NAA Industry Insider: Housing Crisis Over? Not So Fast, Say Most Americans | National Apartment Association

NAA Industry Insider: Housing Crisis Over? Not So Fast, Say Most Americans

June 10, 2014


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Top Story

Housing Crisis Over? Not So Fast, Say Most Americans
Digested From "Allure of Homeownership Slumps Amid Worries of Continued Crisis"
Wall Street Journal (06/03/14) Timiraos, Nick

While home prices have pulled out of their free-fall, a new MacArthur Foundation survey conducted by Hart Research Associates shows that the vast majority of Americans doubt the housing crisis is over. A whopping 70 percent of respondents believe the nation remains mired in a housing crisis, although that is down from 77 percent in 2013. Also, 19 percent of respondents believe the worst is yet to come -- a level that was unchanged from a year earlier. Meanwhile, roughly one in four respondents agree that the housing crisis is "pretty much over," up from one in five last year. While most non-owners said they still aspire to be homeowners, the poll affirmed that homeownership has lost its luster as a great and reliable wealth builder. Two thirds of respondents believe it is less likely today than it was two or three decades earlier to build equity and wealth via homeownership. The survey shows that 50 percent of respondents believe buying a home is an "excellent long-term investment" versus 43 percent who said it was no longer so. Homeownership was most popular among Hispanics and residents of the West, while it was less popular among those who had not attended college and in the Northeast.

Market Trend Insights

Why Apartment Rents Are Growing Faster in Secondary Markets
Digested From "Apartment Rents Growing Faster In Secondary Markets"
NuWire Investor (06/04/14) Anderson, Bendix

According to 2014 projections from Reis Inc. and Pierce Eislen, apartment rents will grow faster in many secondary markets than in the top primary markets of New York City and Los Angeles. Apartment investors have been turning toward such smaller markets since the first of this year in search of higher yields on their investments. Rising rents are expected to make those markets even more attractive. In 2014, the top 10 metro areas for multifamily housing rent growth will not include New York City, L.A., Boston, or Chicago, notes the latest Reis forecasts. Instead, rents are on pace to grow more quickly in such secondary markets as Denver, Dallas, Houston, and Nashville. All four are poised to grow their average rents by more than 4 percent this year, according to Reis researchers. The one thing these secondary markets all have in common are local economies that are dependent on quickly growing industries. "The tech and energy markets are very prevalent," states Reis senior analyst Brad Doremus.

Projections from Pierce Eislen, an affiliate of Yardi Systems Inc., spell even stronger growth for average apartment rents in markets as diverse as the Southwest Florida coast (9.3 percent); Portland, Ore. (6.0 percent); and Atlanta (6.0 percent). Robert Kadoori, senior vice president for debt and structured finance with CBRE capital markets, concluded, "Many of those economies are recovering. There seems to be a consensus that their time has come."

Hatzius Credits Household Formation for Improving Economy
Digested From "Goldman's Top Economist Just Made the Call We've Been Waiting 5 Years to Hear"
Business Insider (06/09/14) Weisenthal, Joe

Jan Hatzius, Goldman's top economist, this week said the words many have been waiting to hear for the last five years -- that the economy is now growing at an above-trend pace thanks largely to new household formation. In fact, he and his colleagues are forecasting a further pickup in the underlying growth pace to more than 3 percent due to the improving housing sector. In addition to the continued favorable 30-year mortgage rates now available, Hatzius writes: "From 2006 to 2012, the share of 18-34 year olds who live with their parents increased by nearly 5 percentage points, equivalent to an extra 3.5 million individuals. Although the reversal of this surge -- which seems to have started last year -- is unlikely to be rapid given the gradual pace of labor market improvement and financial factors such as the high levels of student debt, ultimately we do expect much of it to reverse." Consequently, household growth will eventually exceed population growth in percentage terms, supporting Goldman's forecast that household formation will average 1.25 million per year over the next half-decade.

The Five Major Sacrifices Americans Make to Afford Their Rents
Digested From "Half of Americans Can't Afford Their House"
MarketWatch (06/09/14) Fottrell, Quentin

According to the "How Housing Matters Survey," commissioned by the John D. and Catherine T. MacArthur Foundation and carried out by Hart Research Associates, 52 percent of Americans have had to make at least one major sacrifice in order to cover their rent or home loan over the past three years. Such sacrifices range from getting a second job to deferring savings for retirement to cutting back on health care. Running up credit card debt and even moving to a less safe neighborhood have also come into play. Lawrence Yun, chief economist at the National Association of Realtors, remarks, "Affordability issues are real and a major hurdle. . . . Only by adding more new supply, via housing starts, can home prices be tamed" Home prices have indeed increased 20 percent over the past couple of years while wages have barely risen. While construction of housing units has averaged around 1.5 million a year for the last five decades, Yun thinks it is likely to be less than 1 million this year. Furthermore, at least 15 percent of U.S. homeowners are living in housing markets where the monthly mortgage payment on a median-priced home requires more than 30 percent of a household's monthly median income.

What Parts of the U.S. Are Drawing the Most Movers?
Digested From "South, West Draw Biggest Share of Movers"
USA Today (06/03/14) Henderson, Tim

A Stateline analysis of recently released Census Bureau population estimates shows that Texas, Florida, North and South Carolina, and Colorado ranked as the strongest people magnets between 2010 and 2013. During that time span, the five states attracted nearly 1 million movers combined. Due to a decrease in immigration from other countries, researchers say relocations are now the primary force for population change in the United States. Texas passed Florida, which drew the most movers a decade ago (from 2000 to 2003). At the other end of the spectrum, New York, Illinois, California, New Jersey, and Michigan together have lost almost 1 million people to interstate moves. By region, nearly a net 1.2 million people left the Northeast and Midwest for the South and West between 2010 and last year, according to the Stateline report. Rebecca Tippett, director of Carolina Demography, observes, "North Carolina and Texas are very similar in that they're both what we call 'sticky states' -- the percentage of adults born here who are still living here is very high, plus we are both really large migrant destinations." North Carolina has been drawing people of all ages due to a mix of academic institutions in the Raleigh-Durham area, financial centers in Charlotte, and mountain retirement colonies and military bases such as Fort Bragg. Texas, though, is tops. Over the past decade, the number of people moving to the Lone Star State has almost quadrupled from 100,000 to more than 400,000.

Anchorage Housing Gridlock Chills Cash-Strapped Residents
Digested From "Anchorage Housing Gridlock Driving up Rental Costs"
KTVA (AK) (06/06/14) Greene, Charlo

Anchorage's housing market is in a state of gridlock, with the demand for housing outpacing production. This, in turn, is driving rental rates into the stratosphere. A new study by the United Way of Anchorage found that of the 25 most common jobs in the Alaskan city, only seven pay enough for someone to afford local housing. "Right now, a household has to have 2.8 minimum wage jobs to be able to afford a one-bedroom apartment," laments United Way of Anchorage President Michele Brown. "That's not sustainable." Due to Anchorage's housing gridlock, nearly 50 percent of the population spends at least half of their income on housing. At that rate, the United Way of Anchorage says a single missed paycheck -- due to illness, loss of a job, etc. -- could be the difference between keeping or losing housing. The United Way hopes to have 18,000 new housing units, mostly multifamily housing, built by 2030. Brown has vowed to continue working with the Anchorage Assembly and other area agencies to make those plans a reality.

Where in Austin is High-End Apartment Construction Booming?
Digested From "Lakeshore Boulevard Home to High-End Apartment Construction" (06/02/2014) Kovar, Heather

High-end apartment construction is currently booming along Lakeshore Boulevard in East Austin, Texas. These new communities are taking the place of rental units that a few years ago cost between $500 and $600 a month. The new additions are more than twice the price of the ones they are replacing. To keep up with the demands of this growing area, the Austin Parks and Recreation Department is now working with the Trail Foundation to develop a master plan for a park on Lakeshore Boulevard. The plan is to keep the park as a tranquil refuge that will have better connections to adjacent parks, restore the water's edge, enhance wildlife, and reduce erosion. The Austin City Council is set to vote on the master plan before the end of the month.

Why Some Who Got Mortgage Help May Still Lose Their Homes
Digested From "Why Homeowners Who Got Mortgage Help May Still End Up Losing Their Homes"
Washington Post (06/02/14) ElBoghdady, Dina

Based on an analysis of mortgages modified between 2008 and 2013 to help distressed homeowners dodge foreclosure, many of the loans may be back in danger of default as their temporary interest rate reductions expire. Black Knight Financial Services, which prepared the report, suggests that some borrowers will not be able to handle the gradual interest-rate hikes and higher payments that come with them. This is particularly true if the loan balance is greater than the property's current value, as is the case for about 40 percent of the loans. "Given that the data has shown quite clearly [that] equity -- or the lack thereof -- is one of the primary drivers of mortgage defaults, these resets may indeed pose an increased risk in the years ahead," warns Black Knight's Kostya Gradushy. The firm looked at both proprietary and government loan workout programs. In addition to borrowers who benefited from modifications, it also waved a red flag for those who, with less than 10 percent equity, are on the brink of being underwater. For these homeowners, Gradushy explains, even the slightest price adjustment can have huge ramifications. For example, a 0.25 percent decline in property values from December through January spiked the number of underwater loans in the Fort Hood, Texas, area by 20 percent. Moreover, low-equity sellers probably will have to bring cash to settlement to cover agent commissions. "So even if your house is worth exactly what you owe on your mortgage, you are still technically underwater," according to Gradushy.

Deals and Transactions

Greystar Shines With Its Acquisition of Riverstone Residential
Digested From "New Apartment Leader Emerges With Greystar's Acquisition of Riverstone Residential"
Triangle Business Journal (06/06/14) Hoyle, Amanda Jones

Greystar Real Estate Partners this past week acquired national apartment-management firm Riverstone Residential Group for an undisclosed sum. London-based CAS Capital Limited was the seller. Charleston, S.C.-based Greystar was already among the biggest managers of apartments in the country. The combined portfolio will include more than 350,000 rental units in 41 states and the District of Columbia. Along with property management, the firm performs investment management and development functions. It recently expanded its operations internationally to the United Kingdom and Mexico. Prior to the transaction, Riverstone's total assets under management were valued at more than $17 billion.

Morgan Properties Buys Big MF Portfolio for $309 Million
Digested From "Morgan Properties Acquires 2,700-Unit MF Portfolio for $309M" (06/03/14) Morphy, Erika

Morgan Properties this past week acquired a 2,700-unit multifamily housing portfolio in Maryland and Virginia for $309 million. The Pennsylvania-based company teamed up with the Saudi Arabia-based Olayan Group to complete the deal. The seller of the portfolio, which was selectively marketed by CBRE, was Berkshire Property Advisors. Freddie Mac provided the financing. The Mid-Atlantic Portfolio is comprised of nine apartment communities in such popular Washigton, D.C., suburbs as Hyattsville and Laurel, Md., and Newport News, Va. These include seven garden-style apartment communities erected between 1964 and 1972 and a couple of high-rise apartment assets built in 1964 and 1986. Jonathan Morgan, director of acquisitions and capital markets at Morgan Properties, describes the deal as "a value-add repositioning." He states that the company plans to invest a substantial amount in a renovation to bolster the portfolio's already impressive 95 percent occupancy rate. The deal is further proof of how important the Mid-Atlantic region has become for the company. Morgan concludes, "We are very active in Maryland and, with this deal, we have basically doubled our presence there."

Industry Buzz

5 Steps to Convert Outdated Fountains Into Low-Maintenance Planters
Digested From "5 Easy Steps for Converting Outdated Fountains into Low-Maintenance Planters"
Property Management Insider (06/06/14) Lee, Chris

More and more apartment owners and managers are discovering that converting an old or broken water fountain into an attractive, low-maintenance amenity is a great way to welcome guests and residents while making a statement for water conservation. Most are converting their leaky fountains into eye-catching planters. Those who are considering doing so should follow five easy steps. Step one of a fountain-to-planter conversion entails establishing a plan of action. The second step is to add proper drainage at the base of the fountain. According to the article's author, "this can be as simple as drilling 1/4- to 1/2-inch holes through the fountain." Step three is to install effective irrigation. Running irrigation lines and installing sprinkler heads is widely considered to be the best option for larger fountains. The fourth step is to fill the fountain with layers of rock and soil. Finally, the author urges the owner/manager to "get creative." Elevated fountains offer the chance to create layers of landscape that differ from typical flat, linear beds generally common across the fronts of properties. Recommended are colorful plants and annuals or perennials around the edges or on the exterior of the base.

What Your E-Mail Style Reveals About Your Personality
Digested From "What Your E-Mail Style Reveals About Your Personality"
Fast Company (06/08/14)

Unlike face-to-face communication, it can be more difficult to effectively convey important aspects of one's personality in e-mail. The question then becomes: How competently can the average person infer a personality from our e-mails? The answer boils down to four points. One, "your words define you." After all, people use language in different ways, and those differences are a function of personality. Two, "it's not just what you say but also how you say it." Poor grammar is typically a reflection of lower levels of IQ and academic intelligence. Long e-mails reflect energy and thoroughness. At the same time, such length can denote some degree of neediness and disorganization. Three, "it's easy for readers to misinterpret cues." Correct interpretations require paying attention to such contextual factors as awareness of the sender's main motivation. "It is also important to determine whether cues are truly related to senders’ personality or transient mood and behaviors," the article's author writes. Finally, "trust needs chemistry, which happens in person." Our impressions of others are rarely the same in the digital realm as in the physical world. Even phone conversations can omit key information about individuals' personalities.

Two Ways CHP Technology Will Benefit Equity Residential
Digested From "Aegis Energy Services, Inc. Contracts With Equity Residential Properties for Large-Scale CHP Project" (06/04/14)

Aegis Energy Services Inc. has reached an agreement with Equity Residential Properties to install Combined Heat and Power (CHP) systems in 16 of the REIT's large apartment communities in Boston and New York City. Aegis Energy's CHP systems are designed to do two things: one, reduce energy costs and, two, cut harmful emissions. The modular systems deliver heat and electricity from a single fuel source -- natural gas. Equity Residential owns and manages nearly 400 apartment communities. The company has long emphasized sustainability, issuing an annual Corporate Social Responsibility and Sustainability Report. The CHP systems will allow six of its 16 communities to convert from oil burning boilers to a cleaner, more efficient natural gas solution. The installations are expected to generate a yearly savings of more than $1.2 million.

What Milestone Did Home Properties Recently Celebrate?
Digested From "Home Properties Contact Center Answers 4 Millionth Call"
Wall Street Journal (06/08/14)

Home Properties, Inc. confirms that its Contact Center has answered its 4 millionth call since starting operations in November 2001. The apartment REIT's Contact Center is one of the industry's few in-house, multi-channel support centers for apartment residents and prospective residents. It serves Home Properties' 119 apartment communities containing more than 40,000 rental units and is open seven days a week, 365 days a year. It is presently staffed by a team of 21 Home Properties employees who work out of the Rochester, N.Y., headquarters. If any of Home Properties communities' team members are unable answer the phone immediately, those calls are automatically routed to the Contact Center. The Contact Center team also replies to e-mails requesting leasing information, as well as handles requests for 24-hour Emergency Maintenance Service and supports the live "Web Chat" function via Furthermore, the Contact Center provides support for Spanish-speaking residents and prospective residents. Bernie Quinn, senior vice president of property management operations, comments, "The Contact Center provides our residents with an invaluable service -- the ability to reach out to a helpful team member at any time and for any reason."

How Will Associated Estates Deal With Angry Shareholder?
Digested From "Associated Estates Ought to Sell, Shareholder Argues in Letter to Apartment Company's Board"
Cleveland Plain Dealer (OH) (06/04/14) Jarboe McFee, Michelle

A hedge-fund manager is pushing for major change at Associated Estates Realty Corp. In a letter sent recently to the company's board of directors, Jonathan Litt of the Land and Buildings investment firm contends that the Ohio-based apartment owner is primed for a sale. At the very least, he wrote, the REIT ought to consider a range of alternatives, such as changes to its board lineup or new management. Associated Estates currently owns around 50 apartment communities in nine states. For years, it has been trying to strike a balance between its stable Midwestern apartment communities and newer, more volatile investments in growing cities and coastal states. Litt contends that the public market is not the best place for the company, which might be better off being sold to a private-equity fund or even Litt's own firm. He wrote: "Were there to be a process to explore interest in a potential sale, we have no doubt that there would be multiple bidders with an interest in [Associated Estates] and its assets, and Land and Buildings and certain related parties would be prepared to participate as well."

Legal/Legislative Did You Know

What Ga. City Is Launching a New Crime Reduction Program?
Digested From "City Eyes Crime Reduction Program"
Marietta Daily Journal (06/04/14) Butschek, Hilary

In Georgia, the Marietta City Council is eyeing a new ordinance that would require apartment community owners to enroll in a crime reduction program if the crime rate on their property is higher than the city's average. The proposal would be a first in Cobb County. It is already being used in three states -- Arizona, California, and Texas. In a related development, the council's Public Safety Committee has approved a proposal to create an area along Marietta's Franklin Road that would enforce higher penalties on those who are convicted of drug-related crimes. The crime reduction program would require apartment owners to sign a criminal trespass affidavit, enabling cops to search the outside of the property for violations of fire, health, or city regulations. Officers would look at such things as lighting, fencing, and landscaping and require the apartment community to comply with property regulations and suggestions by police to slash crime locally. Each apartment community would be required to participate for at least six months. Finally, the program would require those apartment communities with inordinately high crime rates to be proactive in reducing illegal activities by holding regular crime watch meetings.

NAA Announcements

We’re Ready to Help You Reach New Heights… Are You?

Next week brings the industry event of the year—the 2014 NAA Education Conference & Exposition, June 18-21 in Denver—your opportunity to take your organization and your career to New Heights.

What awaits you in Denver? The real question is, “What doesn’t?”

• 50+ education sessions offering the latest trends and hot topics in all areas of rental housing management, from marketing and leasing to operations and management.

• 8 world-renowned featured speakers, including international acting sensation Michael J. Fox to leading entrepreneurs and “Shark Tank” alums Barbara Corcoran and Kevin Harrington to “The Apprentice” first season winner Bill Rancic, just to name a few. Read about all our unparalleled featured speakers.

• Attending the 2014 NAA Education Conference & Exposition will give you up to six continuing education credits—all you need to reach your NAA professional designation renewal goal.

• Four days of awe-inspiring networking events, from the Conference Kick-Off Celebration on Wednesday, June 18, the NAA Opening Party, “Festivals of Colorado” (Recreating the experience of some of the state’s best-known festivals all in one night and one location) to the Saturday NAA Awards Breakfast Celebration, featuring special guest speaker Alex Sheen, founder of because I said I would.

• 400+ multifamily service partners exhibiting in the Exposition, a space equivalent to four football fields chalk full of the latest and greatest products and services available to the rental housing industry.

And the list just keeps going. Between the scheduled events and surprises in store, missing this event might just be the biggest mistake in your professional career. Register today and we’ll see you in Denver!
Looking To Maximize Your Multifamily Assets? You’ve Come to the Right Place

Register today for the 2014 Maximize: The Multifamily Asset Management Conference—October 13-15 at the Amelia Island Plantation Resort in Amelia Island, Fla.—the industry’s only event dedicated to staying ahead of the ever-evolving operational curve. The new name for the incredibly successful Apartment Revenue Management Conference reflects the important role that revenue management plays in professional apartment management.

Nowhere else but the Multifamily Asset Management Conference can you find world-class education and first-rate networking, as well as ideas and strategies for boosting net operating income. Maximize: The Multifamily Asset Management Conference focuses on five key areas: Expense Management Strategies; Revenue Enhancement and Pricing Strategies; Data Analytics and Performance Benchmarking; Capital Markets Financing Strategies; and Innovation.

Have something to say? Visit the conference website for full details on submitting your proposal. Then, make sure to register today and be first in line for the information, insight and answers to questions necessary to boost your bottom line.

2013 NAA Annual Report Available

NAA enjoyed another outstanding year in 2013. We invite you to enjoy this digital recap of our highlights. View the report in it's entirety on the NAA website.
Supplier Success Course Offered at the 2014 NAA Education Conference & Exposition

The Supplier Success course is designed to offer an overview of the apartment industry and recommends ways that suppliers can maximize partnerships with apartment owners, apartment management companies and apartment association members. It has been written by successful apartment industry suppliers with years of professional experience.
Wednesday, June 18, 10:30 a.m. – 4:30 p.m.

This course is limited to 50 suppliers and is not included in the conference registration. The price is $99 for members and $129 for non-members. To register, contact Shana Treger.
NAAEI Designation Courses Offered Near You!


Nevada State Apartment Association
September, 2014

Roanoke Valley Apartment Association
November, 2014

CAM Online


South Dakota Multi-Housing Association
September – October, 2014

Apartment Association of Greater Omaha & Lincoln
September – November, 2014

Lubbock Apartment Association
October – December, 2014

Connecticut Apartment Association
October – December, 2014

Roanoke Valley Apartment Association
October – November, 2014


Chicagoland Apartment Association
July, 2014


Roanoke Valley Apartment Association
September, 2014

NALP Online


Nevada State Apartment Association
September, 2014

Roanoke Valley Apartment Association
November, 2014

NAAEI Leadership Experience: Powered by Dale Carnegie:

Greater Cincinnati Northern Kentucky Apartment Association
October, 2014

Find more courses in your area on the NAA website.

For more information about any of the classes listed, please contact Kimberly McCrossen at 703-518-6141 ext. 121.
Did You Know?

Each month we have a units Magazine exclusive come out before the magazine hits your mailbox! This month's exclusive is "We're Family. Multifamily." Check out the story today.
Upcoming Events

2014 NAA Education Conference & Exposition
June 18-21
Colorado Convention Center

2014 Multifamily Asset Management Conference
October 13-15, 2014
Amelia Island Plantation Resort
Amelia Island, Fla.

Need Some Humor With Your Multifamily News?

Don't forget to check out Lauren Boston's weekly blog for a humorous take on all the latest trends in the multifamily housing industry. Check out Lauren's latest blog!
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