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Judge Strikes Down Dallas Suburb's Immigrant Apartment Ban
Industry News
NAA Survey Finds Most Apartment Residents Plan to Stay Put
Charlotte's Apartment Market Heats Up
Marcus & Millichap Expects Costs to Keep KC Apartment Construction Low
UDR Announces Key Leadership Changes
Report Suggests Seattle Apartment Rates Will Climb
Regional Apartment Players Hunt Deals
Unico Properties Brings Prefab Apartments to Seattle
Philadelphia's Apartment Sector Up
Legislative/Legal News
California Senate Approves Smoking Ban in Apartments
Multifamily Housing Owners Feel the Housing Pinch
Grandbridge Real Estate to Operate as a Multifamily Accelerated Processing Lender
Mortgage Bailout at the Expense of Apartment Residents?
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Judge Strikes Down Dallas Suburb's Immigrant Apartment Ban
Digested From "Federal Judge Strikes Down Immigrant Rental Ban"
Fort Worth Star-Telegram (05/29/08) by Patrick McGee
U.S. District Judge Sam Lindsay ruled May 25 that Farmers Branch, Texas' attempts to ban illegal immigrants from renting apartments are unconstitutional. In a 35-page decision, the federal judge wrote: "The court concludes that only the federal government may determine whether an individual is legally in the United States." Michael Jung, a Dallas-based lawyer representing the city, said the city will eventually try to implement another version of the ban that he believes will satisfy the court's constitutional concerns. Farmers Branch's attempts to kick illegal immigrants out of city apartments transformed this Dallas suburb into an epicenter of the country's immigration debate. Local voters supported the ordinance by a 2-to-1 margin. The ordinance Lindsay struck down would have required apartment community managers to demand either immigration papers or signed declarations of U.S. citizenship. Fearing that Lindsay would strike down the ordinance, Farmers Branch City Council members passed a new one earlier this year that would require prospective apartment residents to give copies of their immigration or citizenship papers to a city building inspector, who would then have them checked by federal immigration authorities. The new ordinance would go into effect 15 days after Lindsay ruled on the older version of the rental ban. City Council members believe it will be constitutional because it asks the U.S. government to decide who is in the country legally.
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NAA Survey Finds Most Apartment Residents Plan to Stay Put
Digested From "Survey: 69 Percent of Renters Plan to Continue Renting for Up to 5 More Years"
BuildingOnline (05/29/08)
A new National Apartment Association (NAA) survey finds that 67 percent of current apartment residents will not make the jump to homeownership in the next year and 69 percent plan to stay in place for as many as five years. Instead, NAA research notes that apartment occupancy rates have posted the largest annual increase (approximately 1.5 million units) ever dating back to 1965. In turn, this increase has generated an all-time record high number of rental housing units in the country--34.7 million units. NAA President Douglas Culkin comments, "The country is deep into the discussion of the economic fallout of subprime mortgage lending. However, little attention has been paid to how the crisis is impacting people's choices to stay in rental homes and wait out the storm. The results of this survey reflect what our membership is experiencing across the country: renters are not eager to take a chance on homeownership this year." Among the key findings in the NAA survey: one, consumer confidence is low and is likely to get worse before improving; two, apartment residents are not eager to take a chance on homeownership anytime soon; and, three, a majority--71 percent--of respondents felt that there are legitimate advantages to renting over owning in the current market.
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Charlotte's Apartment Market Heats Up
Digested From "Charlotte's Apartment Market Heats Up"
Charlotte Observer (NC) (06/01/08) by Jefferson George; Lauren Berry
Charlotte's housing market has cooled just as the local apartment sector is heating up. The number of apartments proposed or under construction locally is at a record high, as new communities seek to capture everyone from young adults to those not ready for homeownership. Real Data reports that almost 20,000 apartments were in the Charlotte metro area's pipeline as of the end of February, an increase from fewer than 16,000 a year earlier. As supply grows, developers, property managers and apartment residents say demand could also swell. Those who opt to rent instead of buy either cannot get the easy mortgages they once did or they are waiting for the housing crisis to wane so the houses they buy will not lose value. From 2002 to 2004, Real Data confirms that the apartment vacancy rate for the Charlotte area regularly topped 12 percent. That rate has dipped in recent years, even though a new wave of apartment construction has pushed vacancies higher in 2008. Even so, Greater Charlotte Apartment Association executive director Ken Szymanski notes that apartment owners are beginning to see longer stays by residents. He adds, "Buying a house as a vehicle for wealth-building is not a guarantee by any means. All of those things are being re-examined by consumers."
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Marcus & Millichap Expects Costs to Keep KC Apartment Construction Low
Digested From "Report: Costs Will Keep KC-Area Apartment Construction Low"
Kansas City Business Journal (05/30/08)
Marcus & Millichap Real Estate Investment Services reports that rising capital and construction costs are likely to limit Kansas City-area apartment construction in 2008 to the lowest level in over two decades. The company's newly released forecast predicts builders will add 500 units this year, a decrease from 1,200 in 2007. With area employment expected to rise by 14,200 jobs in 2008, apartment vacancies are likely to decline 0.7 percentage points to 5.7 percent. Effective rents, meanwhile, will likely climb by 3 percent to $655 a month. According to Marcus & Millichap researchers, Kansas City's positive long-term economic outlook should continue to attract apartment investors for the foreseeable future. Capitalization rates have decreased to nearly 8 percent on apartment purchases, but are still high enough to interest both local and out-of-town buyers.
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UDR Announces Key Leadership Changes
Digested From "UDR Announces Key Leadership Changes"
Business Wire (05/30/08)
David Messenger has been appointed CFO at UDR Inc., effective June 2. Also effective that day, Thomas Simon will begin serving as the Denver-based apartment REIT's senior vice president of finance and treasurer. The former is a six-year company veteran who previously served as president of TRC Management Company in Chicago from 2000 to 2002. He began his career in Ernst & Young LLP's real estate division in 1993. For his part, Simon is a two-year company veteran who previously served as treasurer for Prentiss Properties Trust where he worked for more than two decades. Messenger succeeds Michael Ernst, who is stepping down as CFO because of travel demands and family concerns. UDR specializes in owning, operating, developing and redeveloping multifamily housing in targeted U.S. markets. As of the end of this year's first quarter, the REIT owned 43,559 apartments and had another 5,500 or so under development.
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Report Suggests Seattle Apartment Rates Will Climb
Digested From "Report Suggests Apartment Rates Will Climb"
KING 5 News (Wash.) (05/29/08) by Chris Daniels
A new Marcus & Millichap report suggests that Seattle apartment residents may want to lock in their lease rates soon. Researchers report that there has been so much focus locally on building condominiums that the apartment sector has grown rather lean. Until some new apartment communities are added to the existing stock, they contend, rents will likely continue going up. Greg Wendelken, head of the firm's Seattle office, reports, "The Seattle apartment market is still one of the most vibrant apartment markets in the country. . . . We've had absorption, lots of job growth, with no new supply--but you know our demand and supply is out of whack." The new report by Wendelken's firm suggests apartment vacancy rates in and around Seattle are currently below 5 percent. This contributed to apartment rents rising an average of more than 6 percent locally over the past year. Wendelken adds that 48 projects are in various stages of planning and development throughout the area.
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Regional Apartment Players Hunt Deals
Digested From "Regional Apartment Players Hunt Deals"
Wall Street Journal (05/28/08) P. C12; by Nick Timiraos
Credit may be scarce in many property sectors, but financing is still available for acquiring apartment communities thanks to Fannie Mae and Freddie Mac--two government-sponsored enterprises that have a mandate to provide market liquidity for affordable housing and also see multifamily housing deals as a source of profit in an otherwise bleak market. Meanwhile, competition facing such regional investors as Berkshire Realty Group LLC has significantly diminished as the major players that previously ruled the multifamily housing sector are no longer driving the dealmaking activity. The apartment sector has held up favorably when compared with the broader real estate landscape. Real Capital Analytics reports that retail and office sales fell by 70 percent and 80 percent, respectively, in this year's first quarter from the same period a year ago versus a 40-percent dip in multifamily sales. The demand for rental apartments also remains healthy from would-be home buyers unable to get mortgages and homeowners forced out in foreclosures. According to Reis Inc., apartment rents posted a solid 1-percent gain during the first three months of this year.
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Unico Properties Brings Prefab Apartments to Seattle
Digested From "How Will Market for Prefab Apartments Stack Up in Seattle?"
Seattle Times (05/27/08) by Eric Pryne
Unico Properties, formerly a developer of office spaces, is eyeing Seattle and Portland as potential markets for its new modular, prefabricated apartments. The factory-built "Inhabit" units can be stacked in any pattern like children's blocks and are 15 percent less expensive to build than traditional "site-built" apartments. Unico plans to construct a 62-unit development, complete with parking and six "live-work" spaces, on Dexter Avenue North in Seattle. Company President and CEO Dale Sperling believes the 480- to 675-square-foot apartments will appeal to young workers who desire an urban lifestyle and earn modest incomes. "Eighty-five percent of the people who work downtown aren't in corner offices in suits," says the CEO. Unico's units will be priced for those earning between 80 and 150 percent of the area median income, or $50,000 for an individual. "This whole concept [of green affordable housing] belies the notion that modular, factory-built housing has to be the equivalent of Aunt Lil's double-wide," says Sperling.
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Philadelphia's Apartment Sector Up
Digested From "With Housing Down, Rentals Are Up"
Philadelphia Inquirer (05/18/08) by Alan J. Heavens
Philadelphia's rental housing market is picking up as home sales fall and more would-be buyers wait before making purchases. Marcus & Millichap Real Estate Investment Services corporate affairs manager Spencer Yablon says apartment vacancies for the eight-county region hovered around 4 percent in 2006 and 2007, versus a nearly 11 percent national vacancy rate. He notes that developers of for-sale condominiums have been renting out units while they wait for the market to rebound, creating a "shadow rental market." Marcus & Millichap expects a 4.5-percent jump in asking rents to $1,051 per month and a 4.4-percent increase in effective rents to $1,014 per month this year. A rise in demand is allowing landlords in Center City to dictate rental rates, with Prudential Fox & Roach's John Featherman noting, "I've been showing units that haven't been upgraded in many years that are commanding big rents." Though rental demand is robust in the suburbs, high construction costs mean fewer projects are built in those areas. Yablon predicts a 0.7-percent jump in rental stock this year, as 1,300 units are completed; but he suspects a weaker job market will boost the rental vacancy rate slightly to 4.2 percent.
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Legislative/Legal News
California Senate Approves Smoking Ban in Apartments
Digested From "California Senate Approves Smoking Ban in Apartments"
New Kerala (India) (05/31/08)
Late last week, the California Senate passed a proposal that would allow apartment owners to prohibit smoking in communities they own to protect non-smoking residents from secondhand smoke. The bill now goes to the state assembly for consideration. The California Apartment Association, which represents approximately 50,000 apartment property owners statewide, supports the proposal. On the opposing side is the Western Centre on Law and Poverty (WCLP), which contends that the proposal discriminates against the poor, the disabled and people of color who smoke and rent at higher rates than other segments of California's population.
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Multifamily Housing Owners Feel the Housing Pinch
Digested From "Housing Woes Hit Multifamily Owners"
Boston Herald (06/02/08)
In some parts of the country, multifamily housing owners are getting hit hard in the residential property slump partly due to lending standards that are more stringent than those for single-family homes. Massachusetts, which has more than 200,000 two- and three-family communities often known as "triple-deckers," has recorded the steepest decline among the three southern New England states where such homes comprise substantial chunks of the overall housing supply. While sales of single-family residences in the state fell 10 percent last year, sales plunged 35 percent for two-family homes and 43 percent for three-families. The multifamily housing woes have forced many residents who rent out of their dwellings along with the owners as mortgage firms have the legal right to force residents out even if they have met their lease obligations. The National Low Income Housing Coalition, a Washington-based affordable housing advocacy group, estimated in May that at least 45 percent of the housing units in the final stage of foreclosure in Massachusetts, Connecticut, New Hampshire and Rhode Island were occupied by renters whose owners had fallen behind on their mortgage payments.
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Grandbridge Real Estate to Operate as a Multifamily Accelerated Processing Lender
Digested From "Grandbridge Real Estate Capital Gets Boost From HUD"
Charlotte Business Journal (05/30/08)
Grandbridge Real Estate Capital recently received HUD approval to operate as a "Multifamily Accelerated Processing" (MAP) lender for multifamily housing and healthcare programs. The certification enables Grandbridge underwriters to submit applications for MAP-approved loans, allowing the North Carolina-based firm to provide faster access to Federal Housing Authority (FHA) loans. FHA-funded multifamily housing communities and healthcare properties include market-rate and affordable housing, along with manufactured home developments, assisted-living facilities, nursing homes, senior housing and other specialty housing products. A division of BB&T Corp., Grandbridge ranks as one of the country's biggest commercial and multifamily mortgage bankers.
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Mortgage Bailout at the Expense of Apartment Residents?
Digested From "The Fed's Latest $300 Billion Baby"
Seattle Post-Intelligencer (05/29/08) by Deroy Murdock
Scripps Howard News Service columnist Deroy Murdock writes that Congress' efforts to rescue mortgage holders will come at the expense of "America's 83 million equity-starved renters who only fantasize about homeownership." Congress is currently considering legislation to provide a federal backstop for $300 billion in refinanced home loans. With the new program expected to cover just 500,000 to 1 million homes, these taxpayer-insured mortgages would average $300,000 to $600,000--"not exactly low-income housing," Murdock laments. The bailout would benefit those whose home prices have sunk below the value of their mortgages. Murdock notes that while elected officials routinely ignore apartment residents, "people like us inhabit 34.7 percent of America's 108 million households, according to the National Apartment Association. More than one-third of U.S. homes are rented, yet rent payments are not tax-deductible, as are mortgages. Where is the social justice in that?" Murdock concludes that this proposed bailout will "suck tax money out of renters' bank accounts and swallow savings that some are salting away for home purchases."
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