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Construction Rises In Apartment Boom
Industry News
The Great $26 Billion Real Estate Swindle
McKinley Unveils Apartment App
Report Shows Rent on the Rise in Colorado Springs
Apartment Experts Fear Overbuilding in Victoria, Texas
Study Clarifies the Energy Savings in Retrofitted Buildings
A Model for Sustainable Housing in Hartford
Renting the American Dream
Legislative/Legal News
New Jersey's Rent-Control Laws Fading
Corker Introduces Senate Bill to Wind Down Fannie, Freddie
Judge Allows Class Action Lawsuit in Apartment Bedbug Case
White House, Agencies Cut Red-Tape for Multifamily Housing Developers
Unguaranteed Fannie Bonds May Yield Double-Digits
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Construction Rises In Apartment Boom
Digested From "Construction Rises In Apartment Boom"
Investor's Business Daily (11/11/11)
Construction continues to ramp up in the nation's apartment sector. Besides tight supply, new apartment construction is being driven by two factors: falling homeownership rates and growing numbers of people in their 20s and early 30s who are landing jobs and moving into their first place. AvalonBay Communities currently boasts around $1 billion in development projects now under way. Company officials note that rental household formation has increased by more than 1 million units in just the last 12 months. UDR, meanwhile, has more than 2,500 rental units in various stages of construction for an estimated $751 million. Company management note that they are scouting additional sites for possible purchase and development. Ryan Severino, senior economist with Reis, notes that the new inventory will range in both size and price. He adds, "They're all trying to find their angle. They're trying to build higher-end apartments, lower-end apartments, big apartments, small apartments." Those markets with lots of technology jobs that attract young rental households, such as Northern California and Seattle, are seen as better new-construction candidates. This has caused San Francisco and San Jose rents to climb more than 13 percent in the third quarter compared to a year earlier -- more than triple this year's U.S. average of 4.2 percent, notes MPF Research.
Industry News
The Great $26 Billion Real Estate Swindle
Digested From "The Great $26 Billion Real Estate Swindle"
MarketWatch (11/08/11) by Brett Arends
According to Zillow.com, the average price of an American home fell again in October to $171,500, a 4.4 percent decline from a year earlier and the lowest level in eight years. However, it has been somewhat stable over the summer. The Web site compared the average prices with those that people paid in 2009 and last year, when they took advantage of federal tax credit incentives. Zillow researchers note that prices during that time averaged about $186,000, meaning buyers have lost about $14,500 on average -- almost double the value of the credit. Among the biggest losers were those who bought a new home in Santa Barbara, Calif. They have already lost a whopping $50,000 of their $440,000 investment. Others who are down more than $30,000 include home buyers in such cities as San Francisco and Seattle. According to the IRS, the entire program cost taxpayers $26 billion. For its results, Zillow tracks prices in 157 cities and major towns nationwide.
McKinley Unveils Apartment App
Digested From "Live in a McKinley Apartment? There's an App for That"
REJournals.com (11/11/2011)
McKinley recently took the wraps off its My McKinley app at the Android Market and iPhone App Store. After downloading the app, residents of the Michigan-based company's various apartment communities can make maintenance requests and even submit photos of their maintenance problem. Other features still under development includes those that enable residents to pay their rent via the app, view the latest community news and calendar of events, and provide feedback to their apartment managers. McKinley CEO Albert Berriz concludes, "McKinley is very pleased to be offering this cutting edge technology to our residents."
Report Shows Rent on the Rise in Colorado Springs
Digested From "Report Shows Rent on the Rise"
Fox21Online.com (11/10/11) by Alia Willson
A newly released report by the Colorado Division of Housing and the Apartment Association of Southern Colorado shows that Colorado Springs' apartment rents increased 6.7 percent during the third quarter to an all-time high. The average rent increased in all types of apartments from efficiency units to three-bedroom apartments. Researchers further found the apartment vacancy rate in the Colorado Springs metro area rose to 6.2 percent. However, that is down from last year's third-quarter rate of 6.6 percent. Ryan McMaken, a spokesman for the Colorado Division of Housing, said the vacancy rate in the city is the second lowest recorded in the last decade. He notes that a lack of new multifamily housing construction could send the rate further downward. Looking for positives, McMaken disclosed that Colorado's El Paso County is one of the counties with the most new apartment building permits issued since the first of the year.
Apartment Experts Fear Overbuilding in Victoria, Texas
Digested From "Apartment Experts Fear Too Much Building in Victoria"
Victoria Advocate (TX) (11/10/11) by Gabe Semenza
Many apartment professionals believe Victoria, Texas, is ripe for growth. Some, though, are concerned that too many investors will overdevelop the market. Local apartment owner and real estate broker Nancy Garner warns that if everyone who has shown interest in building new multifamily housing actually does, it could hurt the market. She states, "I have been contacted by financial institutions and brokers who have clients who want to develop apartment complexes dealing in over 200 units." A 120-unit apartment community is now under construction in Victoria, with another 244 apartments in the pipeline and rumors of several other potential rivals poised to join the fray. Fortunately, the city right now needs plenty more apartments. Because of the ongoing banking system and credit market woes, lenders have held a tight grip on money for the past several years. This, in turn, has severely limited new apartment development. At the same time, the Lone Star State's population skyrocketed and so did job growth leading to the heightened demand in places like Victoria and elsewhere.
Study Clarifies the Energy Savings in Retrofitted Buildings
Digested From "Study Clarifies the Energy Savings in Retrofitted Buildings"
New York Times (11/09/11) by Julie Satow
The practice of retrofitting buildings with such energy-conserving items as high-quality windows and compact fluorescent light bulbs has been around for years. However, data on whether these changes result in any real savings has been virtually nonexistent. Now, new research shows that these fairly simple and straightforward fixes can substantially reduce spending on fuel and electricity. Deutsche Bank Americas Foundation and Living Cities commissioned the report, examining almost 19,000 affordable housing units throughout New York City that had undergone energy efficiency retrofits. Researchers determined that these changes resulted in a 10 percent savings on electricity and a 19 percent savings on fuel bills across the portfolio. This comes out to $70 in electrical savings and $240 in fuel savings per apartment each year. Ben Hecht, president and CEO of Living Cities, states, "This study is definitely the first foray into data, and that is going to be critical to convince owners and lenders of the importance of retrofitting buildings."
A Model for Sustainable Housing in Hartford
Digested From "In Hartford, a Model for Sustainable Housing"
Connecticut Mirror (11/07/11) by Uma Ramiah
Hartford, Conn., residents say an 83-year-old building that was rescued, renovated, and filled with residents represents the city's most promising path forward in sustainable housing. Before it reopened in 2009 as mixed-income housing, the Hollander Building faced being turned into a parking lot before nonprofit and historical preservationists lobbied successfully for its survival. Now, two-and-a-half years later, its 70 apartments are occupied, and it is financially self-sufficient. "It's a model for what ought to be done in all of Hartford," said David Fink, policy and communications director for the Partnership for Strong Communities. "A mixed-income configuration where people earning a fair income are living with people with low and moderate incomes -- and it works out." The Hollander's units include studios, one-, and two-bedroom apartments. Fourteen of the two-bedrooms are market-rate units, with rents between $1,500-$1,600 a month. The remaining 56 are tax-credit units -- meaning they are available at a lower, fixed price and only to individuals earning less than 60 percent of the region's median income. They are priced no higher than $900 a month. "This is the start of a new generation of building projects," said Rosanne Haggerty, president of Community Solutions and founder of the nonprofit Common Ground. "The Hollander represents a number of firsts for the city."
Renting the American Dream
Digested From "Renting the American Dream"
Barron's (11/05/11) by Gene Epstein
Homeownership, once considered the American Dream, has faded for many over the last 14 months as shares among four REITs specializing in apartments rose. A previous forecast from Barron's revealed that the homeownership rate would fall from its 67.2 percent height recorded in the first three months of 2010, and it has slipped to 66 percent in the second quarter of 2011. The lower rate signals that fewer Americans are buying houses and more are renting. With economic recovery has come an increase in household formation, which has risen 1.1 million to 112.5 million and of that increase all has been from those who rent. Reaping some of the benefits of the rise in renting have been REITs specializing in apartments, with shares of four in particular increasing an average of 27.7 percent. AvalonBay posted a gain of 26.6 percent, while Equity Residential registered a 35 percent gain over the same period.
Legislative/Legal News
New Jersey's Rent-Control Laws Fading
Digested From "New Jersey's Rent-Control Laws Fading"
Wall Street Journal (11/12/11) by Heather Haddon
New Jersey voters and local officials are slowly eroding the state's rent-control laws. In some instances, they are reversing decades-old programs that were long considered among the most resident-friendly in the country. The latest shift came this week when two cities in Hudson County took steps to scale back their local rent-control laws. Hoboken voters approved a city-backed referendum to limit provisions that partly allowed residents to recoup unlimited retroactive overcharges. The Bayonne City Council followd by unanimously voting to decontrol apartments after residents move or are evicted. Analysts note that this turning tide is a sign that towns and cities are looking at every constituency as a means of boosting tax revenue. Robert W. Burchell, the director of the Center for Urban Policy Research at Rutgers University, comments, "It's one way for local governments to spread out their burdens on a body of transitory people." New Jersey is one of only four states and the District of Columbia that allow for rent control. The Garden State boasts the greatest number of towns with ordinances governing rents. According to an analysis by the New Jersey Apartment Association, 98 of the state's 565 municipalities have local rent-control laws.
Corker Introduces Senate Bill to Wind Down Fannie, Freddie
Digested From "Corker Introduces Senate Bill to Wind Down Fannie, Freddie"
BusinessWeek (11/09/11) by Lorraine Woellert
A bill introduced by Sen. Bob Corker (R-Tenn.) on Nov. 9 aims to unwind Fannie Mae and Freddie Mac by creating a uniform legal structure for mortgage-backed securities to be regulated by the Federal Housing Finance Agency. The bill, similar to one up for consideration in the House, would require mortgage borrowers to submit full documentation and make a 5 percent down payment to secure funding. Additionally, Fannie Mae and Freddie Mac would be eliminated over a decade, with private investors to purchase their patents and databases.
Judge Allows Class Action Lawsuit in Apartment Bedbug Case
Digested From "Judge Allows Class Action Lawsuit in Apartment Bedbug Case"
Des Moines Register (IA) (11/11/11) by Jeff Eckhoff
In Iowa, a lawsuit alleging that managers of a couple of Des Moines apartment communities for the elderly and disabled ignored a growing bedbug infestation for more than two years will now be allowed to proceed as a class action. Polk County Senior Judge Joel Novak certified the class in a ruling that is expected to eventually spark new settlement negotiations between roughly 300 current and former residents and the owners of Elsie Mason Manor and Ligutti Towers. Attorneys for the residents of the low-income apartments initially filed suit in last year's first quarter, seeking money for back rent, lost possessions, and other hardships because of a bedbug problem dating back to the fourth quarter of 2007. Residents at the time complained that they had been repeatedly bitten, were forced to discard infested furniture, and shunned both by other apartment owners and managers too afraid to rent to them. While some residents escaped with only emotional damage and laundry bills, others suffered repeated property losses and considerable medical costs.
White House, Agencies Cut Red-Tape for Multifamily Housing Developers
Digested From "White House, Agencies Cut Red-Tape for Some Multifamily Housing Developers"
Housing Wire (11/07/11) by Kerri Panchuk
A pilot program targeting federally supported multifamily housing developers in Wisconsin, Michigan, Washington, Minnesota, Oregon, and Ohio aims to eliminate redundant inspections and other regulations to save upwards of $28.8 million annually as the builders seek out multiple sources of state and federal funding for their projects. The White House, the U.S. Department of Housing and Urban Development, and the U.S. Department of Agriculture Rural Development rolled out the pilot program not to stimulate development but to streamline federal government processes. Affordable multifamily developers underwent 22,546 inspections on 10,485 properties in 2007 -- a number that could be halved by the pilot program, according to Tammye Trevino of the U.S. Department of Agriculture Rural Development.
Unguaranteed Fannie Bonds May Yield Double-Digits
Digested From "Unguaranteed Fannie Bonds May Yield Double-Digits"
MarketWatch (11/07/11) by Ronald D. Orol
The Obama administration is proposing to let Fannie Mae and Freddie Mac sell single-family mortgage securitizations in which 5 percent to 10 percent of the bonds have no government guarantee, meaning that investors would bear any loss in the event of default. The idea -- based on a program in which multifamily loan securities are sold without U.S. backing -- aims to bring private mortgage investors back to the market, but analysts say yields of 10 percent or more will be needed for the plan to succeed.
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