Friday, August 30, 2013

Commercial Investments Rise 24% in First Half of 2013 via NAR Research

As the traditional summer vacation season wrapped up, it became easier to focus on the economic performance over the first half of the year. However, the task became an exercise in reading fortune cookies given the many changes in the economy, the markets, and the legislative environment.

The main measure of economic activity—gross domestic product—has been redefined and revised by the Bureau of Economic Analysis during the second quarter. It has been redefined to include business investments in intellectual property, such as research & development, software, and entertainment and original artistic work. GDP has also been revised, as it normally is at regular intervals.

Read more...Commercial Investments Rise 24% in First Half of 2013

Houston Tops in Assisted Living Construction via

The National Investment Center for the Seniors Housing & Care Industry's numbers are out and show that, as of Q2 2013, construction as a percent of existing inventory among assisted living properties was 4.9%. This marks 100 basis points above its previous cyclical peak.

And, as it has in other categories, Houston took top honors in this construction activity, with 1,141 units being built. According to NIC, this represents 21% of its existing inventory. Other metro markets seeing increased pipeline activity include Denver, Dallas, San Antonio and Phoenix.

Read more...Houston Tops in Assisted Living Construction - Daily News Article -

Thursday, August 29, 2013

When Will Solar Get Cheap Enough for Everyone to Use? via Mother Jones

The prices of solar cells are falling rapidly, and will keep doing so for the next few years. The big questions revolve around the rate of the price declines. And the panels themselves aren't the only place where cost reductions will be found. America has very high "soft costs"—installation, permitting, marketing etc. Whittling down these expenses will help, too.

olar is taking off at a breakneck pace (admittedly from a tiny base). Stephen Lacey at Greentech Media provides the striking figures illustrating the exponential growth of solar photovoltaics (PV) in the past few years:

It took nearly four decades to install 50 gigawatts of PV capacity worldwide. But in the last 2 ½ years, the industry jumped from 50 gigawatts of PV capacity to just over 100 gigawatts. At the same time, global module prices have fallen 62 percent since January 2011. Even more amazingly, the solar industry is on track to install another 100 gigawatts worldwide by 2015—nearly doubling solar capacity in the next 2 1/2 years.

Read more...When Will Solar Get Cheap Enough for Everyone to Use? | Mother Jones

Texas in top 10 for new clean energy jobs via Dallas Business Journal

Texas ranks eighth in the nation for clean energy and clean transportation jobs announced during the second quarter, according to a report by the nonprofit group Environmental Entrepreneurs.

Businesses and communities around the U.S. unveiled 58 such projects during the quarter, promising to create as many as 38,600 jobs, Environmental Entrepreneurs said.

Texas accounts for 2,000 of that job total, while California ranks No. 1 with 12 clean energy and clean transportation projects that could cumulatively generate 9,169 jobs.

Read more...Texas in top 10 for new clean energy jobs - Dallas Business Journal

Apartment and Condominium Market Gains Momentum in Second Quarter, According to NAHB via Multi-Housing News Online

Production of apartments and condominiums gained momentum in the second quarter of 2013, according to the latest Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB). The index increased nine points to 61, which is the highest reading since its inception in 2003.

The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100. The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

Read more...Apartment and Condominium Market Gains Momentum in Second Quarter, According to NAHB | Multi-Housing News Online

Are Cap Rates Correlated with the Ten-Year Treasury? via the Blog of the Real Estate Center

How many times have you heard people talking about how cap rates are going to go up when the ten-year Treasury rate goes up? People who own commercial real estate have been pondering this question intensely most of this year.

What is the fear? That when the Fed begins to slow down their purchases of Treasuries, that long-term interest rates will increase and that cap rates will increase at the same time.

Well, long-term rates are going up. On May 2, 2013, the ten-year Treasury had a yield of 1.65 percent. Then the barometric pressure in the bond market started to fall dramatically when global bond investors first picked up signs of Tropical Storm Bernanke making its way toward the coast. This low pressure system hasn’t even formed into “Hurricane Taper” status yet. We don’t know if it will become a hurricane.

Read more...Are Cap Rates Correlated with the Ten-Year Treasury? | the Blog of the Real Estate Center

Wednesday, August 28, 2013

July 2013 Student Housing Trends via Axiometrics

Welcome to Axiometrics’ inaugural student housing post. This first post will focus on macro new supply trends within student housing, many of which are highlighted in today’s Wall Street Journal. This newsletter also highlights the University of Texas, which is among the universities that have added the most new beds over the last decade. More importantly, it has also posted solid results as it has absorbed this new supply.

Next month we will focus on performance measures, such as the final prelease and effective rent growth numbers for the 2013-2014 school year.

The following supply statistics are based on Axiometrics’ coverage of purpose-built student properties at more than 300 universities across the country.

Read more...July 2013 Student Housing Trends

Multifamily Permitting Remains Solid in July via Axiometrics

The U.S. Census Bureau posted its July residential permitting numbers by metropolitan statistical area (MSA) on Monday, August 26. Privately-owned housing units authorized by building permit in July, measured on a seasonally adjusted annual rate (SAAR), were 943,000. This was an increase of 2.7% from the revised June rate of 918,000, and was 12.4% higher than the July 2012 estimate of 839,000. Single-family permits in July were down 1.9% from June at 613,000 units, but almost 18% higher than July of 2012. Annual multifamily (MF) permits increased 13.5% from June’s annual rate and was 4.5% higher than the comparable period a year ago. With July 2013 MF permits totaling 303,000 units, annual MF permitting has averaged 312,000 units over the last 12 months. New York, Houston, Dallas, and Austin remain some of the strongest multifamily permitting markets in the nation and Denver, Los Angeles, Seattle, and Atlanta are still in the top ten. The top ten markets remained the same from last month but positions have shifted slightly. Moving up on the list of the top twenty are Boston, Portland and Santa Ana (Orange County).

Read more...Multifamily Permitting Remains Solid in July

Affordable housing goals face barriers via HousingWire

Meeting the housing needs of lower-income families is becoming a herculean task for the Department of Housing and Urban Development as it faces a dwindling supply of qualified homes.

The agency is contending with a problem that is two-fold. First, the existing affordable housing pipeline is down. New unit production also continues to decline, according to HUD deputy assistant secretary of multifamily Ben Metcalf, who spoke Tuesday at the Bipartisan Policy Center's housing conference in Ohio.

To put it into perspective, HUD lost more than 100,000 affordable housing units within 15 years time, Metcalf said.

Read more...Affordable housing goals face barriers | 2013-08-27 | HousingWire

Multifamily demand outpaces supply via HousingWire

As home prices and mortgage rates rise, it will become more difficult for potential homebuyers to purchase a home in light of today's tighter lending standards.

With homeownership no longer an option for many, demand for rental properties is on course to keep outpacing housing supply, investors in the space say. In fact, according to an infographic put together by Alan Feldman, CEO of Resource Real Estate, a minimum of 240,000 new apartments each year is needed to meet expected demand levels for the next seven years.

To date, only about 130,000 new apartments are expected to hit the market in 2013. "It’s very simple, the only people or companies that satisfy that demand are profit-seeking developers," said Feldman.

Read more...Multifamily demand outpaces supply | 2013-08-27 | HousingWire

Tuesday, August 27, 2013

DFW apartment construction expands to new heights via Real Estate Center at Texas A&M

At the end of second quarter 2013, almost 24,000 apartments were under construction in North Texas — more than any other market in the country.

Thousands more rental units are on the way, their construction fueled by North Texas’ booming job market and changing demographics. With annual job gains expected to cruise around 100,000 in the DFW area for the next couple of years, housing construction has trailed the economic expansion.

In just the last month, developers have detailed plans for almost 2,000 apartments.

Read more...DFW apartment construction expands to new heights via Real Estate Center at Texas A&M

Green Buildings Could Be Half U.S. Projects, Worth $248 Billion By 2016 via EcoBuilding Pulse

Green building may represent more than half of all commercial and institutional construction as soon as 2016. CleanTechnica looks into a new report from the USGBC entitled "LEED in Motion: People and Progress," that details green building's exponential growth and outlines both the value of the industry and its reach into American Lives. Among the highlights:

More than 4.3 million people live and work in LEED-certified buildings
More than 6.2 million people interact with LEED projects every day during their daily routine
Green building represented 44 percent of all commercial and institutional construction in the U.S. in 2012, and this percentage should increase to 55 percent by 2016.

Read more...Green Buildings Could Be Half U.S. Projects, Worth $248 Billion By 2016 - Legislation - EcoBuilding Pulse

Uncovering the Latest Rental Market Trends with Jay Denton via

Jay Denton is VP of Research at Axiometrics, Inc., a leading provider of apartment data and apartment market research. Jay leads the company’s analytics team and is responsible for managing Axiometrics’ entire research operation. He has been a featured expert in multiple industry and business publications, including Multifamily Executive, Multi-housing News, BusinessWeek, and Barron’s. Our interview of Jay, below, provides valuable insights into the latest rental market trends.

Please tell us about Axiometrics.
Axiometrics has established itself as the leading provider of apartment data and apartment market research. We track asking rent, concessions, and effective rent at the floor plan level as well as occupancy at the property level every month. We track properties from the early planning stage through construction and lease-up to stabilization in over 400 MSAs. We also offer the Axiometrics Student Housing Solution which provides coverage on over 3800 student and student competitive properties.

What are you predications for the rental market in 2014 and into 2015? How do you see rents fluctuating?

Read more...Uncovering the Latest Rental Market Trends with Jay Denton

Home Prices in Texas, Colorado Hit New Highs in June via

As national home prices recover, Texas and Colorado are already busy setting new highs, data from Lender Processing Services, Inc. (LPS) revealed.

In June, national home prices rose to $229,000, representing a 1.2 percent gain from May, and a sharp 8.4 percent increase from a year ago, according to LPS’ Home Price Index (HPI). When compared to the index’s 2005 peak of $270,000, prices are still down 15.2 percent.

However, Colorado and Texas moved ahead of the national trend and hit new highs of $256,000 and $182,000, respectively.

Read more...Home Prices in Texas, Colorado Hit New Highs in June

Interest Rates, Cap Rates and Commercial Real Estate Values via CRE Finance World

Commercial real estate as an asset class was not alone in its decline during the downturn of 2008-2009, as investor sentiment turned overwhelmingly risk-averse and liquidity dried up. As the economy recovered, commercial real estate valuations rose as cap rates fell. By late 2010, cap rate levels had declined significantly. Several factors contributed to this recovery, not the least of which are the low interest rates supported by the Federal Reserve. The question now is how cap rates and commercial real estate valuations will fare, once interest rates begin to rise.

Selection Bias, Cap Rate Confusion and Valuation

Consider the charts below and the divorce between trends in fundamentals and cap rates. The chart on the left indexes vacancy rates for the multifamily, office and retail sectors from the beginning of 2006 until the end of 2012. There is clearly a discrepancy in inflection points and recovery rates, with multifamily leading the way in terms of occupancy improvements. Office and retail vacancies have begun to recover over the last five to six quarters, but at a much slower pace.

Read more...Interest Rates, Cap Rates and Commercial Real Estate Values via CRE Finance World

Metro Commercial Real Estate Briefing via Reis Reports

Join Reis Chief Economist, Victor Calanog, as he walks us through the Q2 2013 quarterly briefing. In this video, he will cover Q2 2013 highlights, including:

A discussion on the quality of jobs being created and the impact on the demand of commercial space
Will the Fed begin tapering off support for the economy later this year?
Q2 2013 trends in the apartment, office, retail, and industrial sectors
Comments on the self storage sector's recent performance

Watch Video...Metro Commercial Real Estate Briefing | Reis Reports

Finding the Best Renters: By the Numbers via Multifamily Insight Blog

A recent study of Experian RentBureau data found that more than 50,000 renters who initiated their leases over a six year period ended their leases owing money. Industry experts convened during the National Apartment Association Education Conference to analyze the study of more than 750,000 U.S. renters of class A & B properties. While some of the analysis may have had predictable outcomes, several findings concluded very surprising results.

The Majority of Renters Have Credit Scores Below 700

While looking over a credit report to see where an applicant’s score places them within the rental criteria, the majority of applicants may not meet the requirement on score alone. And, 56% of all applicants sampled had a score below 7001.One reason for the high percentage of lower scores may be attributed to the fact that “Generation Y” (18 – 29 years old) who account for a critical audience in the rental market, comprise more than half of the applicants in the sample set.

Read more...Finding the Best Renters: By the Numbers | Multifamily Insight Blog

Monday, August 26, 2013

Dallas ranked as a top city for high-tech via Dallas Business Journal

The Dallas area is ranked as one of the top 15 cities in the nation for its concentration of high-technology clusters, according to a new a study by Jones Lang LaSalle.

The Dallas area, which includes Dallas proper and surrounding suburbs north of Fort Worth, was ranked No. 13 in the nation and No. 2 in Texas, following Austin. San Francisco and Silicon Valley took the top spots. Dallas topped metropolitan areas such as Philadelphia, Chicago and Los Angeles.

“We’re in a very strong position,” said George Brody, member of the executive committee for the Metroplex Technology Business Council. “There is a very rich set of companies with a lot of innovation going on here.”

Read more...Dallas ranked as a top city for high-tech - Dallas Business Journal

San Antonio Apartment Market Update July 2013 via O’Connor & Associates

Most key metrics of the San Antonio area multifamily sector recorded positive changes in July 2013.

The occupancy figures recorded negative figures for all the classes except for Class A properties. For class A properties, occupancy increased by 0.39% over the month to close at 93.70%; and decreased by 1.32% over the year. For Class B properties, occupancy went down by 0.52% over the month to close at 92.58%. The largest increase on annual basis was noted for Class D with an increase of 1.06% to close at 91.18%.

Read more...San Antonio Apartment Market Update July 2013

Dallas Fed: "Texas Manufacturing Posts Slower Growth" in August via Calculated Risk

From the Dallas Fed: Texas Manufacturing Posts Slower Growth
Texas factory activity increased but at a slower pace in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained positive but fell from 11.4 to 7.3.

Other measures of current manufacturing activity also indicated slower growth in August. The new orders index was positive for the fourth month in a row, although it moved down from 10.8 to 5.4. The shipments index also posted a fourth consecutive positive reading but slipped 6 points to 11.4. The capacity utilization index fell from 12.2 to 4.6.

Read more...Calculated Risk: Dallas Fed: "Texas Manufacturing Posts Slower Growth" in August

Dallas/Ft. Worth Apartment Market Update July 2013 via O’Connor & Associates

The key metrics for the Dallas/Fort Worth area multifamily sector recorded significant changes both over the month and over the year.

Over the month all the classes recorded a notable decrease in terms of occupancy, except for Class A properties, which recorded a marginal increase of 0.05% over previous month. On a year-over-year basis Class A properties recorded a decrease of 0.21%. Class B recorded a decrease of 0.08% over the month. The largest annual increase of 1.17% was noted for Class C properties.

Read more...Dallas/Ft. Worth Apartment Market Update July 2013

Houston Apartment Market Update July 2013 via O’Connor & Associates

Key metrics for the Houston area multifamily sector recorded mostly positive changes in July 2013.

Occupancy figures recorded positive changes for all classes over the month except for Class A. Over the month, Class A recorded a decrease of 0.10% to close at 94.97%. The largest monthly increase was noted for Class C properties (0.25%). For Class A properties the average went down by 0.07% over the year. The largest annual increase was noted for Class C properties with an average increase of 2.90% to close at 87.93%.

Read more...Houston Apartment Market Update July 2013

Corpus Christi Apartment Market Continues Red Hot Performance via Property Management Insider

Corpus Christi Performance Highlights Q2 2013

Economy: The metro continued its hot streak into the year-ending May 2013, expanding its employment base another 3.0% and taking the #8 spot in the country for proportional job growth. The majority of that employment growth has come in and around the Port of Corpus Christi – the nation’s fifth-largest port.

Occupancy: Corpus Christi ranked second in the entire South region of the country with a rate of 96.9%, behind only Miami (97.1%).

Read more...Corpus Christi Apartment Market Continues Red Hot Performance | Property Management Insider

The Future is still Bright! via Calculated Risk

For new readers: I was very bearish on the economy when I started this blog in 2005 - back then I wrote mostly about housing (see: LA Times article and more here for comments about the blog). I started looking for the sun in early 2009, and now I'm even more optimistic looking out over the next few years.

Early this year I wrote The Future's so Bright .... In that post I outlined why I was becoming more optimistic, even though there might be too much deficit reduction in 2013. As I noted, "ex-austerity, we'd probably be looking at a decent year" in 2013. And of course - looking forward - Congress remains the key downside risk to the U.S. economy.

It still appears economic growth will pickup over the next few years.

Read more...Calculated Risk: The Future is still Bright!

DFW apartments 2Q 2013: Hendricks & Partners via Real Estate Center at Texas A&M

More than 4,000 apartments were completed in the Metroplex since January 2013, according to Hendricks-Berkadia. During the same period last year, 1,590 units were delivered. Over the next year, at least 8,500 units are projected to come online.

In the first half of 2013, permits for 7,340 apartments were issued, an increase of 6.8 percent from one year ago. Annual permitting activity in the past two years has averaged 14,180 units.

Read more...DFW apartments 2Q 2013: Hendricks & Partners

Commercial Real Estate Markets Show Steady, Moderate Growth via

Vacancy rates generally are tightening in commercial real estate sectors with modest rent growth, according to the National Association of Realtors® quarterly commercial real estate forecast.

Lawrence Yun, NAR chief economist, said commercial real estate is on a more moderate growth path. “Office vacancies haven’t declined much because total jobs today are still below that of the pre-recession level in 2007, but rising international trade is boosting demand for warehouse space,” he said. “Consumer spending has been favorable for the retail market, and rising construction is keeping apartment availability fairly even, though at low vacancy levels. That, in turn, is pushing apartment rents to rise twice as fast as broad consumer prices and average wage growth.”

National vacancy rates over the coming year are forecast to decline 0.2 percentage point in the office market, 0.6 point in industrial, and 0.6 point for retail; however, the average multifamily vacancy rate is unlikely to change, with that sector continuing to experience the tightest availability and biggest rent increases.

Read more...Commercial Real Estate Markets Show Steady, Moderate Growth |

Despite Hiccups, CMBS Volume Still on the Rise via National Real Estate Investor

Despite recent volatility in capital markets, conduit lenders are confident they will stay on track to originate more loans this year in any year since 2008. “Whatever we lost, by the end of the year gets made up,” says E.J. Burke, executive vice president and group head of KeyBank Real Estate Capital.

Interest rates for conduit loans rose earlier this summer in line with the rise in 10-year Treasuries. Conduit interest rates depend largely on the yield that investors demand for CMBS, which spiked up in May for AAA-rated CMBS from about 80 basis points over the swap rate to about 130 basis points in July, according to data from Commercial Mortgage Alert. But the CMBS yields fell back again in August to a little over 100 basis points.

Including the steady rise in yields for Treasury bonds, conduit lenders are now offering 10-year interest rates in the 5.4 percent to 5.5 percent range, experts say. That significantly less than the high rates offered this summer, but still higher than the 4.5 percent to 4.75 percent conduit interest rates common earlier this year.

Read more...Despite Hiccups, CMBS Volume Still on the Rise | CMBS content from National Real Estate Investor

Friday, August 23, 2013

Austin multifamily 2Q 2013: Hendricks-Berkadia via Real Estate Center at Texas A&M

Hendricks-Berkadia has released its second quarter 2013 apartment data. Increased construction activity led to the completion of 1,740 units in 2Q 2013 — the largest quarterly delivery since the start of 2009.

Rental demand jumped to 2,800 absorbed units during the last three months. The leasing activity was up from the net absorption of 330 units in 1Q 2013.

Developers filed permits for 8,120 multifamily units in the first half 2013. The submission of permits for 16,250 annualized units in June was a 109.3 percent rise in activity from 2012.

Read more...Austin multifamily 2Q 2013: Hendricks-Berkadia via Real Estate Center at Texas A&M

Multifamily construction pushes housing starts via HousingWire

The recent jump in housing starts was mainly driven by a surge in multifamily construction. At least that’s what the latest U.S. Residential Mortgage Market Update by Deloitte is claiming.

Tight housing supply in recent months has caused builders to respond by pushing housing starts in the first quarter above the one million mark for the first time since June 2008. Total housing starts rose 35% year-over-year in the first quarter, with multifamily starts up 9.1% to an annual rate of 340,000 units.

In April of this year, housing starts slowed their pace, likely as a result of inclement weather. However, permits rose indicating more construction later in the second quarter.

Read more...Multifamily construction pushes housing starts | 2013-08-22 | HousingWire

Thursday, August 22, 2013

Household incomes still well behind pre-recession levels via

Consumers' incomes have recovered about a quarter of the ground they lost during the recession and its aftermath, but progress has stalled in recent months, a new report says.

Median household incomes, before taxes and adjusted for inflation, have risen 2.2% in the last year through June, according to Sentier Research, a consulting firm founded by Census Bureau researchers. They remain 7.2% below where they were in December 2007 — the start of the recession — and 4.8% below when the recession ended in June 2009, Sentier reported.

The recent improvement was concentrated in late 2011, but the median has slipped slightly this year, in part because of inflation, Sentier partner Gordon Green said.

Read more...Household incomes still well behind pre-recession levels –

Homegrown Green Energy Is Making Power Utilities Irrelevant via Businessweek

There are 3,200 utilities that make up the U.S. electrical grid, the largest machine in the world. These power companies sell $400 billion worth of electricity a year, mostly derived from burning fossil fuels in centralized stations and distributed over 2.7 million miles of power lines. Regulators set rates; utilities get guaranteed returns; investors get sure-thing dividends. It’s a model that hasn’t changed much since Thomas Edison invented the light bulb. And it’s doomed to obsolescence.

That’s the opinion of David Crane, chief executive officer of NRG Energy, a wholesale power company based in Princeton, N.J. What’s afoot is a confluence of green energy and computer technology, deregulation, cheap natural gas, and political pressure that, as Crane starkly frames it, poses “a mortal threat to the existing utility system.” He says that in about the time it has taken cell phones to supplant land lines in most U.S. homes, the grid will become increasingly irrelevant as customers move toward decentralized homegrown green energy. Rooftop solar, in particular, is turning tens of thousands of businesses and households into power producers. Such distributed generation, to use the industry’s term for power produced outside the grid, is certain to grow.

Read more...Homegrown Green Energy Is Making Power Utilities Irrelevant - Businessweek

Renter Demand Holding Fast So Far As Apartment Supply Wave Begins to Break via CoStar Group

The tightening competition among apartment investors will yield both winners and losers during this next supply-driven phase in the multifamily market. The winning developers will likely be those that offer products that are new and different, capturing renters who have an expanding menu of housing options and amenities.

"We’re past the point at which simply picking a market that will lead to a successful strategy," said Luis Mejia, CoStar Group director of U.S. research, multifamily at CoStar’s Midyear 2013 Multifamily Review and Outlook. Mejia was joined in the webinar presentation by real estate economist Francis Yuen and quantitative analyst Mark Hickey. "Due to the impending supply wave and increased investor interest in apartments, investors need to go beyond that and be able to identify opportunities within each market -- regardless of whether it’s a mature, early recovery or late-recovery market -- that put them in a position to compete."

Read more...Renter Demand Holding Fast So Far As Apartment Supply Wave Begins to Break - CoStar Group

Interest Rate Risk to Increase as Fed Weans Economy Off QE3 via Commercial Property Executive

Whether it is the leaking of the agenda for the annual Jackson Hole symposium sponsored by the Federal Reserve, or the recent opinions offered by the individual members of the Board of Governors, or even the newly released economic indicators on unemployment and inflation, all eyes and ears seem to be focused on any hint from the Fed about when tapering will begin. Many investors believe that tapering, or the gradual unwinding of the Fed’s third round of quantitative easing (QE3), is long overdue and are anxious for the markets to begin to clear. Other investors, as demonstrated by the rapid sell-offs in the stock market indices and the decline in bond prices, fear an increase in interest rates when tapering begins.

According to the institutional investors polled for Real Estate Research Corporation’s (RERC’s) summer 2013 issue of the RERC Real Estate Report, “Operation Unwind,” the majority of investment survey respondents expect tapering to begin yet this year, with 20 percent of respondents expecting tapering to begin in third quarter 2013 and 36 percent of respondents expecting tapering to commence in fourth quarter. And once tapering does begin, the biggest risk for investors is the “possible surge in interest rates,” state RERC’s institutional investment survey respondents.

Read more...Interest Rate Risk to Increase as Fed Weans Economy Off QE3 | Commercial Property Executive

Job Gains Move from “Moderate” to “Modest” in July via Axiometrics

The U.S. economy is still improving, but at a pace the Fed now calls modest. The Bureau of Labor Statistics (BLS) reported that total nonfarm seasonally adjusted (SA) payroll employment gained only 162,000 jobs in July, below the consensus forecast of 184,000 jobs. Some analysts anticipated as many as 240,000 jobs in the BLS report as ADP had reported a gain of 200,000 private-sector jobs in July and their figures have undercounted the BLS figures by about 40,000 jobs for the last six months.

The roller coaster of revisions continued as well. Last month’s upward revisions for the previous two months (May and April) were followed by downward revisions to June and May. The change in total nonfarm payroll employment for May was revised from 195,000 to 176,000, and June was revised from 195,000 to 188,000. Combined, these revisions resulted in 26,000 fewer jobs than previously reported.

Read more...Job Gains Move from “Moderate” to “Modest” in July via Axiometrics

Tuesday, August 20, 2013

Monthly Review of Texas Economy, August 2013 -- Real Estate Center at Texas A&M

The Texas economy gained 302,300 nonagricultural jobs from July 2012 to July 2013, an annual growth rate of 2.8 percent compared with 1.7 percent for the United States (Table1 and Figure 1). The state’s nongovernment sector added 289,200 jobs, an annual growth rate of 3.2 percent compared with 2.1 percent for the nation’s private sector (Table 1).

Texas’ seasonally adjusted unemployment rate fell to 6.5 percent in July 2013 from 6.9 percent in July 2012. The nation’s rate decreased from 8.2 to 7.4 percent (Table 1).

Read more...Monthly Review of Texas Economy, August 2013 -- Real Estate Center at Texas A&M

The Interest Rate Surge and Its Impact on Multifamily via Housing Finance

We all knew the ultra-low mortgage rates seen over the last couple years wouldn’t last forever. Still, the recent rise of a full percentage point over a two-month period left even the steeliest of apartment professionals reaching for their Pepto-Bismol.

From early May to early July, the benchmark 10-year Treasury yield, against which lenders quote most fixed-rate loans, shot up more than 100 basis points (bps), from about 1.6 percent to more than 2.7 percent. Meanwhile, lender spreads—the amount a lender adds to the benchmark to produce a final interest rate—have also widened gradually over the course of the year.

The net result: Fixed-rate quotes were up about 100 bps over the span of 60 days, with the popular 10-year terms typically ranging from the high–4 to the mid–5 percent range, depending on leverage levels and other risk factors.

Read more...The Interest Rate Surge and Its Impact on Multifamily - Interest Rates, Capital Markets, Cmbs, Debt, Government Entities, Mortgages And Banking - Housing Finance:

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Houston's Rent Growth Creeps Down via

Though Houston is still a hot area when it comes to commercial real estate and multifamily property trends, Axiometrics Inc.'s July 2013 figures demonstrated year-over-year declines in both annual effective rent growth and revenue growth.

Specifically, annual effective rent growth clocked in at 6%, down from the 6.5% reported in July 2012. Revenue saw a larger decrease, from 8.3% in July 2012 to 6.8% in July 2013. Occupancy increased to 94.4% (from 93.4%).

Read more...Houston's Rent Growth Creeps Down - Daily News Article -

Monday, August 19, 2013

Lending ‘Bubble’?: Interview with Sam Chandan via Commercial Property Executive

Chandan Economics’ stress test of 3,900 originated mortgages recently showed “the credit risk of new apartment mortgages weakened over the course of 2012.” [See CPE Feature Article.] Sam Chandan, chief economist, in an interview with CPE, answered questions about the magnitude of the lending risks and suggested that low-cost financing, rather than excess liquidity, is causing the increases in property valuations.

Upward Pressure on Property Valuations:

Low-cost financing is allowing investors to compete more aggressively for acquisitions, in the apartment sector and for core office assets in particular. That is exerting upward pressure on prices that must be offset by sustained income growth.

Read more...Lending ‘Bubble’?: Interview with Sam Chandan | Commercial Property Executive

July 2013 Apartment Market Summary via Axiometrics

After a slight uptick in annual effective rent growth in May and June, the growth moderated in July. For the month, annual effective rent growth measured 3.41%; occupancy remained steady. Although there was no change in occupancy from May to July of this year, occupancy has increased 37 basis points (bps) since a year ago in July 2012.

With annual effective rent growth slowing at the national level for July, all three asset classes (A, B and C) also showed signs of moderation for the month. Still, even though all asset classes reported slower annual effective rent growth from June to July, when comparing July 2012 to July 2013, only Class A has decreased in annual effective rent growth, from 4.12% to 3.20%.

Read more...July 2013 Apartment Market Summary via Axiometrics

El Paso’s Apartment Market Runs Out of Gas via Property Management Insider

While apartment market performance results in 2Q 2013 proved strong almost everywhere across the country, there were a handful of exceptions. The big one was El Paso, which experienced big drops in both occupancy and rents of late.

The metro’s 2Q 2013 occupancy level came in at just 92.2%, off 310 basis points on an annual basis and down 550 basis points from the high of 97.7% reached in early 2010. Furthermore, effective rents for new leases backtracked 3.7% between mid-2012 and mid-2013.

Read more...El Paso’s Apartment Market Runs Out of Gas | Property Management Insider

Friday, August 16, 2013

Top Five Performing Secondary Markets Halfway Through 2013 [Video] via Property Management Insider

Cap rate compression and price appreciation has led to more apartment investors seeking opportunities in smaller markets across the country. MPF Research examines which smaller markets have performed well of late, and which ones offer promise going forward.

Major markets, according to MPF Research, are the top 50 apartment markets according to the total number of apartment units. Secondary markets, as defined by MPF, are those markets outside the top 100 and typically have between 25,000 to 85,000 apartment units.

Watch video...Top Five Performing Secondary Markets Halfway Through 2013 [Video] | Property Management Insider

Austin sees lower jobless rate in July via Austin Business Journal

The unemployment rate in the Austin area fell last month to 5.6 percent, according to the Texas Workforce Commission.

The rate was 5.8 percent in June and 6.3 percent in July 2012.

Texas' jobless rate dropped to 6.7 percent in July, down from 6.9 percent the month before and 7.4 percent in July last year. The U.S. jobless fell slightly to 7.7 percent from 7.8 percent the previous month and 8.6 percent in July 2012.

Read more...Austin sees lower jobless rate in July - Austin Business Journal

Houston Economic Update August 2013 via Dallas Fed

The Houston Business-Cycle Index accelerated to an annual growth rate of 5.3 percent in June from a revised 2.6 percent in May, signaling rising economic activity. From December to June, the index advanced at an annualized 5.8 percent. Energy-related activities continue supporting the region’s performance, but construction and other industries have gained momentum.

Total Houston payroll employment grew at a seasonally adjusted, annual rate of 2.1 percent in June. Growth rates varied, with leisure and hospitality up an annualized 16.7 percent and government jobs advancing an annualized 13 percent, while other services declined 10 percent. Professional and business services also contracted slightly.

Read more...Houston Economic Update August 2013 via Dallas Fed

Housing Starts in U.S. Rise on Multifamily Properties via Bloomberg

New-home construction in the U.S. climbed in July, reflecting a rebound in multifamily projects that overshadowed a slowdown in single-family properties.

Housing starts climbed 5.9 percent to an 896,000 annualized rate from a revised 846,000 pace in June that was higher than previously reported, figures from the Commerce Department showed today in Washington. The median estimate of 82 economists surveyed by Bloomberg was for a 900,000 rate. Multifamily construction surged 26 percent, while work began on 2.2 percent fewer single-family homes.

Read more...Housing Starts in U.S. Rise on Multifamily Properties - Bloomberg

Thursday, August 15, 2013

Another Reason Texas Has More Jobs via the Blog of the Real Estate Center

Austrian economist Joseph Schumpeter years ago described capitalism as a “vortex of creative destruction.” Every day, businessmen and women compete with firms all over the globe. Offering quality goods and services at the lowest possible price is essential for success.

As you can see from the chart, the growth rate of Texas employment is consistently above the national average. In the 16 years I have worked at the Real Estate Center, Texas employment growth has consistently doubled the national average.

There are several reasons why Texas performs so well in creating jobs. One of the keys is that we have the best tasting Mexican food on the planet. But that’s not the topic for today.

Read more...Another Reason Texas Has More Jobs | the Blog of the Real Estate Center

CoStar Repeat-Sale Index Shows Midyear Surge in CRE Pricing via CoStar Group

Pricing for "average" commercial properties outperformed institutional-grade assets while price gains in secondary U.S. markets eclipsed the top markets as buyers of commercial real estate increasingly expanded investment activity outside the handful of prime markets and core properties during the second quarter, according to the midyear CoStar Commercial Repeat Sale Indices (CCRSI) release.

The gains in the CCRSI's repeat sale index are an inversion of trends earlier in the economic recovery when the best properties in primary markets dominated commercial real estate investment activity, signifying a further broadening and deepening in CRE fundamentals and property prices across the nation and among all product types.

Read more...CoStar Repeat-Sale Index Shows Midyear Surge in CRE Pricing - CoStar Group

MF Absorption Tops 6,400 Units via

The region continues humming on all cylinders, with CBRE's Q2 2013 Multi-Houstin MarketView report showing continued absorption, with demand outpacing supply. Absorption improved to 6,492 units during the quarter (up 17% from the 5,542 units reported during Q1 2013). Year-to-date absorption has already reached 12,034 and is on pace to exceed the 14,000 units absorbed during the past three years.

Occupancy area-wide topped 90%, and has increased more than 350 basis points since Q2 2011. Only the northeast was lower than 90%; though at 89.8%, the report notes that it's likely this area will top 90% by the end of Q3 2012.

Read more...MF Absorption Tops 6,400 Units - Daily News Article -

Tuesday, August 13, 2013

CMBS Late-Pays Take Steep Drop via

Dispositions from a single CMBS transaction lay behind the largest post-recession monthly drop in the delinquency rate for securitized commercial mortgages, according to data from Fitch Ratings. The 40-basis point decline from 7.18% in June to 6.78% in July brought the late-pay rate down 223 bps from its July 2011 peak as measured by Fitch, and Mary MacNeill, managing director with the firm, tells we can expect the downward trend to continue.

Similarly, Trepp reported earlier this month that July’s rate of 8.48% is down 186 bps from the July 2012 peak of 10.34% in the Trepp CMBS delinquency rate. The rate has improved by 123 bps since the start of this year, Trepp said.

Read more...CMBS Late-Pays Take Steep Drop - Daily News Article -

Report: MF Construction, Transactions Increase via

Multi-Housing MarketView Report notes that both development and transaction activity took place, with more units coming to market and more multifamily properties bought and sold than the year before.

On the construction side, 14,572 units are currently under construction, with 3,645 units delivered to market during the quarter. Unit absorption was 3,938 units. The report notes that Central Dallas has the most construction (7,466 units under development), while the north and northwest areas have 3,028 units and 2,744 units underway respectively.

Read more...Report: MF Construction, Transactions Increase - Daily News Article -

ALN Monthly Newsletter August 2013 via ALN Apartment Data

ALN Data just released their July 2013 stats on occupancy and rents for 23 markets. In Texas, it includes DFW, Austin, Houston, San Antonio, Lubbock, Amarillo, Abilene and Corpus Christi. It is a must read from a great provider of apartment data.

Read more...ALN Monthly Newsletter August 2013 via ALN Apartment Data

Why the Current Housing Recovery will NOT Pose a Risk to Apartment Demand via Axiometrics

Recently, Moody’s Investor Service released a cross-sector impact report titled “US Housing Recovery Poses Challenges to Multifamily Properties Backing CMBS and Apartment REITs”. We flatly disagree with this premise and some of the conclusions by its author Tad Philipp, Director of CMBS Research. He states that apartment construction is accelerating at a time when renter numbers are likely to start decreasing. He also states that the loss of renters to eventual homeownership may not provide long-term sustainability to all of the apartment buildings currently under construction and that the current low homeownership rate of young adults (28%) will move toward the national average of 65%. In a word: hogwash.

Let’s examine some of the economic and demographic factors affecting renter demand and supply.

Read more...Why the Current Housing Recovery will NOT Pose a Risk to Apartment Demand via Axiometrics

Why Home-Price Growth Will Slow via WSJ

The breakneck pace of home price growth from earlier this year appears to be slowing—and that’s not necessarily bad news for the housing market.

Home prices in June rose by 11.9% from a year ago, essentially unchanged from the year-over-year gain posted in May, according to CoreLogic. On a seasonally adjusted basis, prices in June went up by 0.6% from May, according to Capital Economics, the smallest gain in six months.

A pullback in home prices isn’t a major cause for concern, because prices are still going to rise—just not at as brisk a pace as we’ve seen over the past year. This should calm down those pundits who have fretted over a new crop of housing bubbles.

A report published last week from economists at Goldman Sachs GroupGS -0.25% offers three reasons why home price gains are likely to moderate:

Read more...Why Home-Price Growth Will Slow - Developments - WSJ

Friday, August 9, 2013

The Sunny Side of Rainwater Harvesting for Property Managers via Property Management Insider

When the skies open and the rain pours, apartment properties and property management companies have a perfect opportunity to take advantage of one of Nature’s greatest resources through rainwater harvesting.

Rainwater harvesting is simply collecting rain water from roofs or other elevated areas where runoff typically occurs. Water may be collected above or below ground using simple or sophisticated recovery systems. Reclaimed rainwater may be used for anything from drinking water to irrigating large or small areas on a property, including multifamily.

The water is free; the expense is building and maintaining the collection process.

Water Reclamation for Multifamily Properties Makes Sense

Read more...The Sunny Side of Rainwater Harvesting for Property Managers | Property Management Insider

APARTMENT MARKET STATISTICS: August 2013 via Multi-Housing News Online

Apartment prices continue to increase. Price per unit of apartments in the first quarter was $147,257—increasing from $110,380 in the fourth quarter, according to PPR/Costar. However, fewer properties were transacted—2,193—compared to 3,556 in the fourth quarter.

Apartment completions in the top 30 metros more than doubled in the first quarter compared to a year ago, according to data from Marcus & Millichap Research Services. Apartment rents increased by 3.1 percent to $1,156 nationally in the first quarter, while apartment vacancies held steady at 5.1 percent for these metro markets.

Meanwhile, multifamily permits reached their highest monthly reading since late 2007, according to the National Association of Home Builders (NAHB). Permits in April skyrocketed to a seasonally adjusted annual rate of 374,000 units, or 55 percent higher than in the same period last year.

Read more...APARTMENT MARKET STATISTICS: August 2013 | Multi-Housing News Online

Thursday, August 8, 2013

Freddie Mac: Apartments still good investment via HousingWire

Freddie Mac released its mid-year multifamily outlook for 2013 on Thursday, which included a new Freddie Mac Multifamily Investment Index that measures the attractiveness for investing in apartment properties.

According to the index, apartments are still a good investment in most metropolitan markets it tracks.

“As markets move it is important to have an objective measure of current conditions. Although the multifamily market has slowed, it remains an attractive investment across the majority of the metro areas for equity and debt investors,” said Victor Pa, vice president of multifamily investments and advisory.

Read more...Freddie Mac: Apartments still good investment | 2013-08-08 | HousingWire

Apartment Marketing Tips from Shark Week via Property Management Insider

Just when you thought it was safe to watch television again after the ultra campy (and ultra crappy) SyFy movie “Sharknado” took a bite out of American pop culture last month, along comes Discovery Channel’s annual Shark Week.

Believe it or not, there are many apartment marketing lessons we can learn from the behavior of sharks. I don’t mean to imply that apartment marketers are mindless hunters on a continuous search for their next meal. In fact, sharks are anything but mindless killers regardless of sensationalistic headlines.

I will say that apartment marketing is complicated. There are new developments, changes and innovations almost daily that make it hard to stay relevant to potential customers fishing for a new apartment home.

However, we can study shark facts and behavior to develop winning online and apartment marketing strategies that can help you successfully catch and land the biggest fish in the sea: apartment leads.

Read more...Apartment Marketing Tips from Shark Week | Property Management Insider

What Is Defeasance? How Does It Affect My Commercial Real Estate Loan? via Phil Jemmett

The rules that govern home loans are not the same as the rules that govern commercial real estate loans. One of the major differences is that there is usually no penalty for early repayment of a home loan, whereas investors in commercial real estate can face stiff penalties for early repayment. You might be thinking, "Why woudn't my lender want to receive early payment on my commercial loan?" Early loan repayment is penalized when your loan has been securitized, meaning that your loan has been bundled with other loans and sold to bondholders as a debt security (in this case, a commercial mortgage-backed security [CMBS]). CMBS bondholders are expecting a certain rate of return on their security, and prepayment of your commercial loan will affect that rate of return.

Read more...What Is Defeasance? How Does It Affect My Commercial Real Estate Loan? | Phil Jemmett

Due Diligence – What Is Important When Buying Real Estate? via

When you make a big purchase, or an investment, buy a car, sign up for healthcare, etc. you do you “homework” to hopefully make a sensible decision that gives you good value for the money you are spending.

When you buy real estate, which is likely to be the most expensive, most complex, and riskiest purchase you will ever make, there is an extraordinary amount of due diligence that you should do to reduce your risk and make a smart decision. It’s a time consuming, laborious, and expensive process of which most buyers fail to understand and complete. Most don’t even know many of the steps, or they don’t understand the time and cost required to perform the tasks, steps, procedures, analysis, review, etc. To give you a feel for it, here are the main steps in buying income producing property.

Read more...Due Diligence – What Is Important When Buying Real Estate? |

Q2 2013 Apartment Trends via Reis Reports

Reis VP of Economics & Research, Dr. Victor Calanog, provides an update on the apartment sector performance for the 2nd quarter of 2013.

13 quarter streak of declining vacancies came to an end in Q2 2013
27,000 units came online in the second quarter
Asking rent grew by 0.6% while effective rent grew by 0.7%
East coast and California vacancy rates are tight

Video Transcription
Apartment vacancies remained unchanged at 4.3% in the 2nd quarter of 2013. That brings to an end a 13 quarter streak of vacancy declines since late 2009 when national vacancies peaked at 8.0%. Now that national vacancies are at 4.3%, that’s a 370 basis point decline since the peak of 8.0% in late 2009.

Watch video...Q2 2013 Apartment Trends | Reis Reports

Water Works: Builders Work Ways to Conserve Water via Multifamily Executive Magazine

More than 70 percent of the nation is susceptible to a water shortage. In fact, 36 U.S. states are at risk for water shortages even without the threat of drought, according to the U.S. Environmental Protection Agency.

So when the team at NorSouth Constructs got together with the Decatur Housing Authority to reconstruct a public housing complex, they decided water efficiency was a must, says Colin Edelstein.

Edelstein, a director at NorSouth Constructs, said a rainwater harvesting system was built into the structure of the Oliver House, an 88-unit affordable housing senior building. The water that is collected is used not only for outdoor irrigation but also for toilet flushes. And not a drop is wasted: Hundreds of gallons of water are also collected from the air conditioning units through condensation.

Read more...Water Works: Builders Work Ways to Conserve Water - Multifamily Executive Magazine

Wednesday, August 7, 2013

Single-Family Rental Market Trying to Prove It’s Sustainable via Multifamily Executive Magazine

Last week’s initial public offering by the real estate investment trust American Homes 4 Rent, which captured $706 million, raises more questions than answers about the long-term viability of the single-family rental home market.

That IPO, whose haul was significantly under the $1.25 billion projection the Agoura Hills, Calif.-based company made in its original prospectus, came at a time when some investors have cooled on the other publicly traded companies in this sector, American Residential Properties and Silver Bay Realty Trust Co.

The Wall Street Journal reported late last month that two single-family rental home providers, Waypoint Homes and Colony American Homes, have put their plans to go public on hold. (A spokesperson for Waypoint declined to comment for MFE’s article, and Colony did not return calls from MFE requesting comment.)

Even the Federal Housing Finance Agency—whose Real Estate Owned Pilot Initiative, launched two years ago, has transferred 1,763 REO properties to new owners—seems ambivalent about future demand.

Read more...Single-Family Rental Market Trying to Prove It’s Sustainable - Multifamily Executive Magazine

Strengthening Economic Activity Seen Offsetting Investor Concerns Over Interest Rates via CoStar Group

Analysts believe it is becoming more and more likely that commercial real estate loans coming due in the next few years will face a higher rate environment. However, the strengthening economy is expected to offfset near-term investor risk.

Two notable commercial real estate developers and investors support the assessment that property fundamentals are catching up to the valuations created by strong capital flows into the property markets.

Owen D. Thomas, CEO of Boston Properties, said, "If interest rates go up it’s going to be because the economy is improving and, therefore, demand for real estate will go up and rents will go up.”

Read more...Strengthening Economic Activity Seen Offsetting Investor Concerns Over Interest Rates - CoStar Group

Houston ALN apartment data July 2013 via Real Estate Center at Texas A&M

ALN Apartment Data has released the July 2013 apartment occupancy, effective rent data and more for apartments in the Houston market.

Read more...Houston ALN apartment data July 2013 via Real Estate Center at Texas A&M

How West Texas wind power will reach North Texas via Dallas Business Journal

Texas produces so much wind power that it would rank fifth in the world if it were its own country, according to the U.S. Department of Energy.

Texas had more than 12 gigawatts of wind power installed at the end of 2012 with 1,800 megawatts added over the past year. That’s twice as much as the nearest state, California. A storm that blew through West Texas set a new record for wind-power generation with power peaking at 9,481 MW on Feb. 9.

Looking at other countries, only China, all other U.S. states, Germany, Spain and India rank higher than Texas. The Lone Star State has more wind capacity than the United Kingdom, Italy, France, Canada and Portugal.

Read more...How West Texas wind power will reach North Texas - Dallas Business Journal

Housing’s Energy Hogs via Multi-Housing News Online

Renters use nearly a third more energy per square foot than homeowners, according to data from the Energy Information Administration’s (EIA’s) most recent Residential Energy Consumption Survey (RECS).

However, the topline takeaway from the survey, which is considered the gold standard for energy consumption data among researchers, is leading some industry consultants and academics to the somewhat illogical conclusion that apartments are intrinsically less energy efficient than their single-family counterparts.

But newly released survey micro data is challenging that conclusion, showing that homes in larger multifamily buildings (5+ units) in fact use less energy than single-family houses, as well as homes in small multifamily buildings (2-4 units).

Read more...Housing’s Energy Hogs | Multi-Housing News Online

Obama Throws His Weight Behind GSE Wind-down via

Fannie Mae's and Freddie Mac's days are numbered, if President Barack Obama has anything to say about it—which, as he showed on the stump in Phoenix, Ariz., he certainly does.

Delivering a speech from the epicenter of the housing crisis, the president called for a complete revamp of the housing finance industry, at least in terms of the government's involvement. This revamp, namely, calls for the wind-down of the GSEs.

Specifically, the president pointed to a measure introduced in the Senate this summer by Republican Bob Corker and Democrat Mark Warner that would eliminate the GSEs and replace them with a system in which the private market would purchase the home loans from lenders and then securitize them. The government's role in this scenario would be to insure or guarantee the securities but at a cost to investors.

Read more...Obama Throws His Weight Behind GSE Wind-down - Daily News Article -

Tuesday, August 6, 2013

Increase Your Income Property Bottom Line with RUBS via Multifamily Blogs

From Los Angeles to New York, and Anchorage to Key West, properly allocated utility responsibility and cost is a very important subject in the apartment rental business. As utilities are supplied to a rental property, they are typically split-up, or “branch off” to connect to individual units from the main supply. Ideally, these splits could then accommodate individual meters and shutoff controls. Ideally, each user of the utility being provided would then pay their fair portion of use.

In most newer construction properties that is indeed the case. In older properties, however, master metering for the entire property is something owners must often contend with. When properties are master metered this results in higher expense ratios due to utility costs and hence lower net operating income. Sometimes it is possible to split up the electrical and gas meters, but often this proves impossible. As for water and sewer costs, separate metering is virtually unheard of and these costs are almost never charged to tenants.

Read more...Increase Your Income Property Bottom Line with RUBS - Multifamily Blogs

Did We Waste a Financial Crisis? via

Five years ago this month, before Lehman Brothers imploded and the global economy lurched to a halt, Fannie Mae issued a report that encapsulated the financial system’s biggest problem. The mortgage-finance company, which was wobbling on account of rising defaults, tried to reassure investors that it had $47 billion in capital, which was considerably more than the $30 million required by law. At the time, the report’s authors seemed to fear that some investors might think Fannie was too cautious. In any event, a month later, that protection seemed like a joke. Fannie may have conformed to the rules, but the rules didn’t conform to reality. The lender and its brother company, Freddie Mac, were declared insolvent and handed over to the U.S. government.

Remarkably, five years after the crisis, the health of the financial industry is just as hard to determine. A major bank or financial institution could meet every single regulatory requirement yet still be at risk of collapse, and few of us would even know it. Despite endless calls for change, many of the economists I’ve spoken with have lamented that the reports that banks issue about their finances remain all but useless.

Read more...Did We Waste a Financial Crisis? -

U.S. Commercial Property Prices Fall Amid Rising Rates via Bloomberg

U.S. commercial property prices fell 1 percent in July from the previous month as rising interest rates increased the cost of financing deals, according to real estate research firm Green Street Advisors Inc.

The Green Street Commercial Property Price Index was 4 percent higher than a peak reached in August 2007 even with the decline, the Newport Beach, California-based company said today in a report. The gauge is based on Green Street’s estimate of the value of real estate investment trust portfolios, which tend to have high-quality properties.

“Property values have enjoyed a robust recovery over the last four years, more than recouping all the ground that was lost during the financial crisis,” the firm said in its report. “That recovery has been put on hold for the time being as increases in interest rates weigh on pricing.”

Read more...U.S. Commercial Property Prices Fall Amid Rising Rates - Bloomberg

Report: DFW Investors Continue Chasing Yield via

Colliers International's Dallas/Fort Worth Capital Markets Report notes that during Q2 2013, investor yield-chasing strategies through commercial real estate buys continued in full force. The reasons for these trends ranged from continued low short-term interest rates to the fact that office space continues shrinking, leading to more demand and higher rental rates.

On the commercial real estate investment side, during the trailing 12-month period ending June 30, 2013:

Read more...Report: DFW Investors Continue Chasing Yield - Daily News Article -

Monday, August 5, 2013

A Requiem for Commercial Real Estate? via National Real Estate Investor

The recent increase in interest rates has caused alarm for many fixed-income investors. Many have said it is the end of the 30-year fixed-income bull run. Since the onset of the last recession and the attendant slow growth following, the Federal Reserve has been extremely accommodative.

In May, when the Fed at last signaled the beginning of the end of the super low-rate environment with the announcement of a gradually tapering-off of its bond-buying program, there was generally a sense of panic for fixed-income and yield-oriented investments such as REITs. Has the income which had been the investors guiding light for five years, suddenly become an oncoming train? Does this spell the death-knell for commercial real estate? I don’t think so.

Read more...A Requiem for Commercial Real Estate? | Institutional Investors content from National Real Estate Investor

Houston Multifamily Market Report via

As Houston As Houston continues to create jobs and power the economic engine of Texas, every segment of the multifamily sector continues to push higher. With more than 100,000 jobs added in the past year alone, the newly hired and the job-hungry are leasing up available space in Houston faster than units are being delivered to the market.

Demographics demonstrate a growing shift toward rentals for the city in general. For the first time since 2005, Houston apartment occupancy is averaging more than 90 percent. As the energy, medical, service and construction industries continue to expand in Houston, demand will remain strong across the board for Class A, B and C product.

New multifamily construction is heavily concentrated within the Inner Loop, Energy Corridor and the vicinity of The Woodlands. The development pipeline trends toward these job-ready markets as Houstonians dream of shorter work commutes and “live, work and play” scenarios. Multifamily options inch toward this dream, providing retail, dining and entertainment options on property or nearby.

Read more...Houston Multifamily Market Report via

Regional Economy Shows Positive Signals via Dallas Fed

The regional economy is expanding at a moderate pace, with employment growth slightly stronger in the second quarter than in the first. The Texas Manufacturing Outlook Survey (TMOS) headline index rose to its highest level in two years in June and remained at an elevated level in July, and Texas exports picked up in April and May after weakness earlier in the year. The housing and energy sectors remain major contributors to growth. The outlook for the rest of 2013 continues to project Texas job growth of 2 to 3 percent, weighed down by losses in federal government employment.

Employment growth in the first half of 2013 is just above the state’s long-term average and is outpacing many other areas of the country. Job growth was also slightly less volatile in the second quarter, suggesting that uncertainty may be affecting business decisions less than it was earlier in the year. That said, current numbers suggest job growth has slowed from last year’s stronger pace of over 3 percent (Chart 1).

Read more...Regional Economy Shows Positive Signals - Dallas Fed

Texas Housing Demand Continues via Real Estate Center at Texas A&M

Demand for existing homes in Texas surged again in second quarter 2013, and the median price hit another all-time high.

According to the Texas Quarterly Housing Report, released yesterday by the Texas Association of Realtors (TAR), 79,760 single-family homes were sold in the second quarter — 17.8 percent more than the same quarter last year and the most homes sold in a single quarter since TAR began issuing its quarterly housing report four years ago. The surge in demand was widespread, with 43 of the 47 markets included in the report showing an increase in sales compared with last year.

“The first half of the summer selling season has been very busy for Texas real estate,” said TAR Chairman Shad Bogany. “Demand for homes steadily increased throughout the state, which has prompted competition for properties and is boosting prices.”

Read more...Texas Housing Demand Continues via Real Estate Center at Texas A&M

Friday, August 2, 2013

Houston Still Tops in MF Permitting via

Axiometrics Inc.'s just-released multifamily permitting report noted that, while permitting dipped in June 2013, it remained healthy. The Dallas-based apartment researcher's numbers also placed the Houston MSA in second place for multifamily permitting for the trailing 12 months ending in June.

The Houston MSA permitted 16,410 units during the 12-month period, while the New York City MSA came in first place at 17,501 units permitted. Also among the top 10 were Dallas (at 11,679 units) and Austin (which permitted 11,483 units).

Read more...Houston Still Tops in MF Permitting - Daily News Article -

Thursday, August 1, 2013

Home Ownership, New Stock Squeeze MF Rental Growth via

Widely considered bulletproof not long ago, multifamily rent growth now faces a couple of potential stumbling blocks. Namely, home ownership is back on an upward trend and new construction is putting pressure on existing properties, says Moody’s Investors Service in a new report.

Among the major commercial sectors, “multifamily is the only one to which many tenants have a viable alternative: in this case, renting or owning a single-family home,” writes Tad Phillip, SVP and director of CMBS research at Moody’s. Single-family is still “in the early stages of recovery,” with construction starts that are about one-third of the levels they reached before the recession.

“Conversely, the multifamily segment has matured to the point where rents and construction starts have returned to their approximate pre-crisis levels,” he writes. Apartment development has accelerated to the point of threatening to undermine existing properties’ revenue streams.

Read more...Home Ownership, New Stock Squeeze MF Rental Growth - Daily News Article -

Texas home prices reach all-time high via HousingWire

The median price for homes in the state of Texas hit another all-time high in the second quarter of 2013 as demand for homes in the Lone Star State surged again.

"The first half of the summer selling season has been very busy for Texas real estate," said Shad Bogany, chairman of the Texas Association of Realtors. "Demand for homes steadily increased throughout the state, which has prompted competition for properties and is boosting prices."

On a statewide basis, 79,760 single-family homes were sold in the second quarter of 2013, up 17.78% from the same quarter of last year. This also represents the most homes sold in a single-quarter since the Texas Association of Realtors began this report in 2009.

Read more...Texas home prices reach all-time high | HousingWire

Study: Rising Interest Rates Dampen Debt Financing Conditions in Apartment Sector via

While the demand for apartments remained strong during the second quarter of 2013, increasing interest rates have put a damper on debt financing conditions, according to data from the National Multi Housing Council (NMHC).

NMHC’s quarterly survey of CEOs and senior executives of apartment-related firms nationwide found that 67 percent of the respondents said the cost of debt financing for apartments has risen since April 2013. Additionally, just 8 percent of respondents said debt financing conditions had improved.

“Interest rates have risen 90 basis points since the April survey was conducted, leading two-thirds of the survey respondents to cite worsening debt finance conditions,” said Mark Obrinsky, senior vice president for research and chief economist.

Read more...Study: Rising Interest Rates Dampen Debt Financing Conditions in Apartment Sector

Trepp US CMBS Delinquency Rate Falls Once Again, Rate at Lowest Level Since September 2010 via MarketWatch

Trepp, LLC, the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets, released its July 2013 U.S. CMBS Delinquency Report today (available at

One year ago, the Trepp CMBS delinquency rate reached an all-time high of 10.34%. This month, the delinquency rate for US commercial real estate loans in CMBS dropped to 8.48%. This represents a 17-basis-point drop since June's reading and a 123-basis-point improvement since the start of 2013. The July 2013 level is the lowest Trepp delinquency rate since September 2010.

Read more...Trepp US CMBS Delinquency Rate Falls Once Again, Rate at Lowest Level Since September 2010 - MarketWatch

The Dirty Word: "Overbuilt" Markets Possibly Loom on the Horizon via Multifamily Executive Magazine

Coming out of the recession, Raleigh-Durham, N.C., seemed to be one of those can’t-miss real estate markets. Its economy and demographics were exactly what builders, developers, and investors coveted in terms of potential growth. And competitive conditions seemed ripe for the picking.

So the gold rush began, and aggressive construction of multifamily apartments followed. Maybe a bit too aggressive, say some industry watchers, who uniformly identify Raleigh-Durham among the handful of go-go markets whose building activity might be getting ahead of demand.

Read more...The Dirty Word: "Overbuilt" Markets Possibly Loom on the Horizon - Construction Trends - Multifamily Executive Magazine