NAA Industry Insider: Why Is There a Generation Stuck Living in Mom's Basement?

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TWCFEB13
Why Is There a Generation Stuck Living in Mom's Basement?
Digested From "A Generation Stuck Living in Mom's Basement"
U.S. News & World Report (08/08/13) Dietz, Robert

According to Census data, the U.S. homeownership rate dropped to 65 percent in the second quarter of 2013 from 69.2 percent in mid-2004, with younger generations hit the hardest. The share of Americans owning their homes slipped to 61.4 percent in 2012 from 68.6 percent in 2002 for those between the ages of 35 and 44, while the rate for the under-35 segment fell to 36.7 percent from 41.3 percent over the same time span. National Association of Home Builders economist Robert Dietz says the decrease in homeownership among the young will have far-reaching social and economic impacts. Not only will it contribute to a decline in births -- as it is difficult for people living with their parents to start families -- but it also will put a damper on wealth accumulation, given that homes generally are a household's primary source of wealth. He adds that changes to finance and tax rules that increase the costs of achieving homeownership using a mortgage will significantly affect younger households that depend on loans to purchase homes. Dietz stresses that housing policy decisions must be fair across income and wealth distributions as well as age and demographic class.
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Market Trend Insights


RealPageMay13
Construction Costs Hit Apartment Builders Amid Demand
Digested From "Construction Costs Hit Apartment Builders Amid Demand"
Investors Business Daily (08/15/13) Cariaga, Vance

Demand for housing has begun to rebound, but the lingering effects of the recession resulting in higher material and labor costs are making it difficult for apartment builders to meet demand. After the housing market crashed, many skilled construction workers including carpenters turned to other markets or other industries altogether, leaving many markets with a shortage of skilled labor that has driven up costs as demand return. The cost of building materials have also risen with demand as producers slowly ramp production back up to meet demand. The price of framing lumber, for example, has risen 33 percent in the last two years according to data from Random Lengths. That is partly because many lumber yards closed and remained closed following the housing crash. The other major factor driving construction costs is the difficulty of securing financing.
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How Much Have Apt. Vacancies Ticked Up in Toledo?
Digested From "Rental Vacancies Edge up in Metro Toledo"
Toledo Blade (OH) (08/14/13) Chavez, Jon

The metro Toledo apartment market saw higher vacancies in the first half of 2013 as rental rates for units rose and some owners reported a small increase in residents moving out to become homeowners. According to a midyear report by locally based commercial real estate firm, the Reichle Klein Group, the area's apartment vacancy rate rose to 7.1 percent as of June 30 from 6.9 percent at the end of 2012. While six of 11 local submarkets experienced higher vacancy rates, South Toledo and Holland/Maumee registered double-digit vacancy rates. "Generally, the market fundamentals are looking really good," said President and CEO Harlan Reichle. "There are fewer and fewer properties that need to offer any concessions or incentives that are meaningful."
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Why Downtown Living Is Booming Among Boomers
Digested From "Hip, Urban, Middle-Aged"
Wall Street Journal (08/09/13) P. M1 Keates, Nancy

Baby boomers increasingly are moving to downtown areas, which have become safer and cleaner, in order to be nearer to their jobs and live amongst energetic young professionals. John McIlwain of the Urban Land Institute notes that baby boomers do not have to be concerned about school quality and increasingly are shunning large homes. "Baby boomers are tired of mowing the lawn," agrees Chris Leinberger of George Washington University's Center for Real Estate and Urban Analysis. "They're looking for a more diverse environment." For example, 75 percent of the buyers in Toll Brothers' condo project in Manhattan's Gramercy Park, for instance, are baby boomers. The developer is taking notice by including higher-end fitness centers and finishes, among other amenities. Downtown living is costing buyers more, with the National Association of Realtors reporting an 11 percent jump in the median condo price over the past year. While some younger residents are less than thrilled with baby boomers moving into their neighborhoods, others have befriended neighbors who are nearly their parents' age. "Baby boomers could well drive the sale of downtown condos going forward," according to Robert Rulla of Fitch Ratings, which analyzes the housing market.
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Construction Starts to Grow in 2013, Aided by Multifamily
Digested From "Despite Sluggish Economy, Construction Starts Forecast to Grow Six Percent"
National Mortgage Professional (08/12/13)

According to the Midyear Update to McGraw Hill Construction's 2013 Construction Outlook, groundbreakings are projected to pick up 6 percent this year to $506 billion. Looking at the different sectors, multifamily housing is on pace to increase 23 percent in terms of dollars and 20 percent in total number of units. Activity in this sector is being helped by the gains reported for occupancies and rents during the last year. Single-family housing, meanwhile, is projected to increase 28 percent in terms of dollars. Robert A. Murray, vice president of economic affairs for McGraw Hill Construction, comments, "The recovery for construction continues to unfold in a selective manner, proceeding against the backdrop of the sluggish U.S. economy."
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Many U.S. Workers Still Struggling to Afford Housing
Digested From "Many US Workers Still Struggling to Afford Housing in Metro Areas"
LoanSafe.org (08/13/2013) Ferreras, Alex

In the Center for Housing Policy's latest Paycheck to Paycheck study, researchers drew on first-quarter 2013 data to reveal the gap between wages and the costs of housing in more than 200 U.S. metro areas for workers in occupations central to the vacation industry. CHP senior research associate Maya Brennan, co-author of a report released with the new data, commented, "One of the most overlooked aspects of this recovery is that for many workers, incomes are not rebounding in step with local housing markets. Even in a strong sector like travel and tourism, wages have not kept pace with the rising costs of renting or homeownership." Paycheck to Paycheck 2013: A Snapshot of Metropolitan Housing Affordability for Travel and Tourism Workers details trends in housing affordability for workers in five jobs: waiters and waitresses, automobile mechanics, housekeepers, flight attendants, and front desk managers. Of those five, only flight attendants earn an average wage high enough to afford the mortgage on a median-priced U.S. residence. Workers in two of those jobs -- housekeepers and wait staff -- are unable to afford the typical rent on either a one- or two-bedroom apartment in any metro area. "The continued improvement in housing markets across the country is good news for current homeowners. . . . However, the turnaround in housing prices -- driven by investors in many markets -- along with the still-tight mortgage market, has kept it very difficult for moderate-income families to afford to buy a home," noted CHP director Lisa Sturtevant. "There is a fundamental tension between a housing recovery and housing affordability. The solutions are higher wages or greater access to affordable housing."
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Deals and Transactions


LowesAug2013
Capital One Acquires Beech Street Capital
Digested From "Capital One Acquires Beech Street Capital"
Washington Post (08/16/13) O'Connell, Jonathan

Late last week, Capital One Financial made a move to become a bigger player in the financing of apartment communities when it announced plans to acquire Beech Street Capital. The Maryland-based, privately held firm ranks as the nation's sixth-largest issuer of multifamily loans backed by Fannie Mae, Freddie Mac, and the Federal Housing Administration. Founded in 2009, Beech Street grew its multifamily mortgage business from $1 billion in loans in its first year to $3.9 billion last year. Multifamily mortgages, meanwhile, rank as Capital One's largest line of commercial real estate lending. With the addition of Beech Street, the Virginia firm will become a top-five multifamily lender nationwide. The transaction is on track to close within the next 60 to 90 days, pending approval by Fannie and Freddie. Terms of the deal have not been disclosed.
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New Venture to Build Over 1,250 MD-Va.-D.C. Apartments
Digested From "Owings Mills Developer and Partner to Build More Than 1,250 Apartments"
Baltimore Sun (08/12/13) Ambrose, Eileen

Chesapeake Realty Partners of Owings Mills, Md., has teamed up with Bernstein Management Corp. to develop six apartment communities in Maryland, Virginia, and the District of Columbia. The $250 million effort includes four apartment communities in Maryland, along with 283 apartments in Fairfax County, Va., and an 82-unit community in Washington, D.C. Together, the six communities will be boast over 1,250 rental units.
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How Many Apt. Communities Did Winthrop Buy in Latest Deal?
Digested From "Winthrop Snaps up 4 Class A Apartment Buildings for $246M"
Commercial Property Executive (08/15/13) Baltic, Scott

Winthrop Realty Trust has agreed to purchase four Class A luxury apartment communities for an aggregate price of $246 million. ST Residential was the seller. All four are in different cities -- Phoenix; Houston; Stamford, Conn.; and San Pedro, Calif. -- and all were originally designed and built as condominium projects. Winthrop Chairman and CEO Michael Ashner said what attracted Winthrop to these four communities was indeed the condominium-level quality of the construction and finishes, in addition to the positive cash flow -- the four average 91 percent actual occupancy. Additionally, they reportedly sold for less than their replacement cost.
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Lehman's NY Residential Portfolio Sells for $139 Million
Digested From "Lehman's Dunbar Manor Residential Portfolio Sells for $139M"
Commercial Observer (08/08/13) Barbarino, Al

Massey Knakal Realty Services confirms that it has arranged the $139 million sale of a portfolio of New York apartment assets that includes the Dunbar Manor apartment community in West Harlem. In total, the portfolio is comprised of 1,084 rental units across 15 communities spread throughout Northern Manhattan and the Upper West Side. The portfolio was sold on behalf of Lehman Brothers, having been broken into six tranches. Broker Robert Shapiro remarks, "The market has been eagerly awaiting a large, high-quality residential portfolio in Harlem. The timing of this sale is optimal, as rent-stabilized multifamily properties remain extremely desirable in today's marketplace."
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Industry Buzz


National Exemption Service Inc.
Freddie Mac Celebrates 20 Yrs. of Keeping Rents Affordable
Digested From "Freddie Mac: Helping Renters Find Affordable Housing in the Last 20-Years"
LoanSafe.org (08/13/2013) Ferreras, Alex

Freddie Mac has provided $300 billion in apartment financing over the past two decades to help make housing more affordable to over six million people who rent. The lending giant is celebrating it's 20-year anniversary of providing such financing with its Program Plus lender network, achieving one of the industry's lowest delinquency rates of .09 percent as of June 30. "Freddie Mac's consistent support for the multifamily rental housing market provides confidence to private apartment developers and construction lenders, and facilitates a strong constant flow of capital to the apartment sector," said David Brickman, Freddie Mac Senior Vice President of Multifamily. "This helps ensure a strong and stable pipeline of new apartment communities to accommodate the growing demand for affordable rental housing."
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How Far Did Apartment REIT Price IPO Below the Range?
Digested From "Apartment REIT Independence Realty Prices IPO at $8.50, Below the Range"
NASDAQ (08/13/13)

Independence Realty Trust last week raised $34 million by offering 4 million shares at $8.50, below the range of $10 to $11. The multifamily REIT, managed by RAIT Financial, currently owns eight apartment communities in six states -- Arizona, Colorado, Georgia, Indiana, Texas, and Virginia. It now commands a market cap of $82 million.
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Irvine Is Pumping 2,000 Apartments Into Silicon Valley
Digested From "Residential Boom: Irvine Pumps 2,000 Apartments Into Silicon Valley"
San Jose Business Journal (08/16/13) Donato-Weinstein, Nathan

The Irvine Company has started work on three new communities that will eventually add around 2,000 new apartments to Silicon Valley's South Bay region. It's the latest proof of the California-based firm's continued expansion in the region as it takes action on a series of land acquisitions made in recent years. Two of the new communities will be in San Jose and the third will be in Sunnyvale. Irvine has ranked as one of the biggest builders of apartment communities during the recent recovery, and it has had competition. Driven by strong rent and job growth, such multifamily housing builders as AvalonBay, BRE, Essex Property Trust, Prmetheus, and St. Anton Partners have loaded up on new rental units from San Jose to the Peninsula. RealFacts notes that Silicon Valley apartment rents resumed their upward trajectory in this year's April-through-June period, with the average monthly rate topping $2,128 -- enough to earn the San Jose-Sunnyvale-Santa Clara the top spot among California metro areas. Brandon Park, Irvine's largest new development, will boast 1,308 apartments when completed in the fourth quarter of 2016.
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
Two Reasons Why Apt. Owners Are OK With Smoking Bans
Digested From "Smokers Becoming Less Welcome in Apartments"
Charlotte Observer (NC) (08/15/13) Norwood, Allen

Columnist Allen Norwood writes that smoking bans are becoming increasingly common, even in that region of the nation known as "tobacco country" where he lives. Norwood quotes Irene Gammon, spokeswoman for the Greater Charlotte Apartment Association, who confirms, "There has definitely been an increase, and it has been really well received." Indeed, most apartment owners and managers are fine with the bans because of the high cost of cleaning an outgoing smoker's apartment and due to more and more residents preferring a smoke-free living environment. Ginkgo Residential executive Scott Wilkerson recently stated that the cost of turning the apartment of a smoker averages $2,000 to $4,000 versus $500 to $800 for a nonsmoker. He added that approximately 75 percent of his company's residents have preferred a smoke-free environment. Newer apartment communities are most likely to ban smoking. According to Gammon, it is easier to prohibit smoking in the original lease contract for the first residents. "Converting a complex to nonsmoking as leases expire can be a drawn-out process," Norwood writes. "And, of course, existing tenants who smoke might fuss."
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Do Apartment Weapons Bans Violate the 2nd Amendment?
Digested From "Apartment Residents Say Rule Banning Weapons Violates Second Amendment"
WECT-TV6 (Wilmington, NC) (08/14/13)

Residents at apartment communities in Bladen County, N.C., say that a new rule violates their Second Amendment rights. Residents in at least four area communities -- the Village Street Apartments, Hill Estates, Hill Estates II, and the Lower Pecan Street Apartments -- say they received a letter earlier this month that stated that weapons of any kind are not allowed on their properties by residents or guests. But site manager Kelsey Gorum said some residents had expressed concerns after seeing individuals carrying guns. She notes that in each lease, it says that no resident should feel unsafe. She further stated that even if someone has a gun permit, weapons of any kind are banned from all common areas.
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NAA Announcements


Three Reasons To Get Excited for the Third Annual Apartment Revenue Management Conference

The 2013 Apartment Revenue Management Conference, September 23-25 at the Turnberry Isle Resort in Miami, is the multifamily housing industry’s sole event dedicated to staying ahead of the ever-evolving operational curve and universally recognized as a tremendous value for rental housing professionals. There are many reasons to be excited for the conference; here are three to get you started.

A who’s who of presenters. Primed to deliver insights, ideas and perspectives on all things revenue management, nowhere else can you find the world-class education and strategies for revenue generation, all in one place for one low investment.

A radically expanded program. In addition to benchmarking and best practices, attendees can look forward to a program focusing on new topics such as ancillary revenue, expense management and business intelligence. Keynote speaker Greg Cross, Senior Vice President of Revenue Management for Hyatt Hotels Corporation, will share current trends in lodging and potential parallels in the multifamily marketplace.

World-class networking. Share ideas and strategies for boosting net operating income with like-minded rental housing professionals, learn about new careers in revenue management and ensure your organization is prepared to take advantage of the capabilities and opportunities created by engaging in revenue management.

“NOI is Everywhere,” as the conference’s theme promises; but there is only one place to learn all about it. Register before it’s too late!
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We Think You Should Connect

Is a fear of change keeping you from joining the newest and most exclusive industry social network around?
If you haven’t joined NAA ConnectM, yes, then you’re missing tons of valuable collaboration to boost your career.

Learn all about Connect including different ways to make this members-only tool work for you. If you need a little extra help, check out our series of short video tutorials to see how you can join a community, join a conversation, start a new discussion or share a document.

Don’t miss all of the great ideas and discussion in NAA Connect. Get started today.
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Have You Signed Up For This Week's Webinar Wednesday?

Join NAAEI, Apartment All Stars and Multifamily Insiders for Webinar Wednesdays, the largest premium webinar series in the industry to provide state and local association members with access to industry thought leaders to discuss innovative ideas, best practices and emerging industry trends. These webinars will give participants the tools they need to become industry superstars in their own right.

Upcoming Webinars:

8/21/13 Stephanie Graves - How To Make Your Residents Work For You - Resident Referral Ideas That Work

9/4/13 Mike Whaling - Get Yours Wheels Turning! HOW TO: Apply and Measure the “Hub-and-Spoke” Model of Online Marketing to Apartment Marketing

9/18/13 Eric Broughton - Beyond Craigslist

Learn more and register today!
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Couldn't Attend the Education Conference? It's OK, 'Rewind' with NAAEI

Couldn’t attend the 2013 NAA Education Conference & Exposition in San Diego, or missed a great session? Don’t despair—you still can enjoy the best education sessions in the apartment industry, including video!

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 2013 NAA Education Conference & Exposition—all for just $299!
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Are you an Affordable Housing Management Professional?

Take advantage of this convenient, affordable way to prepare to earn the Specialist in Housing Credit Management (SHCM) certification entirely online.

The Webinar series starts on September 12 and runs each Thursday in September.

The cost for the course, including the SHCM exam, is $599 for non members and $549 for members. Individual Webinars can be purchased at $99 each.

Don't wait, register today!
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NAAEI Designation Courses Offered Near You!

CAM:

Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

CAM Online

CAMT:

Central Iowa Apartment Alliance
September - October, 2013

Hampton Roads Apartment Council
October - December, 2013

Greater Charlotte Apartment Association
October - November, 2013

Apartment Association of Greater Los Angeles
November - December, 2013

CAS:

Nevada State Apartment Association
September, 2013

Roanoke Valley Apartment Association
November, 2013

NALP Online

NALP:

Roanoke Valley Apartment Association
September, 2013

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.
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August 20, 2013

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