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Future of Home Sweet Home May Be Fewer People Owning
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Future of Home Sweet Home May Be Fewer People Owning
Industry News
Tour of Central Ohio Communities Aims to Boost Occupancy
San Diego Market Favors Renting to Owning, Trulia Reports
Associated Estates Reaffirms Full-Year Outlook
AIG Weighing Sale of Former Kushner Cos. Apartments
Riverstone Nabs Five Apartment Assignments on West Coast
NW Washington State Market 'Better Than Average'
Apartment Developer Tests New York's East Village, Chelsea Neighborhoods
Commercial Real Estate Lending Historically Low
Square Footage of Building Starts Now Rising, Multifamily Factoring in
Demand for Apartments Rises as Housing Sector Unrest Continues
Legislative/Legal News
Knoxville Apartment Developer Settles Lawsuit Over Unit Accessibility
El Paso to Revamp Trash Hauling Generated by Apartments
Proposition F Offers San Fran Apartment Residents 'Hardship' Break
Bloomington, Ind., Reports Boom In Bedbug Population 
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Future of Home Sweet Home May Be Fewer People Owning
Digested From "Future of Home Sweet Home May Be Fewer People Owning"
Investor's Business Daily (06/04/10) P. A6; by Kathleen Doler
Demographers and economists are butting heads about homeownership rates over the long term. The national homeownership rate has fallen to 67.1 percent in the 2010 first quarter from 69.1 percent in the 2005 first quarter, according to the U.S. Census. Ogilvy & Mather demographic trends analyst Peter Francese says the collapse of the housing market, high unemployment rates, and student loan debt have made young professionals hesitant to purchase houses, but he believes economic recovery will change their minds down the road. However, Urban Land Institute senior resident fellow John McIlwain contends that the housing bust has sparked permanent change in homeownership trends. McIlwain expects more Americans to rent instead of becoming homeowners, especially since young adults have seen that homeownership makes it difficult to sell and relocate to take advantage of employment opportunities. McIlwain notes that young Americans are interested in living in urban centers and suburban town centers, where it is "easier to rent." Those interested in homeownership, he says, will make house purchases later. Additionally, experts predict those purchasing houses to favor 30-year, fixed-rate mortgages and put real money down, though McIlwain says the economic downturn has made it difficult for parents to help their children financially.
Industry News
Tour of Central Ohio Communities Aims to Boost Occupancy
Digested From "Tour Aims to Boost Rentals at Complexes"
Columbus Dispatch (OH) (06/06/10) by Jim Weiker
A total of 40 central Ohio apartment communities are banding together beginning later this week to promote rental living. Apartment vacancy rates are currently high in the region, but the rate varies widely within the region. Some older apartment communities in parts of central Columbus and south of I-70 are experiencing 20 percent vacancies. However, some newer communities are almost full in downtown Columbus, Hilliard, Upper Arlington, and Dublin. Robert Vogt, a partner in the Columbus real-estate information firm VWB Research, observes, "We haven't had that sort of variation historically." To help draw residents, apartment communities are offering special events and deals during the annual Apartments Alive tour, which will last from June 9 through June 20. Participating apartments span both the financial and geographic spectrum, with monthly rents ranging from about $400 to more than $3,000. Promotions also vary widely. Some communities are offering drawings for an iPod Touch. Steeplechase Village near Rickenbacker Airport, meanwhile, is offering a chance to win a year's rent. Schottenstein Real Estate Group owns several apartment communities taking part in the event. President Brett Kaufman remarks, "There are lots of fun promotions. It's just a good opportunity for people to see what’s out there in the market."
San Diego Market Favors Renting to Owning, Trulia Reports
Digested From "Survey Suggests It's Better to Rent Than Buy in Area"
San Diego Union Tribune (06/04/10) by Roger Showley
In its first survey comparing buying versus renting, San Francisco-based Trulia.com ranks San Diego as the eighth-highest market that favors renting instead of owning out of 50 cities surveyed. Trulia's research staff derived the ratios by dividing the average house price by 12 months of the average rent for a two-bedroom apartment. The average home in San Diego was listed as $396,409, while the average rent for a two-bedroom rental unit was $1,670. That works out to an own-to-rent ratio of 19.8. San Diego County Apartment Association Executive Director Robert Pinnegar was not surprised by the findings, stating, "We're a coastal California city, so it's always going to be more expensive to buy than to rent."
Associated Estates Reaffirms Full-Year Outlook
Digested From "Associated Estates Reaffirms Full-Year Outlook"
Associated Press (06/02/10)
Associated Estates Realty Corp. last week reaffirmed its full-year financial guidance. The Ohio-based apartment REIT still expects adjusted funds from operations between 86 cents per share and 92 cents per share, excluding roughly $554,000 from refunds and one-time charges totaling $1.7 million. In addition, the company raised its acquisition guidance to between $100 million and $150 million from no activity at all. The revision reflects Associated Estates' recent $54.3 million acquisition of the Riverside Station apartment community in Northern Virginia.
AIG Weighing Sale of Former Kushner Cos. Apartments
Digested From "AIG Weighing Sale of Former Kushner Cos. Apartments"
NorthJersey.com (06/02/10) by David M. Levitt; Hugh Son
American International Group Inc. is considering selling its stake in a portfolio of 17,000 apartments that were purchased in 2007 via an agreement between AIG's real estate arm and Morgan Properties. Real estate values were near their peak at the time of the deal, and AIG and Morgan bought a total of 86 apartment communities. Most were in New Jersey and Pennsylvania. AIG Chief Executive Robert Benmosche believes the various communities could be sold to help repay loans that came as part of AIG's $182.3 billion government rescue. Morgan sued AIG in 2009 for delayed payments on a renovation plan, and AIG told Morgan that government overseers were blocking the payments.
Riverstone Nabs Five Apartment Assignments on West Coast
Digested From "Riverstone Nabs Five MF Assignments"
GlobeSt.com (06/07/10) by Jennifer Duell Popovec
Riverstone Residential Group has been awarded management assignments for five apartment communities in Los Angeles, Portland, San Francisco, and Seattle. Riverstone Residential Group President Terry Danner states, "This expansion is a unique opportunity because we were awarded several very visible West Coast assets at one time." He adds that these assignments come after the firm added 28 properties during the first quarter. Riverstone was awarded the five assignments partly because of its existing relationship with the owner, reports Mike Dow, western division president of Riverstone. Indeed, the company managed nearly 2,000 rental units in Sacramento and Southern California for Watermarke Properties, which has closed about $500 million worth of acquisitions in the last year and a half.
NW Washington State Market 'Better Than Average'
Digested From "Whatcom County Apartment Vacancy Rates Up, but Shortage Looms"
Bellingham Herald (WA) (06/06/10) by Dave Gallagher
In Washington state, Whatcom County's apartment vacancy rate has been slowly rising in recent years. Analysts, however, expect that will change as demand starts to outpace supply. The Washington Apartment Survey put the first-quarter vacancy rate for Whatcom's 14,612 apartments at 3.5 percent, an increase from 3.2 percent in March 2009 and 2.1 percent in March 2008. That is still well under the statewide average apartment vacancy rate of 6.1 percent. A possible apartment crunch could be in the making, though, due partly to the fact that the recession slowing construction of new apartment communities. Son-Rise Property Management President Joan Sova notes an increase in inquiries for rental apartments from people living out of the area in the past few months. It's not a huge issue in the current month because college students are currently vacating units for the summer. The fall may be a different story, though. She comments, "I think we'll need more apartment units soon, especially if Western [Washington University] continues to increase its enrollment. The first quarter of 2010 was the lowest vacancy rate we've seen [at Son-Rise] in quite some time."
Apartment Developer Tests New York's East Village, Chelsea Neighborhoods
Digested From "Developer Tests East Village, Chelsea"
Wall Street Journal (06/01/10) P. A24; by Craig Karmin
Atlantic Development Group is looking to test the strength of New York City's rental apartment market rebound by simultaneously opening luxury apartment buildings in the East Village and Chelsea neighborhoods. The company, which currently owns or manages 48 rental apartment communities citywide, is on track to open 2 Cooper near the Bowery in July. Brokers report that the 15-story building is already charging the highest monthly rents ever in this rapidly gentrifying neighborhood, with three-bedroom apartments running as high as $20,000. At the same time, Atlantic is launching Port 10 near the High Line. The 13-story building offers everything from a 24-hour concierge service to a fitness facility. It is being positioned to attract recent college grads that have traditionally flocked to more affordable digs in Murray Hill or the Upper East Side. Luxury rental apartments still present their share of risks. Residential leases are off as much as 30 percent from their highs and will likely take years to return to such levels. In addition, the two buildings represent Atlantic's first stab at offering luxury developments downtown.
Commercial Real Estate Lending Historically Low
Digested From "Commercial Real Estate Lending Historically Low"
San Diego Business Journal (06/07/10) by Lou Hirsh
The Mortgage Bankers Association (MBA) confirms that commercial and multifamily mortgage loan originations in the first quarter were up 12 percent from a year earlier, although loan origination volume was down 26 percent from the fourth quarter of 2009. "Based on surveys from the Federal Reserve Board and discussions with lenders, there appears to be increasing capital available for commercial mortgages, but only limited demand for new mortgages from commercial and multifamily property investors," according to Jamie Woodwell, the MBA's vice president of commercial real estate research. Additionally, MBA researchers report that loan originations for Fannie Mae and Freddie Mac declined by nearly half from the first quarter of 2009.
Square Footage of Building Starts Now Rising, Multifamily Factoring in
Digested From "Square Footage of Building Starts Now Rising"
Reed Construction Data (06/02/10) by Jim Haughey
The square footage of building starts this spring has risen 29 percent over last year, which is a substantial increase but ultimately merely restores numbers to pre-panic fall 2008 levels. But the increase has rebooted construction hiring, materials production, and materials prices. And experts say the square footage of building starts will rise another 19 percent over the next year, and the gains will come from all types of buildings. Multifamily housing, for instance, will account for about 22 percent of that gain. It should be noted that starts square footage is not an entirely accurate representation of the recovery in construction activity because it does not take into account the resumption of suspended projects.
Demand for Apartments Rises as Housing Sector Unrest Continues
Digested From "The Time and Cost Savings of Multi-Unit Real Estate"
NU Wire Investor (06/01/10) by David Lindahl
Demand for houses is increasing in today's real estate market, which means developers have more power to price these homes as they choose. Since many individuals cannot afford to make the leap to homeownership, apartments -- with their affordable monthly rates -- become more attractive. Heightened demand for apartments can lead to rent increases. But even then, the difference between a rent payment and a mortgage payment can be substantial, making an apartment still the more affordable option. Single-family homes appeal to older, more situated households. Even this works to the advantage of an investment property buyer, analysts note, as there is less competition in the rental property market. When buyers invest in apartment communities, they have the power to hire a property manager. The owner of the rental property then can enjoy the numerous benefits of ownership, while others put forth the hard work required to keep it running effectively and smoothly.
Legislative/Legal News
Knoxville Apartment Developer Settles Lawsuit Over Unit Accessibility
Digested From "Developer Settles Lawsuit "
Knoxville News-Sentinel (TN) (06/05/10) by Josh Flory
A federal lawsuit over apartment accessibility is going to be costly for Knoxville-based Murphy Development LLC, which is among the defendants who must pay up to $425,000 and make improvements at 21 communities statewide under an agreement with the Department of Justice. The settlement, which was approved by U.S. District Judge Robert Echols in late March, applies to several Knoxville-based apartment communities in particular. The case grew out of work by the Tennessee Fair Housing Council, which provided federal investigators with information that several apartment communities were inaccessible to people with disabilities. Thomas Perez, assistant attorney general for the Civil Rights Division, states, "This comprehensive settlement will ensure that equal housing opportunities required by law are provided in these 21 housing complexes." Murphy Development confirms that it has hired architects, engineers, and construction firms that have contractually committed to meet all local, state, and federal standards. In addition, the firm has said that in more than a decade of owning and operating apartment communities, it has never received a resident complaint related to the accessibility of its rental units.
El Paso to Revamp Trash Hauling Generated by Apartments
Digested From "El Paso to Revamp Trash Hauling"
El Paso Times (TX) (06/03/10) by Marty Schladen
In Texas, the El Paso City Council is preparing to overhaul the way the city handles trash by requiring that trash generated by apartment communities, restaurants, factories and other businesses be dumped at city landfills. Opponents see it as a method to avoid competition and keep prices down. They say the new strategy will seriously strain the capacity of city landfills. Supporters, on the other hand, say it will save money for residents and increase the prevalence of recycling. The city's 2010 budget included the "flow control" of solid waste as city policy. Members of the public, who voiced their opposition at the city council meeting, questioned why the city was taking business from the private sector. If adopted, the change will cost the city $18 million for scales, heavy equipment, and additional workers.
Proposition F Offers San Fran Apartment Residents 'Hardship' Break
Digested From "Prop. F Offers S.F. Renters 'Hardship' Break"
San Francisco Chronicle (06/01/10) by Rachel Gordon
Proposition F, dubbed the "Renters Financial Hardship Applications" measure, would allow San Francisco apartment residents who lose their jobs or whose wages plummet at least 20 percent to be temporarily exempt from rent hikes. The proposal has been described by supporters as "a measured response to the worst economic recession since the Great Depression." Current law allows residents to ask the city's Rent Board to limit the increase due to financial hardship when their rents are raised to pay for property improvements and tax increases. Prop. F would extend the hardship exemption to the annual rent increase that apartment owners are allowed to impose, tying the cap to the local consumer price index. Residents who become unemployed, see a drop of 20 percent or more in their government-provided benefits, and/or did not receive the cost-of-living increase in the past 12 months can apply for the hardship exemption. Both sides can appeal, and the freeze would be lifted once the resident's financial circumstances improve. Janan New, executive director of the San Francisco Apartment Association, contends that Prop F.'s passage would hurt both owners and residents by compelling the former to charge more when units turn over. New said the proposal "advances the philosophy of public ownership of housing" and boxes in apartment owners.
Bloomington, Ind., Reports Boom In Bedbug Population
Digested From "Bloomington Reports Boom In Bedbug Population"
TheIndyChannel.com (05/28/10) by Stacia Matthews
The city of Bloomington, Ind., has assembled a task force to deal with the booming bedbug population plaguing local apartment communities, hotels, dormitories, and houses. Dr. Marc Lame, an Indiana University insect scientist, is among the city, county, and state health officials serving on this panel. He called the bedbugs an epidemic and said the task force's goal is to find solutions before it gets any worse. One solution is to bake the bugs to death with dry heat, but it is an expensive process. Despite the cost, the city may still consider investing in the technology. Lame cautioned that early detection was the surest way to prevent a very bad infestation.
Abstract News © Copyright 2010 INFORMATION, INC.
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