Five Ways 2014's Housing Market Will Differ
Digested From "Trulia: 2014 Will Be The Year of Repeat Home Buyer"
Huffington Post (12/12/13) Kolko, Jed
Trulia chief economist Jed Kolko lists five ways that the 2014 housing market will differ from this year's. The number one change will be housing affordability, which is expected to worsen in numerous markets. Not only are prices expected to rise faster than both incomes and rents, mortgage rates likely will climb in 2014 due to an improving economy and to the inevitable Fed tapering. Second, rental action is projected to swing back to urban apartments. Investors purchased single-family homes and rented them out during the recession and recovery. According to Kolko, "urban apartments will be the first stop for many of the young adults who find jobs and move out of their parents' homes." So, basically, the new year should bring more supply and demand for urban apartment rentals and slowing supply and demand for single-family rentals. Third, Trulia believes, there likely will be more available for-sale inventory, which, in turn, will mean less competition from speculators. Fourth, as investors take a back seat, repeat home buyers are expected to take center stage in 2014. The fifth and final way in which next year's housing market will be different from 2013's is "how much prices slow will matter less than why and where," Kolko writes. The latest Trulia Price Monitor revealed that price gains are already slowing sharply in the hottest metro areas. In some markets, prices could slow for unhealthy reasons, such as a drop in consumer confidence.
Market Trend Insights
Harvard Study Finds: The Rent Is Too Damn High
Digested From "Harvard Study Finds: The Rent Is Too Damn High"
Bloomberg BusinessWeek (12/09/13) Coy, Peter
According to the recent "America's Rental Housing" study from the Joint Center for Housing Studies at Harvard University, the availability of affordable apartments has not kept pace with demand. The problem has only worsened since the 2007-09 recession. The number of people who rent that are paying more than 30 percent of their income for housing has risen significantly from 25 percent in 1960 to about 50 percent today. Harvard researchers also found that about 28 percent of those who rent in 2011, or 11.3 million people, paid more than half of their income for housing. The problem of affordability could worsen if Congress eliminates the Low-Income Housing Tax Credit, the report warns.
Two Factors That Have Reduced Philly's Apt. Vacancy Rate
Digested From "In Philly Area, a Strong 2013 Apartment Rental Market"
Philadelphia Inquirer (12/15/13) Heavens, Alan J.
The Philadelphia metro area's apartment sector continues to thrive, reports Marcus & Millichap. The firm's local office has issued its fourth-quarter report on the apartment market, which cites two reasons -- "respectable job growth and the formation of new households" -- as reducing vacancy rates in this region over the first nine months of 2013. The job growth is limited, however, to such fields as health care that require academic degrees or specialized training. By contrast, lower-skilled workers continue to face challenges that may be "suppressing performance of apartment buildings on the lower rungs of the quality scale," states the Marcus & Millichap report. At the end of September 2009, the metro Philadelphia apartment-vacancy rate was 6.2 percent reports Delta Associates. This year, however, the 2013 vacancy rate is on pace to drop to 4.9 percent -- the lowest in six years. Metro-area payrolls will increase by 33,000 jobs in 2013, according to Marcus & Millichap. That is compared with 28,700 in 2012. Researchers further note that the number of new rental apartments that will be available in 2013 is almost three times the number completed last year. However, that activity will not keep pace with a demand many economists insist will increase as more and more empty-nesters and younger professionals forsake owning for leasing. Marcus & Millichap concludes that around 3,400 apartments would be added to the rental inventory this year -- an inventory that is more spread around than it used to be, in 10 of the metro area's 16 submarkets. Construction started ramping up in 2011 when financing became less tight.
Student Housing Goes Upmarket
Digested From "Student Housing Goes Upmarket"
Wall Street Journal (12/04/13) Wotapka, Dawn
Student housing could be headed for foreclosure, as new housing hits the market from private-equity and real-estate investment trusts, analysts warn. In the last 10 years, Axiometrics Inc. says developers have built about 310,000 off-campus student beds -- with a record 51,000 new off-campus beds delivered this academic year alone, and more than 50,000 expected in 2014. Although occupancy rates for private off-campus student housing are stable, new developments offer students more choices and fancier amenities, leaving some smaller owners struggling to compete. Real Capital Analytics reports that only 112 student-housing communities have become delinquent on their debt or run into other financial trouble; but 34 properties are in the foreclosure process or under ownership of the lender, and in 2012, 28 distressed student-housing properties were sold to another party.
There's Still Fire in the 55+ Housing Market
Digested From "55+ Housing Market Confidence Is Breaking Records"
RISMedia (12/15/13) Voket, John
The recession and ensuing economic fallout have shook up millions of older consumers' retirement plans and delayed timetables for transitioning into new or smaller homes and apartments where they can age in place. On the positive side, the National Association of Home Builders reports that industry confidence in the 55+ housing market continued to show improvement in this year's July-through-September period, representing the highest third-quarter number since the 55+ Housing Market Index was created. All segments, from single-family homes to rental apartments, registered solid gains. Robert Karen, chairman of NAHB's 50+ Housing Council, noted that association members are seeing steady improvement in the 55+ housing sector as both buyers and renters are attracted to new homes and communities that offer the lifestyle they desire. NAHB chief economist David Crowe added that the 55+ market is on the upswing partly because consumers are more likely to be able to sell their current residences. This enables them to more easily buy a new home or move into an apartment that suits their specific needs.
Deals and Transactions
Freeman Webb Co. Buys Tenn. Rival in Major Deal
Digested From "Freeman Webb Co. Buys Competitor First Management Services"
The Tennessean (12/14/13) Ward, Getahn
Freeman Webb Co., the Nashville metro area's biggest owner and operator of apartments, has acquired local rival First Management Services for an undisclosed amount. The firm expects its acquisition to provide greater leverage in pursuing property management business and in dealings with such vendors as insurers and suppliers. With this purchase, Freeman Webb manages more than 120 apartment communities that together contain 16,000 rental units and 1.5 million square feet of commercial space. The deal comes amid a major boom in Nashville's apartment sector. Consequently, the deal gives Freeman Webb greater leverage in the growing market. Woody McLaughlin, a member of the Greater Nashville Apartment Association's statistics committee, states, "Larger institutional owners want to deal with larger management companies with greater resources, so increasingly the available market of the smaller companies is shrinking. And they also want to deal with people who have a greater geographic reach." Freeman Webb now has triple the number of apartments under management in Middle Tennessee than its closest competitor. It also now ranks as the largest management firm in Knoxville.
Major Apartment Portfolio Acquired by Gaia Partnership
Digested From "Major Rental Apartment Portfolio Acquired by Gaia Partnership"
GlobeSt.com (12/13/13) Jordan, John
A partnership led by New York-based Gaia Real Estate Partners has purchased a portfolio of nine apartment communities in Houston for an undisclosed sum. Together, the nine properties contain 2,594 rental units. Gaia Real Estate's partners in the venture include the Grand China Fund and Menora Mivtachim Insurance. All nine communities are located within the Houston Medical Center, Northwest, and Houston North submarkets and were built between 1998 and 2006. Gaia managing partner Amir Yerushalmi states, "We are thankful for the continued trust from our investors and we look forward to generating great results by implementing our professional, efficient and creative property and asset management." With this latest deal, Gaia now has more than 15,000 rental units under management all in the Lone Star State. Gaia's plan is to implement a value-added strategy to upgrade each of the nine communities' common areas and apartment interiors to enhance each property's competitive position. The nine communities feature such amenities as swimming pools, grilling areas, laundry facilities, clubhouses with business centers, playgrounds, dog parks, and game rooms.
Rent-Regulation Push Raises Tensions in Europe
Digested From "Rent-Regulation Push Raises Tensions in Europe"
Wall Street Journal (12/10/13) Pirolo, Alessia
Tensions are intensifying in Germany, France, and the United Kingdom regarding new attempts to regulate rents. In Germany, for instance, the nascent "grand coalition" government recently laid out a comprehensive national agenda that includes a proposal to cap rents on new lease agreements. Such a rule would be a blow for apartment owners in the country's already heavily regulated rental market. Germany currently limits rent hikes to 15 percent over three years for current tenancies in designated areas, including the nation's biggest cities. The new proposal would prohibit apartments owners from asking for rents more than 10 percent above the Mietspiegel, a locally calculated rent index. At the same time, the French parliament is expected to approve the Loi Duflot by the end of next month. This new law would include a mechanism to cap rents in Paris and other cities. In London, meanwhile, caps have been proposed as a solution for skyrocketing rents that can consume as much as 50 percent of take-home pay. According to the Institute for Public Policy Research, the rental sector currently amounts to 17 percent of all housing stock in the U.K. and 21 percent in London.
Who's the Boss? Millennials Want to Be; Boomers Don't
Digested From "Millennials Want to Be the Boss; Boomers Don't"
MarketWatch (12/13/13) Fottrell, Quentin
According to a new workplace survey of 2,000 adults by the Pew Research Center, only 32 percent of males ages 49 to 67 and 21 percent of females in that age range say they want to eventually occupy the corner office. By comparison, 70 percent of Millennial-age men and 61 percent of women in the same demographic -- defined by the study as ages 18 to 32 -- say they would like to be the top boss. The members of Generation X -- ages 33 to 48 -- were somewhat more evenly split, with 58 percent of men and 41 percent of women saying they yearned for such leadership. Steve Langerud, a leading workplace consultant, reasons, "Boomers have been in the workforce long enough to see the downsides of being in charge." Tim Sackett, president of Human Resources Unlimited Technical Resources, agrees and notes that Boomers are put off by the longer hours and stress that comes with being solely responsible for an organization's performance and strategic direction. "Younger people think they know what it’s like to be the boss," he adds, "so they want to do it. But more experienced workers know the reality." However, such factors as age, lifestyle, and the years left to attain the top job also factor in employees' ambitions, notes Pew researchers. Furthermore, Millennials may have unrealistically high expectations for their careers, with many seeing the meteoric rise of such young business leaders as 29-year-old Facebook CEO Mark Zuckerberg. The average age of an incoming CEO at an S&P 500 company hovers at 52, reports The Conference Board.
Wood Partners Goes Big Hiring Small
Digested From "Wood Partners Hires Noted Multifamily Housing Executive"
EIN News (12/11/13)
Wood Partners has hired Kim Small to serve as its new regional vice president for its Central Region, which includes Texas, Colorado, Arizona, Utah, and the Chicago market. Small will be in charge of directing all property management functions for the region's portfolio of apartment communities. She has managed apartment assets throughout the United States for various firms. Patrick Trask, director for Wood Partners in the Central Region, states, "We're bulking up our management experience in the Central Region, where we have more than 6,000 stabilized units and over 1,500 units in the pipeline. We are fortunate to have such a high-caliber professional with her skill sets, track record, and business relationships." For the past five years, Small has headed The Morgan Group's national property management company. Earlier in her career, she served in various leadership capacities at Gables Residential and its predecessor, Trammell Crow, where she specialized in lease-ups. Her distinguished career has also included a stint as the 2011 president of the Houston Apartment Association. Wood Partners ranked the country's No. 2 apartment developer last year based on 5,100 unit starts. The firm has offices in 16 major U.S. markets, including: Atlanta, Baltimore, Boston, Charlotte, Dallas, Denver, Houston, New York, Orlando, San Francisco, and Seattle.
Commercial/Multifamily Mortgage Debt Posts Biggest Gain Since '08
Digested From "Commercial/Multifamily Mortgage Debt Posts Largest Increase Since ’08"
A new report by the Mortgage Bankers Association (MBA) says that outstanding commercial and multifamily mortgage debt grew to its highest level in five years in the third quarter, increasing by $25.2 billion as all four major investor groups increased their holdings. According to the report, total outstanding commercial and multifamily mortgage debt stood at $2.47 trillion in the third quarter. Commercial banks continue to hold the largest share of commercial and multifamily mortgages, with $870 billion, or 35 percent of the total. In the July-through-September period, banks and thrifts saw the largest increase in dollar terms in their holdings of commercial/multifamily debt, up 1.7 percent.
Why Everyone Will Totally Read This News Abstract
Digested From "Why Everyone Will Totally Read This Column"
Wall Street Journal (12/01/13) Manjoo, Farhad
Neetzan Zimmerman is a 32-year-old editor at the news-and-entertainment site Gawker. In his position, he is responsible for posting "viral" content -- everything from videos to photos to crazy local news stories -- that readers can't resist sharing with everyone they know. His posts generate over 30 million page views a month, making Zimmerman quite possibly the most popular blogger working on the Internet today. Some of his critics dismiss Zimmerman as an automaton who simply posts every sensational news story that comes across his desk. Others say he is a mere "aggregator" who contributes no originality to the field of journalism. Such critics are missing Zimmerman's skill. He only posts a dozen or so items each day, and almost every one becomes a big traffic hit -- quite the rate of success. His secret, he says, is a "deep connection to his audience's evolving, irreducibly human, primal sensibilities." Zimmerman's dominance in this regard has become part of Gawker's business plan. By earning so much traffic on his own, he is able to effectively subsidize the rest of the staff, thus freeing them to pursue deeper and more experimental pieces. While this isn't exactly a new model in journalism, it has now become the touchstone model of the Web, in use at Gawker, BuzzFeed, and dozens of smaller websites.
Legal/Legislative Did You Know
What Ohio City Is Expanding Recycling to Apartments in 2014?
Digested From "Columbus Expands Curbside Recycling to Condos and Apartments in 2014"
Columbus Underground (12/15/13)
Columbus, Ohio, announced this past week that the RecyColumbus program will be rolled out to eligible apartment and condominium communities beginning in February. Previously, the curbside program was only made available to single-family homes and buildings with four or fewer residential units, leaving bigger apartment and condo communities excluded from participation. Columbus Mayor Michael Coleman comments, "Residents in condo and apartment complexes have asked for the recycling program, and we are delivering. We will build on the overwhelming success of this program and make Columbus even cleaner and greener than before." The expansion is set to add an estimated 15,000 customers to the program at properties that have room to store the 64-gallon recycling containers for biweekly collection. Ohio's capital city will start distributing containers in February, with the process expected to be completed the following month.
Manufacturers to Flick the Switch on Traditional Bulbs in 2014
Digested From "Light Bulb Ban Set to Take Effect"
CNN Money (12/13/13) Hargreaves, Steve
Light bulb manufacturers will cease making traditional 40- and 60-watt light bulbs -- the most popular in the nation -- at the beginning of the new year. This comes after the controversial phasing out of incandescent 75- and 100-watt light bulbs at the start of this year. In their place will be halogen bulbs, compact fluorescent bulbs, LED bulbs and high efficiency incandescents. All are substantially more expensive than traditional light bulbs. However, they offer considerable energy and costs savings over the long run for residential and commercial customers. While the rules are designed to address gross inefficiencies with old light bulbs, they have drawn fire from conservatives and libertarians who are unhappy about the federal government telling people what light bulbs they can use. Their contention is that if the new ones really are so good, consumers will purchase them on their own without being required to do so. The National Electrical Manufacturers Association, which represents 95% of all light bulb makers in the country, was a major proponent of the new rules. They contended that they headed off a patchwork of pending state laws that would have made the business highly complicated. The high efficiency incandescents cost about $1.50 each versus 50 cents or so for the old bulbs. However, they last twice as long and use 28 percent less power. The saving are even greater with LEDs. A 40-watt LED goes for around $7.50 and uses 85 percent less energy than a traditional bulb. Additionally, LEDs turn on instantly, contain no mercury, and give off a warm light.
Grease Is NOT the Word for These Ga. Apartments
Digested From "County Tackling Grease Dumping Near Apartment Complexes"
Crossroads News (12/13/13) Watts, Ken
In Georgia, apartment communities will be the target of a new anti-grease dumping campaign that DeKalb Watershed Management is set to launch next month. According to county officials, statistics show that a growing number of sewage spills caused by fats, oil, and grease (FOG) have been occurring near apartment communities. They say this signals an increase in illegal dumping of grease down kitchen sinks and sewer mains. As part of an information blitz dubbed the FOG pilot program, the county will urge apartment residents to be careful about what they put down their drains. Alicia Pennie, the department's director of public relations, states, "We have shown that there's a direct correlation between where apartment complexes are located and where we're having sewer spills, and we know that 70 percent of our spills are grease-related." Improper grease disposal coupled with a lack of daily maintenance have proven costly for DeKalb. In 2010, the EPA mandated $700 million in sewer upgrades after the county tallied 871 raw sewer spills in the previous five years.
Residents of New MN Apts. Won't Hear a Sound ... Even a Jet
Digested From "New Apartments Proposed for Bloomington Central Station"
Minneapolis Star Tribune (MN) (12/10/13) Smetanka, Mary Jane
It now appears likely that a 420-unit apartment community will be erected at Bloomington Central Station, as the Bloomington, Minn., City Council last week overwhelmingly approved final construction plans. A chief concern of council members was how Lennar Multifamily Investors would soundproof the building sited so close to the airport. The apartments would be built out of wood and feature opening windows to insulate residents from the noise. "We know we can achieve [sound reduction] through wood framing," says Lennar development manager Peter Chmielewski. He further notes that Lennar intends to not only develop the apartments, but to own and manage them as well. "It has to function at the very highest level," Chmielewski stresses.
Exchange and Engage With Top Executives at the 2014 NAA Student Housing Conference & Exposition
2014 student housing lease-ups on your mind? How about techniques for identifying and hiring top talent for management positions? For insight into these and other leading issues, don’t miss your chance to hear from top-tier executives during Q & A following the “Exchange and Engage with Executives” session during the 2014 NAA Student Housing Conference & Exposition, March 3-5 in Las Vegas at the ARIA Resort.
Back by popular demand on Tuesday, March 4 from 4:15 p.m. to 5:30 p.m., Chief Operating Officers representing student housing’s small, mid-size and large operators will share the stage with student residents to discuss current approaches to development, marketing & operations. In addition to the student and executive panelists, this information-packed session will incorporate video from student housing residents in different markets sharing their perspective on the same topics addressed by the panelists.
Register now to ensure you don’t miss any discounted wisdom (that’s $300 off, not wisdom that otherwise has been disregarded)—and the chance to pose your question during the live Q & A.
All breakout sessions for the 2014 NAA Student Housing Conference & Exposition have been finalized. Attending and nervous you won’t be able to fit all these incredible education sessions into your schedule? Not to fear: NAA’s Education Institute (NAAEI) will once again be offering it’s “REWIND” program, featuring 14 PowerPoint-synced audio sessions from the Conference, available for pre-order before Jan. 10, 2014 with your Conference registration for just 89!
Keep checking www.naahq.org/shc for registration, schedule, housing and the latest announcements. And remember to use the official hashtag #NAAStudentConf to engage, discuss and follow the conference.
Your School of Thought Awaits at the 2014 NAA Education Conference & Exposition—Two More Thought Leaders Announced!
NAA Conferences, which maintain industry-wide a reputation for convening the best and brightest in business today, has announced that two new Thought Leaders are confirmed to appear at the NAA Education Conference & Exposition, June 18-21 in Denver.
In addition to Bill Rancic and Seth Mattison, attendees of the 2014 Education Conference & Exposition will have the opportunity to hear from Terry Jones, Founder of Travelocity.com, and Susan Packard, Co-Founder and former Chief Operating Officer of HGTV.
Jones, e-commerce pioneer, will speak to the importance of building digital relationships as he unlocks the mystery of how to connect with customers online teaches attendees all phases of the digital conversation, Thursday, June 19 from 9 a.m. to 10:30 a.m.
Packard, Author, innovator and cable executive, will share leadership lessons from businesses she has helped to build and discus how vision, audacity and relentless focus are some of the key factors that make great leaders, Friday, June 20 from 8 a.m. to 9:30 a.m.
Let NAA help you “Reach New Heights” in 2014. More exciting announcements are forthcoming for this can’t-miss event, but no need to wait to register! Visit http://educonf.naahq.org/emailregister and remember that the largest discounts go to those who register early. Have four friends? Register as a group to take advantage of even more savings!
We See You Lurking … Here’s an Incentive to Start Talking
You’ve probably snuck a peek at NAA Connect… but we’re offering an incentive for you to fully participate md reap the full benefits of NAA Connect this month. Eight active Connect users will win just for collaborating, problem solving and networking. Prizes vary, and include a $200 Amazon gift card, a $100 gift card and a $20 Starbucks gift card. But don’t be late to the party—the contest runs throughout December, and the more active you are the more chances you’ll have to win. Learn more.
The 2014 Get Reel Video Challenge is Now Underway
In honor of Apartment Careers Month in February, The National Apartment Association Education Institute (NAAEI) is calling for video submissions for it's 2014 Get Reel Video Challenge. Aimed at promoting careers in the apartment industry in Management, Leasing and Maintenance, videos should highlight a day in your work life and show what you love about your job and the industry. A panel of industry experts will judge all entries and choose the winner who will receive a trip to the NAA Education Conference in June in Denver! View more details on rules and how to enter on the NAA website.
NAAEI Opens New Path for Lapsed Students Through 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!
Columbus Apartment Association
January – February, 2014
El Paso Apartment Association
January – April, 2014
Austin Apartment Association
February – March, 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.