Housing Is Up, But Is the Foundation Sound?
Digested From "Housing's Up, but Is Foundation Sound?"
Wall Street Journal (06/10/13) P. A2 Timiraos, Nick
Demographics will play a major role in the strength and length of the housing marketing recovery. Those bullish on housing expect the rebound to last for several years because new-home construction and household formation fell during the downturn even though the U.S. population continued to grow. As more young adults move out of their parents' homes, they will seek apartments before achieving homeownership, and those who put off buying a home during the recession are now ready to make purchases. Even after taking the so-called shadow inventory into account, the bulls say more housing units need to be built. Zelman & Associates calculates that 14 million additional housing units are needed this decade to accommodate population growth, but only 5.7 million will be built by 2015. With another 2 million homes per year needed during the last four years of the decade, analysts believe the economy will reap the benefits of increased construction. Ivy Zelman of Zelman & Associates says, "It's all about occupancy and shelter." Meanwhile, the bears believe tighter credit standards, higher consumer-debt levels, and too much of a reliance on investors mean the housing recovery will be short-lived. They believe many Americans will find it difficult to obtain mortgages because income growth has stalled and they carry too much debt. Would-be first-time buyers with a lot of student loans could be hit the hardest.
Market Trend Insights
What's Going Right for Apartments on the Left Coast?
Digested From "Apartment Fundamentals on West Coast Continue to be Strong, Schall Says"
REIT.com (06/12/13) Irzinski, Mitch
Essex Property Trust President and CEO Michael Schall declares that apartment fundamentals on the West Coast continue to be strong. He remarked, "We just received our April-May 2013 results, which indicate that same property revenue is up 6.3 percent, which accelerated from [the first quarter] and is above the midpoint of the guidance rating for 2013." Northern California and Seattle continue to drive the regional market. Meanwhile, Southern California's apartment sector continues to rebound at a steady, gradual pace. Schall went on to describe the acquisitions market in light of the strong fundamentals. "Owners of property are pretty pleased with the current conditions, [and] they see the economy getting better," he said. "Buyers on the other hand, have seen a lot of rent growth already occur and are concerned about overpaying." According to Schall, Essex Property Trust will keep its West Coast development activity conservative. The REIT currently has nine communities under construction right now, for an aggregate estimated cost of about $1 billion. He concludes, "Our strategy on the development side is to be an early-cycle developer. . . . We expect to slow down our development activity as we get further along in the economic cycle."
No Hard Living for Apartment Owners in the Big Easy
Digested From "New Orleans Area Apartment Rents, Occupancy Rates Continue to Rise"
New Orleans Times-Picayune (06/14/13) Sayre, Katherine
The New Orleans metro area's apartment sector continues to see rising average rents and occupancy rates, according to a report issued twice annually by apartment brokers Larry G. Schedler & Associates, the mortgage firm Madderra & Cazalot, and the Multi-Family Advisory Group in Metairie. The report is based on a survey of 130 apartment communities, including more than 30,400 rental units over a six-month period that ended in April. Researchers found that Algiers registered the biggest recent uptick in rents. Meanwhile, New Orleans' historic core neighborhoods and St. Tammany Parish show the most potential for future development. The study states: "The greater New Orleans apartment market is experiencing a period of stability with a sustained growth in occupancy and rents it has not seen in more than a decade. Today, market rate occupancies are at 93 percent, and average rents are $1.02 per square foot. Combined with historic low interest rates and associated financing costs, apartment owners are experiencing exceptional returns." Occupancy rates averaged between 90 percent and 96 percent for all but one of the eight sub-markets in the study. Kenner was the lone trouble spot, with declining numbers of occupied apartments and lower rents compared to the previous six-month reporting period. In Algiers, the average monthly rent rose from $698 in fall 2012 to $727 this past spring.
How Lehigh Valley's Apts Came Through the Lows of Recession
Digested From "No Vacancy"
Allentown Morning Call (PA) (06/14/13) O'Donnell, Patrick
In 2011, U.S. Census figures show that apartment vacancies hovered around the 8.5 percent mark in Pennsylvania's Lehigh Valley area and homeowner vacancies were at 2 percent. Figures for 2012 are not yet available, but apartment industry professionals expect their side of the equation will almost certainly be much lower. The Great Recession had a lot to do with the numbers. Mindy Lacey, an account executive for the Lehigh and Berks County division of Apartment Finder, remarks, "People in general were just hunkering down and not committing to wanting to buy a house. They're renting, they're not buying." Mark Molitoris, senior vice president of DanJon Management, says the number of filled rental units has gone "through the roof" over the last six months at his company's communities. In DanJon's case, the influx of residents probably has a lot to do with price. Molitoris notes that DanJon has been "aggressively lowering the prices of the rents to attract people" for much of the past year. In some of its apartment communities, it has dropped rents by as much as $125 per month. Home Properties has also seen a "bump up" in rents locally. Regional vice president Kerri Haltom remarks, "In general, the properties are really performing phenomenally, with little to no vacancy. And what vacancies we have are not units sitting vacant, but units waiting to be moved into." She attributes Lehigh Valley's apartment boom not just to the recession, but also to the Valley's business growth.
Fannie Mae Survey Tackles Rent Vs. Own
Digested From "Most Renters Plan to Buy, but Fear Lending Standards"
A Fannie Mae survey shows that 90 percent of those who rent housing expect to buy a home down the road, but most are afraid that they would not qualify for a mortgage under current underwriting standards. The survey found that 42 percent of renters think they will have to wait at least five years to make a home purchase. Most respondents said they would improve their credit scores or finances or consider a less expensive home if they could not secure a mortgage, with just 25 percent of people who rent saying they would give up on getting a mortgage. Additionally, 51 percent of respondents said homeownership made more sense than renting in terms of financial and lifestyle benefits.
What Three Groups Are Driving Demand for Green Bay Apts?
Digested From "Downtown Living Space in High Demand"
Green Bay Press Gazette (06/09/13) Ryman, Richard
While demand for living space in downtown Green Bay is strong, the number of available apartments and condominiums falls short. According to Marcelo Cruz, associate professor of Urban and Regional Studies at the University of Wisconsin-Green Bay, there are three demographic groups driving the increased interest in multifamily housing: empty-nesters; young, upwardly mobile professionals; and dual-income married couples with no children. Several apartment communities are in the pipeline, but downtown property managers say people are ready to move now. "We don't see demand falling any time soon," said Christopher Naumann, executive director of On Broadway Inc. Experts say more people want to live downtown, be closer to work, and reduce commuting time. Building owners and managers say rental apartments and for-sale condos along both sides of the Fox River are at or near full capacity.
Deals and Transactions
Which Firm Is Looking to Increase Apartment Holdings in NM?
Digested From "Peak Capital Partners Acquires its Third NM Apartment Complex"
Albuquerque Business First (06/11/13) Scott, Damon
Peak Capital Partners recently acquired its third apartment community in New Mexico, the 216-unit Sandia Valley in Albuquerque. The Utah-based residential multifamily investment firm said that it will begin improvements to the property, including new landscaping and a renovated clubhouse. "Albuquerque is a significant focus market for us," said Jeff Danley, founder and managing partner of Peak Capital. "Our firm is actively looking to acquire multifamily communities across the greater Albuquerque and Santa Fe areas." The purchase price of the deal was not disclosed.
Go West, Young Crescent Communities!
Digested From "Crescent Communities Heads West to Build Apartments"
Charlotte Observer (NC) (06/13/13) Roberts, Deon
Crescent Communities last week announced plans to expand its apartment construction activity to the Southwest U.S. As part of that strategy, the Charlotte-based company is opening an office in Denver and developing a 275-unit, luxury apartment community in Scottsdale, Ariz., in partnership with Glimcher Realty Trust. To date, Crescent has primarily focused on the Southeast. However, it has completed some mulitfamily housing communities in the West, including condominiums in Phoenix and a student-housing community in Austin, Texas. A company press release stated there is a "need for additional multifamily housing in several key markets in the Southwest."
NAAEI Salutes Vets Interested in Apartment Careers
Digested From "Apartment Industry Groups to Host Career Fair for Veterans"
San Diego Business Journal (06/10/13)
The National Apartment Association Education Institute (NAAEI) and the San Diego County Apartment Association have scheduled a career fair for military veterans and their spouses for June 19. According to a statement from the two groups, hiring representatives from approximately 50 apartment-related companies will be on hand. The career fair is limited to veterans, transitioning military personnel, and their spouses. It is being held in conjunction with the 2013 NAA Education Conference and Exposition. Fair organizers are donating exhibitor booth space fees to Armed Services YMCA San Diego and Reboot, a organization that provides training and other assistance to transitioning veterans.
Camden Property Trust Announces Q2 2013 Dividend
Digested From "Camden Property Trust Announces Second Quarter 2013 Dividend"
The Herald (06/14/13)
Camden Property Trust's board of trust managers has declared a second-quarter cash dividend of $0.63 per share, which will be payable July 17 to shareholders of record as of June 28. The Houston-based multifamily housing REIT has ownership stakes in 178 apartment communities containing 61,737 rental units nationwide. It currently has nine additional communities in various stages of development that will boost its total portfolio to 64,582 apartments once completed. Camden was recently named by Fortune Magazine as one of the "100 Best Companies to Work For" in America for the sixth year in a row.
Why Is Apartment Demand Set to Explode in London?
Digested From "London's Renters Fuel Apartment Investing Boom"
Business Week (06/10/13) Callanan, Neil; Gower, Patrick; Spillane, Chris
More and more Londoners will be turning to rental housing after the U.K. capital's average home price passed 500,000 pounds (or US$778,000) in May. First-time buyers are having to borrow more than ever and save longer to afford a down payment. Consequently, leasing demand is poised to skyrocket, and apartment developers and investors are gearing up to build at a rapid pace. The Greater London Authority is forecasting that households renting privately owned apartments or single-family homes will increase from 25 percent in 2012 to 37 percent by 2025. Nick Joplin, executive director of Grainger PLC, the U.K.’s largest publicly traded residential landlord, states, "It's one of the most exciting, if not the most exciting asset class in the market today. Institutions are recognizing that, too." Investors ranging from Grainger to Dutch pension-fund asset manager APG to developer Quintain Estates & Developments are among those already seeking to profit. Meanwhile, such others as New York-based private-equity firm KKR & Co. have said they are considering entering the London market. Finally, Savills PLC estimates that at least 210,000 more U.K. households will seek to rent in the next three years, mostly in the capital.
Legal/Legislative Did You Know
Supreme Court to Hear Housing Discrimination Case
Digested From "Supreme Court to Hear Housing Discrimination Case"
Los Angeles Times (06/18/13) Savage, David G.
On Monday, the Supreme Court opted to take up a politically volatile housing discrimination issue that the White House had gone to great lengths to keep away from the court. The justices voted in favor of hearing a New Jersey city's appeal arguing it could not be held liable for housing discrimination in redeveloping a depressed area of town and reducing the number of homes that are available to Latinos and African Americans in the process. The core issue is whether the Fair Housing Act forbids actions by cities or mortgage lenders that end up having a "discriminatory effect" on minorities. This will be a first for the Supreme Court, as it has never ruled on whether the Fair Housing Act extends to discrimination claims where there may be no proven intent to discriminate but rather a statistically demonstrated "discriminatory effect" or "disparate impact."
Five Ways NY Apartments Can Guard Against Climate Threats
Digested From "NYC Airs Ideas for Preparing Buildings for Storms"
Associated Press (06/13/13) Peltz, Jennifer
A New York City-commissioned report details at least five ways buildings can guard against climate threats. According to the report, apartment towers should be outfitted with common faucets that would work in a power failure and windows and doors that are wind-resistant. The report, produced by the Building Resiliency Task Force, also called for requiring most new apartment buildings to be able to power emergency lighting in hallways and stairwells for extended blackouts. Other suggestions include urging owners to move electrical and other key equipment to higher floors and extending requirements for light-colored roofs to keep buildings cooler. Commercial skyscrapers, meanwhile, should have exterior hookups for generators.
Texas Apartment Association Urges CARE to Avoid Heat Stress
Digested From "CARE Offers Help for a Hot Summer"
Times Record News (TX) (06/12/13)
With temperatures heating up across the Lone Star State, the Texas Apartment Association (TAA) is urging its more than 10,700 members to promote its Neighbors CARE program to residents of rental housing. Established in 1998, the program advocates awareness of heat stress symptoms and encourages apartment residents to care for their neighbors to help minimize the potential for people suffering heat stress symptoms and ailments. "Experts tell us that one of the best ways to prevent heat-related tragedies is for neighbors to look out for each other and check on each other regularly," said George B. Allen, executive vice president of the TAA. "That's what we're asking our members to encourage their residents to do." The group is encouraging residents to check on their neighbors daily, take precautions themselves, and report any concerns about the health and safety of anyone to the proper authorities. "We're also asking our members and their residents to support, where available and possible, the utility company bill checkoff programs that allow individuals to contribute money to assist with the utility bills of those less fortunate," Allen said.
What WI City Is Pondering a Moratorium on Rental Conversions?
Digested From "La Crosse Ponders Moratorium On Converting Homes Into Rentals"
Wisconsin Public Radio News (06/05/13) McCollum, Maureen
In Wisconsin, La Crosse Mayor Tim Kabat has proposed a moratorium on converting certain homes into rental housing. About 50 percent of the homes in La Crosse are rentals. The city's Neighborhood Revitalization Commission unanimously supported Kabat's proposal to temporarily stop converting single-family homes into rental properties -- a moratorium that would last for at least a year. La Crosse requires an owner to register such properties, although La Crosse officials lament that some do not. According to Commission Vice Chairman Andrew Londre, the moratorium would give city leaders time to develop better standards. He comments, "A lot of times these rental properties are being converted by landlords who don’t have the best of intentions. Rental properties bring in a whole host of issues that are entirely different from what most people are used to dealing with." One example is the rise of college students moving into more traditional family neighborhoods. Pamela Strittmater, president of the Apartment Association of the La Crosse Area, is concerned that the moratorium will have a negative impact on responsible owners. He asks, "Is anyone going to want to buy a house in the city of La Crosse if they run into a situation where they can't sell it or they can't rent it? Or are they going to take that risk and go elsewhere?"
The 2013 NAA Education Conference & Exposition Starts Tomorrow: Here’s Five Things You Need to Do to Prepare
Before you arrive in San Diego for the 2013 NAA Education Conference & Exposition, June 19-22, follow these four steps to maximize the return on your investment and time.
1. Use myNAAPlanner
A convenient tool that offers attendees the ability to schedule their conference experience in advance, choosing the plan that offers the best return on your time and money investments.
2. Download the mobile app. The NAA Education Conference and Exposition app, sponsored by Apartment Guide, is available for Apple and Android smart phones and tablets, and offers a conference dashboard, scheduling functionality, event overviews and much more.
Visit the mobile app webpage for downloading instructions.
3. Keep An Eye on #naaeduconf Get yourself and your tweets in front of influential multifamily housing professionals, follow what’s trending and be the first to know of special announcements and offers.
4. Join the National Apartment Association Community on LinkedIn and become a fan of NAA on Facebook. Use social media to its fullest potential: communicate with like-minded peers and connect with each other before arriving onsite.
5. Attend the Conference Kick-Off Celebration, Wednesday, June 19, 4:45 p.m. to 6:45 p.m. Even if you’re a veteran of the NAA Education Conference & Exposition, attendance at the Conference Kick-Off Celebration is key for those wishing to make the most of their experience in San Diego.
There is still time to register. No matter your schedule or budget, NAA offers a range of registration options for the 2013 NAA Education Conference & Exposition.
Registration Now Open for the 2013 Apartment Revenue Management Conference
In its third year, the Apartment Revenue Management (ARM) Conference®, September 23-25 in Miami, is the apartment industry’s sole event dedicated to staying ahead of the ever-changing operational curve.
Interested in strategies and tactics to improve revenue generation? Are you responsible for ancillary income? You’re not alone. The ARM Conference® is the place to be for revenue managers, operations executives, marketing directors, risk managers, rental housing business intelligence experts, pricing managers, investors, asset managers and anyone else who understands (or wants to learn about) the value inherent in revenue management.
Learn more about the ARM Conference® and register today!
Order 2013 NAA Education Conference Sessions for Only $199
It’s not too late to pre-order REWIND, the Education Sessions from the 2013 NAA Education Conference & Exposition. Now through June 6, you can purchase 21 video and 20 PowerPoint-synced audio sessions for only $199.
Order your sessions today!
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