NAA Industry Insider: 10 Things Generation X Won't Tell You

July 1, 2014
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10 Things Generation X Won't Tell You
Digested From "10 Things Generation X Won't Tell You"
MarketWatch (06/30/14) Fottrell, Quentin

Many Gen Xers are in bad shape economically, and that is because they bought their first homes just prior to the housing market's crash. Surging house prices during the first part of this century helped build wealth for people who bought homes prior to 2000. But many people now in their 30s and 40s purchased at bubble prices and are still feeling the negative effects today. Consider that from 2007 to 2010, the median net worth of Gen Xers fell by 45 percent, according to Pew, with declining home equity accounting for the lion's share of the drop. Housing finances and net worth are just some of the many detailed characteristics described by Marketwatch columnist Quentin Fottrell. Others include spending power, marketing and the battle of the sexes in the office. Marketers and the media are largely ignoring Generation X (which comprises people born between 1965 and 1980), writes Fottrell. “Given that Generation Xers are in their late 30s and 40s now, they are -- at least in theory -- nearing their peak income and spending power." But marketers are more fascinated by the Millennials and Baby Boomers, reports Sharalyn Hartwell, executive director at research and consulting firm Frank N. Magid Associates. Population numbers are one reason for the attention gap. There are 89 million Millennials (those born between 1981 and 1996) and 75 million Boomers (those born between 1946 and 1964) in the United States versus only 49 million Gen Xers. Finally, male Gen Xers may be the first generation to face serious competition from females in the workplace. According to a 2011 CTI survey of nearly 3,000 college-educated, white-collar workers, almost 20 percent of Generation X males earn less than their wives versus 14 percent of Boomer-age men.

Market Trend Insights


RealPage-July14
How the U.S. Apartment Market Is Showing Such Staying Power
Digested From "Apartment Market Shows Staying Power"
Wall Street Journal (06/25/14) Dulaney, Chelsey

The continued strength of the apartment community sales market has been a relief to many owners who were concerned the sector would weaken. Apartments were among the first types of commercial real estate to rebound after the Great Recession. However, as early as 2011, some analysts were forecasting that the sector would cool off due to competition from improving home prices and the fledgling single-family rental market. However, the competition from the sales market has been weaker than anticipated mainly because mortgage lending has continued to be so tight. Nationally, rental apartment values are up 14 percent from peak 2007 levels, reports a Green Street Advisors index that tracks the performance of listed apartment owners. Both rents and occupancy rates are up nationwide.

From January through March, rents climbed another 0.6 percent and are now up 13 percent since the upswing started in 2009. Meanwhile, vacancies slipped to 4 percent, states Reis Inc. Few developers are building "workforce housing" right now, leaving that niche wide open for high returns. Real Capital managing director Dan Fasulo notes that workforce housing has less risk than upscale apartments because there is less new supply in the pipeline. He remarks, "If the overall economy does improve, you'll basically reap the benefits." Looking at individual markets, Denver remains among the most intriguing with rents having risen there for the past five years and are up 20 percent since peak 2007 levels. Some, though, are concerned that an oversupply of upscale housing will flood the market. The supply of multifamily housing in Denver is on pace to increase 8.1 percent over the next four years, projects Green Street.

Why Multifamily Housing Matters
Digested From "Why Multifamily Housing Matters"
U.S. News & World Report (06/30/14) Dietz, Robert

The growth of multifamily housing construction in the past few years has been a significant source of job creation. The NAHB Multifamily Production Index's first-quarter reading came in at a level of 53. Any score above 50 indicates that more multifamily housing builders are reporting positive market conditions than poor. The first quarter marked the ninth quarter in a row above the 50 mark. According to analysts, this confidence in the market is consistent with the latest production statistics. Census data shows that, since the construction low point of 165,000 units in December 2010, the number of multifamily units under construction has soared to 406,000 as of May 2014 -- a whopping 246 percent increase. This sizable increase in multifamily building has had a positive impact on construction employment. The National Association of Home Builders estimates that for every 1,000 multifamily housing units built, enough economic activity is created to sustain 1,130 jobs. Furthermore, the increase in multifamily construction has been an important contributing factor to the residential construction sector adding nearly 275,000 jobs since its 2010 cyclical low.

Canadian REITs Charge Into U.S. Rental Apartments
Digested From "Canadian REITs Charge Into U.S. Rental Apartments"
Business in Vancouver (06/29/14) O'Brien, Frank

Lured by the tightest U.S. rental housing market in six years, more and more Canadian REITs are charging into America's apartment sector. In May, for instance, Vancouver-based Pure Multi-Family REIT bought a resort-style apartment community in Houston for US$43.8 million, or around $124,000 per unit. In the past couple of years, Pure has purchased a total of 3,966 U.S. apartments and is on the lookout for more. Andrew Greig, Pure's director of investor relations, states, "We are seeing a 2 percent to 3 percent overall vacancy rate." For its part, Toronto-based Milestone Apartment REIT now owns 18,388 apartments throughout the U.S. south. It recently bought a 424-unit apartment community in Orlando for US$50.7 million, or less than $120,000 per apartment. Each of these sales projected a capitalization rate of between 6 percent and 6.9 percent. First-time buyers now represent barely 27 percent of home sales in the U.S. Historically, notes the National Realtors Association, their share has been closer to 40 percent. Many young buyers have been priced out of the market by the tighter lending practices by financial institutions that came in the wake of the 2008 market crash. Others prefer the flexibility of renting in an uncertain job market.

From Bikes to Barks: Six Surprising Housing Trends
Digested From "6 Surprising Real Estate Trends, From Bikes to Barks"
CultureMap Austin (06/22/14) Bivins, Ralph

The 48th annual conference for the National Association of Real Estate Editors, held recently in Houston, provided a snapshot of emerging trends in the property market. With obesity an ever-growing problem in the United States, for example, access to fitness facilities and outdoor recreation is taking on increasing importance. According to Will Holder of Trendmaker Homes, buyers now favor communities that have trails winding through them over golf course developments. In the multifamily niche, meanwhile, more and more projects are accommodating occupants' desire for parks, grooming, and sitting services for their pets. Two more trends likely to have a big impact on the market are the growing tendency for young people -- discouraged by tight underwriting -- to stick with renting instead of buying and the increasing preference of existing homeowners to keep and rent out properties with ultra-low mortgage rates rather than put them up for sale when they are ready to buy another house.

How High Have Avg. Seattle-Area Apartment Rents Climbed?
Digested From "Seattle-Area Apartment Rents Climb to Average $1,284 a Month"
Seattle Times (06/27/14) Bhatt, Sanjay

According to a new study by Apartment Insights Washington, Seattle-area apartment rents rose 4.1 percent in this year's second quarter to an average $1,284 a month. The increase comes as strong demand for rental units pushed the vacancy rate in King and Snohomish counties to its lowest level in at least nine years. Over the past 12 months, the average rent has climbed by 7.9 percent, or $94, accelerating from a 6.8 percent annual gain in the January-through-March period. To be sure, the area is registering a wide range of rents. West Bellevue had the highest overall rent at $1,912 a month, a 6.4 percent annual increase. Downtown Seattle, meanwhile, ranks the highest on a per-square-foot basis at $2.43 -- a 5.7 percent increase from the first three months of this year. The lowest rents were measured in SeaTac ($901) and Des Moines ($923). Apartments in Seattle's Ballard neighborhood recorded the largest increase in rents at 12.3 percent to $1,628 a month. Ballard also had the highest vacancy rate in Seattle at 8.6 percent. When new apartments that just opened are factored in, the rate soars to 18 percent.

Will Higher Rents Drive Up Mortgage Rates?
Digested From "Will Higher Rents Drive Up Mortgage Rates? Expert Argue"
CNBC News (06/23/14) Olick, Diana

Mortgage rates are now lower than they were a year earlier for the first time in a year -- the product, some observers say, of soaring rents. National Association of Realtors chief economist Lawrence Yun, for one, cautions that mortgage rates could be headed up as a result of rent inflation. He remarks, "Given that housing is the biggest weight to overall consumer price inflation, if this rent trend continues, and it could easily because vacancy rates are falling and falling, then the overall CPI inflation will be higher than anticipated, which will then force the Federal Reserve to raise interest rates sooner than later." Since jumping last June, 15- and 30-year mortgage costs have not moved much in the last 12 months. Meanwhile, apartment rents are climbing at the fastest pace in five years; and vacancies are approaching all-time lows. Sam Chandan of Chandan Economics disagrees with Yun's assessment, concluding, "I just don't see a scenario where interest rate policy would be driven by apartment rents. Monetary policy is a blunt instrument that impacts almost every aspect of the U.S. economy. If, for a subset of American households, rents are rising at a rate that is above historic norms, adjustments in monetary policy are not the appropriate intervention." He and others note that much of the rent demand is driven by a lack of first-time home buyers, who accounted for just 27 percent of home sales in May. While rent may be on the rise, tenants do not have to come up with down payments nor do they need high credit scores.

Albuquerque's Apartment Market Shows Resiliency
Digested From "Apartment Market Exhibits Resiliency"
Albuquerque Business First (06/23/14) Metcalf, Richard

The Albuquerque metro area's apartment market showed its resiliency this spring, posting small improvements in the fundamental measures of occupancy and average rent that would seem to contradict continued losses in jobs reports. According to the latest market survey from the Eagle Multi Housing Team at commercial real-estate services firm CBRE, the occupancy rate for mostly larger apartment communities edged up to 94.2 percent in May from 93.1 percent in January and 93.9 percent a year earlier. The average monthly rent, meanwhile, rose to $744 from $730 in January and $733 in May 2013. The year-over-year increase marks the first significant rent hike locally since 2011. CBRE's David Eagle remarks, "It's tough to project how high the tide will rise without employment, population, and income growth."

Deals and Transactions


Lowes-14April
When the Smoke Clears, Old Tobacco HQ to Offer Apts, Hotel
Digested From "Tobacco Headquarters to Become Hotel, Apartments"
WFAE 90.7 FM (Charlotte) (06/30/14) Boraks, David

PMC Property Group has announced plans to purchase and redevelop R.J. Reynolds Tobacco's historic headquarters complex in Winston-Salem, N.C. The Philadelphia-based firm plans to spend $7.8 million to buy the 22-story building and invest another $60 million overall in the conversion. Plans call for a boutique hotel on the bottom six floors and 120 luxury rental apartments above. Demolition is expected to begin in the next 30 days, with a fall 2015 grand opening targeted.

Tikijian Associates Sold Two Apt. Communities in One Market. Where?
Digested From "Tikijian Associates Sells Pair of Apartment Communities in Indianapolis"
REJournals.com (06/27/2014)

Tikijian Associates last week arranged the sale of two Indianapolis apartment communities for Blue Valley Apartments, Inc. The firstr was Arrowwoods Apartments, a 153-unit apartment community on the north side of Indianapolis. The second was Inverness Apartments, a 220-unit apartment community on the northwest side of the city. Tikijian Associates reports that it received 17 offers for the two assets. Term Security Corp. ended up buying both of them in two separate transactions. Terms were not disclosed.

Industry Buzz


SatelliteProlinkJuly14
Seven Tips to Conserve Water and Still Keep Your Community Green
Digested From "July is Smart Irrigation Month"
Property Management Insider (06/27/14) Cunningham, Michael

Apartment owners and managers are taking heed that July is Smart Irrigation Month. For the past nine years, Smart Irrigation Month has touted the positive impact of efficient irrigation and water uses. The month is designed to educate apartment owners, commercial businesses, and others about efficient water use. In 2014, more than 27 states have been petitioned to proclaim July as Smart Irrigation Month. Why July? Because it is the month that typically experiences peak water demand for outdoor watering, which annually accounts for 7.8 billion gallons or 30 percent of the nation's consumption. The Irrigation Association (IA) offers several tips for conserving water, yet still maintaining an effective landscape watering schedule. Tip one, schedule each individual zone in your irrigation system to account for type of sprinkler, sun or shade exposure, and soil in that section. Two, consider soil type. According to the article's author, type of soil determines how quickly water can be absorbed without runoff.

Three, and perhaps most importantly, do not send water down the drain needlessly. Managers and grounds staff should set sprinklers to water plants, not parking lots, sidewalks, patios, or the sides of buildings. Tip four, water only when meeded. After all, watering too much and too frequently can result in such problems as shallow roots, weed growth, disease, and fungus. Five, water at the best time. Studies have shown that watering during the heat of the day can cause losses of as much as 30 percent due to evaporation. Another strategy is to water more often for shorter periods. Finally, the IA advises to "adapt watering to the season." This may entail investing in a smart controller so your system can make seasonal changes automatically.

Bostonians Truly Have the Luxury of Renting
Digested From "In Luxury Complexes, All the Bells and Whistles"
Boston Globe (06/29/14) Conry, Jaci

The latest Zillow.com research shows that the median apartment rent in the Boston metropolitan area has shot up a whopping 87.5 percent in the last four years from $1,200 a month in 2010 to $2,250. At the same time, the local market has witnessed a boom in luxury rental construction. In and around Boston, apartment communities have been built featuring such posh amenities as yoga studios, community gardens, pet services, free onsite Zipcars, and more. Apartment List Chief Executive John Kobs remarks, "There's a massive increase in supply of expensive apartments, but keep in mind our supply of apartments for the whole city went up over the past year." Currently, he notes, there are more than 9,200 rental units that rent for more than $5,000 a month versus 3,223 a year ago. Boston’s low condominium inventory is one of the big reasons why the apartment industry has surged. According to Joshua A. Golden, a principal/broker of Luxury Residential Group, "People can’t find the condos they want, and there are so few of them that bidding wars are taking place. For a lot of people, it makes more sense to rent." Furthermore, most would rather not make compromises on things like unit size or finishes. Among the top apartment communities is One Back Bay on Clarendon Street, boasting doormen and 24-hour concierges.

What Fla. Market Remains a Hotbed for Apartment Construction?
Digested From "More Projects Coming in Apartment Growth Surge"
Tallahassee Democrat (06/29/14) Hodges, Dave

Tallahassee is still enjoying a fairly significant apartment construction surge, with hundreds more rental units planned between now and the end of next year. The latest report on multifamily housing projects from the Tallahassee-Leon County Planning Department shows that a total of 989 apartments are currently in various stages of planning and development and will come on the market either this summer or fall. This additional inventory surpasses last year's growth, in which seven apartment communities added 928 units. Among the communities currently listed as proposed is The Evergreen at SouthWood, which would boast 292 apartments once completed. This and other projects in the planning and construction stages are close to the local college campuses and are primarily oriented for students. According to Francis Rentz, managing director at SouthLand Commercial Real Estate Advisors, that segment of the local housing industry continues to be a major draw for institutional investors. Some, though, do wonder if the continued growth in student housing demand locally can be sustained, considering the level of enrollment at Florida State University (approximately 41,000 students), Florida A&M University (11,000), and Tallahassee Community College (14,000). As the apartment inventory has expanded, the Tallahassee market has so far managed to absorb the added units. The newest apartment communities are competing to offer the most and best amenities, including resort-style swimming pools, fitness facilities, Wi-Fi availability, and interior features and appliances that rival those of single-family homes.

New Apartment Investment Firm Is Targeting Which Two States?
Digested From "Real Estate Investment Firm Targeting the Texas and Florida Multifamily Markets"
San Antonio Business Journal (06/27/14) Silva, Tricia Lynn

Finlay Management Inc. Chairman and CEO Christopher C. Finlay has founded Lloyd Jones Capital, a new firm on the lookout for apartment communities in Florida and Texas. The firm is focusing on acquiring and improving multifamily housing for institutional investors, private buyers, and for its own account. Finlay remarks, "We sponsor investments in high-potential, multifamily real estate. It's the same thing we have been doing successfully for our own account for 30 years." Analysts expect one of Lloyd Jones Capital's strengths will be its sister company, Finlay Management, which has a three-decade history in the property management field. Jim Eddings, executive vice president and CFO of Finlay Management, has agreed to serve as managing director of the new firm.

Legal/Legislative Did You Know


EDUConfAd14
New Ala. Law Allows Some Residents to Have Records Cleared
Digested From "New Law Allows Some Residents to Have Their Records Cleared"
Tuscaloosa News (AL) (06/28/14) Taylor, Stephanie

During its 2014 legislative session, Alabama became the latest state to allow residents with nonviolent criminal histories to seek to have their records expunged. The new law is set to go into effect on July 7. It will indeed allow people who were charged, but never convicted, of nonviolent crimes to have their records expunged. Once a court order is granted, those affected will not have to disclose the arrest on an application for apartment rental, employment, credit, or other types of applications. They must still disclose the record to any government, regulatory, or licensing agency; utility; or financial institution.

Judge Blocks Major Va. Apartment Community
Digested From "Judge Blocks Stony Point Apartments"
Richmond BizSense (06/29/14) Rolett, Burl

In Virginia's Stony Point, local neighborhood associations have won a court-ordered temporary injunction barring Taubman Centers from selling local land to Atlanta-based Wood Partners on which it planned to build a 282-unit apartment community. The Huguenot Farms Area Association next hopes to make that ban permanent. Mark Shuford, a lawyer representing the neighborhood association, remarks, "The complaint asks for permanent injunctive relief, to the extent that we would ask the court to prohibit Taubman from selling to Wood or anyone else for the purpose of developing that property as residential." Wood Partners still hopes to erect a four-building apartment community on a 27-acre plot previously reserved for office and light retail use. City council members and planning commissioners voted late last year to amend the plan to make way for apartments. Shuford, though, successfully argued last week that the neighbors had their own agreement with Taubman to bar residential development onsite regardless of council action. When the city council considered the project, proponents said Wood Partners offered extended buffer zones to reduce the impact on surrounding neighborhoods. Representatives from several neighborhood groups countered that the proposed apartment community's density was excessive and the around-the-clock occupancy at a residential development would be less desirable than, say, a 9-to-5 office park.

NAA Announcements


Interested in Greater Value Creation of your Multifamily Housing Assets? Then 2014 Maximize is For You

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Marty McFly isn’t the only time traveler from the 2014 NAA Education Conference & Exposition—42 education sessions designed to take your organization and your career to New Heights at the industry event of the year are available to you right now with the click of your mouse.

NAA’s Education Institute (NAAEI) is once again presenting its “REWIND” program, offering 21 recorded video sessions and 20 PowerPoint-synced audio sessions from the 2014 NAA Education Conference & Exposition.

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September, 2014

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September – October, 2014

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September – November, 2014

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October – December, 2014

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October – December, 2014

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Chicagoland Apartment Association
July, 2014

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September, 2014

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September, 2014

Roanoke Valley Apartment Association
November, 2014

NAAEI Leadership Experience: Powered by Dale Carnegie:

Greater Cincinnati Northern Kentucky Apartment Association
October, 2014

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For more information about any of the classes listed, please contact Kimberly McCrossen at 703-518-6141 ext. 121.
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NAA Turns 75: Looking Back, Looking Forward

NAA Turns 75: Looking Back, Looking Forward  

Yep, we made it: 75 years. Industry luminaries take a look at how far we've come and where we are heading. Learn more.Wish a happy birthday on social media.