Are U.S. Apt. Owners Nearing the Top of What They Can Charge?

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TWCFEB13
Are U.S. Apt. Owners Nearing the Top of What They Can Charge?
Digested From "Multifamily Rental Prices Cresting"
NuWire Investor (09/09/13) Anderson, Bendix

According to the Center for Housing Policy, rents throughout the United States are rising faster than incomes by about $1.75 for every dollar earned. This means apartment owners may be reaching the peak of what they can charge for rent before forcing their residents to look for more affordable digs elsewhere. Even so, rent growth is not accelerating as much as researchers previously forecast. Reis Inc. reports only marginal increases -- increases that have made a significant difference for residents despite the fact that low supply and increased construction in prime markets should be hiking prices even higher. The combined cost of housing and transportation in the country's 25 biggest metro areas have increased by 44 percent since 2000. Over that same time span, household incomes have climbed just 25 percent. The growth of apartment rents has slowed in the last few quarters. Asking rents inched up by only 0.6 percent in the April-through-June period, while effective rents grew by 0.7 percent -- roughly half what rent growth was the year earlier. Victor Calanog, vice president of research and economics for Reis, remarks, "Given how tight the national market has become, historical data suggests that rent growth ought to be accelerating."
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Market Trend Insights


RealPageMay13
Multifamily Delinquency Rate Decline Implies Strong Market
Digested From "Multifamily Delinquency Rate Decline Implies Strong Market"
Housing Wire (09/04/13) Hopkins, Megan

A Mortgage Bankers Association (MBA) report shows that multifamily mortgage delinquency rates dropped during this year's second quarter, offering further proof that this part of the housing market is gaining momentum. Freddie Mac chief economist Frank Nothaft observes, "There have been a lot of very positive developments in the multifamily apartment market. As the cash flow improves for the owners and [managers] of the apartment buildings, that helps to support their payments they need to cover their expenses." The analysis chronicles the commercial/multifamily delinquency rates for five of the biggest investor-groups: commercial banks and thrifts, commercial mortgage-backed securities, life insurance companies, and Fannie Mae and Freddie Mac. Together, these interests hold more than 80 percent of commercial/multifamily mortgage debt outstanding. The delinquency rate for multifamily loans held by Freddie Mac was 6.72 percentage points lower than the series high of 6.81 percent in 1992's fourth quarter. Meanwhile, the delinquency rate for multifamily loans held by Fannie Mae was 3.34 percentage points lower than below the series high of 3.62 percent in the October-through-December period of 1991. In this year's April-through-June swing, the 60-plus day delinquency rate for commercial and multifamily mortgages held in life company portfolios was down 0.01 percentage points to 0.08 percent. Also in the second quarter, the 60-plus day delinquency rate for multifamily loans held or insured by Freddie Mac dropped 0.07 percentage points to 0.09 percent.
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Two Reasons Why Condo Towers Could Rise Again
Digested From "New Condo Towers May Rise With U.S. Housing Recovery"
Investor's Business Daily (09/06/13) P. A10 Gose, Joe

High-rise condominium construction was largely dormant for years after the housing crisis and economic meltdown. Thousands of units had to be converted to rental apartments or simply remained unsold and in a state of limbo. Lately, though, two factors could soon spark another round of high-rise condo building in cities with growth prospects: strengthening sales and a still-strong desire among many Baby Boomers and their offspring for city living close to job centers, restaurants, and cultural activities. "We went from hearing nothing about condos six months ago to hearing about them every other day now," notes Mark Humphreys, CEO of Humphreys & Partners Architects, a top designer of rental and for-sale residential communities. Looking at individual markets, CMK Cos. is planning a 150-unit condo tower in downtown Chicago, where Appraisal Research Counselors says only 645 unsold condos were available as of June 30 -- a decrease from some 8,000 at the end of the building boom in 2008. Meanwhile, a wave of Latin American cash is financing a new condo boom in and around Miami.
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Which Wisc. Cities Are Seeing the Most New Apartments?
Digested From "Apartment Construction Increases in Several Wisconsin Cities"
Wisconsin Public Radio News (09/02/13) Schossow, Breann

Buying a home used to be part of the American Dream, but the housing crisis changed that for many people. Developer Otto Gebhardt says that buying a home is not for those who do not want to worry about potential fluctuations in value or be tied down. Consequently, apartment construction is up in several Wisconsin cities, including Eau Claire, Madison, and Milwaukee. Experts say many of the new rental units coming onto the market are high-end. But not everyone can afford the higher monthly rents that goes along with these apartments. "One thing that we have heard with regard to the development that we're seeing is that there haven't been a lot of new, affordable units brought online recently," confirms Tim Parks with the Madison Department of Planning and Development.
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O, Canada! Apartment Construction Looks Set to Boom
Digested From "Rental Apartment Construction Set to Boom"
Toronto Globe & Mail (Canada) (09/08/13) Perkins, Tara

Several of Canada's largest real estate owners -- from pension funds to REITs to insurers -- are showing increased interest in developing new apartment communities in major cities than they have in decades. This emerging trend comes as the cost of purchasing older apartment communities has increased. At the same time, financing for new construction is relatively inexpensive because of low interest rates. Other factors supporting the trend include rental demand and rents rising, concerns of provincial rent control regimes subsiding, and condo markets throughout Canada weakening. Macquarie Securities analyst Michael Smith states, "For the first time in generations, it's starting to make sense to build rental apartment buildings in big cities. I think we're in the early stages of a new era. If condo prices correct some more and mortgage rules get tougher, I see purpose-built rentals in big cities starting to fill the void." There has been a definite lack of new apartments in the last two decades. Most of the new building activity that has taken place has been in Canada's smaller markets. Killam Properties Inc. CEO Philip Fraser observes, "We've all basically been buying existing product. It's just come to the tipping point where the lack of supply, increasing values, and increasing rents have us looking at ourselves and saying we are prepared to be a developer, and to build our own product." Killam has been one of the first and has recently been erecting new apartments in Newfoundland, Prince Edward Island, Nova Scotia and New Brunswick. Bentall Kennedy is also getting into the act. Rock Apartment Advisors Inc. CEO Derek Lobo notes that apartments should be viewed as long-term investments. He further cautions that the apartment sector holds the risk that rents will not be as strong one or two decades down the road.
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Apartment and Condo Market Gains Momentum in Q2 2013
Digested From "Apartment and Condominium Market Gains Momentum in Second Quarter"
RISMedia (09/02/13)

According to the National Association of Home Builders' latest Multifamily Production Index (MPI), production of apartments and condominiums picked up in this year's April-through-June period. The MPI increased nine points to 61 -- the highest reading since its creation a decade ago. The index measures builder and developer perception of current conditions in the apartment and condominium market, using a scale of 0 to 100. Any score over 50 indicates that more respondents report that conditions are improving than are worsening. The MPI provides a composite measure of three main elements of the multifamily housing market: construction of low-rent units, market-rate rental units, and for-sale condos.
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The Sun's Shining on Apartment Owners in Rainy Seattle
Digested From "Study: Seattle Rent Hikes Average Highest in Nation"
Q13 Fox (09/01/13) White, John

Reis Inc. reports that Seattle apartment rents rose higher in the last year than anywhere in the country. The New York-based firm tracked rent hikes in more than 80 major U.S. cities and found that the average rent in Seattle rose 6 percent in the last year, topping such other cities as San Francisco, San Jose, and Boston. Reis researchers note that Seattle's rents increased more than twice as fast as the U.S. average of 2.6 percent. The Seattle area's average asking rent was $1,150 a month as of June 30. A separate Dupre + Scott study shows that the apartment vacancy rate in King County, Wash., this past spring was 3.32 percent -- the lowest since 1998.
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Deals and Transactions


LowesAug2013
Which Orlando Neighborhood Recently Saw Two Apt. Sales?
Digested From "Two Orlando Apartment Complexes Sell for $85.6 Million"
Orlando Business Journal (09/04/13) Fluker, Anjali

Both a Florida and a California investment firm acquired apartment communities in August in the Orlando neighborhood of Rosemont for a combined total of $85.6 million. Experts say the sales are further proof that Central Florida is attracting multifamily housing investors looking for strong secondary markets like Orlando. Orlando Leased Housing Associates purchased the 492-unit Nassau Bay apartment community for $393.3 million on Aug. 27. That same week, Omninet Village of California bought a 989-unit portfolio that includes the Village Lakes at Lake Orlando Apartments, the Village Park Apartments, and the Village Townhomes, for $46.3 million.
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Charlotte Suburb to See New Apartments
Digested From "Ten Apartment Buildings Planned"
Charlotte Observer (NC) (09/02/13) Marusak, Joe

Grading recently began for 10 buildings that will house 281 apartments in the Morrison Plantation mixed-use community, which is located in Mooresville, N.C. Mike Flores, project manager of general contractor Fortune-Johnson, said the Grove at Morrison Plantation will include one-, two-, and three-bedroom rental units in three-story buildings at the site. According to Flores, the first building will be ready for residents in May 2014. Community amenities will include a swimming pool with cabana, a fitness center, and a cyber cafe.
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Industry Buzz


Sherwin-WilliamsSept13
Fannie, FHA Ease Rules for Borrowers With Blemished Credit
Digested From "Fannie, FHA Ease Rules for Borrowers With Blemished Credit"
Los Angeles Times (09/06/13) Harney, Kenneth R.

Columnist Kenneth R. Harney writes that policy changes by Fannie Mae and the Federal Housing Administration (FHA) -- two of the biggest players in the mortgage market -- could pave the way for thousands of people who were hit hard by the housing bust to become homeowners again this fall. Fannie Mae has devised a "fix" aimed at helping large numbers of consumers whose short sales were misidentified as foreclosures by the national credit bureaus. Previously, short-sellers would have to wait as long as seven years before becoming eligible for a new mortgage to purchase a home. "Under the revised plan," Harney notes, "they may be able to qualify for a mortgage in as little as two years." At the same time, the FHA has taken the wraps off a new program allowing borrowers whose previous mortgage woes were caused by "extenuating circumstances" beyond their control to obtain new mortgages in as little as one year after losing their houses instead of the current three years. They will need to prove that their delinquency problem was the result of a 20 percent or greater decrease in income that continued for at least six months and that they are now "back to work" and meeting their monthly commitments on time. They must also be earning enough to qualify for a new FHA-insured mortgage.
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Meet MAA's New General Counsel
Digested From "MAA Hires New General Counsel"
Memphis Business Journal (09/03/13) Ashby, Andy

Mid-America Apartment Communities Inc. has hired former Baker, Donelson, Bearman, Caldwell & Berkowitz PC shareholder Robert J. DelPriore to serve as its new general counsel. The Memphis-based apartment REIT felt it needed a securities expert to fill the position. In his new post, DelPriore will be in charge of overseeing all legal and regulatory matters for MAA. He will also coordinate corporate governance and enterprise risk management activities. MAA Chairman and CEO Eric Bolton states, "Our board and management team have worked with him in his capacity as our outside securities counsel for a number of years. . . . In joining our management staff he will be in a position to have a more active and hands-on involvement with our expanding operation and strategy development. Prior to his stint at Baker Donelson, Memphis' biggest law firm, DelPriore served as a member of Bass, Berry & Sims PLC. There, he advised on corporate matters including registered securities offerings, securities law reporting obligations, and compliance with NYSE listing standards. He comes to MAA as the company is in the midst of a merger with Colonial Properties Trust Inc.
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Do Apartment Residents Still Crave the College Dorm Days?
Digested From "'What Renters Want' with Jessica Fiur: Are Apartment Communities Trying to be Like Dorms?"
Multi-Housing News (09/13) Fiur, Jessica

Columnist Jessica Fiur asks, "Are apartment communities trying to be more like dorms?" With many communities offering parties and other social activities to get residents involved and social, it seems like more and more market-rate property managers are indeed borrowing ideas from student housing. Fiur confesses she is of two minds on this. "Offering programs and parties that are similar to what would be offered at a college dorm could attract a lot of that golden demographic, the young professional," she writes. Additionally, they might get a lot of residents participating, which would lead to more of a community feel. This, in turn, which would ideally lead to positive word of mouth for the apartment community and higher resident retention. On the other hand, the college days are over and left behind for most of those out in the working world, looking to make rent each month, advance their careers, and build lives. Social activities can be quite awkward if not planned and executed wisely. "Many people are content doing their own thing and after a long day of work want some peace and quiet to relax," she concludes.
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What Former Apartment Exec Has Joined Blackstone's Board?
Digested From "Blackstone Adds Former AvalonBay Chairman to Unit's Board"
Bloomberg (09/04/13) Gittelsohn, John

Blackstone Group LP on Wednesday added former AvalonBay Communities Inc. Chairman and CEO Bryce Blair to the board of its Invitation Homes unit, the biggest owner of single-family rental houses. Blair was a decision maker for apartment REIT AvalonBay for 20 years. The New York-based Blackstone ranks as the world's largest private-equity firm. It has spent upwards of $5 billion to purchase approximately 32,000 single-family rental homes. This comes as Wall Street-backed investors have come together to create a new real estate asset class from what had traditionally been a mom-and-pop business. Invitation Homes Chairman and CEO Nick Gould notes that his business will be helped greatly by Blair's "background building a leading company in the multifamily space." He served as AvalonBay's chief executive from 2001 to 2011.
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Legal/Legislative Did You Know


2013 Diamond Sponsors with correct Azuma logo
NAAEI Grants CAMnesty for Lapsed Students to Earn Desgination
Digested From "NAAEI Opens New Path for Lapsed Students to Earn Certified Apartment Manager Designation under CAMnesty Program"
Multi-Housing News (09/13)

The National Apartment Association Education Institute (NAAEI) is now offering individuals who did not complete their Certified Apartment Manager (CAM) designation in the past seven years a second chance. The organization recently launched its CAMnesty program, which is expected to run through March 2014. Under the program, those who have previously completed all the requirements for the CAM except the community analysis or course exam can now pay a fee, complete a new course module, and take the exam to earn the designation. The fee ranges from $250 to $350 depending on how long it has been since the individual started the CAM course. This is NAAEI's latest attempt at updating its CAM program to meet the needs of today's adult learners.
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Apartment Owners Accuse Ga. City of Discrimination
Digested From "Apartment Owners Accuse City of Discrimination"
Reporter Newspapers (09/09/13) Earle, Joe

Owners of two Dunwoody, Ga., apartment communities have filed suit, accusing the city of violating federal housing laws and trying to drive minority and low-income residents out of the city. The owners of the Dunwoody Glen and LaCota apartments contend that city officials used enforcement of housing codes to harass them and tried to force them to either sell or close their communities. According to the lawsuit, the city's actions were "irrational and . . . based upon unwarranted fear and prejudice." The lawsuit asks that the court order the city to stop prohibiting affordable housing in Dunwoody and instead encourage it. The apartment owners claim the city's efforts to purchase and raze the apartments were motivated by a desire to eliminate rental housing in Dunwoody, to remove as many as 560 children who lived in the apartments from Dunwoody schools, and to move minorities out of the city. The lawsuit names the city and Community Development Director Steve Dush as defendants. As of presstime, the city and Dush had no comment on the pending litigation.
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NAA Announcements


Behr.July13
Don’t Delay: The Apartment Revenue Management Conference Is Just Two Weeks Away

If you haven’t already registered for the 2013 Apartment Revenue Management Conference, the time to do so is quickly running out.

The 2013 Apartment Revenue Management Conference—September 23-25 at the Turnberry Isle Resort in Miami—is the industry’s only event dedicated to staying ahead of the ever-evolving operational curve.

But it’s so much more than that.

This year’s program has been radically expanded to include ancillary revenue, expense management and business intelligence. Seeking out-of-the-box ideas? You’re in luck: Keynote speaker Greg Cross, Senior Vice President of Revenue Management for Hyatt Hotels Corporation, will share with attendees the current trends in lodging and all the potential parallels in the multifamily housing marketplace.

Nowhere else but the 2013 Apartment Revenue Management Conference can you find world-class education and first-rate networking, as well as ideas and strategies for boosting net operating income.

“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!

BONUS! Brand-new this year, rental housing owner, operator and property manager attendees will have unique access to insight on operational best practices, supplier and system recommendations, ideal benchmarking metrics and loads more during the exclusive “Owner’s-Only Revenue Management Roundtable” closed-door session. Learn more about this session and how it will provide the information, insight and answers to questions necessary to boost your bottom line.
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Participate to Win An Erik Wahl Masterpiece and Support NAA Advocacy Efforts

Participate in the Wahl to Wall advocacy campaign and support the NAAPAC or the NAA Better Government Fund. All you need to do is guess how many pennies are in the jar. The jar of pennies was displayed at the Education Conference in June and can be viewed online. Start guessing today! Questions? Contact NAA’s Kathleen Gamble.
Owners, Make the NAA Lease Program Work For You—Watch the Latest IROC Webinar and Learn How

If you missed last month’s IROC Webinar it’s not too late to learn how the NAA Lease Program can work for owners of all sizes. Get a demonstration of how it works, see how to integrate the lease with your property management software and learn why owners like you are making the NAA Lease Program the most widely-used residential lease forms in the country. To see what you missed, join the IRO Community today and watch the Webinar from Aug. 20.
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REWIND the Education Conference 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!
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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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Best Days of the Month? 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.

Upcoming Webinars:

9/18/13 Eric Broughton - Beyond Craigslist

Learn more and 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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September 10, 2013

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2013 Apartment Revenue Management Conference

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'One Industry. One Voice.' Join Us for the 2015 NAA Capitol Conference

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