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List of Rent Ratios for Over 50 Metro Areas Is Updated
Industry News
CallSource Builds Learning Mgmt System for NAA & Affiliates
CEOs Are Urged to Do More to Keep Top Employees
CEO Optimistic About Orange County Multifamily for 2011
San Antonio Multifamily Gains Investment Ground in 2010
Wichita Competes to Fill Lower Number of Vacancies
Modest Pay Increases Expected in Year Ahead
Houston Affiliate Names President and President-Elect
Hamilton Co. Acquires Multifamily Portfolio in Boston
Budget Woes for Phoenix-Area Apartments
Group Puts $200M in Apartments Up for Sale
Legislative/Legal News
Cincinnati Nuisance Law Criticized by Apartment Interests
California County Pushes for Smoke-Free Communities
Senate Fails to Approve Fannie/Freddie Nominee
Apartments Targeted in New Tax Plan in Ridgeland, Miss.
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List of Rent Ratios for Over 50 Metro Areas Is Updated
Digested From "Buy vs. Rent: An Update"
New York Times (12/22/10) by David Leonhardt
The New York Times recently updated its list of rent ratios -- the price of a typical home divided by the annual cost of renting that home -- for more than 50 metropolitan areas nationwide. Topping the list is East Bay, Calif., with a ratio of 35.9 followed by Honolulu (34.4) and San Jose (32.7). Ranking at the bottom were Pittsburgh (11.4), Cleveland (11.7), and Detroit (12.4). The data, which comes from Mark Zandi of Moody's Analytics, covers the second quarter of this year. According to columnist David Leonhardt, "A good rule of thumb is that you should often buy when the ratio is below 15 and rent when the ratio is above 20. If it's between 15 and 20, lean toward renting -- unless you find a home you really like and expect to stay there for many years."
Industry News
CallSource Builds Learning Mgmt System for NAA & Affiliates
Digested From "CallSource Delivers Custom LMS to NAAEI and NAA Affiliated Associations"
Benzinga (12/16/2010)
CallSource, an industry leader in call tracking and recording, performance analytics, sales and management training, has announced a an exclusive partnership with the National Apartment Association Education Institute (NAAEI) to deliver a custom Learning Management System (LMS) known as the “NAAEI Online University." It will be used by the National Apartment Association and its affiliated state and local associations and their members throughout the United States. CallSource and the NAAEI are committed to improving the training experience for the members of all NAA affiliates, and the LMS makes that learning available 24/7/365. The online-based education will reduce the cost of education without reducing its effectiveness and will also increase its availability. "The National Apartment Association Education Institute sought to improve communications with and provide additional value to its affiliated local and state apartment associations around the country. After reviewing proposals from various educational and technology companies, the NAAEI selected CallSource to design a custom learning management platform for the NAAEI and its state and local apartment associations," said Maureen Lambe, CAE, NAAEI Executive Vice President.
CEOs Are Urged to Do More to Keep Top Employees
Digested From "Message to CEOs: Do More to Keep Your Key Employees"
Wall Street Journal (12/27/10) by Joann S. Lublin
Veteran management adviser Ram Charan urges CEOs to take steps now to prevent defections of key employees in 2011. He states, "The biggest risk is top management not knowing explicitly whom they depend on lower in the organization for success." Specifically, he thinks that companies in the industries of personal computing and generic drugs should consider extensively shaking up senior management in 2011 as they will be competing against businesses from emerging markets that are "faster, cheaper, and on the offensive." Charan has counseled hundreds of CEOs over the past 40 or so years, including ones at Ford Motor Co. and General Electric.
CEO Optimistic About Orange County Multifamily for 2011
Digested From "2 Percent Rent Hikes Seen for Apartments in '11"
Orange County Register (CA) (12/24/10) by Jeff Collins
Lyon Apartment Communities Chairman and CEO Frank T. Suryan Jr. gives his 2011 outlook for Orange County, Calif.'s apartment sector. He describes him and his staff as being "cautiously optimistic" about the year ahead, stating, "Although the economy continues to experience challenges, our portfolio is experiencing positive activity as renters gravitate toward quality during this challenging market. That has resulted in rent growth, and we foresee that continuing next year." He adds that economic growth and job creation will continue to be at the forefront of any sustained change. In addition to growing confidence in their own job security, projected job gains should give workers enough confidence to make housing decisions that will help revitalize the market. "Thus, as the market continues to slowly strengthen in 2011," he concludes, "I believe we will see many of the residents who are living with roommates gain enough economic confidence to move out on their own but remain in the same community that they currently enjoy."
San Antonio Multifamily Gains Investment Ground in 2010
Digested From "Multifamily Market Gains Investment Ground in 2010"
San Antonio Business Journal (12/24/10) by Tricia Lynn Silva
A recent uptick in investment activity in San Antonio's apartment sector has local property brokers feeling that the worst may be over. Austin-based multifamily research firm Austin Investor Interests reports that two dozen area apartment communities changed hands during the first three quarters of this year. By contrast, over that same time period a year earlier, 18 apartment communities had traded owners.
Wichita Competes to Fill Lower Number of Vacancies
Digested From "Apartment Communities Compete to Fill Lower Number of Vacancies"
Wichita Business Journal (KS) (12/24/10) by Daniel McCoy
According to a list of apartment communities published last week in the Wichita Business Journal, occupancy rates at some of Wichita's biggest apartment communities either held firm or increased this past year. This, in turn, has resulted in increased competition to lure the potential apartment residents who remain in the market. Nine of the 11 apartment communities surveyed with comparable data from 2009 reported either higher or flat occupancy rates throughout 2010. More and more apartment managers say they are having to be proactive in what is an increasingly competitive market. This means heightened use of incentives to lure potential residents.
Modest Pay Increases Expected in Year Ahead
Digested From "Modest Pay Increases Expected in Year Ahead"
Wall Street Journal (12/27/10) by Joe Light
The new Hay Group survey of compensation and human-resources managers reports that companies plan to raise their salary budgets a median of 2.8 percent in 2011 after giving median 2.4 percent raises in 2010. However, next year's projected pay hikes are still more than a percentage point below the 4 percent yearly raises seen from 2005 to 2007. Tom McMullen, North American reward practice leader for Hay Group, comments, "As long as the economy is sputtering, raises will gradually inch upward, but many companies will be conservative in increasing their base costs." The survey of 468 firms found that the energy and life-sciences industries had among the biggest expected increases at 3.6 percent and 3.3 percent, respectively, while financial services -- at 2.9 percent -- had one of the smallest.
Houston Affiliate Names President and President-Elect
Digested From "People in Business"
Houston Chronicle (12/24/10)
The Houston Apartment Association last week elected Kim Small as president and Jenifer Paneral as president-elect for 2011. The former currently serves as Morgan's senior vice president and director of national operations. The latter, meanwhile, is senior vice president and COO of property management at Concierge Asset Management.
Hamilton Co. Acquires Multifamily Portfolio in Boston
Digested From "Harold Brown's Hamilton Co. Acquires Multifamily Portfolio in Arlington and Cambridge"
Boston Business Journal (12/21/10)
The Hamilton Co. has paid $41.2 million for a Boston-area portfolio of apartment communities previously owned and managed by a private trust. The deal involved 316 rental units spread throughout the Beantown suburbs of Arlington and Cambridge. The seller, a combination of private trusts, was represented by Cushman & Wakefield's capital markets. The deal marks the latest in a string of high-profile transactions for apartment communities, considered by most commercial real estate professionals as the only viable area of investment considering the economy's effects on such rival asset classes as offices and retail. Nationwide, Greater Boston is widely considered as one of the strongest markets within the multifamily housing sector.
Budget Woes for Phoenix-Area Apartments
Digested From "Budget Woes for Apartments"
Arizona Republic (AZ) (12/19/10) by J. Craig Anderson
Scores of apartment owners in the Phoenix, Ariz., metro area have been forced to short-sell their communities, and many others have been foreclosed upon by lenders. According to attorney Margaret Steiner, the problem is that many apartment owners have seen the value of their assets plummet more than 50 percent and their occupancy decline to the point where the owners no longer can afford to make their loan payments. Steiner explains what has been happening to apartment owners who have been forced to sell short or have their property sold at a foreclosure auction. In either scenario, the lender has been holding the apartment owners responsible for the unpaid balance of their debt. However, the amount owed by former owners often can be disputed or negotiated successfully. Steiner also warns struggling apartment owners about the tax liabilities associated with loan forgiveness and advised them to consult with a tax expert.
Group Puts $200M in Apartments Up for Sale
Digested From "Group Puts $200M in Apartments Up for Sale"
Dayton Daily News (OH) (12/18/10) by Tim Tresslar
Factors such as a drought of new apartments and weakness in single-family homes prompted the Connor Group to anticipate selling between $300 million and $350 million in properties by September of next year. Based in Centerville, Ohio, the group has seven properties in the Dayton area and $1.3 billion in assets and nearly 16,000 apartment units in Ohio, Georgia, North Carolina and Texas. It has put $200 million in apartments on the selling block in the last four months, listing four of its Cincinnati properties and two in Columbus as well as some in Texas and North Carolina. Larry Connor, managing partner, attributes the apartment sector’s resiliency to declines in new apartment construction over the last couple of years combined with continued strong demand from tenants. He also says investors have returned to the sector as a place to generate returns. Brian Murphy, a senior associate with Marcus Millichap in Cincinnati who specializes in multifamily housing, said luxury and high-end apartments are especially attractive to investors seeking stability.
Legislative/Legal News
Cincinnati Nuisance Law Criticized by Apartment Interests
Digested From "Nuisance Law Criticized by All Sides"
Cincinnati Enquirer (12/25/10) by Mike Boyer
Three years after Cincinnati enacted a "chronic nuisance" ordinance to force apartment owners to be more accountable for problems at their communities, administration of the law continues to be a source of controversy among owners, neighborhood councils, and the city's Police Department. Downtown Property Management Inc., one of the city's largest apartment owners, is suing the city in federal court. The company, with a portfolio of nearly 3,000 apartment units, argues that the law is overly vague and is not equally applied to all. Cincinnati's nuisance ordinance is modeled after the one in Milwaukee. It enables city police to bill apartment owners for the cost of police calls if they generate too many complaints for any of more than a dozen offenses from loud noises to felony assaults. Under the ordinance, multifamily housing units are considered a chronic nuisance if they generate more than three calls in a 30-day period or from six to 18 calls -- depending on the number of apartments -- in a calendar year. Once an apartment community has been tagged as a chronic nuisance, police can put the owner on warning to craft a plan to reduce the nuisance calls and/or face monthly bills for police calls and even possible criminal fines. Downtown Property and other large owners counter that the annual nuisance call threshold discriminates against them because of the large numbers of people who live in their apartments. Cincinnati police say stepped-up enforcement and ongoing owner training on dealing with problem residents has reduced the number of nuisance calls by 12 percent in the past two years.
California County Pushes for Smoke-Free Communities
Digested From "SLO County Pushes for Smoke-Free Apartment Buildings"
KSBY.com (12/23/10) by Carina Corral
A major push is underway to make more apartment communities in California's San Luis Obispo County smoke-free. Christina Lefevre, a health education specialist with the county's Tobacco Control Program, remarks, "In the past few years, we have seen a slow and steady increase in the number of apartment buildings that have gone smoke-free, but we still have a long way to go. Many buildings still allow smoking on all or some of the property. It is the primary complaint we receive." Apartment residents with children are among the most vocal. A new study in the January issue of Pediatrics shows children who live in smoke-free apartments, but have neighbors who smoke, still suffer from exposure to smoke because it seeps through walls or shared ventilation systems.
Senate Fails to Approve Fannie/Freddie Nominee
Digested From "Fannie and Freddie Regulator in Doubt After Senate Fails to Approve Nomination"
GFSNews (12/23/2010) by Will Henley
President Obama's nominee to regulate U.S. mortgage finance agencies may face a battle after the Senate adjourned until 2011 without casting a final vote on his appointment. Joseph Smith Jr.'s name was submitted in November to be director of the Federal Housing Finance Agency and passed a committee vote in mid-December. With five more Republicans set to join the Senate in the new Congress, there is some doubt over whether the appointment will pass muster in an increasingly partisan environment on Capitol Hill.
Apartments Targeted in New Tax Plan in Ridgeland, Miss.
Digested From "Apartments Targeted in New Tax Plan"
Madison County Journal (12/22/10) by Matt Stuart
A 1-percent sales tax increase is being pushed by city officials to redevelop the southeastern section of Ridgeland, Miss., by, among other things, reducing the number of apartment communities. If approved through a ballot measure, the tax would be levied on all sales, generating an estimated $6 million to $8 million in revenue to be dedicated to redevelopment. Ridgeland Mayor Gene McGee said that if the legislation passes, the city would be able to address a myriad of issues in southeast Ridgeland, including overhauling dilapidated areas that have been a source of numerous code violations and complaints and revitalizing aging infrastructure to make the area more suitable for potential developers. A specific area of concern has been several apartment communities that city leaders have been critical of due to their poor condition. The cost to make repairs and remedy the violations is estimated to be more than $1 million, and the issue is expected to go to Municipal Court soon.
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