Monday, April 30, 2012

Increasing Recycling Participation in Your Community via

According to the EPA, there are 13.2 million multifamily housing units in the United States and approximately 52 percent of them are served by a recycling program. If recycling was made available to all multi-family units at least 847,000 additional tons of materials could be diverted from the waste stream.

Although there is no single model for a successful recycling program due to variations in building size, layout, resident characteristics, and trash disposal systems, there are numerous methods to establish a successful recycling program. The benefits of implementing a waste reduction program allow properties to decrease waste disposal costs, bring buildings into compliance with applicable regulations, help achieve local and state recycling goals, as well as make recycling accessible to more community members.

One of the most effective ways to ensure success is a city or state mandated program. The EPA estimates that 62 percent of multifamily housing recycling programs are already mandated. Mandates can include state or city requirements that offer waste reduction opportunities to residents; requirements that haulers provide waste reduction services; or requirements that all residents participate. Financial incentives for property managers and owners are usually available. Many cities and states have seen an increase in recyclables due to mandates; however, if your area is not mandated, here are several ways to implement a successful recycling program:

Read more...Increasing Recycling Participation in Your Community - Multifamily Blogs – Experts – Technology, Products ::

Fitch: CMBS Servicer Data Show Importance of Size, Location via MarketWatch

Fitch Ratings believes higher balance commercial real estate loans are more likely to be modified than liquidated by special servicers. And A/B notes are almost exclusively used in that end of the market. Fitch also believes that the smaller volume of loans now in special servicing is a further sign of recovery in the market.

The average balance for modifications is approximately $26 million, while the average balance for loans liquidated is below $10 million. Fitch found that A/B notes were among the least often used modification type, making up just 5% of modifications in 2010 and 2011. But they have been used most often on large regionally notable buildings.

Read more...Fitch: CMBS Servicer Data Show Importance of Size, Location - MarketWatch

HUD Compliance: Fair Housing Complaints Should be Taken Seriously via Property Management Insider

Each year, the United States Department of Housing and Urban Development (HUD) receives about 12,000 complaints against properties for alleged violations of the Fair Housing Act. For every complaint received there are another 10 inquiries at Fair Housing and Equal Opportunity (FHEO) regional offices from people who think they may have been discriminated against.

Complaints or inquiries – mostly from the apartment industry – roll into the country’s 10 regional FHEO offices by phone, mail, and the HUD website. Almost five of all received each day usually merit enough attention that the FHEO staff springs into action. Region VI, comprised of Arkansas, Louisiana, New Mexico, Oklahoma and Texas, was particularly busy last year.

FHEO Region VI Director Garry Sweeney said the region logged 2,000 complaints in 2011 between his office and contracting Fair Housing Assistance Program agencies. About 300 thought to have national impact were processed through HUD, and federal charges were issued in two.

Read more...HUD Compliance: Fair Housing Complaints Should be Taken Seriously | Property Management Insider

Regional Economy Picks Up via Dallas Fed

Regional economic indicators point to stronger job and output growth in the first quarter of the year. Improvement has been pronounced and broad based, although growth slowed in March. Since December, Texas job growth has surged, unemployment has dipped, survey indexes have posted strong readings for production and revenue, retail sales have increased and exports have risen further. The Texas Leading Index increased in February for the fifth consecutive month. However, construction remains subdued, house prices are still depressed and purchasing power is undermined by high fuel and food prices.

Employment Growth Strong
First-quarter employment grew at a rapid rate of 3.1 percent in Texas (annualized), compared with 1.9 percent in the nation (Chart 1). The pace slowed as the quarter progressed. Employment grew at an annualized rate of 6.8 percent in January, 2.3 percent in February and 0.4 percent in March. The unemployment rate fell from 7.1 percent in February to 7 percent in March.

First-quarter job growth was broad based. All major industries except government saw employment increases. Notably, construction employment rose 7.2 percent (annualized) in the quarter after falling in the last two quarters of 2011.

Read more...Regional Economy Picks Up - Dallas Fed

Austin Apartment Market is Still Hot, but Rent Growth Levels Ease a Bit via Property Management Insider

by Jay Parsons on April 30, 2012

Austin still ranks among the nation’s leaders with year-over-year rent growth of 6.5%, but apartment fundamentals have eased back a bit in the past couple quarters.

Watch Video...Austin Apartment Market is Still Hot, but Rent Growth Levels Ease a Bit | Property Management Insider

Cumulative Defaults on CMBS Inch Up During Q1 via

Although the long-term pace of CMBS defaults is moderating, delinquencies in securitized mortgages are far from a thing of the recent past. Fitch Ratings said Friday that the cumulative default rate among CMBS crept up 25 basis points to 12.96% during the first quarter of this year, while a few days prior, the latest Monthly CMBS Delinquency Report from Morningstar found that the delinquent unpaid balance for CMBS increased by $1.71 billion during March, the first reported increase since October 2011.

Over the past year, the delinquent unpaid balance has vacillated—by $1 billion or more—between increases and decreases on a month-to-month basis, with the balance decreasing in seven of the preceding 12 months. Morningstar attributed this to “an overall trend of volatility” seen in legacy CMBS.

For its part, Fitch says the cumulative default rate would reach 15.42% if loans that did not refinance at maturity were included. The agency expects the pace of new defaults this year to be “relatively stable” compared to ‘11 levels. Newly defaulted loans for Q1 totaled $1.7 billion, or 155 Fitch-rated loans.

Read - Cumulative Defaults on CMBS Inch Up During Q1 - Daily News Article

Friday, April 27, 2012

Apartment rent decreases in Houston, increases nationwide via Houston Business Journal

The average rent for apartments in Houston decreased 1.1 percent over the past year, a new analysis from TransUnion shows.

Houston’s average rent was $881 in the first quarter of 2012, down from $891 in the same quarter a year earlier. Meanwhile, the average rent nationwide was $865 in the first quarter, up 4.4 percent from the $829 average recorded in 2011.

That increase is not surprising considering vacancy rates reached their lowest level since 2001, TransUnion Rental Screening Solutions President Mike Mauseth said in the company’s statement.

Read more...Apartment rent decreases in Houston, increases nationwide - Houston Business Journal

For Sale By Owner – Vital Marketing Steps Will Be Missed via The Full Nelson

A recent NY Times article reported about two owners who elected to sell their NYC office properties without an exclusive broker. The article will no doubt help bring buyers to the table and accomplish one of the ways of creating exposure for a property: press. However, there are many of the other vital steps that they will miss out on which could result in underselling the property.

The key element to maximizing a sales price is to expose it to the largest audience of buyers. It’s very simple: the more people who see a property, the more bids an owner will receive. The odds are overwhelmingly in the seller’s favor that if they receive more offers, the price will go up.

An exclusive agent can help expose a property the largest audience of buyers to generate multiple offers. There are many steps an exclusive agent takes to accomplish this. They include:

Read more...For Sale By Owner – Vital Marketing Steps Will Be Missed | The Full Nelson

Fitch: statistics suggest U.S. multifamily reaching peaks via Reuters

The rise in rents and occupancies in the multifamily sector is
close to the peak last seen before the beginning of the recession, according to Fitch. However, we believe that favorable demographics and a limited new supply will ensure the market will not overheat.

Multifamily price data is regionally specific and can be challenging to use as an overall measure. Based on our own research and a recent report by Federal Home Loan Mortgage Corporation (Freddie Mac), sales of multifamily properties have seen a rise in prices since the lows of late 2009, but they still remain approximately 25% below their peak. The real estate data specialist REIS calculates net effective rents on a national level at or near peak levels.

Evidence of a reduction in multifamily vacancy is more complete and sends a clearer message. According to REIS, current national vacancy is 5.2%. This is the lowest recorded vacancy since 2001 and is meaningfully lower than the 8% in 2009. The significant reduction in vacancy can largely be attributable to the lack of new supply that has come on line since the start of the recession.

Read more...TEXT-Fitch: statistics suggest U.S. multifamily reaching peaks | Reuters

Market Conditions Improve For Apartment Industry via National Multi Housing Council - NMHC

Optimism continues for the apartment industry, according to the latest results of the National Multi Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. The findings reflect a gradual recovery for the multifamily sector that faced a 50-year low in apartment starts in 2009.

The Q1 2012 survey’s four indexes measuring Market Tightness (74), Sales Volume (57), Equity Financing (62) and Debt Financing (65) remained above 50 for the eighth time in the past nine quarters. Any number above 50 indicates quarter-to-quarter growth.

“Market conditions improved across the board, even from the rather strong level of three months ago,” said NMHC Chief Economist Mark Obrinsky. “Demand for apartment residences – and apartment properties – continues to grow. We anticipate this increasing further in the coming years due in part to the large number of younger households moving into the housing market and a greater preference shown for renting.”

Read more...Market Conditions Improve For Apartment Industry via National Multi Housing Council

The Effects of Demographics on the Apartment Industry via

The renter of the next 10 to 20 years will be much more different from that of today. Are you prepared?

“The demographic of renters is changing in an unprecedented way, by age, family, composition, country of origin and even head of household,” says Jack Kern, managing director, Kern Investment Research LLC.

The changes have been occurring even as we speak, and apartment companies have certainly already been laying the groundwork to receive the new customers. Echo Boomers, Baby Boomers, immigrants, single households, older renters are all cohorts that will be the customers of apartments. Larger apartments, smaller apartments, a greater emphasis on downtown living, are all a part of the mix.

The demographic profile of the U.S. has been undergoing massive transformation within a mere 50 years, and the apartment industry has been feeling at the least the trickle-down effects. As the latest data from the census bureau indicates, the U.S. population has hit 308.7 million, an almost 10 percent increase from 281.4 million in 2000. The population is inexorable marching towards a projected half a billion by 2040. The majority of babies born in the country are now members of minorities.

Read more...The Effects of Demographics on the Apartment Industry

Thursday, April 26, 2012

Apartments Still In Recovery, But Pace Will Slow: Marcus & Millichap via

Last year at this time, Marcus & Millichap researchers stated that although the economy was not at risk for a double dip, the US would see “a very volatile and choppy recovery.” Twelve months later, nothing much has changed, although the pace of the multifamily recovery is slowing a bit, said Hessam Nadji, the firm’s managing director of research and advisory services, in a webcast yesterday.

The US economy is facing significant headwinds, said Nadji, including a decline in confidence due to the US credit downgrade and the deadlock over the debt ceiling and other issues, as well as the geopolitical and economic crises in the Eurozone. There are also concerns over rising oil prices; high unemployment (8.2% today vs. 5% in 2007); a high unemployment rate at 14.5%; low consumer confidence; and decline in single-family home sales and prices.

“While these headwinds are long-term in nature, we cannot ignore some of the positive aspects that are evidence of a strengthening economy,” said Nadji. These include job growth in the private sector, rising worker productivity, growing corporate profits, a rise in exports, rising GDP, low Treasury rate (the 10-year is at 1.93%); and retail sales’ rising 10% above their pre-recession peak.

Read - Apartments Still In Recovery, But Pace Will Slow: Marcus & Millichap - Daily News Article

NPS Provides Prepaid Card Program to Renters via

Neighborhood Pay Services, LLC (NPS), innovators in Rent Assurance for the $300 billion Multifamily Housing industry, today announced an agreement with The Western Union Company (NYSE:WU), a leader in global payment services, to offer Western Union® Prepaid MasterCard® products to renters across the United States.

Starting in the second quarter of 2012, NPS will offer the Western Union® MoneyWise™ Prepaid MasterCard® through the NPS Rent Assurance™ payment platform, a management solution that enables property clients to effectively expand credit acceptance terms to the millions of working Americans who apply for apartment rentals.

In addition to providing renters with improved access to professionally managed apartment housing, this agreement aligns with the NPS mission to provide consumers with the opportunity for improved financial independence. The NPS Rent Assurance™ program is available exclusively through apartment leasing offices and rent payments are reported for each enrolled resident to a national credit bureau.

Read more...NPS Provides Prepaid Card Program to Renters - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

U.S. homeownership hits record low: Gallup via HousingWire

The 62% of Americans who say they own their own home marks a new low since Gallup began tracking self-reported homeownership in 2001.

It's down from 68% in 2011.

But those surveyed also said they thought it was a good time to buy and that they thought prices would rise this year.

While the recession and financial crisis took place in 2008-2009, homeownership rates didn't begin to reflect the bursting of the housing bubble until 2010, when 65% of Americans reported owning their own home — the lowest level recorded before this year.

Read more...U.S. homeownership hits record low: Gallup | HousingWire

Frothy: CMBS Deals Return to the Days of Loans Exceeding 100% of Value via CoStar Group

Moody's Investors Service raised a red flag in its quarterly review of the U.S. CMBS market, saying the leverage on loans backing upcoming CMBS conduit transactions is poised to increase. Several conduits in its second quarter 2012 CMBS deal pipeline have collateral pools with average leverage approaching or exceeding 100% Moody's loan-to-value ratio (MLTV).

"While final pool composition is still subject to change, should the more highly levered Q2 transactions be issued as currently constituted, they will see from 50 to 100 basis points of additional credit support across their investment-grade rated bond classes," said Tad Philipp, Moody's director of commercial real estate research. "Should the adverse credit drift continue in future quarters it will be met with further subordination increases."

Read more...Frothy: CMBS Deals Return to the Days of Loans Exceeding 100% of Value - CoStar Group

Asset Management Quarterly: Chasing a Falling Yield via

Commercial real estate yields have been falling, especially in top-tier markets, as investors purchase properties in anticipation of economic recovery. Institutional investors are bidding up prices of quality properties, driving up values and pushing down cap rates. Institutions, including pension funds, life insurance companies and foreign investors, desire quality properties with predictable income streams in major markets.

Many secondary and even tertiary markets have also seen prices rise, but not to the same extent as top cities. Those locations, along with value-add plays, remain largely the realm of private investors with local market expertise.

“It’s a cyclical business,” says Mitch Roschelle, real estate business advisory leader with PricewaterhouseCoopers in New York City. “At this point of the cycle, values are going up and cap rates are going down.”

Read - Asset Management Quarterly: Chasing a Falling Yield - Daily News Article

Wednesday, April 25, 2012

Facebook Key in Student Housing via

Some commercial real estate sectors use social media more than others, particularly when connecting with their target markets. As some of the comments from our recent student housing-themed Tweetchat illustrate, Facebook is the network of choice for industry professionals in this area.

Representatives from Catalyst Austin, Campus Apartments and Greystar Student Living weighed in on which social network is best for them to connect with their key demographic: upper-class high school teens and college-age students. Twitter is a little popular amongst college students, but Facebook is the surefire way to reach out.

“We’ve found Facebook to be our best social media tool for reaching & engaging residents,” Campus Apartments posted, ‘Photos & video are our popular content.” Similarly, Catalyst Austin concurred and commented via Twitter: “Facebook is the dominant social network.”

Read - Facebook Key in Student Housing - Daily News Article

Multifamily: Too Much of a Good Thing? via CoStar Group

Multifamily investment sales continue to outpace other commercial property types in terms of growth of volume year over year. Multifamily sales in the first quarter were up 33% compared to a year earlier and were up 52% in 2011 compared to 2010.

In preliminary full first quarter numbers, CoStar Group is showing nearly $14 billion of apartment property sales in the first quarter vs. $10.5 million a year ago. The segment recorded $64.6 billion in sales last year vs. $42.5 billion in 2010.

The health of the market has caused some to question current market property enthusiasm and valuations. However, new analysis from Fitch Ratings, Moody's Investor Services and Freddie Mac dispel some investor concerns by reporting that market fundamentals appear to support current valuations.

Read more...Multifamily: Too Much of a Good Thing? - CoStar Group

Marcus & Millichap Q1 apartment building investment call via Ashworth Partners

Year over year manufacturing jobs grew 238k. Manufacturing = 20% of GDP but gets no press, where as single family housing < 2% gets all the coverage.

There is still a historic % of 18-34 Y/Os still living ‘with the parents’ but they are also getting a larger proportion of the new jobs. (See chart) Good for apartment building investors as these people typically become renters when they move out.

A props in primary (coastal) markets seeing compressed cap rates; most on the call (including me) thought they were a little frothy.

Read more...Marcus & Millichap Q1 apartment building investment call. | Ashworth Partners

Crunch the State's Numbers on The Texas Economy via Texas Comptroller


Take a look at the numbers that make the state's economy tick — all in one place — at www.TheTexas There you can get an eye for trends from the Comptroller's Weekly Economic Outlook and visualize the state's performance by viewing Texas' Key Economic Indicators. Both resources provide powerful, concise economic data that power your understanding of the Texas economy:

Texas total nonfarm employment increased by 10,900 jobs during March 2012.
Texas' total nonfarm employment increased 2.3 percent between March 2011 and March 2012.
The Texas unemployment rate dropped to 7.0 percent for March 2012, down from 8.0 percent in March 2011.

Read more...Crunch the State's Numbers on The Texas Economy via Texas Comptroller

Multifamily Marches On via

With some analysts warning that multifamily will soon reach a point of over saturation due to the significant amount of new product slated for delivery in the next couple of years, it may seem as though the sector has lost much of its investment potential. However, once we examine the demographic factors that are fueling demand for multifamily supply, it is evident that this market will remain strong in the immediate future and beyond.

Even with thousands of multifamily units currently in the pipeline, demand continues to outpace supply by a vast margin. The CoStar Group, a provider of commercial real estate research and information services, forecasts that more than 203,000 new units combined will be delivered to the market over the course of 2012 and 2013. Yet, even this tremendous uptick in development will not be enough to meet the substantial demand for product, which is being driven by a burgeoning pool of renters nationwide. Hundreds of thousands of new renters are pouring into the market due to recent demographic shifts and economic trends.

Read more...Multifamily Marches On via

Selling Multifamily: Five Hard Exit Strategies via Multifamily Insight Blog

In today’s environment exiting from an owned multifamily asset can be a tough nut to crack. Why? It would be easy to say ‘its the times we live in”. Well, yes, but that is not actionable or of any value. Selling multifamily today is difficult, primarily, because people fail to recognize the time and complexity of the process. Buyers are there, assets are available… the timeline is the thing.

Exits are hard because even the easy one’s require serious expertise and a serious time commitment. Selling is as common as buying, of course, just recognize the timeline. Market time to a sale in primary markets is six to twelve months, longer in secondary and tertiary markets. Following are five reasons why it can be hard to sell a multifamily asset.

Read more...Selling Multifamily: Five Hard Exit Strategies | Multifamily Insight Blog

Tuesday, April 24, 2012

RECON - Unemployment Falls Across Texas via Real Estate Center at Texas A&M University

Texas unemployment remains lower than the national rate, with some cities faring especially well.

The Austin Business Journal reported a slight drop in Austin’s unemployment rate to 6 percent, down one-tenth of a percent from February. Despite losing jobs in the construction sector, the region added 1,800 jobs overall.

Adding 1,500 jobs, Corpus Christi’s unemployment dropped from 6.8 percent in February to 6.5 percent in March, according to the Corpus Christi Caller-Times. Improvements in leisure and hospitality are credited for the boost in job growth there.

Read more...RECON - Unemployment Falls Across Texas via Real Estate Center at Texas A&M University

The One Trillion Commercial Real Estate Time Bomb via ZeroHedge

Imminently, Zero Hedge will present some of its recently percolating theories about some oddly convenient coincidences we have witnessed in the commercial real estate market. However, for now I focus on some additional facts about why the unprecedented economic deterioration and the resulting epic drop in commercial real estate values could result in over $1 trillion in upcoming headaches for financial institutions, investors and the administration.

When a month ago I presented some of the projected dynamics of CMBS, a weakness of that analysis was that it did not address the issue in the context of the CRE market's entirety. The fact is that Commercial Mortgage Backed Securities (or securitized conduit financings that gained a lot of favor during the credit bubble peak years for beginners) is at most 25% of the total commercial real estate market, with the bulk of exposure concentrated at banks (50%) and insurance companies' (10%) balance sheets.

Read more...The One Trillion Commercial Real Estate Time Bomb | ZeroHedge

Single Family Rentals Now Exceed Multifamily via

While inventories of homes for sale have been shrinking this spring, MLSs are filling the void with rental listings for single family homes that until recently were foreclosures. Some 16.1 percent of all listings on MLSs today are rentals, more than double the number in 2006.

Single family rentals are $3 trillion business today and growing as investors turn to real estate and opt to rent out the bargains they buy until prices improve. Today the single family rental market accounts for 21 million rental units or 52 percent of the entire residential rental market, according to a new study by CoreLogic economist Sam Khater.

Yet the single family rental market is poorly understood and almost invisible to economists and journalists because virtually all rental market data tracks multifamily properties and either ignores the single family segment or lumps it together with multifamily.

Read more...Single Family Rentals Now Exceed Multifamily -

Is There an Apartment Market Bubble? via

MHN: In many of the top U.S. markets, apartment pricing appears to have returned to, or be close to, peak levels achieved in 2007. In certain cases, cap rates are once again sub-4 percent. Is there a possibility of a bubble developing in multifamily real estate driven by the low cost of capital, low yields in alternative investments, aggressive projections of apartment incomes in valuation and/or any other factors?

Generally, I do not see a bubble in the for-rent apartment housing market at this time, but it is on the horizon with arrival dependent upon the relationships between supply and demand and interest and cap rates for each market. This is really nothing new; it is, after all, a cyclical business.

The strong apartment market fundamentals over the past two years, when coupled with low interest and cap rates, have resulted in values improving substantially from the trough. While this has aided operators, investors and lenders in recouping most of their losses from the downturn, it has also stimulated interest in the asset class, resulting in prices being bid up for existing properties and making development more financially attractive. This is a good thing.

Read more...Is There an Apartment Market Bubble? via

Monday, April 23, 2012

Houston adds most jobs since beginning of recession - Houston Business Journal

Houston is the top market nationwide for private-sector jobs added between February 2008 and February 2012, a new report shows.

Houston added 49,500 jobs during the time period, increasing its private-sector jobs from 2.213 million to 2.263 million, the Business Journals' On the Numbers analysis of U.S. Bureau of Labor Statistics data shows.

Austin ranked No. 2 for jobs added, with 29,6000, and Pittsburgh is No. 3, with 10,500. Three other Texas markets — McAllen-Edinburg, El Paso and San Antonio — ranked No. 4, 5 and 6, followed by New Orleans at No. 7. Those seven markets were the only ones of the nation's 100 largest metro areas to add jobs during the time period.

Read more...Houston adds most jobs since beginning of recession - Houston Business Journal

Austin Economic Indicators via The Greater Austin Chamber of Commerce

The Chamber's monthly Economic Indicators report on the Central Texas region chronicles economic activity on a monthly or quarterly basis. For this overview including links to downloadable data files please visit the Economic Indicators page within the Business section.

Central Texas Economy in Perspective
By: Beverly Kerr, Vice President, Research

April 17, 2012 edition

The level of Austin's home building activity has seen a notable uptick based on the last several months of permits data from the Census Bureau and the Real Estate Center at Texas A&M. Both January and February saw significantly more, 115.4%, permits issued in Austin than was seen over those months in 2011. November and December were 49.5% ahead of the same months a year earlier.

Read more...Economic Indicators : Media Center : Chamber : The Greater Austin Chamber of Commerce

Interest Rates Down, Leverage Up for Conduit Loans via

Conduit lenders are competing for investors’ business, offering progressively lower interest rates and larger loans to commercial real estate borrowers, according to worried bond underwriters at Moody’s Investors Service.

“Spreads have come in … some lenders are offering more leverage,” says Tad Philipp, director of commercial real estate research for Moody’s and co-author of a report “U.S. Q1 2012 Review: Q2 Poised to See More Highly Leveraged Collateral Pools, Increased Subordination Levels.”

In the second quarter, Moody’s expects to rate CMBS backed by loans with a weighted average interest rate of 5.53 percent. That’s down from 5.70 percent in the first quarter.

Read more...Interest Rates Down, Leverage Up for Conduit Loans via

Keeping Costs in Check with a Green Maintenance Plan via National Apartment Association Blog

Property owners and managers should be proactive with their maintenance plan. Its primary purpose is to prevent minor repairs from growing into expensive major repairs, so developing a plan is important. Preventive maintenance can range from cleaning the coils of your air conditioner to sealing parking lot cracks. Whatever is on your list of repairs, the benefits of property maintenance include:

Preventing repairs from becoming worse
Maintaining or raising property value
Increasing resident / tenant/ guest satisfaction and keeping the property attractive
Saving on utility costs and resources

Consider that last point. When you approach property maintenance from a green perspective, you reap additional savings. Following environmentally preferable practices can help you to realize long-term savings and conserve resources. Many of them are easy to implement, affordable, and will provide a return on investment in a short period of time. Be sure your checklist includes green maintenance from the list below:

Read more...Keeping Costs in Check with a Green Maintenance Plan via National Apartment Association Blog

A New Game Plan via

As multifamily assets are bought and sold, one of the challenges facing owners and operators is how to reposition older properties that are underperforming. Whether the goal is to better compete with new product in the neighborhood or to mend a tarnished reputation, there are a number of tips that can help.

Many of the marketing techniques that are working for high-end apartment communities can also be applied to mature properties that are struggling, according to Kevin Thompson, senior vice president of marketing at Bell Partners Inc., a multifamily real estate investment and management company based in Greensboro, N.C. The Bell portfolio includes 225 communities and more than 64,000 units in 15 states, spanning a spectrum of ages and market classes.

To ensure marketing success, Thompson suggests finding the competitive edge by looking at the asset from the prospect standpoint. “What feature or amenity stands out the most, from a marketing and advertising perspective? An older asset may have a better location and bigger floor plans. Perhaps it’s more affordable, or can be marketed at ‘lower rent per square footage,’ or located in a well-established neighborhood,” says Thompson. These are a few examples of features to emphasize.

Read more...A New Game Plan via

Friday, April 20, 2012

Texas Home Sales Spring Forward via Real Estate Center at Texas A&M University

Home sales in Texas cities were hot last month, rising in Austin, Dallas-Fort Worth, Houston and San Antonio.

According to the Multiple Listing Service (MLS) report by the Austin Board of Realtors, 1,852 single-family homes were sold in the Capital area during March, up 15 percent over the same period in 2011.

The Dallas-Fort Worth region reported a 13 percent increase in single-family home sales, with 6,126 properties sold in March, according to a report from the MetroTex Association of Realtors.

Read more...Texas Home Sales Spring Forward via Real Estate Center at Texas A&M University

First Quarter 2012 Real Estate Investment Outlook via

The NREI/Marcus & Millichap Investor Sentiment Index shows that investor confidence has not only rebounded from its fourth-quarter dip, but it has leaped forward to reach a new peak. The Investor Sentiment Index climbed to 166 at the end of first quarter—the highest level since the index began in 2004.

Investor confidence regained some of the ground that was lost in fourth-quarter when investor confidence stumbled and the index dipped to 152. Sentiment also surpassed the previous high point in the survey of 164 that was recorded in second quarter 2011. National Real Estate Investor and Marcus & Millichap Real Estate Investment Services have conducted research on investor expectations and views over the past eight years as part of a commercial real estate industry forecast.

Read more...First Quarter 2012 Real Estate Investment Outlook via

Lending Rebound Bolstering CMBS Pipeline via

Commercial MBS issuance is picking up steam.

After a slow first quarter, volume is now on track to reach $20 billion by midyear. That would surpass the $17.1 billion of activity in last year’s first half and put the sector on pace to exceed the $38 billion annual issuance forecast by a panel of bond pros.

Ten more transactions totaling $11.8 billion are expected to price by midyear, according to a review by Commercial Mortgage Alert (see Page 18). Coupled with the $3 billion of transactions that have already priced this month, second-quarter volume would total $14.8 billion — more than double the $6 billion of first-quarter activity.

The pipeline through June 30 contains eight multi-borrower transactions totaling $10.2 billion, a $1.4 billion single-borrower deal and a $200 million distressed-loan securitization. By month, that breaks down to $2.9 billion for the rest of April, $2.9 billion in May and $6 billion in June.

The pickup in activity reflects somewhat better lending conditions for CMBS shops in recent months. What’s more, lenders said borrower inquiries have increased steadily over the past few weeks, raising hopes for a busier second half.

Read more...Lending Rebound Bolstering CMBS Pipeline via

Apartment Recycling: Challenges and Solutions -

It’s a common complaint from eco-minded apartment residents: Why doesn’t my complex have a recycling program?

While there are a number of barriers preventing recycling at multifamily complexes, setting up a successful recycling program at your apartment building is not a lost cause. Earth911 spoke with Josh Allen, CEO of waste and recycling consulting company Global Disposal Reduction Services, about common challenges to apartment recycling and ways to overcome them.

Limited space, restrictive local programs and high recycling rates
“In a perfect world, there would be a trash and recycling bin at every [trash enclosure in an apartment complex],” says Allen, whose San Diego-based company works with small- and medium-sized businesses, including multifamily complexes, to reduce their waste streams and garbage bills.

But many apartments were not designed with recycling in mind and have little space to set recycling bins next to trash containers.

Read more...Apartment Recycling: Challenges and Solutions -

The Rental Boost From Green Design via

The U.S. housing industry is much like the U.S. auto industry in its resistance to change. The design of both single-family homes and apartments is only just beginning to change, just as the American auto industry is only just now trying to figure out how to deliver newer, truly fuel-efficient cars. Unlike the auto industry, however, the housing industry doesn’t have the federal government’s fuel efficiency (CAFE) standards to prod it along.

But there are early signs of change. New single-family homes in Phoenix, Arizona, are selling even at slightly higher prices than existing homes—that is, if they have green, energy-efficient features that will significantly reduce the cost of lighting, cooling, and heating over time. This is happening in many other parts of the country as well.

Energy efficiency is, as one developer puts it, “the new granite countertop.” After all, no one asks what the payback period is for a countertop. So, just as items that were once added to a new home or condo for an additional price are now standard, so too are energy-efficient equipment and design becoming standard features expected by the buyer or renter.

Read more...The Rental Boost From Green Design

Thursday, April 19, 2012

Multifamily building to beef up 30% in 2012 via HousingWire

Describing the performance of multifamily building as better than most recoveries, Fannie Mae forecasts that the sector will expand by nearly a third in 2012.

While single-family housing starts declined sharply in February, reversing gains during the previous two months, multifamily permits posted a strong increase for a second 
consecutive month.

Fannie expects multifamily housing starts to jump 30% from 178,000 in 2011 to 231,000 in 2012. And then to 278,000 the following year.

Consumers’ expectations of rising home prices in 2012 are gaining traction, with expectations extending for the fifth consecutive month, as indicated by a Fannie Mae housing survey in March.

Read more...Multifamily building to beef up 30% in 2012 | HousingWire

Houston Economic Update April 2012 via FRB of Dallas

Economic activity in the Houston metropolitan area, as measured by the Federal Reserve Bank of Dallas business-cycle index, grew at an annualized rate of 5.4 percent in February—significantly outpacing all other major metro areas in the state. Despite persistent worries from the international economy and the drag of sustained high oil prices on the nation, the outlook for Houston remains positive, with hydrocarbon industries and manufacturing leading the way and fueling the growth of Houston’s other industries and international trade.

Read more...Houston Economic Update April 2012 via FRB of Dallas

Visa Program Seen Playing Bigger Role in Financing CRE Development via CoStar Group

A federal program allowing foreign nationals to secure a green card in exchange for investing in job-creating ventures, including commercial real estate development, is gaining new cachet among developers stymied by the lack of traditional financing.

Known as the Immigrant Investor Program, or EB-5 visa, the program administered by the U.S. Citizenship and Immigration Services (USCIS) under the Department of Homeland Security provides a permanent resident visa, or green card, to foreign investors if they invest $1 million in a U.S. project that creates or retains at least 10 jobs.

Read more...Visa Program Seen Playing Bigger Role in Financing CRE Development - CoStar Group

Wednesday, April 18, 2012

San Antonio's Pathway to Zero Waste via

San Antonio is creating a perception change for how residents view zero waste. The change started with how businesses create products, how people use them, and how solid waste is managed. The City’s underlying goal has been that all discarded materials be reused or recycled back into nature or into the production cycle, reaching a 60% recycling rate by 2020. Thus, the 10 Year Recycling Resource Recovery Plan was born in 2010, allowing more than 150,000 multi-family residents to finally have access to recycling.

As part of the ordinance, it is required that owners or property managers of multifamily properties supply recycling containers, place containers in convenient locations, provide clear and visible signage, and distribute recycling information and instructions to residents. Properties with valet collection service are required to have a minimum of one recycling container on the premises. Prior to initiating recycling collection service, a “recycling plan” must be developed and approved by the Department. If the recycling plan is denied, the owner or property manager has 30 days from notification of the denial to submit a revised plan for approval. Owners or managers must also resubmit a recycling plan for review when the multifamily property has a change in ownership or management, a change in recycling collection services, or when the method of collection has changed (i.e., container type).

Read more...San Antonio's Pathway to Zero Waste - Multifamily Blogs – Experts – Technology, Products ::

Lease Audit: What to Look for During Real Estate Inspections via

Mechanical inspections: check. Foundation inspection: check. Roof inspection: check. Lease audit: what?

The Lease Audit is listed right there on your property inspection checklist, but what is it, why do you need it, and where do you start?

The Lease Audit is an extremely important part of your due-diligence, but they are often overlooked during the property inspections. A lease audit is a physical inspection of the leases. A lease audit involves reviewing each lease to ensure that all appropriate steps have been taken and that they match the information is accurate. Most investors spend a great deal of time and effort inspecting the physical aspects of the properties, but only glance over the leases. This is a huge mistake.

Read more...Lease Audit: What to Look for During Real Estate Inspections via

Multifamily Sales Decrease in 1Q12, But Average Price Increases via

Preliminary first quarter 2012 multifamily property sales data indicate that transaction velocity decelerated from the rapid pace observed during the fourth quarter of 2011.

After recording more than 360 U.S. apartment sales valued at $10 million or more during the fourth quarter of 2011, total sales closed during January, February and March probably declined by one-third or more. The average price of a unit traded in the first quarter of 2012, increased, however, rising 5 percent from $122,400 in the fourth quarter of 2011 to $128,600 during the first quarter of 2012.

Read more...Multifamily Sales Decrease in 1Q12, But Average Price Increases via

Multifamily Construction Starts and Household Formation via Multifamily Insight Blog

Is the great recession over? Are we there yet? These questions will remain unanswered, but I can tell you with a high degree of certainty that as household formation picks up steam multifamily construction is well below future demand.

Household formation drives demand in multifamily construction. As we see household formation accumulate to measurable numbers we will also see increasing construction starts. And this time, with a much sharper pencil with limited tertiary construction with a hope and prayer that “they will come”.

As job creation returns more adults will choose to leave living arrangements with family members caused by recessionary pressures. This increase in household formation will place added pressure on multifamily demand. As the rate of household formation increases, concurrent with years of low multifamily construction starts, vacancy will decrease and rent growth will escalate.

Read more...Multifamily Construction Starts and Household Formation | Multifamily Insight Blog

A Tale of Two Housing Markets: Single and Multi Family via CNBC

The numbers are in, the analysts are out, and given the volatility of this particular economic indicator, the spin is at full speed:

“Good News on Housing Permits More Than Offsets the Bad News on Starts”— HIS Global Insight

“Housing Starts Decline Again” – Capital Economics

“March Multifamily Starts Down; Permits Continue Upward Trend”— KBW

“March Construction Numbers Aren’t As Bad as They Look”—

“Housing Starts Lacking Consumer Confidence” — Sageworks Inc.

Here’s the problem: We are living a tale of two housing markets, single and multi-family. Depending on what kind of builder or investor you are, you’re going to see the housing starts numbers differently. Let’s weed through it first:

Read more...A Tale of Two Housing Markets: Single and Multi Family, US Business News - CNBC

Tuesday, April 17, 2012

Extend-and-Pretend Continues via the Blog of the Real Estate Center at Texas A&M University

The commercial real estate industry is waiting for the market to clear. It is waiting for the banking system to flush troubled real estate assets into the hands of investors. Since 2007, the Federal Reserve and the FDIC have been unable to allow this to happen.

Many commercial real estate lenders and investors are wondering how long the extend-and-pretend regime will last. Unfortunately, the end does not appear to be anywhere in sight as we enter second quarter 2012.

Read more...Extend-and-Pretend Continues | the Blog of the Real Estate Center at Texas A&M University

How to Market Your Green Multifamily Community via

Residents want to live in a green apartment community. In fact, according to a 2010 study, 86% of resident’s value living in a community with eco-friendly amenities and more than half are willing to pay more in order to do so. Seven out of ten renters are also more likely to renew their lease and nearly two-thirds would recommend their green community to a friend. There is growing evidence that renters consider eco-friendly amenities when making the decision to lease or renew, which is why it’s critical that you effectively market your green values.

Advantages of marketing your green community are operational cost-savings, positive public image, and increasing your NOI via strengthening rent and occupancy rates. Property managers or owners are also entitled to tax credits, rebates, and financial support to retrofit their community.

Read more...How to Market Your Green Multifamily Community - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Supply of Affordable Housing Shrinks via Affordable Housing Finance

The affordable housing gap is growing for the nation’s poorest residents.

In 2010, there were 9.8 million extremely low-income renter households but only 3 million rental homes that were affordable and available to them, according to a new analysis by the National Low Income Housing Coalition (NLIHC).

The result is a staggering deficit of 6.8 million affordable and available units for these households, an increase from 6.4 million in 2009.

The figures paint one of the clearest pictures of the affordable housing shortage in the country.

Read more...Supply of Affordable Housing Shrinks via Affordable Housing Finance - News

ALN Monthly Newsletter April 2012

ALN Data just released their March 2012 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 great read from a great provider of apartment data.

Read more...ALN Monthly Newsletter April 2012

Monday, April 16, 2012

Reducing Insurance Costs for Apartment Owners and Managers via

Apartment ownership and management can be a risky business. The property itself, the resident’s usage of your property and your operations of the facility all involve risk. Apartment owners and managers protect themselves from this risk by purchasing insurance. While insuring your business is mandatory, the actual cost of your insurance program is still largely in your control. The most effective way to reduce your business’s exposure to loss and the corresponding costs associated with it is to leverage another party’s insurance policy—a policy that won’t cost you money. In risk management terms, we call this contractual risk transfer.

All standard commercial insurance policies provide the ability for one party in a contract to assume the tort liability of another party. While the specific policy language can vary, your vendors and service providers have the ability to assume your liabilities, thereby reducing your risk profile and insulating you and your insurance program from losses. This is important because your insurance cost is based on four criteria:

Read more...Reducing Insurance Costs for Apartment Owners and Managers via

Twitter for Property Managers via The Rental Standard

You’ve done the easiest part of putting your property management office onto Twitter: setting up an account. Now you need to engage your followers and encourage renters to follow you. What do you Tweet so that your time spent on social media is worthwhile and informative to everyone involved?

Here are 7 tips on how you can use Twitter for property management.

Don’t use your Twitter account for personal tweets. Using social media for business helps your property management team interact with residents. They’re most likely following your tweets for updates about the community and their complex, not to find out more about your personal life. If you find that most of your tweets are going to friends and family, or aren’t remotely property-management related, it might be time to set up a personal Twitter account.

Read more...Twitter for Property Managers | The Rental Standard

Do Quarterly Net Move-Outs Signal Trouble in Dallas/Fort Worth? via Property Management Insider

Do quarterly net move-outs signal trouble in Dallas/Fort Worth? Not really. The year-over-year revenue numbers still look very good, and strong job growth should continue to boost demand for apartments – even with the single-family market recovering.

Watch video...Do Quarterly Net Move-Outs Signal Trouble in Dallas/Fort Worth? | Property Management Insider

Friday, April 13, 2012

LIHTC Program on the Chopping Block via

During the recession, low-income housing project development and financing—like all commercial real estate projects—went into hibernation. The demand was certainly there for these assets, but the Treasury Department’s tax credit program that funds many of these projects was just not being used that much, in large part because firms did not have robust profits to offset with the credits.

With the recession over all of that is changing, just in time to face another, perhaps fatal challenge: Congress and its army of budget-busters.

The fear in the low-income housing community is palatable that this tax credit program will be severely scaled back or even completely eliminated, Amy Dosen, vice president and equity sales manager at Key Community Development Corp., in Cleveland, tells “Because it’s an expenditure, everyone I have talked to feels there’s a good chance it’ll be impacted,” she says.

Read - LIHTC Program on the Chopping Block - Daily News Article

Five Tips for Preventing Water Damage in Apartment Units via Property Management Insider

Clear skies and warm days don’t always mean that apartment properties will remain high and dry. Regardless of the season, apartment units can become shallow water pools if they are not properly maintained. Something as simple as a worn out washer hose can flood an apartment and cause as much water damage beyond wet carpet as can torrential rains.

When walls and baseboards get wet, the likelihood of more severe internal issues rises dramatically. Usually, a remediation service must be called to get a handle on the situation. Water drying can be expensive, especially if remediation is required at apartment properties that contain asbestos and lead paint. Mold is another issue.

Read more...Five Tips for Preventing Water Damage in Apartment Units | Property Management Insider

Can Investors Meet the Multifamily Challenge? via

A new generation of multifamily apartment projects is under construction across America. Within the next year or two thousands of brand new properties will be competing toe to toe with single family landlords for tenants. Will investors be up for the challenge?

Soaring vacancy rates and rising rents have driven multifamily construction to the highest level in years. The nation’s apartment-vacancy rate in the fourth quarter fell to its lowest level since late 2001 In the fourth quarter, the vacancy rate fell to 5.2 percent from 6.6 percent a year earlier and 5.6 percent at the end of the third quarter, according to Reis. Increases will likely top the 10 percent mark annually for the next couple of years, according to John Burns of John Burns Real Estate Consulting quoted in CNNMoney last year. (See Rental Outlook 2012: The Good Times Roll on.)

Read more...Can Investors Meet the Multifamily Challenge? via

Commercial Real Estate Forecasted to Improve via Realty Times

The latest National Association of Realtors quarterly commercial real estate forecast indicates that all major commercial real estate sectors are seeing improved fundamentals.

Lawrence Yun, NAR chief economist, said vacancy rates are improving in all of the major commercial real estate sectors. "Sustained job creation is benefiting commercial real estate sectors by increasing demand for space," he said. "Vacancy rates are steadily falling. Leasing is on the rise and rents are showing signs of strengthening, especially in the apartment market where rents are rising the fastest."

The rental market has undergone some dramatic changes since the real estate bubble burst several years ago. Recession conditions and continued lagging in the economic recovery have led to more renters and subsequently rising rental rates.

Read more...Realty Times - Commercial Real Estate Forecasted to Improve

Could the Housing Bubble Reinflate? via The Atlantic

My baseline scenario for the U.S. included a rapid increase in the number of multifamily housing units and a general return to renting.

However, a few factors are combining to make me think that an alternate scenario, one in which the single-family housing bubble returns, is increasingly likely.

First, multifamily starts simply aren't increasing as fast I thought they would. This means that rent pressure will be even more severe, and quite plainly there simply won't be enough apartments to absorb all of the newly forming families.

Second, no permanent solution to the global savings glut has been offered, and with austerity across Europe and deficit cutting on the agenda for the United States, the fundamental problems will only increase.

Read more...Could the Housing Bubble Reinflate? - The Atlantic

Thursday, April 12, 2012

Safety and Security via

This month, MHN teamed up with research and consulting services firm Kingsley Associates—which surveys over 1 million residents each year—to gauge renters’ opinions of their apartment’s security features. From working gates to onsite security guards, amenities that relate to safety can have a tremendous impact on how residents view their communities, and subsequently, on how likely they are to renew their leases. While a bad experience pertaining to any other element of housing might be assuaged with certain corrective actions, a bad experience with safety and security can leave an indelible mark on a resident’s or visitor’s impression of a community. If a person feels they or their belongings are at risk, they are unlikely to view a given community as home. Thus, safety and security should be of utmost importance to property managers, and constant updates of the respective technology should go a long way toward giving renters the peace of mind they seek and deserve.

Read more...Safety and Security via

Dallas Beige Book April 11, 2012 via Dallas Fed

The Eleventh District economy grew at a moderate pace over the past six weeks. Overall manufacturing activity continued to expand. Demand for business services rose slightly, and transportation services activity remained positive overall. The housing sector continued to improve modestly, and nonresidential leasing activity remained solid. Respondents said retail sales grew at a modest pace and auto sales strengthened. Financial firms noted a modest pickup in loan demand. Energy activity continued to be strong, although gas-directed drilling activity weakened. Drought conditions improved. Employment levels were steady to slightly higher. Prices were unchanged or somewhat higher, according to contacts. Outlooks across industries remain positive, but more respondents noted concern about higher energy costs.

Read more...Dallas Beige Book - Dallas Fed

Returns for REO-to-rental investors could reach $100 billion via HousingWire

he rental market for real estate owned properties could reach $100 billion in 2012 with single-family REO investors in Florida and the Midwest reaping the most profit.

According to new data from CoreLogic ($16.05 -0.05%), the single-family rental market is “strong and vibrant with stable rents, low months’ supply and a healthy pace of closings." The sector boasts potential returns for investors that are far and above many asset classes in the real estate market, helped by the government's new REO-to-rental program.

Read more...Returns for REO-to-rental investors could reach $100 billion | HousingWire

Importance of Managing Utilities via

While newer apartment complexes have separate utility meters for gas and electric, older properties often have a central meter for all utilities, with the end result being units marketed to tenants as ‘utilities included.’ An attractive prospect from a marketing standpoint, the fact remains that including utilities in your tenant’s rent can be a risky policy that may ultimately pay off for tenants while costing your management company thousands of dollars a year in inflated utility costs. While increasing rents to cover rising utility costs is an option, rents can only be raised at the end of a lease period, so the tenant abusing that heating or cooling system may have nearly a year of opportunity to abuse the system until you can raise the rent.

Fluctuating utility costs also contribute to the difficulty in determining just how much to add to the market cost of each unit in order to cover your expenses accordingly. Low-ball this amount and you’ll end up paying…and paying. Water bills are particularly hard, since the majority of apartment complexes have one central billing meter. But that is beginning to change due to certain areas experiencing unprecedented drought. As a result of the drought, many cities and municipalities are instituting water restrictions that must be followed. Water conservation programs are also active in many areas, but having a central meter for all billing makes it difficult for apartment managers to truly have any control over water usage. By passing those costs directly onto tenants, you’ll be placing the water conservation effort squarely where it belongs, into the hands of your tenants.

Read more...Importance of Managing Utilities |

Wednesday, April 11, 2012

Region-by-region breakdown of Beige Book via MarketWatch

The Beige Book of anecdotes on the U.S. economy breaks down activity by each region. Here are the regional summaries: See story on Beige Book

• Boston: Economic activity continues to expand at a moderate pace in the First District. Most contacted retailers, manufacturers, and consulting and advertising firms report higher revenues in recent months than a year earlier. Commercial real estate markets are mostly unchanged, while residential contacts across the region cite rising sales and declining prices. Except for a consulting firm unable to meet very strong demand growth without aggressive hiring, responding firms are hiring modestly or not at all; a few mentioned small layoffs. Retailers express concern about what rising energy costs may do to consumers’ willingness to spend, while manufacturing contacts acknowledge the increasing costs, but say they are not a problem.

Read more...Region-by-region breakdown of Beige Book - Economic Report - MarketWatch

MBA report: Multifamily continues to lead commercial real estate recovery via

There’s no doubt which commercial real estate sector is performing the best today: multi-family. And a new report from the Mortgage Bankers Association does nothing to contradict this.

According to the Mortgage Bankers Association’s 2011 Commercial Real Estate/Multifamily Finance: Annual Origination Volume Summation (what a name!), multi-family loan origination volume topped all commercial sectors at $77.4 billion last year.

The good news, though, is that commercial real estate loan origination volumes in general rose significantly in 2011. The bankers association reported that combined commercial and multi-family mortgage origination volumes soared 55 percent in 2011, another sign that the commercial real estate industry is indeed in recovery mode.

Read more...MBA report: Multifamily continues to lead commercial real estate recovery via

The Fed’s Support of Stock Prices via the Blog of the Real Estate Center

In the past two years, I’ve noticed an interesting new phenomenon. Whenever the stock market drops, the actors of my favorite soap operas that play continuously on CNBC and Bloomberg immediately begin to speculate when the Federal Reserve will “do something.”

The punch line in these cliffhanger TV shows usually goes something like, “The stock market decline has led traders to assume that the next version of quantitative easing (QE) is just around the corner.” QE is just a fancy way of saying the Fed will print money and buy something to make the price increase.

It’s interesting to see how dependent stock market investors have become. It seems to be another case of how we like Capitalism when we are making money, but we embrace Socialism when we are losing money.

Read more...The Fed’s Support of Stock Prices | the Blog of the Real Estate Center

April 2012 Tierra Grande Online via Real Estate Center at Texas A&M University

The latest issue of Tierra Grande magazine will hit mailboxes later this month, but if you just can't wait, visit our website. All articles are now online.

In this month's edition:

China's Crisis, America's Hope?
Some view the economic slowdown in China as a threat to the U.S. recovery. However, it could be an opportunity for job growth in U.S. manufacturing and expansion of U.S. commercial real estate. (Gerald Klassen)

Home Groan
Recovery in the Texas housing market is occurring slowly. For the remainder of 2012 and into 2013, sales and new construction should expand and prices should stabilize. Major economic indices should show sustained improvement. (Jim Gaines)

Read more...April 2012 Tierra Grande Online via Real Estate Center at Texas A&M University

Local Energy Programs Offer Incentives and Create Transparency via

Some of the nation’s biggest metro areas and states have local programs and laws regarding energy efficiency that building owners, investors and brokers should be aware of. In my recent free-of-charge webinar, Engineering Returns Through Energy Efficiency, I discuss many of these programs that either provide funding for energy audits and implementation, or have some sort of energy disclosure law to create transparency in the market and reward energy efficient buildings.

A few of these programs and laws are listed below. To learn more, check out the webinar which is available to view on demand until June 21st.

Local energy efficiency rebates and incentives:

There are many utility- and government-provided programs that offer rebates and incentives for completing energy audits or implementing efficiency measures. A few such programs are described below, but most utilities offer some sort of incentive so it never hurts to call them and ask.

Read - Local Energy Programs Offer Incentives and Create Transparency - The Science of Real Estate Article

Tuesday, April 10, 2012

The Myth-Busting Edition: Are Renters Flocking to Buy Homes? via Property Management Insider

by Jay Parsons

Small shifts in data tend to quickly make headlines and dominate conversations. Most recently, it’s the uptick in single-family home sales creating some news about apartment renters leaving to buy homes. But it’s not a big spike – and even if it was, that wouldn’t necessarily be a bad thing for the U.S. apartment industry. Greg Willett and Jay Parsons explain why in this video edition of Apartment Market Dynamics.

Watch Video...The Myth-Busting Edition: Are Renters Flocking to Buy Homes? | Property Management Insider

A Coming Deluge of Apartment Construction via NREI

Apartment fundamentals are performing at robust levels, with vacancies cratering to levels unseen in more than a decade. With few other real estate sectors offering such promising returns, developers are planning to open hundreds of thousands of new rental units in the next few years. Will the growth in new supply arrest improvements in occupancy and rents?

First quarter figures for 2012 are no less impressive than the arc of recovery that apartment properties have followed over the last two years. National vacancies dropped to 4.9 percent, the lowest level since late 2001. This is only the third time in more than 30 years of Reis history that national apartment vacancies have dipped below 5 percent.

More than 36,000 units leased up from January to March. Effective rent growth tends to spike as landlords perceive that tight market conditions allow for greater pricing power, and it is typically at levels below 5 percent that a pullback in concessions accelerates. Sure enough, effective rents grew by 0.9 percent in the first quarter, the fastest pace of increase since end-2007.

Read more...A Coming Deluge of Apartment Construction via NREI

2,000 apartments planned for near-south and near-west Fort Worth via

Fort Worth is about to see something it hasn't seen in quite some time: thousands of new apartments.

The buildings are planned for popular neighborhoods on the near-south and near-west sides. Some are already being built, while others are awaiting financial backing. But within the next 24 months, more than 2,000 new units could be ready for renters.

Developers say that young professionals, jaded by watching their parents' homes lose value during the recession, are flocking to rental properties. In addition, it's harder to qualify for mortgages, and multifamily projects are about the only commercial lending happening right now.

Read more...2,000 apartments planned for near-south and near-west Fort Worth via

Is the DFW Apartment Building Investment Cycle Peaking or just taking a breather? via Ashworth Partners

In their RECON report The Real Estate Center @ Texas A&M quotes The Dallas Morning News on apartment building investment in the DFW market:

“Apartment leasing in Dallas-Fort Worth dipped for the first time in over two years.

Net leases fell by 270 during first quarter 2012, with most of the declines occurring in the northern suburbs.

Greg Willett of apartment analyst MPF Research believes the slight dip is nothing to worry about.

Read more...Is the Dallas/Fort Worth Apartment Building Investment Cycle Peaking or just taking a breather? | Ashworth Partners

Big Data, Big Strides via Apartment Finance Today

Advances in today’s statistical models are enabling apartment executives to make operational decisions they couldn’t have dreamed of just a few short years ago.


In general, those of us in the apartment industry haven’t yet jumped into the deep end of the Big Data pool. But our toes are in the ­water, and we’re likely to be swimming laps at a fast and furious pace soon.

The most common example of predictive-analytics usage in the apartment sector right now is background screening of prospects looking to rent housing. You currently can check a would-be resident’s credit score, criminal history, and rental payment patterns in a matter of seconds. A few years ago, compilation of this information took days or wasn’t possible at all. Furthermore, once the information is in place, you’re no longer forced to rely on gut instinct to determine what the data suggest about a prospect’s likely behavior. A statistical model predicts whether he or she will pay the rent on time and be a generally responsible resident.

Read more...Big Data, Big Strides via Apartment Finance Today

10 Predictions for the New Age of Real Estate via The Source For NAR Commercial Real Estate

Today’s guest post comes to us from the Institute of Real Estate Management, one of the commercial affiliate organizations of the National Association of REALTORS(R).

*Out of 100 contained in Transformational Leadership in the New Age of Real Estate, by Christopher Lee, IREM 2012. Mr. Lee will also be speaking on the topic at the IREM Leadership and Legislative Summit on April 16, 2012.

1. The best long-term, value-appreciating opportunities in real estate will be found at or adjacent to: (1) major colleges and universities; (2) hospitals; (3) coastal and capital cities; (4) corridor or string cities; (5) 24/7 knowledge cities and financial centers; (6) edge cities; (7) areas surrounding ports and transportation hubs; (8) locations proximate to the growing populations of Hispanics, retirees and Generation Y adults; and (9) niche markets serving growing industries.

Read more...10 Predictions for the New Age of Real Estate | The Source For NAR Commercial Real Estate

Monday, April 9, 2012

The Early Phase of Real Estate Recovery via

We consider real estate to be in the early phase of a cyclical recovery. After a hiring slump in mid-2011, the job market has begun to show signs of strength, as the unemployment rate continued declining in the first quarter of 2012.

Real estate investment performance continues to display favorable conditions, a result of historically low borrowing rates and a modest inflationary outlook. Very limited new supply and rising demand is buoying real estate fundamentals for most property types.

Investor interest to date has been focused on top-tier assets in prime markets and is thus reflected in bifurcated cap rates, with rate compression in those select markets and assets. At this early phase of the real estate recovery, we believe the real estate asset class can provide very attractive return opportunities relative to other alternatives.

Read more...The Early Phase of Real Estate Recovery via

Top Ten Reasons to Own Multifamily via Multifamily Insight Blog

Why own apartments? Following are ten reasons to own multifamily. While real estate investing is a contact sport with numerous pitfalls the rewards can be enormous. Positive outcomes require patience, expertise, access to capital and time with equal emphasis on all of these.

Immediate income. With use of reasonable leverage immediate cash flow to investors is the draw to being in this sector. Over-leverage decreases cash flow, sometimes to the point of bringing it to zero. Price, leverage (debt levels), occupancy and rent growth are the big determinants of immediate income.

Eventual (significant) passive income. While no investment is really passive, over time as cash flow increases there is more cash. Thus, cap ex reserves are fully funded with NOI now reflecting true un-obstructed free cash flow.

Read more...Top Ten Reasons to Own Multifamily | Multifamily Insight Blog

Winning & Losing Craigslist Ads via Ashley Halligan

In a story originally written by Ashley Halligan, an analyst at a Web-based software solution company, she said

Craigslist is one of the most valuable marketing tools available to rental property owners–particularly because it’s free (aside from brokered apartment rental listings in NYC). Craigslist provides a platform for free advertising, and is one of the most popular databases for prospective tenants.

Maximizing the value of your property’s ad can attract more potential tenants, and save over time in advertising costs (vacancy equals loss of income). Surprisingly though, there’s still quite a few rather ineffective and spammy ads lingering in the Craigslist space.

I’ve gathered insights from a few industry experts to define exactly what it is that makes a winning or losing Craigslist ad. Sounds simple enough, but what do the experts say?

Read more...Winning & Losing Craigslist Ads

Multifamily Bonds Surging to Record U.S. as CMBS Fade: Mortgages via Bloomberg

Bonds backed by Fannie Mae and Freddie Mac tied to apartments soared to a record as the government-supported mortgage companies made low-cost loans on rental properties amid a continued slide in home values.

Fannie Mae, Freddie Mac and Ginnie Mae sold $13.5 billion of securities tied to the buildings in the first quarter of 2012, an 81 percent increase from the year-earlier period and up from $5.2 billion issued in all of 2008, according to data compiled by Bloomberg. It’s the highest quarterly issuance since records began in 1993.

The mortgage companies, rescued by the government after taking losses on home loans, are increasingly packaging apartment debt into securities for sale as regulators instruct them to aid housing and shrink their balance sheets. Wall Street banks are benefiting from selling the deals as Europe’s sovereign fiscal crisis has fueled volatility in credit markets and restrained transactions without the guarantees.

Read more...Multifamily Bonds Surging to Record U.S. as CMBS Fade: Mortgages - Bloomberg

Reis: Apartment Vacancies Drop Below 5 percent via

The multifamily sector continued its torrid run as vacancy rates fell by 30 basis points in the first quarter down to 4.9 percent, according to real estate research firm Reis Inc. The last time the vacancy rate was this low was more than 10 years ago in the fourth quarter of 2001.

According to Reis, “It is also significant to note that national vacancies have improved beyond the benchmark 5 percent level used as a rule of thumb by apartment landlords: for most markets, once vacancies tighten below 5 percent, effective rents tend to spike as landlords perceive that tight market conditions allow for greater pricing power. With overall vacancies below this level, expect rent growth to accelerate even more.”

Read more...Reis: Apartment Vacancies Drop Below 5 percent via

CMBS Delinquencies Spike Again in March via

Volatility in market-peak securitizations, according to a recent Morningstar report, “is to be expected as balloon maturity and default risk remains an issue for highly seasoned CMBS transactions as loans are unable to pay off.” As if to illustrate this point, the CMBS delinquency rate shot up in March after showing monthly declines since last summer.

Last week, Fitch Ratings in New York City put the increase at 13 basis points, with late-pays among Fitch-rated CMBS rising to 8.43% from 8.3% in February and individual property sectors experiencing even larger increases. Office rose by 31 bps to 7.99% and industrial climbed 37 bps to 10.91%, according to Fitch, while the office sector accounted for nearly 40% of new delinquencies last year. “The pace and magnitude of rising office delinquencies will continue to intensify in the coming months,” says Mary MacNeill, managing director at Fitch, in a release.

Read - CMBS Delinquencies Spike Again in March - Daily News Article

Friday, April 6, 2012

Apartment Vacancies Decline in 2012.Q1 via National Association of REALTORS

The first quarter of this year brought signs of a strengthening economy. With improving employment conditions, household formation is expected to grow. Coupled with lingering issues in the housing market, these factors are boosting the performance of the apartment sector.

Demand for apartments, as measured by net absorption, posted a good year in 2011. The trend continues into the first quarter of 2012, with net absorption at a positive 36,484 units, according to REIS. Vacancy rates declined to 4.9 percent for the quarter. In addition, rent growth continued on an upward trajectory, with effective rents rising 0.9 percent during the first quarter, the fastest rate of growth since 2008. Nationally, effective rents were at $1,018 per month.

Read more...Apartment Vacancies Decline in 2012.Q1 via National Association of REALTORS

U.S. Census Bureau: Growth spurts in Southern and Western areas via HousingWire

Metro areas in the South and West grew the fastest from April 2010 to July 2011, according to new census data, but some cities, like Las Vegas, that saw major growth from 2000 to 2008 dropped significantly in the rankings.

Of the top 50 metropolitan areas with the highest growth, 46 were in the South or West with the number one area located in Kennewick-Pasco-Richland, Washington.

Robert Groves, director of the Census Bureau, said he attributes the numbers to how the nation is changing.

Read more...U.S. Census Bureau: Growth spurts in Southern and Western areas | HousingWire

When in Texas, Consider Secondary Markets via

When discussing multifamily property investments in the Lone Star State, the foursome of Austin, Dallas-Fort Worth, Houston and San Antonio seems to top that list. Experts with Apartment Realty Advisors’ secondary markets group tell that while these major markets are fine, pretty decent multifamily investment deals are plentiful in Texas’ secondary and tertiary markets.

Given the huge economic disparities across Texas, attempting to make a blanket statement about the state of secondary and tertiary markets overall can be difficult. After all, what’s going on in El Paso (home of Fort Bliss) is radically different than what’s happening in oil-and-gas-active Beaumont on the other side of the state. However, “they’re all doing pretty well,” says ARA principal Jeffrey L. Patterson. “With interest rates as low as they are, we’re seeing some pretty decent transactions in many of the secondary markets.”

Read - When in Texas, Consider Secondary Markets - Daily News Article

Multifamily Capital Is Plentiful for Those Who Need It Less via Multifamily Executive Magazine

After spending a couple of days with multifamily players in Las Vegas at the Apartment Finance Today Conference, "Meet the Money," from April 2–4, we're convinced that worklife behind and beneath the giddy headlines is anything but giddy.

Clearly, expectations around the fundamentals of demand are high and rising higher. Just as evident, supply has been at a low ebb for what seems like forever, and it also seems like what's coming out of the housing stock through obsolescence is doing so at a level accelerated by neglect, lack of resources, or both.

The biggest takeaway we can offer up after listening to the tentative and hyper-selective way capital is working into the arterial network of the multifamily gross domestic product is this: If you don't need money, you can probably get more of it. If you do need money, you're going to have to do an awful lot right and pay a lot for the privilege of having people profit from your borrowings or need for equity.

Read more...Multifamily Capital Is Plentiful for Those Who Need It Less - Business - Multifamily Executive Magazine

Affordable Housing Goes Green with $12 Million Energy Efficiency Program via

By now, people are aware of how important going green is for the multifamily industry—it’s better for the environment, and it also often provides money-saving benefits. Because of this, Enterprise Community Partners Inc. has formed the National Multifamily Energy Services Collaborative (The Collaborative) with the Center for Neighborhood Technology Energy (CNT), LINC Housing and the Hispanic Housing Development Corporation. The Collaborative will design and implement green services for affordable multifamily properties.

The Collaborative is a $12 million program. It received funding, leveraged and matched by Enterprise with public, private and philanthropic funding, from a recent grant of $2.8 million from the U.S. Department of Housing and Urban Development’s Energy Innovation funding.

“There are a lot of entities all trying to figure [retrofitting] out, and that’s a real barrier to creating a scalable retrofit marketplace, because at the end of the day, there are no real standards or no real operating procedures to take advantage of the economies of scale that come when we’re all heading in the same direction,” Dana Bourland, vice president, Enterprise Green Communities, tells MHN. “It was our idea through The Collaborative that we would create a national platform to standardize the operating procedure to retrofitting existing multifamily affordable buildings.”

Read more...Affordable Housing Goes Green with $12 Million Energy Efficiency Program via

Thursday, April 5, 2012

Hot to Trot via Apartment Finance Today

New York; Boston; Washington, D.C.; the Bay Area; Southern California; and Seattle.

They’re called the “sexy six,” and they roused the multifamily industry out of the recession. Investor interest in those core markets has been intense since mid-2009, leading to rabid bidding wars and ever-higher price tags.

But in some ways, the sexy six may have run their collective course. Capitalization rates have gone so low in those areas—declining to and, in some cases, going below their pre-recession lows—that a growing number of investors are searching for yield in less celebrated cities.

“If all the money flows into the sexy six, either not everyone will get fed, or people will get fed but won’t like the meal,” says Mike Kavanau, senior managing director in the Chicago office of Holliday Fenoglio Fowler. “At the end of last year, we saw cap rates back up a little in the core markets—you can only go so low on cap rates before people start expanding their horizons and look at secondary markets.”

Read more...Hot to Trot - Apartment Finance Today Online Article

The Shadow Effect via CCIM Institute

A backlog of unforeclosed properties haunts today’s market.
by Rowan Sbaiti and Robert Grunnah, CCIM

One of the mysteries of today’s commercial real estate market is the current dearth of foreclosed properties on the market. After the credit meltdown of 2007–2008, industry professionals expected foreclosed properties to flood the market, but few ever did. Today, brokers and investors alike question why more foreclosures are not occurring. The economic climate is not that much better: Unemployment is almost in double digits, discretionary spending is almost zero, and banks are failing across the country. Many more institutions are conspicuously on life support.

Even solvent companies have downsized, giving space back to the market. Rising vacancies in most market segments across the nation are putting downward pressure on rents, squeezing property owners who are unable to cover their debt service. Owners should be in default and banks should be foreclosing.

At least that was the traditional process. Obviously other factors are at play in this “new normal” commercial real estate market. Determining what is happening with defaulted properties and how it is affecting the real estate market in general may give some insight into the opportunities that will be available in the next 18 to 24 months. This article attempts to define the shadow inventory that exists through broad analysis as applied to commercial mortgage-backed securities statistics.

Read more...The Shadow Effect | CCIM Institute

Trepp | Delinquency Rates | Commercial Loans | March 2012 via

The nationwide delinquency rate for commercial mortgages spiked in March, rising well past the 12-month average and to a five-month high. In its March 2012 U.S. Commercial Mortgage-Backed Security Delinquency Report, Trepp measured the delinquency rate to be 9.68 percent, up from 9.37 percent in February and 9.42 percent in March 2011.

Multi-family properties were responsible for much of the rise, as that sector’s delinquency rate rocketed 74 basis points to 15.39 percent. Meanwhile, office delinquency rates jumped 37 basis points from February to an all-time high of 9.41 percent. Hotels were the only property type to see a declining delinquency rate — falling 42 basis points to a 10.63 percent delinquency rate. At 8.24 percent, retail retained its title as the best performing commerical sector.

Read more...Trepp | Delinquency Rates | Commercial Loans | March 2012 via

Report Raises Alarms about Older Americans' Housing Needs via

A just-released report from the Center for Housing Policy points out one interesting trend: Namely that in the United States, the 65-and-older population will swell to nearly 90 million by 2050; approximately one in five people will be 65 or older. And the report entitled “Housing an Aging Population-Are We Prepared?” points out another interesting trend: Namely that there may not be enough housing options to meet that fast-growing demographic.

The issue is, of course, the baby boom population; the leading edge of which began turning 65 in 2011. But the study also points out that there will be a lot of growth in the 85-year-old-plus category as well; which is anticipated to triple from 5.8 million in 2010 to 19 million in 2050.

“The policymakers concerned about older adults have been thinking about this issue from a healthcare perspective, but little has been considered from the housing standpoint,” says Maya Brennan, senior research associate for the Center for Housing Policy in Washington, DC. “One of the biggest findings in this report is that older adults already have tremendous housing challenges.” One of those challenges, she tells, is affordability. Another involves mobility challenges. “One in four of those 65 years of age and older will have some kind of lower body limitation, making it difficult for them to get in and out of the home in which they live, or to move around inside their homes,” Brennan adds. Then there are the socio-demographic aspects of this group; namely that many of them are alone.

Read - Report Raises Alarms about Older Americans' Housing Needs - Daily News Article

Wednesday, April 4, 2012

Fitch: CMBS defaults dropped 38% in 2011 via HousingWire

Defaults within commercial mortgage-backed securities dropped 38% in 2011 from the year before, according to Fitch Ratings.

Roughly 950 loans totaling $13.7 billion defaulted, down from nearly 1,500 loans worth $22.1 billion the year before. The annual default rate was 2.4% in 2011, nearly half the 4.1% rate the year before, Fitch said.

The rating agency expects the default rate in 2012 to hit 14%, though the pace should slow despite a spike in March as reported by Trepp this week.

Read more...Fitch: CMBS defaults dropped 38% in 2011 | HousingWire

The Sustainable Future of Multifamily via

In today’s market, multifamily represents the most stable and sought after real estate investment property type in the commercial and residential sectors respectively. With that said, it’s imperative that Owners factor in preventative maintenance strategies to assure building conditions remain in order long-term. One such strategy is sustainability. Sustainability by definition means the “ability to satisfy the basic needs of today without compromising the ability of future generations to satisfy their needs”. In other words, the same resources available and utilized today should be accessible in the same capacity to future generations as well. Acquisitions of value-add/non-performing apartment assets requiring any level of retrofitting or remodeling units within stabilized assets during vacancy between tenants both present an ideal opportunity to incorporate energy efficient solutions – hence sustainability.

Read more...The Sustainable Future of Multifamily via

Marcus & Millichap Apartment Building Investment Outlook via Ashworth Partners

Marcus & Millichap’s latest report on Apartment Building Investment called “The Outlook” is just out today. In it they cover the usual national multifamily trends; rents up, vacancy down, economy slowly recovering, jobs growing but could be better. Then they take it a little deeper with these points (bel0w) then flesh it all out with charts demonstrating that things are really picking up for apartment building investors.

Here’s the exec sum:

Read more...Marcus & Millichap Apartment Building Investment Outlook | Ashworth Partners

Apartment vacancy rate falls to decade low via Reuters

The Apartment vacancy rate in the first quarter fell to its lowest level in more than a decade, and rents posted their biggest jump in four years, as Americans eschewed home ownership and renting retained its popularity, according to real estate research firm Reis Inc.

The national vacancy rate fell 0.30 percentage points in the first quarter to 4.9 percent, the lowest level since the fourth quarter 2001, according to preliminary results Reis released Wednesday.

Meanwhile asking rents jumped by 0.5 percent from the prior quarter to $1,070 per month. Stripping away months of free rent and other perks designed to lure or retain tenants, effective rent rose to $1,018 per month, up 0.9 percent, the largest increase since the first quarter 2008, Reis said.

Read more...Apartment vacancy rate falls to decade low | Reuters