Name: Thomas K. Shelton
Title: President
Company: Western National Property Management
Q: What multifamily housing trend will most prominently impact the market this year?
A: “The major trend that will affect the multifamily market into 2010 is the state of the distressed property market, which is a direct result of the loosened lending parameters extended to owners and investors over the past several years. Many properties are on the verge of foreclosure, and this growth in inventory of distressed properties will have a direct impact on the multifamily market and its future in 2010. With owners of distressed properties focused on minimizing losses, rents are being driven down at other multifamily properties in the region or owners are forced to offer rental concessions in order to avoid losing residents to the attractive rental rates seen at competing distressed properties. Despite this struggle, these distressed properties will create fantastic opportunities for experienced property managers who will be hired to maintain the properties during the transition from owners to banks, as well as throughout the process of the banks deciding the next best move for each community.”
Q: What needs to change in order for investment activity in the multifamily housing marketing to rebound this year?
A: “In order for investment activity to begin to catch momentum, banks will have to begin lending, as well as decide their next steps with the large amount of distressed properties being placed on their balance sheets. Banks will have to determine reasonable rates at which to dispose of these properties to investors with liquidity available to close on the acquisition. On a positive note, there have also been recent acquisitions of multifamily properties that were purchased well below replacement costs and at significantly lower levels than their previous market values. Once a reasonable value level is determined, multifamily properties can begin changing hands between investors and banks, or between investors and owners hoping to dispose of properties prior to their foreclosure.”