Headlines
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IFC Fire Safety Retrofit Requirements Could Be Costly
Industry News
More Fla. Apartment Residents Are Negotiating for Better Rent 
Jump-Starting Affordable Housing Development
Rental Housing Increases in Tough Market
Mid-America's CFO Simon Wadsworth to Retire
Napa Apartment Market Softens
Pittsburgh Again Ranks Tops for Apartment Occupancy
Downtown Chicago Apartments Perform Well in Recession
Concessions Help Upscale Buildings Fill Apartments in D.C. Area
Top 15 Rural Areas to Retire
Losing the Human Touch With Social Networking
Mid-America Apartment Communities Inc. Sets Quarterly Dividend
Sioux Falls Apartment Vacancy Rate Doubles
Group Starts New Apartment Listing Business in Boston
Legislative/Legal News
New Credit Scoring Model May Boost Some Borrowers' Scores
Strategies for Those Apartment Owners on the Defensive
Top Story
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IFC Fire Safety Retrofit Requirements Could Be Costly
Digested From "IFC Fire Safety Retrofit Requirements Could Be Costly"
NAA News Release (09/01/2009)
The National Apartment Association (NAA) has received reports from affiliate associations that local governments are considering the adoption of the 2009 International Fire Code (IFC), which contains several expensive fire safety retrofit requirements. These requirements, if adopted in their unamended form, will cost members several thousands of dollars per property. NAA members and affiliates are strongly encouraged to investigate whether legislators and regulators at the state and local level are considering adoption of the 2009 IFC.
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Industry News
More Fla. Apartment Residents Are Negotiating for Better Rent
Digested From "Negotiate Your Rent"
Fox 13 WVTV (Tampa Bay, Fla.) (08/23/09) by Eric Seidel
The economic crisis is affecting just as many people who rent apartments as own homes. With apartment owners struggling to maintain occupancy rates, more and more residents are realizing they have the advantage in re-negotiating for lower rent. This is especially true in such areas as Tampa where more and more owners are sitting down with residents and bargaining. A Fox 13 WVTV report interviews local attorney Dale Appell and consumer lawyer Eric Seidel, who detail several ways residents can go about approaching owners regarding such matters.
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For talking points that address residents seeking to renegotiate their rent, click here.
Jump-Starting Affordable Housing Development
Digested From "Jump-Starting Affordable Housing Development"
UNITS (09/09) by Jeffrey Lee
A couple of new programs created through the American Recovery and Reinvestment Act are providing sorely needed federal stimulus funding to jump-start stalled affordable apartment communities. The U.S. Treasury-administered Section 1602 Program and the HUD-run Tax Credit Assistance Program (TCAP) will together provide billions of dollars to get affordable housing communities that are unable to attract traditional Low Income Housing Tax Credit (or LIHTC) investment. In an economy where new apartment construction is practically non-existent, these developments stand out as exceptions. In addition to delivering new affordable rental units, such new communities will also create employment opportunities in management, development and construction. Michelle Kitchen, Director of Government Affairs for the National Affordable Housing Management Association, remarks, "We hope that the bill will allow the developments to move forward and buy us time until the market gets back on its feet. This will help us survive."
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Rental Housing Increases in Tough Market
Digested From "In a Tough Market, More Homeowners Turn to Leasing"
Detroit News (08/29/09) by Louis Aguilar
According to U.S. Commerce Department statistics dating back to 1965, the occupancy rates in U.S. rental housing have seen the biggest annual increase in history -- 1.5 million units. The increase has generated an all-time record number of rental housing units nationwide, now totaling approximately 34.7 million units. Meanwhile, a May report by the National Apartment Association (NAA) determined that 67 percent of current apartment residents nationally do not plan to purchase their own home within the next year. The NAA survey further found that 71 percent of adults feel there are advantages to renting over owning in the current housing market. NAA President Douglas Culkin comments, "The country is deep into the discussion of the economic fallout of sub-prime mortgage lending. Renters are not eager to take a chance on homeownership this year. If the economy improves, that trend may abate, but, for now, people are generally staying put."
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Mid-America's CFO Simon Wadsworth to Retire
Digested From "Mid-America's CFO Simon Wadsworth to Retire"
Memphis Business Journal (08/27/09)
Simon Wadsworth has announced his retirement as CFO of Mid-America Apartment Communities Inc. (MAA), effective Jan. 1. The 62-year-old is retiring as part of the company's "long established succession planning program," reports MAA Chairman and CEO Eric Bolton. He will be succeeded by treasurer and director of financial planning Albert Campbell III, who joined the Memphis-based apartment REIT 11 years ago as vice president of financial planning. He was promoted to senior vice president status and treasurer in 2003. MAA is a self-managed, apartment-only REIT.
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Napa Apartment Market Softens
Digested From "Apartment Market Softens"
Napa Valley Register (08/29/09) by Kevin Courtney
In California, Napa's apartment vacancies are on the rise. According to city numbers, the vacancy rate for communities with more than 20 rental units was around 4 percent during the month of July, more than twice the 1.6 percent rate measured a year earlier. Property managers report that the sluggish economy is the primary reason for the growing vacancy rate. People who have lost their jobs are moving out of the area entirely or are doubling up with roommates or family, thus reducing the demand for apartments. At the same time, a growing number of families are moving out of apartments and into an expanding inventory of rental houses. Finally, some who had been renting are taking advantage of lower home prices and a first-time buyers' tax credit to become first-time buyers. Napa's apartment vacancy rate is the highest it has been since 2005, when the rate was 5.6 percent. During that year, the vacancy rate rose as a number of new apartment communities came onto the market. Mindy Wyman, an apartment manager at Hedgerow Property Management, notes that higher vacancies have frozen some apartment rents and caused others to decline. She adds, "Rents definitely are not going up. I've heard that a lot of wineries are laying people off. I think people are leaving Napa altogether."
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Pittsburgh Again Ranks Tops for Apartment Occupancy
Digested From "Pittsburgh Again Ranks No. 1 Nationwide for Apartment Occupancy"
Pittsburgh Tribune-Review (PA) (08/26/09) by Sam Spatter
A year ago, Texas-based M/PF Research ranked Pittsburgh No. 1 for the highest apartment occupancy rate nationwide. The market has eased somewhat since then, although area apartment owners still have few vacancies. In addition, Steeltown has now ranked No. 1 for the second consecutive year with the highest rental occupancy rate among big U.S. cities as of June 30. The city's apartment communities have an occupancy rate of 96.6 percent, a full percentage point below its top position in the summer of 2008. It is still the best by a fairly substantial margin. Greg Willett, M/PF's vice president of research and analysis states, "Pittsburgh simply is losing fewer jobs than most other metro areas, so the housing market is holding up better. Furthermore, Pittsburgh is one of just a handful of markets nationally where rents are still increasing." Monthly apartment rents rose 1.3 percent during the year ended June 30, reaching an average of $860. Broken down by type, average rents are $535 a month for efficiency units, $779 for one-bedroom apartments, $907 for two-bedroom apartments and $1,181 for three-bedroom units. At least 12 downtown Pittsburgh apartment communities have occupancy rates in the mid- to high-90 percent range. Some are even fully occupied, with average rents in the $1,200-per-month or more range. Cynthia Kamin, senior vice president of CB Richard Ellis/Pittsburgh, adds, "Out-of-town investors still are interested in local apartment buildings, but they are now getting more competition from local buyers." In previous years, 70 percent of buyers were from out of town. Today, they comprise around 50 percent.
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Downtown Chicago Apartments Perform Well in Recession
Digested From "Rental Rebound"
Crain's Chicago Business (08/26/09)
The apartment sector has traditionally taken its share off hits during times of economic recession given the fact that it generally tracks the labor market. This has not been the case, however, in the downtown Chicago market where both rents and occupancy rates have risen for a second consecutive quarter. So far in 2009, Appraisal Research Counselors confirms that the average downtown apartment rent is averaging $2.17 per square foot. Meanwhile, the research firm puts downtown Chicago's overall apartment occupancy rate at 93.4 percent. AMLI Residential Partners CEO Greg Mutz was interviewed for this special video report, along with Crain's Chicago senior report Eddie Baeb.
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Concessions Help Upscale Buildings Fill Apartments in D.C. Area
Digested From "Concessions Help Upscale Buildings Fill Apartments"
Washington Post (08/25/09) by Dina ElBoghdady
Delta Associates confirms that an unusually high number of upscale apartment communities have opened in the Washington, D.C., metropolitan area this year, resulting in an intense scramble among owners and managers to fill vacancies. The latest Delta Associates research shows that about 47 communities were on the market for the first time as of June versus just 14 at the same time three years earlier. The new communities comprise 14 percent, or one in seven, of the region's high-end apartment communities. Julie A. Smith, a partner at the Bozzuto Group, notes, "The thing about concessions is they are contagious. All you need is a few owners to start doing them and everyone jumps in." Bozzuto owns and manages dozens of apartment communities in and around Washington. Apartment communities around the new Nationals Park stadium, for example, collectively have offered the deepest concessions since Delta began keeping track of such data 18 years ago. Some of those communities gave away the equivalent of four months' rent in concessions. The current apartment market reverses a trend of three years ago, when there was an apartment shortage at the tail end of the housing boom. In the boom era, developers cut back on the number of apartment communities they started and converted many existing rental communities into for-sale condominiums. The opposite is proving true today. More and more condos are being converted into rental units, and apartment communities begun a few years ago are now entering the market.
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Top 15 Rural Areas to Retire
Digested From "Fifteen Top Rural Areas to Retire"
MarketWatch (08/25/09)
According to a newly published report by the U.S. Department of Agriculture's Economic Research Service, the rural population age 55-75 will increase by at least 30 percent between 2010 and 2020 if baby boomers follow similar migration patterns to those of previous generations. Geographically, the retirement-aged population is projected to increase 32.1 percent in the Northeast, 31.8 percent in the West, 26.1 percent in the South, and 21.9 percent in the Midwest. John Cromartie, co-author of the "Baby Boom Migration and Its Impact on Rural America" report, went on to list the top 15 non-metropolitan counties nationwide in which people will want to live out their golden years. They included such North Carolina counties as Dare, Graham and Jackson, along with such Colorado counties as Hinsdale, Jackson and Mineral. Also making the top 15 were Mono County, Calif.; Monroe County, Fla.; and Valley County, Idaho.
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Losing the Human Touch With Social Networking
Digested From "Why Gen-Y Johnny Can't Read Nonverbal Cues"
Wall Street Journal (08/28/09) by Mark P. Bauerlein
Tasked with chronicling communications differences among the different generations in the workplace and other social settings, Emory University English Professor Mark Bauerlein writes: "We live in a culture where young people -- outfitted with iPhone and laptop and devoting hours every evening from age 10 onward to messaging of one kind and another -- are ever less likely to develop the 'silent fluency' that comes from face-to-face interaction." Bauerlein laments that too many of today's cutting-edge communication tools involve the exchange of written words alone. While phones at least allow the transmission of tone of voice, pauses and so forth, this is not the case in text-dependent communications. Bauerlein states: "Users insert smiley-faces into emails, but they don't see each others' actual faces. They read comments on Facebook, but they don't 'read' each others' posture, hand gestures, eye movements, shifts in personal space and other nonverbal -- and expressive -- behaviors." Some in the workplace are beginning to take steps to improve the situation. In Silicon Valley, for instance, several companies have implemented "topless" meetings in which laptops, iPhones and other similar tools are banned to combat the problem of "continuous partial attention." With a device close by, attendees at work meetings have proven time and again they are unable to devote their full attention to who is speaking. Bauerlein remarks, "It's too easy to check e-mail, stock quotes and Facebook. While a quick log-on may seem, to the user, a harmless break, others in the room receive it as a silent dismissal." Consequently, such devices must now be checked at the door. Bauerlein is the author of "The Dumbest Generation: How the Digital Age Stupefies Young Americans and Jeopardizes Our Future."
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Mid-America Apartment Communities Inc. Sets Quarterly Dividend
Digested From "Mid-America Apartment Communities Inc. Announces Quarterly Common Dividend"
PRNewswire (08/27/09)
Mid-America Apartment Communities Inc.'s (MAA's) board of directors has declared a quarterly common dividend of $0.615 per share, which will be payable Oct. 30 to shareholders of record as of Oct. 15. MAA is an apartment-only REIT, which currently has ownership stakes in 42,685 rental units located across the nation's Sunbelt region.
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Sioux Falls Apartment Vacancy Rate Doubles
Digested From "Vacancy Rate Doubles"
Argus Leader (08/27/2009) by Kelly Thurman
A new South Dakota Multi-Housing Association study shows that Sioux Falls' apartment vacancy rate has nearly doubled since last year to about 10 percent. Industry officials report that more and more people are taking advantage of the $8,000 first-time homebuyer tax credit or moving back in with their parents rather than renting. Association President Denise Hanzlik laments, "The people who have a little bit more to spend are purchasing. As long as they have good credit now is a great time to buy." The survey shows that the city's apartment vacancy rate topped 9.8 percent in July -- an increase from 7.64 percent in January and 5.31 percent from the same period a year earlier. The survey chronicles more than 10,400 rental apartments citywide. Sioux Falls' outlying suburbs registered the highest vacancy rate at 16.03 percent, while the northwest saw the lowest rate at 6.66 percent. Rodney Fitts, owner of Rod's Property Management Co., states, "What I hear in the market is people in higher-end apartments are experiencing the greatest vacancies." With apartment vacancy rates indeed on the rise, more owners and managers are offering incentives ranging from $200 off to one month's free rent. The last time such incentives were offered was in the first quarter of 2005 when interest rates were low and a large number of people were making the leap to homeownership.
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Group Starts New Apartment Listing Business in Boston
Digested From "Group Starts New Business in Boston"
BostonChannel.com (08/24/09)
Billing themselves as "America's only student-owned and operated real estate agency," a group of Boston students have dedicated themselves to helping their peers locate housing. All of the licensed realty agents at the Brighton-based firm are students themselves. "Everyone who works here is in college," confirms Boston University business senior Alex Hodara. His Hodara Real Estate Group boasts 1,000 apartment listings at the moment, and he says the company already has produced nearly $100,000 in revenue.
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Legislative/Legal News
New Credit Scoring Model May Boost Some Borrowers' Scores
Digested From "Making the Grade"
MarketWatch (08/24/09) by Amy Hoak
With FICO 08, the newest version of the FICO credit-scoring system, minor delinquencies are now overlooked in calculating creditworthiness. Under the updated scoring model, small, missed payments lingering in collections with original amounts of $100 or less will no longer do damage to one's credit score. In addition, consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago and if their credit history is otherwise unblemished. FICO , formerly Fair Isaac Corp., developed the FICO scoring system. Careen Foster, director of global scoring product management, states, "There's more flexibility with missing a payment. If you have a more habitual pattern of paying accounts late . . . You're more likely to get penalized for that." The new system has been available at all three credit bureaus -- Equifax, Experian, TransUnion -- since July. Individuals who pose a low credit risk will likely see their scores rise a bit with the changes. Meanwhile, those who have been a high risk could see their scores decline. Finally, FICO 08 addresses the practice known as "piggybacking," which is used by credit-repair firms to help consumers improve their scores. Under a piggybacking scenario, an individual pays to become an authorized user on a stranger's account. The account holder gets paid for permitting the individual to be associated with the account, and the new authorized user is able to improve his or her credit score. One of FICO 08's chief goals is to uncover those individuals who are named as authorized sources via deceptive means.
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Strategies for Those Apartment Owners on the Defensive
Digested From "The Gathering Storm"
Apartment Finance Today (08/09) by Jerry Ascietero
Many apartment owners remain on the defensive amid weakening fundamentals, falling property values, and myriad maturing loans on the horizon. The article details four strategies to help owners and their lenders through these times of distress. The first strategy to consider is a workout with Fannie Mae and Freddie Mac. Both government-sponsored enterprises have been hammering out plans to be out ahead of the potential wave of distress and help distressed borrowers survive the downturn. While these workouts will be decided on a case-by-case basis, among the tactics up for consideration range from extending maturities to lowering the balance of an existing loan. Closing the equity gap is the second strategy. KeyBank Real Estate Capital, for instance, is currently exploring the idea of raising an equity fund in order to clear some loans off its books. The third strategy many multifamily housing owners are embracing is a cash-out refinancing. That is when a property is refinanced for more than is owed on it, and the owner pockets the difference. At a time when many markets have seen rising vacancy rates and declines in monthly apartment rent, owners are looking to find the kind of strategic liquidity that can help bolster their underperforming assets. Finally, an intensified focus on asset management is the fourth strategy listed in dealing with the aftershocks of the distressed asset shakedown.
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