MBA Reports Multifamily Lending Up 33 Percent
Digested From "MBA Reports Multifamily Lending Up 33 Percent"
National Mortgage Professional (10/11/13)
A total of 2,803 different multifamily housing lenders provided $146.1 billion in new loans last year for apartment communities with five or more rental units, reports the Mortgage Bankers Association (MBA). The 2012 dollar volume represents a 33 percent gain from the previous year's levels. Two-thirds of the active lenders made five or fewer multifamily loans over the course of 2012. The $146 billion of multifamily mortgages originated last year went to a broad array of investors. In terms of total dollar volume, the biggest share (40 percent) went to Fannie Mae and Freddie Mac. In terms of number of loans, 80 percent went to commercial bank, thrift, and credit union portfolios. The top multifamily lender in 2012 by dollar volume was JPMorgan Chase Bank, followed by Wells Fargo and CBRE Capital Markets Inc. Jamie Woodwell, MBA's vice president of Commercial Real Estate Finance, remarks, "In many ways, we were in a golden age of multifamily finance in 2012, that to a large extent continues today. Low interest rates, strong property fundamentals, and increasing multifamily property prices are all supporting a very favorable lending environment."
Market Trend Insights
Two Reasons Investors Are Forsaking Single-Family Rentals
Digested From "Investors in Rental Homes: 'It's a Business Not a Trade'"
CNBC News (10/03/13) Olick, Diana
A growing number of big investors are pulling out of the single-family rental market due to two reasons -- a potential stall in home price gains and a sizable drop in the number of distressed properties. They are exiting at the same time that billions of investor dollars are continuing to pour in. Oaktree Capital Group's recent decision to sell about 500 of its homes added fuel to other reports that Och-Ziff Capital management is also selling its properties. For its part, Carrington Mortgage Services ceased buying distressed homes in 2012's fourth quarter, explaining that the market had become "a bit too frothy." Home prices have risen more than 12 percent from a year earlier, reports CoreLogic, but are still 18 percent off their 2006 peak. Critics charge that without rising prices, the rental trade is a low-to-mid single-digit return proposition. Meanwhile, management of the various properties can be as tricky as it is costly, which can cut profits dramatically. Still active is American Residential Properties. The Arizona-based REIT has already purchased 80 portfolios of rental homes from smaller aggregators and is now setting its sights on such markets as Georgia, North and South Carolina, Indianapolis, and Chicago. American Residential President and COO Laurie Hawkes concludes, "I think soon there will be consolidation from potentially other players who might have had private equity, who can't make it work."
Orlando Apartments Fill up, With More on Way
Digested From "Apartments Fill up, With More on Way"
Orlando Sentinel (FL) (10/20/13) Shanklin, Mary
According to Charles Wayne Consulting Inc.'s semi-annual Residential Markets Report for Orlando, apartment-occupancy rates in this particular market edged up from 93.9 percent a year earlier to 94.5 percent. Since 2009, when the Orlando metro area's multifamily residential sector was only 87.5 percent occupied, over 19,000 rental units have been leased. While occupancy rose in nine of the region's submarkets, three other submarkets showed some softening. The Apopka market boasted the highest occupancy rates, where apartment communities were 97.1 percent full on average last month. Demand was also strong in Osceola County and South Orlando. By comparison, apartment communities in the North Orlando/Winter Park/Maitland area were 90.8 percent occupied because of new construction being completed. Also according to the report, around 3,000 additional units are being leased each year but more than twice that amount are being built. The pace of new apartment development has more than tripled in the past couple of years, with 7,124 units underway in September versus 1,929 units that were under construction in the same month in 2012.
How Seniors and Young 'Uns Are Teaming to Boost Spokane Apts
Digested From "Spokane-Area Apartment Market Favors Renters"
Spokesman-Review (10/21/13) Sowa, Tom
Apartment residents are benefiting as Spokane's economy slowly gains momentum. Through the Spokane region, those who rent are finding they have plenty of apartments to choose from as builders of multifamily housing add hundreds of units to the local stock each year. Despite all this activity, apartment rents are stable and much lower than those in the Seattle metro area where rents are currently skyrocketing. In 2012, builders added 888 apartments throughout Spokane County. Since the first of this year, builders have already added 899 rental units. So many new apartments are coming online that analysts are asking the same question: "Who's moving into them?" Many are the traditional younger crowd who don't want to be homeowners or can't afford to purchase a house. However, another growing factor seems to be a change in homeownership among empty-nesters. Jim Frank, CEO of Greenstone Homes, confirms, "A larger number of empty-nesters and seniors are finding that renting is a preferable lifestyle option." That choice is driven by such factors as a desire to avoid home maintenance and the cost-cutting impulse to downsize into a smaller home. "Some of our [apartment communities] have as many as 25 percent of the units occupied by empty-nesters or seniors," Frank added.
How Apartments Factor Into New Growth of CRE Loans
Digested From "Commercial-Property Lending Begins to Ramp Up"
Wall Street Journal (10/14/13) Johnson, Andrew R.
Many U.S. banks are starting to see fresh growth in commercial real-estate loans as a result of rising real-estate values and improved credit quality. Analysts said the lending rebound, still in the nascent stages, is being driven largely by apartment communities. According to the Moody's/RCA Commercial Property Price Indices, apartment property prices have increased 13 percent over the past year as of August, though growth has slowed in recent months. Development of new multifamily housing increased in the second quarter, according to a National Association of Home Builders index, which rose nine points from the first quarter to 61 on a 100-point scale. As of June 30, U.S. banks had $991.2 billion in total commercial real-estate loans, up 3.3 percent from the year prior, according to SNL Financial. Last year's 2.4 percent rise in total commercial real-estate loans to $972.7 billion was the first growth since 2009, according to SNL.
Reno-Sparks Apartments Appear Worth the Gamble
Digested From "Apartment Rents Inch up as Vacancy Rates Decline"
Northern Nevada Business Weekly (10/14/13) Sabo, Rob
Apartment vacancy rates are down, but rents are rising in the multifamily housing market of Reno and Sparks, Nev., as the area sheds the last effects of the economic downturn. Overall vacancies among all apartment types were at 4.65 percent in the second quarter, while monthly rents increased $14 per unit to an average of $843. According to a survey of the regional apartment market by Johnson-Perkins & Associates, the number of apartment communities offering concessions fell to 48 percent. Johnson-Perkins principal appraiser Scott Griffin said all signs now point to a healthy apartment market, which could spark a flurry of apartment sales as well as new construction. One-bedroom rental units continued to be the most sought-after of all apartment types and had a vacancy rate of 3.5 percent in this year's April-through-June period.
Deals and Transactions
Three Factors Have Elevated Houston's Apartment Market
Digested From "Miami Investment Firm Launches National Expansion With Houston Apartments"
Houston Chronicle (10/16/13) Feser, Katherine
The Houston market has captured the attention of apartment investors due to its strong job growth, low vacancies, and rising rents. So much so that Miami-based Ytech International has expanded outside of Florida with its $35-million acquisition of five apartment communities in the Houston metropolitan area. "Ytech's entry into the Texas multifamily real estate market and Houston, in particular, is an important milestone for the company as we embark upon a nationwide expansion from our base in Florida," said Yamal Yidios Char, president and CEO of Ytech International. The 1,312-unit portfolio includes such communities as Kirkwood Landing, the Pine Creek Apartments, and the Forest Apartments.
In What Three States Did REIT Buy Four Apt. Communities?
Digested From "Landmark REIT Buys 1,346 Units for $98 Million"
GlobeSt.com (10/18/13) Morphy, Erika
Landmark Apartment Trust of America recently acquired four apartment communities in Florida, Texas, and Alabama. All four were acquired through two separate transactions totaling $98.2 million and together contain 1,346 rental units. They also boast a cumulative 95 percent occupancy rate. The communities acquired include Landmark at Grayson Park in Tampa, Landmark at Woodland Trace in Orlando, Landmark at Lancaster Place in Birmingham, and Landmark at Collin Creek in Dallas.
How Will Retiring Boomers Affect the Real Estate Market?
Digested From "How Will Retiring Boomers Affect the Real Estate Market?"
NuWire Investor (10/16/13) Burgess, Richard
Some experts believe the next financial crisis will be tied to retirement of the Baby Boomer generation. There are at least 78 million baby boomers in the United States, and research indicates that an average of 4 million will retire each year over the next 20 years. When factoring in the assumption that 75 percent are married couples or families, at least 1.5 million households will enter retirement annually. Baby boomers are responsible for much of the demand for large, suburban, single-family homes between 1990 and 2010; and when many of them decide to downsize when they retire, it begs the question of who will buy all the homes that will subsequently hit the market -- particularly in areas where population growth is stagnant or declining. This becomes more of a concern when today's low birth rates are taken into consideration, along with the fact that most buyers between the ages of 25 and 35 would rather live in multifamily housing than large suburban houses. Although the growing population of Hispanics could potentially absorb the supply -- as they are more likely to live in multigenerational family groups and need big single-family homes -- this demographic would have to overcome economic disparities, and home prices would have to fall to the point that these dwellings become affordable.
Americans on The Move as Home Prices, Jobs Rise
Digested From "Americans on The Move as Home Prices, Jobs Rise"
Investor's Business Daily (10/18/13) P. A10 Dobbs, Kevin
America's job market continues to face a long upward climb to full recovery, with U.S. unemployment still high and labor participation at all-time lows. But mobility -- workers' willingness to relocate for a new job -- is picking up as housing recovers, giving economists and market watchers hope that the underpinnings of a stronger market are taking hold. Some 7.1 million Americans moved across state lines in 2012, estimates the Census Bureau's American Community Survey (ACS). While that is still significantly off the nearly 8 million pace the nation enjoyed prior to the 2007-08 recession, it is up markedly from the 2010 low of 6.7 million. A fluid workforce allows talent to migrate to faster-growing employers and parts of the United States. In turn, this serves to accelerate hiring because employers are typically more eager to add personnel when they are confident they are attracting the most qualified candidates. California State University Channel Islands economist Sung Won Sohn states, "If people can move for the jobs they are best matched for, those jobs can get done better and more efficiently, and when productivity goes up, we get economic growth." Mobility was greatly hampered as a result of the housing meltdown, which left a large number of Americans owing more than their residences were worth. New data compiled by Challenger, Gray & Christmas show that 14 percent of unemployed managers and executives relocated for new jobs in the first six months of this year, more than twice the year-ago rate and the highest since the first and second quarters of 2009.
Why (and Where) Are Condos Going Back Up for Sale?
Digested From "Condos Are Going Back Up for Sale"
Wall Street Journal (10/21/13) P. A3 Dougherty, Connor
Many condominium developers who rode out the housing slump by renting their units are now returning their focus to the for-sale market. Condos lost favor and apartment rents rose during much of the recession and its aftermath. New rental apartments significantly outpaced new condos. Now, in such major markets markets as San Francisco and South Florida, the trend is reversing. In 2012, 2,080 apartments were converted to condos from rentals -- the highest total since 2008, reports Reis Inc. Researchers say the numbers are muted, however, because of two factors: the continued strength of the apartment sector and because the bulk of today's conversions are different from the boom years and should more accurately be termed "reversions." The developers had always planned to sell the units as condos but were unable to find buyers during the bust years. "It's different from 2005 or 2006 when [investors] would buy an apartment building, kick everyone out and put a condo map on it," said Shlomi Ronen, managing principal of Dekel Capital, of today's conversions.
Legal/Legislative Did You Know
Utility Hikes to Affect Up to 3 Million Ohio Multifamily Residents
Digested From "Utility Markups May Affect up to 3 Million Ohio Apartment, Condo Renters"
Associated Press (10/21/13)
A recent Columbus Dispatch investigation found that Ohioans who rent apartments and condominiums pay markups for utilities between 5 percent and 40 percent when their community owners and managers ink deals with certain third-party firms that make big profits from reselling electricity and water. These companies are unregulated, and if customers are unable or refuse to pay, can resort to collection tactics that are illegal for regulated utilities. These tactics can include shutting off the heat in winter and even eviction. Currently, no state agency has the authority to take action on the matter. That would require action by the Ohio Legislature. According to Attorney General Mike DeWine, "it seems to be a problem when you have a small minority of consumers who do not have those protections. That, to me, would raise a lot of questions." Following a 10-month investigation, the Dispatch determined that up to 20,000 housing units in and around Columbus alone are affected. The unregulated utilities have the potential to affect up to 3 million Ohio apartment and condo residents, the newspaper further found.
GSE Reform Proposals Next on the To-Do List
Digested From "GSE Reform Proposals Next on the To-Do List"
Housing Wire (10/14/13) Mlynski, Christina
A new report by Standard & Poor's indicates that housing finance reform is one of the next items on Congress' to-do list and that there appears to be bipartisan support for winding down Fannie Mae and Freddie Mac and encouraging private capital support for the mortgage market. S&P analysts say the proposed Housing Finance Reform and Taxpayer Protection Act (Corker-Warner bill) would still require servicers and mortgage aggregators to be approved to participate in government-sponsored programs, so it would have less of an impact on banks. However, the report notes that the Protecting American Taxpayers and Homeowners Act could have a bigger effect on banks by delaying the implementation of the Basel III capital rules and delaying or repealing Dodd-Frank rules. Moreover, S&P says the market faces greater uncertainty the longer it takes to reform the origination and servicing system, no matter which reform bill is passed.
Have Four Friends? Of Course You Do! Get Together With Them to Save $400 by Registering Now for the 2014 NAA Student Housing Conference
Plan to learn everything there is to know about housing the next generation—and make it a team effort—March 3-5, 2014, as NAA convenes the 2014 Student Housing Conference & Exposition in Las Vegas at the ARIA Resort.
For a limited time, save $300 on the cost of registration. And, to sweeten the deal, groups of five or more have the opportunity to save another $100 each by registering together.
Join more than 900 star pupils for two days chock-full of education and networking opportunities, from general and breakout sessions led by recognized experts in the student housing business, to reception and time spent interacting with exhibitors on the trade show floor. Position yourself at the top of this expanding sector of rental housing and better understand the next generation of residents—how they communicate, where to find them and what amenities will bring them to your community and keep them happy.
Visit the NAA Student Housing Conference website for registration, schedule and the latest announcements. Breathe easy—no admissions essay required!
Remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
Registration for the 2014 NAA Education Conference & Exposition, the Largest Event in the Multifamily Housing Industry, Opens Monday, Oct. 28
Don't miss out on the opportunity to “Reach New Heights” as more than 6,600 multifamily professionals convene in Denver June 18-21 for the 2014 NAA Education Conference & Exposition.
From world-famous speakers to the latest and greatest from multifamily supplier partners, if career enhancement is what you seek, then this is the one event you can’t afford to miss.
Don’t delay—registration for the 2014 NAA Education Conference & Exposition opens this Monday, Oct. 28, and the largest discounts go to those who register early.
Make sure to book your housing as soon as you register—rooms will go fast and you will be unable to book without first registering. Visit the Education Conference website for information and reservations for all official NAA Education Conference hotels.
Are You A Regional Supervisor or Corporate Department Head?
NAAEI has partnered with Dale Carnegie Training to deliver a world-class pilot program called the NAAEI Leadership Experience. Are you looking to lead effectively across generations, delegate tasks to develop and train others and most importantly, find time to work on future business growth? The NAAEI Leadership Experience is an investment you cannot afford to pass up! This course will be held Nov. 19-21, 2013, in Atlanta at a one-time discounted rate. For information or to register contact Kim McCrossen at 703-797-0610.
Calendar Alert: The Deadline to Participate in The 2014 NAA Education Conference & Exposition Call For Presentations is Oct. 25
Convinced you have a fantastic session idea for the 2014 NAA Education Conference & Exposition? Don’t keep it to yourself! The online Call for Presentations for the 2014 NAA Education Conference, June 18-21, 2014 in Denver, is now open for education session submissions.
A few notes: Education session proposal submissions are limited to four per individual and/or company (including subsidiaries); no paper documents accepted; you will be required to submit all requested information, and incomplete submissions will not be accepted or reviewed; and the deadline to submit is Oct. 25, 2013.
2013 NAA Survey of Income & Expenses Data Now Available
The 2013 NAA Survey of Income & Expenses is now available. The survey includes an executive summary, detailed data, reports and charts about rental communities.
A total of 4,526 properties containing 1,138,056 units are represented in this year's report. Data was reported for 4,117 market rent properties containing 1,077,468 units and 409 subsidized properties containing 60,588 units. The executive summary appeared in the Sept. issue of units magazine. To order, please visit the NAA Store.
NAAEI's "CAMnesty" Program Gives CAM Students a Second Chance
CAMnesty is a new program that offers individuals who have started but may not have completed their Certified Apartment Manager (CAM) designation the opportunity to pick up where they left off and earn the CAM designation. Learn more about the CAMnesty program.
NAAEI Designation Courses Offered Near You!
Roanoke Valley Apartment Association
Apartment Association of Greater Los Angeles
November - December, 2013
El Paso Apartment Association
January – April, 2014
Austin Apartment Association
February – March, 2014
Columbus Apartment Association
January – February, 2014
Lubbock Apartment Association
January – February, 2014
Roanoke Valley Apartment Association
Apartment and Office Building Association of Metropolitan Washington
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.
Abstract News © Copyright 2013 INFORMATION, INC.