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Economy Today Requires More Rental Housing for a Mobile Workforce
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Economy Today Requires More Rental Housing for a Mobile Workforce
Industry News
Independent Study Shows Renting Beats Homeownership
Apartment Communities Highly Sought After in Jersey
Cassidy Turley Secures $170M Financing for Mid-Atlantic Apartment Group
Reis Inc. Reports Richmond, Va., Is an Apartment Residents' Market
Apartment Rents Climb in Hampton Roads, Va., as Vacancies Fall
Equity Residential Declares Q2 2010 Dividend
Legislative/Legal News
Residents at Peter Cooper Village and Stuy-Town in NY Extend Rent Deal
NY Governor Seeking Rent Law Reform
Reform of Fannie/Freddie Could Lead to Changes in Housing Tax Subsidies
Wasau (Wis.) Apartment Owners Disappointed Over Task Force Recommendations
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Economy Today Requires More Rental Housing for a Mobile Workforce
Digested From "Homeownership Is Overrated"
Wall Street Journal (06/07/10) by Richard Florida
Richard Florida, author of "The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity," writes that owning a home may actually be a drawback in today's economic reality. He notes, "My colleagues and I tracked homeownership levels across U.S. cities and regions to see how they correlate to other measurable demographic and economic factors. As we expected, the rates of homeownership are greatest where housing prices are lowest." However, cities with high levels of homeownership -- in the range of 75 percent like Pittsburgh and St. Louis -- had, on average, significantly lower levels of economic activity and substantially lower wages and incomes. Florida adds, "Far too many people in economically distressed communities are trapped in homes they can't sell, unable to move on to new centers of opportunity. The cities and regions with the lowest levels of homeownership -- in the range of 55 percent to 60 percent like L.A., N.Y., San Francisco and Boulder -- had healthier economies and higher incomes." He goes on to report that those who are not locked into mortgage payments have a greater degree of flexibility and resilience in the face of economic shocks and downturns than those who have a mortgage. Those individuals can downshift as needed or more easily move to take advantage of employment opportunities elsewhere. Florida currently serves as director of the Martin Prosperity Institute at the University of Toronto.
Industry News
Independent Study Shows Renting Beats Homeownership
Digested From "76 Percent Think Renting Beats Homeownership"
Orange County Register (CA) (06/09/10) by Jon Lansner
The National Apartment Association (NAA) recent commissioned an online survey of more than 2,000 Americans, which found that 76 percent of respondents see renting as a better option than owning a home. Researchers note that is five percentage points better than 2008. The top reason, cited by 64 percent of respondents, why is that major repairs and maintenance issues are left to the rental housing owner. Financial considerations, such as home-value risk and chance of foreclosure, also ranked high. NAA President Douglas Culkin states, "While some may want to declare the housing crisis over, consumer patterns of behavior are showing otherwise. . . . The simple fact remains that in a bad economy, people must make whatever changes necessary to improve their situation, especially if they have lost their job."
Apartment Communities Highly Sought After in Jersey
Digested From "Multifamily Properties Highly Sought After "
NorthJersey.com (06/11/10) by Brian Whitmer
Northern New Jersey's apartment sector has been a hotbed of investment activity during the past two turbulent years. Today, such factors as high occupancy rates, slowing rental rate declines, fewer incentives, and readily available financing continue to make multifamily housing a prime target. New Jersey's rental fundamentals have moved in sync with the country, outperforming the national average. While employment pressures and housing purchases have led to a more volatile swing at Class A apartment communities compared to Class B and Class C properties, both have seen occupancy rates return to relative parity. For apartment owners, this is a positive sign that downward rental adjustments are no longer required. Rents at Class A communities have fallen by as much as 15 percent since their 2007 peak, but remain in line with inflation. As the economy continues to rebound, multifamily housing will profit from its shorter lease durations allowing the ability to raise rents more quickly than other property types. In northern New Jersey, there has yet to be a sale of an apartment community in excess of $10 million this year compared to a total of five deals in 2009 and an average of 16 deals per year from 2004 to 2007.
Cassidy Turley Secures $170M Financing for Mid-Atlantic Apartment Group
Digested From "Cassidy Turley Secures $170M Financing for Apartment Group"
Gazette.Net (06/11/2010)
Cassidy Turley has arranged permanent financing under Fannie Mae's multifamily housing lending program for 5,000 apartments in a dozen Maryland communities and one in Virginia for partnerships involving Kay Management. Christian Miles, Cassidy's senior managing director, comments, "Lenders were particularly impressed with the professionalism and organizational skill of Kay Management, a skill set which was critical for handling the financing of many properties simultaneously." The apartment portfolio currently boasts a 96 percent occupancy rate and includes a mix of mid-rise, high-rise, and garden-style communities. An estimated 60 percent of the properties are located within access of a Metro subway station.
Reis Inc. Reports Richmond, Va., Is an Apartment Residents' Market
Digested From "A Renter's Market?"
Richmond BizSense (06/08/10) by Al Harris
Reis Inc. reports that Metro Richmond's first-quarter apartment vacancy rate - 8.7 percent - was the highest it has been in five years. That's up from 6.9 percent in the first three months of last year and 6.2 percent in first-quarter 2008. The rising rate comes at a time when rent prices are on the decline. According to Reis, average asking rent dropped to $787 in this year's January-through-March period from $798 a year earlier. Still, apartment developers continue to pursuing new opportunities locally. Dominion Realty Partners, for instance, is now renovating the John Marshall Hotel building into 238 rental apartments. Gilbane, meanwhile, is planning 160 apartments nearby. Matt Duffy, who oversees acquisitions and finance for Rogers Realty Advisors, observes, "A lot of developers are optimistic and forward thinking. A lot of these assets have been on the drawing board for many years and just now coming to the market."
Apartment Rents Climb in Hampton Roads, Va., as Vacancies Fall
Digested From "Apartment Rents Climb as Vacancies Fall"
Daily Press (Virginia) (06/08/10) by Veronica Chufo
Real Data reports that about 6.4 percent of Hampton Roads apartments are vacant. That's down from a year earlier, when the local apartment vacancy rate hit 7.3 percent -- its highest level in at least a decade. Dan W. Johnson, a senior vice president of CB Richard Ellis in Norfolk who specializes in the local apartment market, notes that vacancy rates were high a year ago because people were finding roommates or moving back home to live with family in the midst of the recession. Now, many of these people appear to be venturing back into the rental market. Johnson remarks, "I think the general outlook is better than a year ago, and people are willing to go out and take their own place now." Wendy Drucker, managing director of Drucker & Falk Real Estate, which manages 31 apartment communities in Hampton Roads, further adds that living in an apartment is often a lifestyle choice. She states, "Apartment living has become a choice. The lifestyle that you can have with all the amenities that are offered is like having a country club in your backyard. I think that's why there's been a demand for high-end properties." Soaring foreclosures is another factor driving up occupancy. April's 458 foreclosure filings on the Peninsula set a new all-time high. Average apartment rents in Hampton Roads currently range from a low of $676 in southern Newport News to a high of $986 in central Virginia Beach.
Equity Residential Declares Q2 2010 Dividend
Digested From "Equity Residential Declares Second Quarter Dividends"
Business Wire (06/08/10)
Equity Residential last week announced a quarterly common share dividend of $0.3375 per share, which will be payable July 9 to shareholders of record as of June 18. The Chicago-based apartment REIT is an S&P 500 company that is focused on acquiring, developing, and managing high quality apartment communities in some of America's top growth markets. It currently has ownership stakes in 492 such communities totaling just over 137,000 rental units.
Legislative/Legal News
Residents at Peter Cooper Village and Stuy-Town in NY Extend Rent Deal
Digested From "Stuy-Town Parties Extend Rent Deal"
GlobeSt.com (06/10/10) by Paul Bubny
Under an extended agreement announced June 10, residents at the massive Peter Cooper Village and Stuyvesant Town apartment community in Manhattan will continue paying lower rents until the end of this year. This marks the second extension for the agreement, which was originally set to originally expire Jan. 31 but was extended until the end of this month. The accord adjusts market-rate rents to estimated rent-stabilized levels for a group of residents who sued the massive complex's ownership. Last fall, the New York State Court of Appeals ruled that Stuy-Town’s ownership -- a joint venture led by Tishman Speyer Properties and Blackrock Realty -- illegally deregulated approximately 4,400 apartments at the 11,227-unit complex on Manhattan's East Side.
NY Governor Seeking Rent Law Reform
Digested From "Paterson Seeking Rent Law Reform"
Times Newsweekly (06/03/10)
New York Gov. David A. Paterson recently took the wraps off a package of proposed amendments to the state's rent laws aimed to help to restore stability and certainty to a chaotic housing market. The amendments would modify and extend New York's rent laws, which are scheduled to expire in 2011, for eight years. They also seek to reduce the rate at which apartments become deregulated, provide additional protections for residents, and address a recent Court of Appeals decision that left many questioning the status of thousands of deregulated apartments. Paterson remarked, "This series of rent regulation proposals seeks to create a rational framework for resolving issues surrounding rent regulation, while protecting both tenants and owners of New York's regulated buildings. During these difficult times it is essential that we do all we can to preserve rent regulation while restoring certainty to the rent regulation system and making it more transparent, manageable and equitable."
Reform of Fannie/Freddie Could Lead to Changes in Housing Tax Subsidies
Digested From "Reform of Mortgage System Can't Ignore Sacred Cows"
Wall Street Journal (06/10/10) P. C14; by David Reilly
As Congress takes up reform of Fannie Mae and Freddie Mac, observers believe lawmakers also should rethink tax subsidies for housing, noting that they have not increased homeownership rates to sustainable levels as evidenced by the recent decline reported by the Census Bureau to 67.1 from a high of 69 percent in 2006. The Joint Committee on Taxation says the mortgage interest deduction will cost close to $600 billion from 2009 to 2013, while the price tag for property tax deductions and capital gains exemptions will top $200 billion. However, given that FDIC Chairman Sheila Bair recently called for a more balanced housing policy between homeownership and renting, observers think lawmakers could decide not to remove or reduce the tax subsidies for housing but find a way to extend them to renters.
Wasau (Wis.) Apartment Owners Disappointed Over Task Force Recommendations
Digested From "Bad Tenants Should Pay, Residents Say"
Wasau Daily Herald (06/08/10) by Jake Miller
Wasau, Wis., last year created a city task force to address local housing blight. The panel recently concluded its research and has since proposed a series of recommendations. Local apartment owners, though, are disappointed that none of the suggestions address resident responsibility. Task force recommendations range from re-inspecting trouble properties to updating the existing housing code. Several owners attended a recent forum on the matter and said they are fine with being held accountable through re-inspections and a property database, but bad residents who leave units in disrepair should also be held legally accountable. Meanwhile, drug sales and other criminal activity continue to be a source of concern. Owners can opt not to rent to someone if he or she has a criminal record. However, unearthing such past activity can be difficult if the person comes from out of state. Wisconsin Apartment Association President John Fischer notes that the state's online court record database is reliable only if the person has been convicted.
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