local multifamily housing sector as long as developers keep their expansion activity in check. In fact, the D.C. area is the only large metro region that has gained more jobs this year than in 2007. Delta further notes that shift in the single-family housing sector has caused many would-be condominium buyers to wait out the market and remain in apartment rentals. Many other households in the region are renting by choice. The stabilized vacancy rate for investment-grade apartment communities in the Washington area climbed to 3.6 percent at midyear, compared to 2.9 percent a year earlier. When compared to the national rate of 5.6 percent, it remains one of the lowest vacancies in the United States. Rent hikes were also off from the long-term average of 4.5 percent annually, clocking in at 3.1 percent between the end of last year's first half and June 2008. Class A apartment rents rose by only 1.8 percent during that same time span--still better than midyear 2007, when rents for such units plunged by 30 basis points. The pipeline, though, is declining. After peaking at 36,951 apartments at the end of '07, the number of units in the pipeline came in at 33,802 units as of June 30.
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UDR Provides Solid Dividend
Digested From "UDR Provides Solid Dividend"
Zacks Equity Research (07/16/08) by Greg Sukenik
Zacks.com analyst Greg Sukenik writes that his stock tracking Web site is maintaining its "Buy" rating on UDR Inc. due to valuation and continued problems in the nation's for-sale housing market. The apartment REIT specializes in owning, managing and developing middle-market apartment communities. In early March, UDR sold 40 percent of its portfolio located mainly in slower growth, lower rent markets in the Midwest and across the South. Sukenik writes: "While this transaction will be dilutive in 2008, overall we like this deal as the company will improve its asset base and balance sheet. The company will use the majority of the proceeds to acquire better assets in higher rent areas, pay down debt, buy back shares and possibly pay a one-time special dividend." Overall, Zacks.com expects apartments to be one of the safer REIT sectors in the weakening economy.
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Legislative/Legal News
Virginia Suburb OKs Residents Creating Apartments in Their Homes
Digested From "Arlington Passes Measure for Residents to Create Apartments in Their Homes"
WTOP News (07/19/08)
A proposal that would allow people to create apartments in their Arlington County, Va., single-family homes was recently approved by a majority of the County Board. Advocates say it would create more affordable places for people to live. However, opponents remain concerned about an influx of largely temporary residents creating parking and noise problems in otherwise safe and quiet communities. In recent months, elected officials throughout Northern Virginia have been cracking down on overcrowded houses. Some, though, charge that such efforts unfairly target illegal immigrants.
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Apartment Owner Cited Over Lead Paint Dangers
Digested From "Landlord Cited Over Lead Paint Dangers"
Journal Inquirer (07/17/08) by Kym Soper
The Community Builders Inc. and its 23 affiliated community owners have been cited with 839 violations of laws requiring them to notify residents about lead paint in their apartments. Together, the developer and its affiliates are facing multimillion-dollar penalties for repeatedly breaking lead disclosure laws in 11 communities throughout Connecticut and Massachusetts between 2003 and 2006. Vernon (Conn.) Town Administrator Christopher Clark comments, "There's no information that there’s lead paint in any of the properties. But there's also been no indication that the apartments have been tested at all there." To protect children from ingesting lead, federal law requires building owners to notify prospective residents about the potential for lead paint hazards in units. High lead levels can cause diminished intelligence, reading and learning disabilities, impaired hearing, reduced attention span and behavior programs, in addition to difficult pregnancies and nerve disorders. At presstime, EPA officials said there was no indication that any kids were lead poisoned because of the violations.
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