NAA's Culkin Takes to CNBC to Trumpet Rental Housing
Digested From "US Rental Market Benefiting From Mortgage Rates?"
CNBC News (08/27/13)
National Apartment Association (NAA) President and CEO Doug Culkin went on CNBC Tuesday morning to comment on the U.S. housing market. He observed that the home buyers' market seems to be "where the pain is," citing rising mortgage rates and inventory as problem areas. He then hailed the nation's rental housing market as being "pretty strong," especially with so many demographic groups -- young adults, married couples without children, empty nesters, and so forth -- seeing apartments as a more viable living option. Culkin said that one big thing going in his sector's favor is supply and demand. He remarked, "Right now, we don't have an excess supply of rental housing. The rental housing market is now starting to get back into the development side for the first time in a number of years. We had over 1 million households added to the rental housing market just this past year." By contrast, U.S. new home sales dipped 13.4 percent during July -- the lowest in nine months.
Market Trend Insights
CoStar Predicts Apartment Investor Winners & Losers for 2013
Digested From "Renter Demand Holding Fast So Far As Apartment Supply Wave Begins to Break"
CoStar Group (08/21/13) Drummer, Randyl
CoStar Group's Midyear 2013 Multifamily Review and Outlook forecasts that tightening competition among apartment investors will yield both winners and losers during this next supply-driven phase in the multifamily housing market. Researchers expect the winning developers will be those that offer products that are new and different, capturing residents who have an expanding menu of housing options and amenities. That said, it is critical that developers position their communities as new, different, and better from an operational, technological and/or locational perspective -- especially in higher-end markets like Silicon Valley and Boston. The total number of units delivered is now outpacing net absorption by residents. Property & Portfolio Research Inc. (PPR), CoStar's analytics and economic forecasting company, expects about 170,000 apartments to be delivered this year in the top 54 markets that PPR analyzes -- on pace to more than double the amount delivered last year. With over 65 million Echo Boomers ages 20-34 now entering their prime renting years -- more than at any time since the 1970s -- savvy apartment investors will continue to find opportunities in spite of new supply pressures. Last year, the U.S. apartment sector absorbed a net 130,000 units. PPR is forecasting another 150,000 net units to be rented this year, rivaling the peak of the previous up cycle.
Louisville Residents Slug It Out for Available Apartments
Digested From "A Hot Rental Market Leads to Few Vacancies for Louisville Apartment Hunters"
Courier-Journal (08/18/13) Downs, Jere
The rental housing market in Louisville is hot and is unlikely to cool anytime soon, according to local property experts. Apartment communities throughout the metro area are seeing 95 percent to 96 percent occupancy rates, reports Gale Lively, executive director of the Louisville Apartment Association. Declining home values have turned off many would-be homeowners. The Metropolitan Housing Coalition reports that the rate of homeownership peaked at 67.9 percent in 2008 prior to the recession and fell to 61.7 percent by 2011. This means that four in 10 families are potential rentals households vying for the estimated 105,000 apartments spread throughout the 13-county Louisville metropolitan area, according to Lively. Coupled with college students who typically crowd the market at this time of year, demand is currently high for available rental units. Complicating the demand is residents' tendency to stay in apartments longer, notes Lively. Turnover of 30 percent in the Louisville apartment has become the norm compared to 50 percent to 60 percent annual turnover seen prior to the recession.
How Far Have Rents Dipped in the West Texas Town of El Paso?
Digested From "Local Apartment Market Dips"
El Paso Inc. (TX) (08/18/13) Gray, Robert
The apartment vacancy rate in El Paso, Texas, was on the rise throughout the first six months of 2013, leading owners and managers to slash rents to both retain and attract residents. This recent decline, while slow, stands in stark contrast to the past several years when the area apartment sector flourished. The apartment vacancy rate in the El Paso metro area climbed to 8.1 percent as of June 30 compared to 5.3 percent a year earlier. At the same time, the average monthly rent for all apartment types in El Paso dipped 3 percent to $784 from the year before, notes a study by national brokerage firm Hendricks-Berkadia. "The market has slowed down a little bit. We are starting to get oversupplied," states Bobby Bowling, president of El Paso-based Tropicana Building Corp., which builds primarily subsidized apartment communities for low-income residents locally. For newer and nicer apartment communities, the vacancy rate is closer to a healthy 4 percent or 5 percent. Apartment developers requested building permits for 1,070 rental units in the first and second quarters. That compares to permits issued for 460 units during the year-ago period.
Rent-to-Condo Conversions on the Rise by the Bay
Digested From "Bay Area Rental Pendulum Swings to Condos"
San Francisco Chronicle (08/18/13) Said, Carolyn
During the housing downturn, many new condominiums in the San Francisco area became for-rent apartments as the number of homebuyers dried up. But as the housing recovery has accelerated, several East Bay and South Bay developments in the Golden State are switching back to for-sale condos. Michael Reynolds, managing partner of developer Embarcadero Pacific, is switching The Bond 101-unit building to condos after opening them in 2009 as apartments. About a quarter of the units have sold in less than three months. Reynolds says, "We gain vacancies through natural attrition as renters move out. We then refurbish the units with new finishes and put them out for sale so part of the building is leased, part is owner-occupied." However, lenders are now requiring a minimum percentage of owner-occupied units before they will issue mortgages in a condo complex, making conversions more difficult.
How Immigrants Will Fuel Housing Market This Decade
Digested From "A New Wave of Homebuyers"
Chicago Tribune (08/17/13) Handley, John
Based on U.S. Census Bureau data, National Association of Home Builders housing policy economist Natalia Siniavskaia expects more than 2 million multifamily units and more than 1.2 million single-family homes to be occupied by immigrants by 2020. International buyers -- half of them recent immigrants -- already make up 3 percent of home sales, according to National Association of Realtors managing director of quantitative research Jed Smith; and markets like Miami, San Francisco, and Chicago are projected to see a major jump in buying activity among immigrants. Thus, it is important that real estate agents consider a client's culture when it comes to interactions and to ensure that they are shown homes that meet their specific needs. To avoid inadvertently insulting a prospective buyer, agents should understand that different cultures perceive personal space differently, and Asian or Middle Eastern women do not shake hands, for instance. Among other factors, agents must take into account that some buyers will want to make room for extended family and that second- and third-generation immigrants are more assimilated and have different needs than first-generation clients.
Deals and Transactions
Go West Young Investment Group ... and Invest in Apartments!
Digested From "NYC Investment Group Plans New Apartments in Seattle, Portland"
Q13 Fox (08/21/13) Sumrall, Christie
Mack Real Estate Group of New York last week announced plans to build approximately 3,000 apartments over the next five years in Seattle and Portland. The real-estate investor group is launching a West Coast affiliate with local partners to accomplish this task. The group recently announced its investment in Mack Urban, a Los Angeles real-estate company that combines the portfolio of Seattle's Harbor Urban and Los Angeles' Urban Partners.
In What Two States Did Apartment REIT Add Three?
Digested From "Landmark Apartment Trust of America Adds Three Apartment Properties"
Virginia Business (08/22/13)
Landmark Apartment Trust of America recently added three apartment communities, worth $42.2 million, to its multifamily housing portfolio in a deal with three other companies. The REIT added apartment communities in Florida and North Carolina with a total of 703 rental units in deals with Elco Landmark Residential Holdings, MB Equity Holdings, and Legacy Partners. The three firms received a combination of cash and operating partnership units valued at approximately $14.9 million. The communities changing hands include: Landmark at Savoy Square in Clearwater, Fla.; Landmark at Ocean Breeze in Melbourne, Fla.; and Landmark at Grand Arbors Reserve in Raleigh, N.C.
Two Apartment Deals Land Square in North Carolina's Triangle
Digested From "Peak Capital Partners Acquires Two North Carolina Apartment Communities"
Fort Mill Times (08/20/13)
Utah-based Peak Capital Partners has acquired a couple of apartment communities in North Carolina in two separate transactions. The first purchase was The Links, which consists of 274 rental units in Charlotte. The Links was nominated for the National Apartment Association Paragon Award in the Excellence category earlier this year. In the second deal, the company acquired the 184-unit Oxford Square apartment community in suburban Cary. As part of the deals, the firm has made extensive and on-going capital improvements to each of the communities, including new landscaping, refinished parking lots, exterior improvements, and renovated clubhouses. "Our firm is actively looking to acquire additional multifamily communities in the high-growth areas of Charlotte and Raleigh," said Jamie Dunn, founder and managing partner of Peak Capital Partners.
Southern California Renters Have an Edge Over Home Buyers
Digested From "Southern California Renters Have an Edge Over Home Buyers"
Los Angeles Times (08/24/13) Khouri, Andrew
In Southern California, the rental market provides a stark contrast to what has become a robust housing recovery. In Los Angeles County, apartment rents have increased only slowly, with an expanding supply of rental units holding down prices. In downtown Los Angeles, an apartment building boom has even driven rents down by 5 percent over the past year to an average of $1,990 as of June 30. Rents also dipped in the single-family housing market, as an influx of cash investors continue to drive up prices for home buyers. The median rent for single-family homes in L.A. County decreased 4.1 percent in the second quarter versus the 2012's April-through-June period, reports Trulia. That is indeed in stark contrast to the county's 29 percent year-over-year median home price increase over that same time span. Analysts note that the diverging paths of the rental and buyer markets should be viewed as an anomaly -- after all, they have risen in tandem for most of the last century. In the second quarter, average rents for L.A. County apartments topped $1,652 a month, basically flat from the first quarter and a 2.2 percent increase over a year earlier, states Marcus & Millichap. It will be very interesting to see where the market goes from here. L.A. County is presently in the first year of a two-year apartment-building boom, with builders on pace to complete finish 6,000 rental units this year -- roughly double the number they finished in 2012. A sizable population of young adults, who tend to favor apartment living, has spurred builders to break ground. This younger generation is also putting off major life events, such as marriage and children, that often spur home purchases. Annie Gerard, principal with Apt Market Research, states, "We have this perfect storm of people the appropriate age for apartments."
Guess Where Condo Conversions Are Inching Back Up?
Digested From "Condo Conversions Inch Up in Los Angeles"
Los Angeles Times (08/08/13) Ottens, Cale
Apartment owners in Los Angeles and across California are once again converting to for-sale condominiums, but not at the sizzling pace of 2007 when condo conversions peaked prior to the Great Recession. The work-live units at Universal Lofts in Studio City were built in 2008 initially conceived as condominiums. But with the 2007-09 recession underway, developers decided to turn them into apartments. Now the owners are looking to turn them back into condos -- one of the first such communities to return to the once-popular trend. Prior to the recession, it was common for apartments to convert to condos when the market was hot. But that trend came to a halt when the housing boom went bust. At the market's peak in 2007, city officials issued 208 permits allowing apartment communities to be converted. That total has declined every year since, with the city issuing a paltry 38 permits in 2012.
Legal/Legislative Did You Know
L.A. Owners Are All Shook Up Over Who Pays to Retrofit Apts.
Digested From "Is Your Apartment Complex Safe During an Earthquake? Jim Clarke Explains"
KTLA-TV (Los Angeles) (08/26/13)
Jim Clarke, executive director of the Apartment Association of Greater Los Angeles (AAGLA), sees a need to retrofit a large number of apartment communities in the L.A. metro area to make them safer in the event of an earthquake. He just doesn't know how such pricey upgrades can be paid for. So-called "soft story" structures -- those with ground-floor parking with the apartments just above, usually with thin supporting columns and erected before 1978 -- are particularly vulnerable as proven in the deadly Northridge quake of 1994. L.A. Councilman Tom LaBonge is asking the Department of Building and Safety to identify wood-frame, soft-story buildings for retrofit. However, if building owners are forced to retrofit, the cost will almost certainly be passed on to the residents in the form of higher rent. State and federal funding may be an answer, LaBonge states. "We have all the money in America," he cracked. "It's just in how you cut the pie." Clarke notes that those apartment communities built before 1978 are subject to rent control and, by law, cannot pass the retrofit costs on to residents. Those built after that year would likely hike rents to pay for the upgrades. He suggest FEMA get involved in the discussion and be proactive instead of reactive as was the case in '94.
Three Reasons Why Utah Town Adopted Apartment Program
Digested From "S. Ogden Adopts Good Landlord Ordinance"
Standard-Examiner (UT) (08/18/13) Lampros, Jamie
The city of South Ogden, Utah, recently adopted a Good Landlord Program citing three reasons -- to improve its neighborhoods, increase residents' quality of life, and decrease public safety costs by reducing crime. Under the program, rental dwelling licenses will be issued to all rental housing units, the cost of which is discounted significantly if owners agree to participate in the program and follow specific requirements. Some of the requirements include agreeing to conduct criminal background checks on all new residents, refusing to rent to individuals with serious criminal histories, attending an approved training course, and maintaining apartment communities to a specific standard, said City Manager Matt Dixon. The Utah Housing Coalition said local governments have been imposing disproportionate rental fees to units because of increased costs to municipalities due to numerous police calls at some communities. The Utah Apartment Association designed the program in response to those types of fees.
New South Dakota Apt. Sprinkler Law Puts Those Fires Out
Digested From "New Apartment Buildings Will Require Sprinklers for Fire Suppression"
Argus Leader (South Dakota) (08/21/13) Atyeo, Janelle
New apartment communities in Sioux Falls, S.D., with six or more units will now be required to have automatic sprinkler systems. The Sioux Falls City Council recently passed an ordinance that brings the city's code in line with a state law enacted two years ago. The new city code does not apply to existing apartment communities or those that have been renovated. Mike Top, the city's assistant fire chief, said national statistics show that people are 86 percent more likely to survive a fire in a building equipped with sprinklers.
City to Apartment Communities: You're Such a Nuisance!
Digested From "City Files Lawsuit Against Two Local Apartment Complexes"
The City of Indianapolis recently filed public nuisance charges against two local apartment communities. The suits allege that, since 2008, La Esmeralda Apartments and Heather Ridge Apartments unreasonably consumed city, public, and law enforcement resources. According to the suits, the drain on resources includes more than 3,200 police runs and over 200 incidents with the Department of Code Enforcement (DCE) and Marion County Public Health Department (MCPHD) investigations. "It is absolutely critical to our efforts to combat crime and improve the quality of life in our neighborhoods that we crack down on negligent property owners," said Mayor Greg Ballard. "We must hold property owners accountable for draining unnecessary public resources and damaging our communities." City officials are seeking an unspecified amount of financial restitution for damages caused. In addition, they are demanding that both apartment communities increase crime prevention and awareness efforts.
Attention Owners, Managers: Apartment Revenue Management Conference ROI Just Got a Whole Lot Better
The 2013 Apartment Revenue Management Conference, September 23-25 at the Turnberry Isle Resort in Miami, is universally recognized as a tremendous value for rental housing professionals. For owners and managers, that value has significantly increased.
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Learn more about this session, as well as preview the radically expanded conference program for 2013, including new topics revolving around ancillary services, business intelligence and forecasting.
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Miss the IROC Webinar? We (and the National Lease Program) Have You Covered
If you missed last week’s IROC Webinar it’s not too late to get the information! A recording of the Webinar as well as relevant documentation is posted to the IRO Community so you can learn how to make the NAA Lease Program work for you. The Webinar included a demonstration, step-by-step instructions and information on integrating it with your own property management software. Watch it today.
"REWIND" and Earn CECs
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!
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!
Gain Knowledge Right From Your Desk With Webinar Wednesdays
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.
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!
NAAEI Designation Courses Offered Near You!
Nevada State Apartment Association
Roanoke Valley Apartment Association
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
Nevada State Apartment Association
Roanoke Valley Apartment Association
Roanoke Valley Apartment Association
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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