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Rise in Apartment Residents Ends Era of Homeownership
Industry News
Urban Housing Rises Amid High Gas Prices and Other Factors
Developers Expected to Build More Denver-Area Apartments
Albany-Area Apartment Communities Seeking Higher Rents
Grand Junction, Colo., Deals With Difficult Apartment Market
Associated Estates Realty Corporation Declares Common Share Dividend
AvalonBay Facing Challenges
Led by Multifamily Building Booom, Housing Starts in Northeast Soar 61.5 Percent
Essex Property Trust Declares Quarterly Distributions
Colonial Properties Selling $500 Million of Multifamily Housing and Retail
Legislative/Legal News
Oregon County Aims to Turn Apartment Residents Into Recyclers
California Apartment Owners Settle Discrimination Suit
Beaumont Considering Raising Water Rates at Apartment Communities
Pennyslvania Program Aims to Preserve Affordable Apartments
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Rise in Apartment Residents Ends Era of Homeownership
Digested From "Rise in Renters Erasing Gains for Ownership"
New York Times (06/21/08) by Rachel L. Swarns
The nation's unsettled housing market means that Americans are renting apartments and houses at the highest level since the Bush White House launched a campaign to expand homeownership six years ago. The U.S. Census Bureau reports that the percentage of households headed by homeowners fell from a record 69.1 percent in 2005 to 67.8 percent this year--the sharpest decline in 20 years. The figures reflect an important shift in national housing trends, with the gains in homeownership achieved under the Bush administration all but wiped out over the past couple of years. Meanwhile, many new apartment residents are having a tough time getting into decent apartments as vacancy rates decrease, rents climbs and more residents opt to stay put. William C. Apgar, a senior scholar at the Joint Center for Housing Studies at Harvard University, remarks, "The bloom is off of homeownership. We're seeing more dramatic growth in renters and a decline in the number of owners. People are beginning to understand that homeownership can be a very risky venture." Apgar adds that the Joint Center recorded a surge of 1.5 million apartment residents from 2005 to 2007 alone. White House spokesman Tony Fratto said that the administration had hoped the homeownership gains would stick, adding, "We're disappointed that conditions in the housing market didn't allow those gains to be sustained. But we're optimistic that they can return." Nationwide, rents have risen nearly 11 percent since 2005, the year homeownership rates began to decline. That growth is slowing, reports the Bureau of Labor Statistics.
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Urban Housing Rises Amid High Gas Prices and Other Factors
Digested From "Suburbs a Mile Too Far for Some"
Wall Street Journal (06/17/08) P. A18; by Jonathan Karp
Arthur Nelson of Virginia Tech's Metropolitan Institute attributes rising demand for urban housing to higher gas prices and demographic shifts. These changes are occurring among baby boomers, who increasingly are downsizing from suburban homes to urban condominiums, and millennials, who are shunning the cul-de-sac environment that many grew up in, according to housing consultant Todd Zimmerman of N.J.-based Zimmerman/Volk Associates Inc. Experts note that the second-largest expense for families is transportation, prompting many in this demographic to consider moving to the city as well, allowing them to live closer to their jobs and save on gasoline costs. Suburban sprawl will not come to an end anytime soon, as many suburbs continue to create city centers to attract jobs. However, experts predict increased demand for urban mixed-use, mixed-income development as more cities focus their attention on commuter-rail systems. Experts note that cities must contend with the challenge of enhancing public transit and providing developer incentives to spur building on non-traditional housing tracts. Many cities, including Denver, are building multifamily housing and retail near public transit, with Reconnecting America anticipating a jump in households residing in such developments to 15 million from 6 million by 2030.
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Developers Expected to Build More Denver-Area Apartments
Digested From "Developers Expected to Build More Denver-Area Apartments"
Denver Business Journal (06/16/08)
Hendricks & Partners expects Denver-area apartment construction to increase this year as developers move away from a weakening condominium market. According to the company's researchers, developers built 2,262 units in 2007, and they expect that number to reach between 2,500 and 3,000 units both this year and next. A total of 217 new units were completed in the first three months of this year. Locally, the slowing for-sale housing market means that some potential buyers are hesitant about taking the step toward ownership. The overall average vacancy rate fell to 5.9 percent by the end of March--the lowest first-quarter rate since 2001. This increased demand has led to higher monthly rents, with the average rent rising 2.3 percent from the first quarter of 2007. By the end of 2009, Hendricks & Partners predicts the average apartment rent will pass $900 and set a new all-time high. Hendricks & Partners now warns that that apartment demand will likely decline because of increased competition from condos and single-family homes being rented out. Hendricks & Partners specializes in brokering apartment sales and tracking information on sales and rentals.
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Albany-Area Apartment Communities Seeking Higher Rents
Digested From "Apartment Complexes Seeking Higher Rents "
Albany Times Union (NY) (06/21/08) by Chris Churchill
A new Sunrise Management and Consulting report shows that the average apartment rent sought this spring by larger apartment communities in the Albany, N.Y., metro area was $884 a month--a modest 3.8 percent increase from a year earlier. In the fall of 2007, the average apartment rent sought was $873 per month. Sunrise President Jesse Holland attributed the rent increase partly to the slowing real estate market, remarking, "A lot of people who might have bought houses are holding back." Holland further noted the continued tightness of the market. Recent U.S. Census Bureau data confirms that the Albany-Schenectady-Troy metropolitan area had a vacancy rate of just 4.9 percent last year--the fifth-tightest market among the country's 75 largest metro areas. In addition, Albany County had the highest per-square-foot rent at 96 cents--three cents higher than 2007. Not far behind was Schenectady County at 95 cents, according to the survey. To compile the bi-annual report, Sunrise contacted the owners and managers of 120 apartment communities, all of which had at least 30 units.
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Grand Junction, Colo., Deals With Difficult Apartment Market
Digested From "Apartments Difficult to Find, High-Priced for Those Who Do"
Grand Junction Sentinel (CO) (06/19/08) by LeRoy Standish
The Colorado Division of Housing reports that the apartment vacancy rate in Grand Junction rose one-tenth of 1 percent in the first three months of this year to 1.8 percent. Agency officials state that the numbers are indicative of a tight rental market, which means fewer available apartments and rising rents. The average apartment rent in the Grand Junction area is $648 a month, up from $496 a month in the first quarter of 2003. Meanwhile, the vacancy rate has bounced between 1.5 percent and 2.1 percent for the past year. According to Cindy Hoppe of locally based Bray Property Management, a rate of 1.8 percent indicates new residents are moving in almost as quickly as old ones are moving out. She states, "It is a sign that we need more affordable housing." Grand Junction has among the lowest vacancy rates statewide, trailing only Buena Vista (1.2 percent), Salida (1.3 percent) and Aspen and Glenwood Springs (1.4 percent each). Comparing Grand Junction to the Front Range, the apartment vacancy rate is 5.9 percent in the Denver metro area and 6.4 percent in Adams County.
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Associated Estates Realty Corporation Declares Common Share Dividend
Digested From "Associated Estates Realty Corporation Declares Common Share Dividend"
PrimeNewswire (06/18/08)
Associated Estates Realty Corp. has declared a quarterly dividend of $0.17 per share, which will be payable August 1 to shareholders of record as of July 11. A member of the Russell 2000 Index, the Ohio-based REIT directly or indirectly owns, manages or is a joint venture partner in 54 apartment communities in nine states. Together, these communities contain 13,396 rental units.
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AvalonBay Facing Challenges
Digested From "AvalonBay Facing Challenges"
Zacks Equity Research (06/18/08) by Greg Sukenik
Zacks Equity Research continues to rate AvalonBay Communities' shares a "hold" because of a still-high comparative valuation and what could be worsening multifamily housing fundamentals. While new apartment construction is down, more unsold condominiums and houses are now being rented and that adds significant competition to the high-end rental market. In addition, U.S. job growth has been sluggish at best--another factor that is negatively affecting apartment demand in some markets. Nevertheless, AvalonBay posted positive results in this year's first quarter, with funds from operations per share increasing 11 percent over the same period a year earlier. Growth has been driven by such factors as higher rental rates and contributions from new apartment communities.
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Led by Multifamily Building Booom, Housing Starts in Northeast Soar 61.5 Percent
Digested From "May Housing Starts Jump in Northeast, Fall Elsewhere"
Philadelphia Inquirer (06/18/08) by Alan J. Heavens
Led by a boom in multifamily building activity, the Census Bureau confirms that housing starts in the Northeast soared 61.5 percent in May from the previous month. Nationally, though, building permits decreased 1.3 percent in May from April and 36.3 percent from May of last year; while new construction was off 3.3 percent month-to-month and 32.1 percent year-over-year to a rate of 975,000 units. Global Insight Inc.'s Patrick Newport notes that estimates of regional housing starts were not as reliable as regional permits estimated, adding, "A whopping 153 percent jump in multifamily starts, for example, is behind the increase in starts for the Northeast. It is impossible to tell, however, if the weather, sampling error or a developer pouring concrete on a major multi-unit project was behind May's increase."
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Essex Property Trust Declares Quarterly Distributions
Digested From "Essex Property Trust Declares Quarterly Distributions"
Marketing AdVents (06/08)
Essex Property Trust Inc.'s board of directors has declared a regular quarterly cash dividend of $1.02 per common share, which will be payable July 15 to shareholders of record as of June 30. The board further declared quarterly distributions of $0.30469 and $0.48828 per share on its 4.875 percent Series G Cumulative Convertible Preferred shares and its 7.8125 percent Series F Cumulative Redeemable Preferred shares, respectively. The California-based REIT invests in apartment communities located in highly desirable, supply-constrained West Coast markets. Essex currently has ownership stakes in 133 communities, containing 26,963 apartments. It has another 1,658 units in various stages of development.
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Colonial Properties Selling $500 Million of Multifamily Housing and Retail
Digested From "Colonial Selling $500M of Retail, Multifamily"
GlobeSt.com (06/16/08) by Amy Wolff Sorter
Colonial Properties Trust confirms that it is putting 18 multifamily housing communities with 4,000 apartments and three shopping centers totaling 700,000 square feet on the selling block. These moves are as part of the Alabama-based REIT's asset recycling program. The estimated value of the portfolio is $450 million to $500 million. The apartment communities are located in six states--North and South Carolinas, Florida, Georgia, Texas and Virginia. All were added to the Colonial portfolio in the $650-million acquisition of Cornerstone Realty Income Trust four years ago. Colonial treasurer Jerry Brewer says the multifamily portfolio is currently 96 percent occupied and has been divided among three brokerage companies for the sales campaign. Colonial Properties expects to entertain both single and multiple offers, with deals expected to close in the second half of the year. The retail properties up for sale are in various stages of development and will be packaged as joint venture opportunities upon completion.
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Legislative/Legal News
Oregon County Aims to Turn Apartment Residents Into Recyclers
Digested From "Marion County Aims to Turn Apartment Renters Into Recyclers"
Statesman Journal (Salem, Oregon) (06/20/08) by Beth Casper
In Oregon, a new Marion County pilot program aims to get apartment residents to increase their recycling. In early July, residents in 20 apartment communities will receive a recycling package that includes stickers, refrigerator magnets and a recycling flier in Spanish and English. In addition, some units will receive a recycling bin or a recycling tote bag. According to the county, if apartment residents were to increase their recycling by 15 percent, more than 4,300 tons of material would be diverted from the trash per year. According to a 2005 waste composition study, 15 percent of Marion County's garbage was paper, 10 percent was plastic and 7 percent was metal. Those three materials are all recyclable. If the pilot program is successful, Marion officials plan to expand it countywide. A survey of the residents in the program will determine whether apartment communities countywide will get a bin, tote bag or neither. Getting apartment residents to recycle has some significant challenges, notes Oregon Department of Environmental Quality analyst Peter Spendelow. Occupants in rental apartments turn over frequently, and in many cases do not speak English and are unfamiliar with recycling. He adds, "The other problem that you have is the way that garbage service is set up. Garbage service is paid as part of rent, so there is no incentive to recycle." Campus Court Apartments Manager Deborah Gregson plans to include the recycling bins on her move-in sheet that lists everything that comes with the apartment unit. In addition, she plans to have a booth for Marion County to provide information about recycling at her annual resident appreciation party.
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California Apartment Owners Settle Discrimination Suit
Digested From "East Palo Alto Apartment Owners Settle Discrimination Suit"
San Mateo County Times (CA) (06/21/08)
The California Department of Fair Employment and Housing reports that the owners of an East Palo Alto apartment community paid $25,000 to settle a lawsuit that alleged the only prospective residents they contacted were white women. In its lawsuit, the agency alleged that Joseph Balaty and Fred Kiani discriminated against black men by ignoring their applications and phone calls while responding only to those from white females. Without admitting liability, the two Kiani settled the suit out of court and have agreed to pay $25,000. The lawsuit was sparked by an incident that occurred in November 2004, when Kiani ignored a resident application and numerous phone calls from a 64-year-old black male. White had held a secure job as an office assistant for the previous 11 years and had good credit, noted Mary Prem, director of fair housing at Project Sentinel, the housing equity nonprofit that subsequently investigated his complaint. The first of the 11 people Project Sentinel sent to the apartment community posing as potential residents was a black man who called the manager 11 times between Feb. 2 and Feb. 19, 2005. Calls left by male testers and black female testers were also not returned. However, when a white woman called and was leaving a message, Prem noted that the manager picked up the phone. In fact, according to the department, all five white female testers "received active encouragement from one of the owners."
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Beaumont Considering Raising Water Rates at Apartment Communities
Digested From "Beaumont Considering Raising Water Rates at Apartment Complexes"
KFDM 6 (TX) (06/17/08) by Ashley Rodrigue
The Water Utilities Department in Beaumont is pushing to raise water rates for residents of apartment communities and mobile home parks, who currently pay lower prices than homeowners. The increase would give the Texas city $1 million more in revenue each year, but Water Utilities Department director Dr. Hani Tohme says the issue is mostly about fairness. Beaumont renters have seen the cost of water increase only 2 percent since the mid-1980s. Tohme says the new proposal, which could take effect as early as January, would raise the minimum rate for water and sewage in apartment complexes and mobile homes to a level equal to that of homeowners. To soften the blow, the city will offer 1,000 free gallons of water for every unit. The average monthly utility bill would go up by just $7 to $9, according to Tohme.
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Pennyslvania Program Aims to Preserve Affordable Apartments
Digested From "'Smart Rehab' Will Preserve Affordable Apartments"
Baltimore Business Journal (06/16/08)
The Pennsylvania Housing Finance Agency (PHFA) and West Penn Power Sustainable Energy Fund (WPPSEF) are teaming to help preserve affordable housing in 23 counties in the state's western and central regions. The two organizations will lower heating and cooling costs for multifamily housing communities containing affordable units in an effort to prevent people from being forced out by steep energy prices. The "Preservation Through Smart Rehab Program" will provide funding to allow apartment community owners to assess energy use and make the necessary retrofits. The partners believe that energy assessments will help enhance efficiency and keep costs down to consumers. Up to $600,000 will be spent over the next two years to help at least 30 housing communities. "PHFA's focus on improving the quality of affordable housing is the perfect match for our residential energy efficiency programs," said WPPSEF President Michele Ponchione. "Together, we can build the quality of older apartments while reducing energy usage."
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