Four Factors Pushing First-Time Buyers Out of the Market
Digested From "First-Time Home Buyers on the Decline, NAR Survey Reveals"
Four factors -- rising interest rates, more stringent lending standards, home price appreciation, and a tepid employment market -- continue to push many first-time home buyers out of the market. The latest numbers send up red flags because first-time buyers are an indicator of the future growth and vitality of the industry. The National Association of Realtors' annual Profile of Home Buyers and Sellers report shows that first-time buyers represented 38 percent of all house sales in the last year -- a decrease from 39 percent last year. It should be noted that the research was limited to owner-occupants and did not factor in vacation homes or investors. Since 1981, four out of 10 home purchases have been by first-time buyers on average; and the recent dip does not really change that ratio by much. NAR chief economist Lawrence Yun remarks, "The share of first-time buyers appears to be only modestly below normal, but we have to keep in mind that investors have been more active in recent years, and they're not included in these results. Historically, first-time buyers are instrumental in housing recoveries because they help existing homeowners sell and make a trade."
Market Trend Insights
Homeownership Rate Not Showing Improvement
Digested From "Homeownership Rate Not Showing Improvement"
Reuters (11/06/13) Mutikani, Lucia
According to the Commerce Department, the U.S. homeownership level remained flat at 65.1 percent for the third quarter -- down from a 2004 peak of 69.4 percent. The seasonally adjusted 3Q rate, at the lowest point in 18 years, points to a nation still struggling to shake off the effects of recession. The residential rental vacancy rate, in turn, bumped up 0.1 point to 8.3 percent for the three-month period, which is markedly lower than the peak of 11.1 percent just three years ago. Homeowners are being held back by persistent unemployment, tight underwriting requirements, and creeping mortgage rates.
How Is 2013 Looking for Austin Apartments?
Digested From "Austin Apartment Market Posts Strong Fundamentals"
Austin Business Journal (11/08/13) Buchholz, Jan
According to the latest Apartment Research Market Report by Marcus & Millichap, Austin's apartment sector is expected to post strong returns as the Texas state capital's population of 20- to 34-year-olds remains on pace to grow at more than twice the U.S. average this year. Adding to the positive outlook, apartment rents appear poised to have risen about 5.7 percent during 2013. The highest rent growth has occurred for apartment communities erected prior to 1970. Monthly rents have climbed an average of 9.7 percent in that category due partly to soaring job growth in lower-paying industries. By the end of December, developers will have delivered approximately 6,300 new rental units citywide compared to 3,850 apartments delivered in 2012. Pre-1970s apartments have the tightest vacancy rate of 2.7 percent. By contrast, units built since 2000 have the highest vacancy rate. However, it's still small -- in the 5 percent range. Finally, investment sales look to be on par with last year, which saw an acceleration of deals in the October-through-December swing in advance of changes to capital gains tax formulas.
Why Is Cheyenne Struggling With an Apartment Shortage?
Digested From "Cheyenne Struggling With Shortage of Housing"
Wyoming Tribune-Eagle (11/10/13) Chilton, James
In Wyoming, census numbers show that Cheyenne's population has increased more than 16 percent since 2000. Unfortunately, people are having an increasingly hard time finding a place to live with an unemployment rate of just 4.1 percent and economic development promising hundreds of new jobs in the months to come. A couple of recent efforts by developers to erect additional rental apartments either failed to meet the approval of the Cheyenne City Council or were withdrawn because of opposition from neighbors. Depending on which research report you believe, the vacancy rate for apartments in Cheyenne is anywhere from 1 percent to 7 percent. The rate is especially low for newer communities, and few allow pets. Michelle Ryun with Crown Realty and Property Management comments, "Of my entire inventory, 450 properties, I’d say maybe 1 percent would negotiate with a pet. I've been here for eight years, and the entire time I've been here, it’s been a growing and growing market [for rentals]." Ryun notes that her portfolio's vacancy rate is currently around 7 percent, though she said that number dips to just 3 percent when taking into account communities that are currently off the market for remodeling or cleanup. Most of those were erected between 1973 and 1978. The most recent estimate from HUD holds that there are about 8,000 rental properties in Cheyenne -- a total that has not gone up fast enough to meet local demand. Most agree that the rate of new apartments being built is too slow to keep up with demand, which could hurt the city in the near term as people are forced into available housing south of the Wyoming border.
Study Blames High Unemployment on ... High Homeownership?
Digested From "High Unemployment? Blame High Home Ownership, Study Says"
NBC News (11/01/13)
A study by Warwick University economics professor Andrew Oswald and Dartmouth College economics professor David Blanchflower reveals that high homeownership rates are tied to increases in unemployment. Specifically, the lack of labor mobility keeps homeowners in place, and the lag from ownership levels to unemployment rates may not materialize for as long as five years. The study, looking at data from the continental United States as far back as 1950, finds that a state's jobless rate can more than double with a doubling of the homeownership rate. The results may explain why Switzerland, with a homeownership rate of 30 percent, has only a 3 percent unemployment rate; while Spain has an 80 percent homeownership rate and a jobless rate above 25 percent. Homeownership could put a damper on the labor market by making it more difficult for people to relocate for new jobs, or homeowners could be opposed to new businesses opening in their neighborhoods. "I have become convinced that by boosting homeownership we have ruined our labor market," says Oswald.
Out-of-Area Apartment Investors Sing a New Tune in Nashville
Digested From "Out-of-State Investors Snap up Bellevue, Antioch Apartment Buildings"
The Tennessean (11/05/13)
The recent sale of two Nashville-area apartment communities to out-of-state buyers has further accelerated the trend of outside investors making investments in the local multifamily housing sector. Los Angeles-based Arenda Capital Management has agreed to pay $47 million for the 560-unit Madison Ridgelake apartment community in Bellevue. The community was 98 percent leased at the time of the transaction. Greg Curci, vice president at Equus Capital Partners Ltd., states, "Nashville's compelling market fundamentals and renter demographics combined with Madison Ridgelake's history of consistent rent growth resulted in an extraordinary level of investor interest for this well-located community." In the second deal, Utah-based Peak Capital Partners has bought the 276-unit Hickory Trace apartment community. Jamie Dunn, founder and managing partner of Peak Capital Partners, comments, "This is the third apartment community Peak Capital Partners has acquired in Nashville. Nashville is a significant growth market for us and we look forward to making future investments in the city."
Why More Americans Prefer Mixed-Use Neighborhoods
Digested From "NAR Study: Americans Prefer Mixed-Use Neighborhoods"
National Mortgage Professional (11/01/13)
Americans continue to prefer pedestrian-oriented, mixed-use neighborhoods and shorter commutes, according to the National Association of Realtors. The group's 2013 Community Preference Survey reveals that 60 percent of respondents favor a neighborhood with a mix of houses and stores and other businesses that are within easy walking distance rather than communities that require more driving between home, work, and recreation. The findings suggest Americans are willing to compromise the size of the property for a preferred neighborhood and less driving. NAR reports that 78 percent of respondents said the neighborhood is more important to them than the size of the house. Fifty-seven percent said they would forgo a house with a larger yard if it meant a shorter commute to work; and 55 percent said they would forgo a home with a larger yard if it meant they could live within walking distance of schools, stores, and restaurants.
Deals and Transactions
Three Reasons for Spike in Hawaii Apartment Deals
Digested From "Sales of Apartment Buildings in Hawaii Top $100M So Far This Year"
Pacific Business News (11/05/13) Shimogawa, Duane
Sales of apartment communities in Hawaii registered strong results in the third quarter due to three factors -- low inventory, rising investor confidence, and favorable interest rates. More than $34 million in sales were tallied from July through September, according to a new report by Apartment Advisors LLC. Year to date, the total sales volume of apartment communities has topped the $100 million mark and is expected to continue to climb between now and the end of December. The median price of apartment communities rose to $1.85 million, a $400,000 increase from the second quarter. Meanwhile, the average price-per-unit increased to an estimated $194,000 for a one-bedroom, one-bathroom rental unit. Small- to mid-sized apartment communities continue to dominate the market, account for over 87 percent of multifamily sales under $3 million. Finally, Apartment Advisors confirms that the average number of days that apartment communities have stayed on the market spiked to 124 days per transaction because of investors purchasing properties that had been on the market for longer periods amid a lack of new inventory.
In What State Has HGI Bought Three Apt. Communities?
Digested From "Harbor Group International Acquires Three Florida Apartment Properties"
National Real Estate Investor (11/04/13)
Harbor Group International (HGI) affiliates have acquired three apartment communities in Florida. Two of the properties -- the 272-unit West Winds and the 210-unit Verandahs at Hunt Club -- are in Orlando. The third, the 146-unit Forestlake Apartments, is located in Daytona Beach. Terms of the deals were not disclosed. HGI President T. Richard Litton remarks, "Orlando and Daytona Beach are the right markets for our continued investment strategy throughout Florida. HGI continues to actively pursue portfolio acquisitions that provide us unique opportunities to provide returns to our investors." The company plans to invest almost $2.2 million in capital improvements at the three communities. HGI owns nine additional apartment assets in markets across the Sunshine State. In the last three years, HGI has closed a total of four multifamily housing portfolio transactions made up of 22 apartment communities containing approximately 7,500 rental units.
10 Reasons to Rent in Retirement
Digested From "10 Reasons to Become a Renter in Retirement"
U.S. News & World Report (11/11/13) Brandon, Emily
Apartment renting is being seen as an increasingly viable option in retirement. If they pick the right community, seniors who go this route will no longer have to climb steps, mow lawns, or live isolated. The article offers 10 reasons to rent in retirement. Number one is being able to tap your home equity. Selling one's home and renting allows you to add that home equity to your nest egg, which could significantly improve retirement finances. Outsourcing home maintenance is another big benefit. In many rental agreements, it is the apartment owner's responsibility to maintain the property, including the exterior of each building and many of the major appliances. To this end, those who rent have just one phone call they need to know for repairs. Another benefit of renting during one's golden years is living closer to desired amenities. Apartment communities are often situated in walkable locations near retail stores, arts districts, public parks, and recreational opportunities. Greater flexibility is another popular benefit. "Renting gives you the flexibility to experience a new location or lifestyle without a long-term commitment," the article's author writes. Other benefits listed range from age-appropriate apartment features to planned social activities for residents and a chance to make friends.
Dale Carnegie Partners With NAAEI for Leadership Training
Digested From "Dale Carnegie Partners With NAAEI for Leadership Training"
Dale Carnegie Training has teamed up with the National Apartment Association Education Institute (NAAEI) for the first "NAAEI Leadership Experience: Powered by Dale Carnegie Training." The three-day program is scheduled for Nov. 19-21 in Atlanta. Based on Dale Carnegie Training's principles and education tools, it is designed to develop the leadership skills of apartment industry regional managers and corporate department heads by instructing them on how to engage and motivate team members to meet and exceed company objectives. In particular, the NAAEI Leadership Experience will place special emphasis on the value and importance of employee engagement. NAAEI President William Wollinger remarks, "Most apartment companies do a great job training front-line employees. However, once an apartment manager moves up to a regional leadership position, many companies expect the employee to automatically transition from 'doing' to 'leading' without any formal training or coaching." He adds that the Dale Carnegie partnership will provide the apartment industry with leadership training that is customized to meet its needs. The "NAAEI Leadership Experience: Powered by Dale Carnegie" is comprised of several seminars addressing such topics as building trust, credibility, and respect among employees; creativity and innovation; and "coaching for performance."
How to Limit, Remediate Mold Exposure
Digested From "Moisture Control: How to Limit, Remediate Mold Exposure"
Multifamily Executive (11/06/13) Isaacs, Linsey
Even some green-building techniques can help create a humid environment where mold thrives. Now as cold weather rapidly approaches, mold spores are likely to get locked in humid environments in any sort of apartment setting. With the number of lawsuits ticking upwards, many property managers need to ensure the building envelope does not allow conditions that promote mold growth. Proper water-proofing and ensuring that plumbing systems are functioning appropriately are key. Furthermore, while its important to pick the best roofing, windows, and draining systems, some things are not clear to the naked eye. "We've had instances in new construction where a nail would penetrate a waste line or a water line, and we don't know about it until you see a condition that reaches the surface material," said Skip Szymanski, deputy executive director and COO with the Housing Authority of the City of Santa Barbara. The key for apartment owners is to outline potential issues and educate residents from the get-go so they understand their responsibility. But Szymanski said it is also a good idea for maintenance teams to perform annual inspections for any mold issues in order to catch problems early.
Texas Mutual Pays Big Dividend to Texas Apartment Assoc.
Digested From "Texas Mutual Pays $309K Dividend to Texas Apartment Association"
Texas Mutual Insurance Co. last week confirmed that the Texas Apartment Association (TAA) safety group earned a $309,686 workers' compensation dividend. The dividend is based mainly on group members' collective workplace safety record. Since 2009, TAA has earned $1.5 million in Texas Mutual safety group dividends since 2009. In addition, numerous group members have qualified for individual policyholder dividends based primarily on their personal safety records. The TAA safety group is open to qualifying property managers. Group members receive discounts on their workers' comp premiums in addition to potential dividends and have access to workplace safety materials tailored to their industry.
What Are America's Most Walkable Cities?
Digested From "America's Most Walkable Cities: No. 1 New York; No. 2 San Francisco; No. 8 Seattle"
GeekWire (11/06/13) Soper, Taylor
Walk Score has released its 2014 list of America's most walkable cities and neighborhoods. The Seattle startup -- which assigns a walkability rating of 1 to 100 on homes and businesses -- reportedly analyzed 10 million addresses and more than 2 billion walking routes to neighborhood amenities to determine which cities were most walkable. Topping the rankings was New York City, with a Walk Score of 87.6. It was followed by San Francisco, at 83.9, Boston, 79.5; Philadelphia, 76.5; and Miami, 75.6. Rounding out the top 10 were Chicago; Washington, D.C.; Seattle; Oakland; and Baltimore.
Legal/Legislative Did You Know
Can Denver Tell Apartment Residents Where to Park It?
Digested From "Denver Officials Look at New Rules to Limit Residential Parking Permits in Densely Populated Areas"
Denver Post (11/06/13) Meyer, Jeremy P.
Under new rules proposed by Denver's Public Works Department, apartment residents applying for new residential parking permits in the city may find them more difficult to obtain. City officials have long struggled with the reality of too many automobiles and too few parking spaces, particularly in such densely populated areas as Capitol Hill. Limiting the number of permits given to people moving into apartments with nine or more rental units has caused an uproar, forcing the city to cancel a recent rule-making hearing and instead take part in a public meeting to discuss the issue. Nancy Burke, vice president of government affairs for the Apartment Association of Metro Denver, remarked, "I just don't think they like renters. Approximately 15,000 Denver citizens living in over 8,500 units will be impacted." Denver officials insist they are working on creative ways to address an increasingly difficult problem -- a mushrooming local population and a limited number of parking spaces. They have stressed that no existing permits will be revoked. Only people living in apartment communities with nine or more units applying for new permits will face increased scrutiny. Public Works officials add that the changes have already been implemented. The new rule simply puts the practice into writing.
Stop! Rent Check Thief!
Digested From "Rent Checks Being Stolen From Apartment Drop Boxes"
Gainesville Sun (FL) (11/07/13) Cordeiro, Monivette
In Florida, the Gainesville Police Department (GPD) warns that thieves have been stealing checks and money orders from apartment community drop boxes. At least 30 checks were stolen from complexes citywide this past week, notes GPD public information officer Ben Tobias. He states, "We're urging people not to use the drop boxes or door slots. While it's convenient, it's not a smart thing to do now." So far, there have been no signs of forced entry to the boxes. As a result, the theory is that the thieves are using some sort of tool to reach inside and get the checks. Once the thieves steal the checks, they sometimes alter and cash them. Police are asking that, for the time being, apartment residents hand-deliver any payment directly to staff and to report any suspicious activity in their bank accounts. GPD has increased overnight patrols in apartment communities throughout Gainesville. Officers are also working closely with Gainesville-area apartment owners and managers to end this type of crime.
Peter Sheahan, Behavioral Change Expert, Promises to Enlighten Attendees at the 2014 NAA Student Housing Conference & Exposition
Peter Sheahan, founder and CEO of ChangeLabs and internationally recognized for inspiring innovation and creating lasting behavioral change, will deliver the keynote address at the 2014 Student Housing Conference & Exposition, March 3-5, 2014 in Las Vegas at the ARIA Resort.
Counting Apple, Google, Coca-Cola and Ernst & Young among his many clients, Sheahan recently released his sixth book, “Making It Happen,” which offers his unique insights into execution of ideas through business growth, understanding consumer behavior and compelling market positioning.
With accolades including 2006 National Speakers Association Keynote Speaker of the Year, one of the 25 Hottest New Speakers in America and one of the 25 Most Influential Speakers in the Industry, Sheahan’s presentation is not to be missed.
Register now for the 2014 NAA Student Housing Conference & Exposition to hear this 2012 National Speakers Association Hall of Fame inductee give you the inside track into exploiting business trends and new market opportunities.
It’s Never Too Late to Learn, But It Soon Will Be Too Late to Save $300 on Registration to the 2014 NAA Student Housing Conference & Exposition
It’s Never Too Late to Learn, But It Soon Will Be Too Late to Save $300 on Registration to the 2014 NAA Student Housing Conference & Exposition
Don’t delay: Save $300 by registering now for the premier student housing event in the multifamily housing industry, the 2014 NAA Student Housing Conference & Exposition, March 3-5, 2014 in Las Vegas at the ARIA Resort.
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—and plan to make it a team effort: Groups of five or more have the opportunity to another $400 by registering together.
High-caliber sessions, great networking opportunities, and the latest technology await you in Las Vegas March 3-5, 2014. Visit the NAA Student Housing website for registration, schedule and the latest announcements, and remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the exciting news from this conference.
Denver: Home of the Rockies, Peyton Manning and the 2014 NAA Education Conference & Exposition
The Mile-High City will be the place to launch your business and career to new heights as more than 6,600 multifamily housing professionals convene 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 and business enhancement is what you seek, then this is the one event you can’t afford to miss. Don’t delay—the largest discounts go to those who register early.
And, 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.
Budget Blahs? 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.
Students Get a Second Chance with NAAEI's CAMnesty Program
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
Columbus Apartment Association
January – February, 2014
El Paso Apartment Association
January – April, 2014
Austin Apartment Association
February – March, 2014
Roanoke Valley Apartment Association
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.
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