Friday, November 30, 2012

Austin area apartment 4Q 2012: Marcus & Millichap via Real Estate Center at Texas A&M University

The booming technology industry in the Austin metro is driving demand for apartment units across the region. Transaction velocity in the Austin market accelerated during the last four quarters, and sales so far this year are outpacing total sales for 2011.

Approximately 980 units were brought online during the most recent 12-month period, down from the 1,400 units added to inventory in the previous time frame.

Developers have over 20,000 units planned for the metro with two projects scheduled to break ground before year end. Additionally, there are nearly 11,000 units under construction with completion dates scheduled through 2014.

Read more...Austin area apartment 4Q 2012: Marcus & Millichap via Real Estate Center at Texas A&M University

Change is Coming via Multi-Housing News Online

Demand for apartments is set to increase dramatically by 2020; compensation in the apartment industry will continue to rise faster than the rate of inflation; hospitality companies may seek to acquire an apartment REIT or privately held multifamily company by 2020; and over 50 percent of today’s senior leadership will pass the baton by 2020.

These are some futuristic predictions from Chris Lee, president and CEO of Los Angeles-based CEL & Associates Inc., a leading real estate consulting firm. Lee has just completed a book, “Transformational Leadership in the New Age of Real Estate,” which is available through the Institute of Real Estate Management. The book lays out the future of real estate and explains the need for executives of the future to be visionary and supportive of individual entrepreneurship.

“The book was driven by my interactions with 500 real estate clients who are continually probing and asking questions about not only the information we have, but also what the information means, what the future holds and how to prepare for the future,” Lee tells MHN. “Business as usual will not guarantee success tomorrow. Leaders have to be transformational in how they approach the company and capture those opportunities.”

Read more...Change is Coming | Multi-Housing News Online

Multifamily Demand Forecast | The Balance Sheet via Yardi Corporate Blog

The pace of continued economic recovery will determine whether the number of U.S. renter households will grow by 1 million or closer to 1.7 million between now and 2015.

That’s the consensus of a recently released report from Freddie Mac’s Multifamily Research department, which also notes that there has been major growth in the single family home rental market. The number of 1-4 unit buildings rented has grown by 3 million – a 16 percent increase – since 2007.

The report casts a rosy glow over the future for multifamily, which has been enjoying low vacancy rates and rising rental incomes in most markets for the last couple of years.

Read more...Multifamily Demand Forecast | The Balance Sheet - Yardi Corporate Blog

Top 10 Growth Markets: Energy and Tech Rule via

The cities REAL ESTATE FORUM has chosen to spotlight as leading markets for job growth, based on a consensus from multiple industry studies and reports, have a few things in common. Three are in Texas, while three more are on the West Coast—including two that are across San Francisco Bay from one another. A common thread among all of them is the key drivers of employment growth in their markets: energy, tech or both.

Energy and tech are broad-based terms, the latter in particular. The tech sector may mean biotechnology or the likes of Google and Microsoft. In more than a few of these markets, such as Silicon Valley, it covers both bases.

Read - Top 10 Growth Markets: Energy and Tech Rule - Underwritten by Zurich NA - Daily News Article

DFW apartments 3Q 2012: Hendricks & Partners via Real Estate Center at Texas A&M University

The DFW apartment supply has increased by 3,920 units so far this year. With another 2,260 units expected in the final quarter 2012, full-year completions are anticipated to exceed the 5,290 apartments that came online in 2011.

In third quarter, multifamily permit issuance reached an annualized total of 13,650 units, 9 percent above the previous quarter.

Average vacancy increased 6.2 percent in the past three months with asking rents in the DFW area rising 1 percent to $826 per month in 3Q.

Read more...DFW apartments 3Q 2012: Hendricks & Partners via Real Estate Center at Texas A&M University

Dallas 1 of 3 cities to fully recover from recession, Brookings says via Dallas Business Journal

Dallas is one of three U.S. cities that have fully come back since the end of the 2007-2009 economic recession, according to a report released today by the Brookings Institution.

The other U.S. cities to recover are Pittsburgh, Pa., and Knoxville, TN.

According to report, Dallas is "is outperforming the United States on employment change, but is lagging on GDP per capita change," and ranks 91st in the world in Brookings' Economic Performance Rankings with a 1.6 percent rise in GDP and a 2.1 percent increase in employment since in 2011-2012.

Read more...Dallas 1 of 3 cities to fully recover from recession, Brookings says - Dallas Business Journal

Thursday, November 29, 2012

Fannie, Freddie Will Live Forever: Street Whispers via Minyanville's Wall Street

If you are waiting for a plan from Washington to wind down mortgage finance giants Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC), don't hold your breath. They aren't going anywhere.

Far from ending their dominance, policymakers are drafting new rules governing the origination and securitization of mortgages that might only strengthen the stronghold of Fannie and Freddie, according to FBR Capital analyst Paul Miller.

"We foresee a continued dominance of the implied government guarantee. While Fannie Mae and Freddie Mac may be ended 'in name,' Congress will keep the infrastructure in place to further its homeownership goals," Miller wrote in a report titled the "Future of the Housing Market: Winners and Losers."

Read more...Fannie, Freddie Will Live Forever: Street Whispers | Real Estate | Minyanville's Wall Street

LIHTC in Jeopardy - Lihtc, Legislation via Housing Finance

The low-income housing tax credit (LIHTC) has less than a 50 percent chance of survival next year if the affordable housing industry does nothing, said Terri Ludwig, president and CEO of Enterprise Community Partners.

Ludwig sounded the alarm to several hundred developers attending the AHF Live conference in Chicago.

Others have warned that the mighty LIHTC could be eliminated as Congress sets its eyes on tax reform, but Ludwig went further and laid down some tough odds.

She no doubt meant her statement to be a call to arms for the affordable housing industry, the odds something that developers would not be willing to chance.

Read more...LIHTC in Jeopardy - Lihtc, Legislation - Housing Finance

Jobs Numbers Increase, MF Demand Shows Slight Decline via

Though the September, 2012 unemployment figure of 7.8% created some buzz (especially in advance of the general election), October figures from the Bureau of Labor Statistics opened even more eyes, stating as it did, that 171,000 new jobs were created in October (above the forecasted 140,000-145,000). Even more interesting is that, despite the increase in jobs and downward creep of unemployment (7.9% in October), the apartment sector is seeing some softening.

Annual rent growth in October was 3.54%, with year-to-date rent growth, through October, at 4.32%. Occupancy also moved down somewhat to 94.4% in October (versus 94.5% in September).

Read - Jobs Numbers Increase, MF Demand Shows Slight Decline - Daily News Article

Austin apartments 3Q 2012: Hendricks & Partners via Real Estate Center at Texas A&M University

Since June, apartment operators have noted positive net absorption of 650 units, compared with 675 net move-ins during third quarter 2012, according to Hendricks & Partners.

Although there are a considerable number of projects under construction, deliveries have remained steady but low in 2012, with 300 apartments coming online in 3Q 2012.

The average vacancy has plunged to 4.1 percent in 2012. The current quarterly rate is the lowest on record since 2000. Asking rents have advanced 2 percent since the close of 2011 to $933 per month in 3Q 2012.

Read more...Austin apartments 3Q 2012: Hendricks & Partners via Real Estate Center at Texas A&M University

Multifamily Bubble on the Horizon? via American Banker

It's easy to see why multifamily construction is booming: vacancy rates are falling and rents are on the rise, making investments in rental property particularly attractive.

According to the Harvard Joint Center for Housing Studies' "The State of the Nation's Housing 2012" report, multifamily starts surged 54% from 2010 to 11. And in the first quarter of 2012, they were up 36.1%.

Despite the optimism, several risk factors are pointing to a potential multifamily housing bubble. Developers and their lenders should proceed with caution.

Why worry?

Read more...Multifamily Bubble on the Horizon? - Bank Think Article - American Banker

Five Steps to Handling Resident Complaints via Multifamily Blogs

Have you ever heard the statement, “Customer service would be easy if it weren’t for those customers?” Sometimes that is just too true, isn’t it?

After all we know that sometimes residents:

  • Don’t read their leases
  • Don’t think their leases actually apply to them
  • Cause the problem then get mad at you for the problem
  • Can be unreasonable
  • Can be dishonest
  • And on and on and on and on

The challenge that you face is even if a complaining resident is all of the above, you still have to deal with the situation don’t you? In other words, the fact that a resident may be all of the above doesn’t mean that you can just “DQ” their complaints and brush them off. Well you could try but then you still have ‘Harold’ standing in the middle of the leasing office wondering why he can’t “speak to the manager!”

Read more...Five Steps to Handling Resident Complaints - Multifamily Blogs

Apt. Building Boom Drives Recovery In Commercial Construction via CoStar Group

A host of new data and leading indicators show that commercial and residential construction is gaining significant strength in most regions of the U.S., led almost entirely by a surge in development activity in the multifamily and single-family housing markets.

In more evidence that the single-family housing recovery is strengthening, U.S. builders in October started construction on the most homes and apartments since July 2008, according to Commerce Department numbers. Apartment construction, more volatile from month to month than single-family building, rose 10% in October to an annual rate of 285,000.

Building permit applications, an indicator of future construction, fell 2.7% to 866,000 after jumping 12% in September to a four-year high. But applications to build single-family homes still rose to their highest level in more than four years.

Read more...Apt. Building Boom Drives Recovery In Commercial Construction - CoStar Group

Wednesday, November 28, 2012

Austin No. 1 for projected percentage of household growth via Austin Business Journal

Austin and Provo, Utah are tied for the top spot for the projected percentage of household growth over five years, an analysis shows.

The Capital City and Provo are expected to see 7.4 percent growth between 2012 and 2017, the subsidiary of Connecticut-based Pitney Bowes Inc. (NYSE: PBI) said in a statement released Tuesday.

Other Texas markets that made the top 20 include Houston at No. 7 with 6.7 percent projected growth. Killeen-Temple-Fort Hood, San Antonio, McAllen-Edinburg-Mission and Fort Worth-Arlington all have projected household growth of more than 6 percent.

Read more...Austin No. 1 for projected percentage of household growth - Austin Business Journal

Dallas Beige Book November 28, 2012 via Dallas Fed

The Eleventh District economy expanded at a modest pace over the past six weeks. Reports on manufacturing and transportation services activity were mixed. Demand for staffing services declined, while that for other business services held steady or increased slightly. Retailers' reports on demand were mixed, while automobiles sales were flat. Residential sales and construction increased, and energy activity remained steady at high levels. Financial firms reported mixed demand. Agricultural conditions remained mostly dry. Most respondents said prices held steady, and employment levels were steady to up. Many firms' outlooks remain uncertain, given regulatory and fiscal concerns and short-term disruptions caused by Hurricane Sandy.

Prices Most reporting firms said prices were steady, however there were a few scattered reports of higher prices. Retailers said prices had not changed much since the last report, but the drought is expected to increase food costs. Some transportation services firms noted that prices were up due to increased fuel and labor costs. Several manufacturers of construction products said that stronger demand was supporting higher prices. Some paper manufacturers noted an increase in selling prices. Grain prices declined over the reporting period and cotton prices remained weak.

The price of WTI was volatile during the reporting period but ended up in the mid-$80 per barrel range. Natural gas prices, while still depressed, rose to $3.40 per thousand cubic feet over the same period. On-highway diesel and gasoline prices trended down over the reporting period, and prices of petrochemical products were mostly flat.

Read more...Dallas Beige Book November 28, 2012 - Dallas Fed

5 Ways Negative Reviews Are Good For Business via Small Business Trends

We talk a lot about online reviews. We talk about how important they are in influencing buying decisions, how SMBs need to respond to them, and how Google is starting to give more weight to reviews as social signals. But in doing that, we also create a lot of fear around the reviews that exist out there about our businesses.

There’s the sense that a single bad review can kill your business. Or that a handful of unhappy customers can send new customers away and ruin your brand in the search engines. And while it’s important for a small business to build an online review strategy, it’s equally important to remember that we’re all human. A few bad reviews won’t kill your business. In fact, those negative reviews may even help.

Sound crazy?

Below are five ways negative reviews can actually be good for business.

Read more...5 Ways Negative Reviews Are Good For Business | Small Business Trends

Multifamily and Commercial Mortgage Originations Drop 7 Percent in the Third Quarter of 2012 via

The third quarter Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations shows multifamily and commercial mortgage originations have dropped by 7 percent versus the third quarter of 2011. The survey also shows origination volume to be 17 percent lower than the second quarter of 2012, but 15 percent higher year to date on a year over year basis.

"Commercial and multifamily mortgage borrowing slowed in the third quarter," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Even though low interest rates continue to make borrowing extremely attractive, a moderate pace of commercial property sales transactions and a continued drop in the volume of commercial mortgages maturing limited the overall amount of commercial mortgage loans originated."

Read more...Multifamily and Commercial Mortgage Originations Drop 7 Percent in the Third Quarter of 2012 - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Rents to rise at steady clip, forecast says via

Apartment rents will go up again next year for the fourth consecutive year as the economy improves — good news for landlords but tough on renters.

Rents for apartments — which make up about half of all rental housing — will jump 4.6% nationally next year after a 4.1% increase this year, the National Association of Realtors predicted Monday in its commercial forecast.

Rents will keep rising, more than 4% a year for 2014 and 2015, says market researcher Reis.

Read more...Rents to rise at steady clip, forecast says via

Monday, November 26, 2012

Mapping Where To Build Next via WSJ

Housing construction has risen to its highest level in four years, the Census reported recently, in part a response to rising confidence among home builders, but also, as the Journal wrote this month, because household formation is beginning to pick up.

But if the Census numbers are any guide, most of these new households – students graduating from college, adult children moving out of their parents’ basements, singles moving into new homes as they get married – will move into rental apartments or condos rather than detached single-family homes.

Although construction of both homes and apartments is gaining steam, multifamily construction once again far outpaced single-family housing starts this month, in every U.S. region except California, where there are low inventories of single-family homes for sale.

Read more...Mapping Where To Build Next - Developments - WSJ

DFW ranks No. 30 in lowest housing vacancy via Dallas Business Journal

More than 90 percent of housing in the Dallas-Fort Worth area is occupied, according to a recent report.

On Numbers, a Business Journals feature, analyzed data from the U.S. Census Bureau’s American Community Survey for 109 markets. DFW ranked No. 30 on a list of markets with the lowest housing vacancy for the nation.

DFW has a 9.19 percent vacancy rate, which means 232,786 vacant housing units of 2,532,937 total housing units, which includes houses, apartments and condominiums.

Read more...DFW ranks No. 30 in lowest housing vacancy - Dallas Business Journal

Texas Manufacturing Outlook Survey November 26, 2012 via Dallas Fed

Texas factory activity was little changed in November, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, came in at 1.7, indicating output barely increased from October.

Other survey measures suggested flat manufacturing activity in November. The new orders index came in at 0.4, suggesting that demand was unchanged from October. The capacity utilization index plunged more than ten points, coming in at -1.3, indicating utilization rates were little changed from last month. The shipments index edged down from 4.7 to 0.9, with more than half of the respondents noting no change from October.

Perceptions of broader business conditions worsened in November. The general business activity index fell to -2.8, returning to negative territory. The company outlook index moved down to -4.8, registering its first negative reading since April.

Texas Manufacturing Outlook Survey - Dallas Fed

Houston Economic Update November 2012 via FRB of Dallas

The Dallas Fed’s Houston business-cycle index indicated that economic activity in the Houston metropolitan area accelerated to an annualized rate of 8.5 percent in September. Strong employment growth for September and continued health in key area industries are pushing up activity despite eroding international expectations. Real estate markets are improving, energy prices are mostly in healthy territory and retail indicators are positive.

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

Commercial Real Estate Vacancies Slowly Declining, Rents Rising via

Most of the major commercial real estate sectors show gradually improving fundamentals and are easily absorbing the relatively small amount of new space that is coming online, with a full recovery already in the multifamily market, according to the National Association of Realtors® quarterly commercial real estate forecast.

Lawrence Yun , NAR chief economist, said the market has been slowly building momentum. "Job creation is the key to increasing demand in the commercial real estate sectors," he said. "The economy is expected to grow 2.5 percent next year, and with modest job creation, assuming there is no fiscal cliff, the demand for commercial space will gradually rise. The greatest friction that remains is a tight credit environment, notably for smaller properties."

Vacancy rates over the next four quarters are forecast to decline 1.0 percentage point in the office market, 0.6 point in industrial, 0.2 point for retail and 0.1 point in multifamily; however, multifamily has the tightest availability and is experiencing the strongest rent increases, well above the rate of inflation.

Read more...Commercial Real Estate Vacancies Slowly Declining, Rents Rising |

Austin’s job market rebounds to pre-recession growth via

Back in the halcyon days of 2007, before the recession crept its way into Austin’s economy, local employers were adding jobs at a remarkable clip.

If the latest job numbers from the Texas Workforce Commission are any indication, the region is climbing back toward those lofty rates.

Employers in the Austin metro area added about 6,100 positions in October, the commission said Friday, boosting the region’s annual job-creation rate to 3.5 percent. That’s the fastest pace the region has posted since February 2008, the month that local payrolls started a steady deceleration that eventually led to 14 consecutive months of year-over-year employment contraction in Austin.

Read more...Austin’s job market rebounds to pre-recession growth via

Housing Starts Edge Up 3.6 Percent in October to Set the Highest Pace of New Construction Since 2008 via

Nationwide housing production rose 3.6 percent in October to a seasonally adjusted annual rate of 894,000 units, according to the U.S. Commerce Department. This is the highest pace of new-home construction since July of 2008.

“This report is in line with our latest builder surveys, which show improving confidence and optimism in the marketplace as buyers take advantage of low mortgage rates and very attractive prices,” said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla. “Builders are acting to meet rising demand while continuing to exercise caution by pulling a modest increase in the number of single family permits as the market continues to gradually gain its footing.”

“Today’s report bears out similar changes in other economic indicators that housing continues to recover at a slow but steady place, and is right in line with our expectations of modest month-to-month growth,” said NAHB Chief Economist David Crowe. “However, we still have a long way to go to get back to normal production as inaccurate appraisals, tight lending conditions for home buyers and policy uncertainties continue to impede the recovery.”

Read more...Housing Starts Edge Up 3.6 Percent in October to Set the Highest Pace of New Construction Since 2008 - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Wednesday, November 21, 2012

Risks to Multifamily Overbuilding Averted, For Now via ReisReports

Earlier this year, there were signs that construction would spike in 2013, in the order of 150,000 to 200,000 units. Developers have since postponed many projects to 2014, so that 2013 figures hover closer to 130,000 units – not far off from the pre-recession 10-year annual average of around 125,000 units. The “bubble” now shows up in 2014, but if economic growth ramps up, then additional supply will most likely be absorbed relatively painlessly.

This is not to say that certain metros will not be at risk. Washington, DC and Suburban Maryland both face historically high inventory growth prospects over the next couple of years; these metros cannot rely on solid demand drivers such as strong employment growth in certain sectors like tech to push demand for rentals like Austin or Seattle.

Read more...Risks to Multifamily Overbuilding Averted, For Now | ReisReports

USGBC Debuts Green Building Data Tool via MortgageOrb

The U.S. Green Building Council (USGBC) has announced the launch of the Green Building Information Gateway (GBIG), a Web-based tool designed to accelerate market transformation by providing greater transparency and understanding of the green dimensions of the built environment.

According to the USGBC, GBIG provides a transparent view of places, projects, collections and credits, detailing the actions and activities of Leadership in Energy and Environmental Design building owners and project teams over time. The tool provides maps, analytics and insights that reveal trends, patterns and processes in green building practice. Users can search and explore green building activity around the world, analyze trends and patterns in green building practice and discover connections between projects, people, products and services.

Read more...MortgageOrb: USGBC Debuts Green Building Data Tool

Credit Risk of Multifamily Renters Decreases Yearly in Q3 via

As the rental market continues to grow stronger, the quality of rental applicants also showed improvement from last year, according to report from CoreLogic.

The data provider’s multifamily applicant risk (MAR) index report stood at 106 in Q3 2012, an improvement of two points from last year, but a decrease of 3 points from Q2 2012.

The increase in the MAR index from last year indicates a modest increase in “national renter credit quality and applicant pool quality,” the report explained. A score above 100 indicates an applicant pool with reduced average risk of default. The data is based on nearly 6 million apartment home across the U.S.

Read more...Credit Risk of Multifamily Renters Decreases Yearly in Q3 via

Commercial Real Estate Will Continue to Recover in 2013, but a Boom Won’t Come Until Later via NREI Readers Write

The commercial real estate industry has made a slow but steady recovery since the depths of the Great Recession, and 2013 will see more of the same.

And while the phrase “slow but steady” may not initially excite you, don’t fall asleep at the wheel or you’ll pass by some truly great opportunities.

On a recent episode of “America’s Commercial Real Estate Show,” Robert O’Brien, a partner and vice chairman with Deloitte & Touche and the leader of the firm’s U.S. Real Estate Services Group, presented the company’s top issues for 2013. Then I presented investor tips and my projections about the industry’s performance in the year ahead.

Read more...Commercial Real Estate Will Continue to Recover in 2013, but a Boom Won’t Come Until Later | NREI Readers Write

Will a Rise in Homeownership Rates Hurt the Multifamily Sector? via

Times seem good for the business of owning and managing apartment properties. Vacancy rates are low and rent growth relatively high. What could go wrong?

For one, renters could start shopping for bargains on the for-sale housing market—especially especially as the cost of renting continues to rise while home prices remain flat. For now, doubts about housing markets and the broader economy are keeping many generation X and older generation Y renters from shopping for homes. But that uncertainty won’t last forever.

“Uncertainty is keeping people from making home-buying decisions,” says Brady Titcomb, Research Manager for the multi-family capital market group for Jones Lang LaSalle.

Read more...Will a Rise in Homeownership Rates Hurt the Multifamily Sector? via

Commercial-Mortgage Market Gets Frothy via

Earlier this year, it looked as if the owner of Las Vegas's Fashion Outlets mall was facing a problem: Its $107 million in debt was nearing maturity, and the credit markets weren't strong enough to refinance that entire amount.

But since then, the real-estate finance market has gotten a lot rosier. The 376,000-square-foot mall's owner, AWE Talisman, was able to borrow $32 million of junior, or "mezzanine," debt and another $73 million of senior debt that was packaged into commercial mortgage-backed securities at attractive terms.

"We're seeing deals that we thought wouldn't be able to refinance, actually refinance," said Darrell Wheeler, head of commercial-mortgage bond strategy at Amherst Securities Group.

Strong investor demand for yield in a low-interest rate world has unleashed a lending boom in commercial mortgages, producing the most favorable conditions for borrowers since 2008. The commercial-mortgage bond market, which all but died in the years following the financial crisis, is expected to see $46 billion of new issues in 2012 and as much as $65 billion in 2013.

Read more...Commercial-Mortgage Market Gets Frothy -

Tuesday, November 20, 2012

Housing Starts in U.S. Increase to Four-Year High via Bloomberg

New-home construction unexpectedly climbed to a four-year high in October, more evidence of a revival in the industry that’s helping propel the U.S. economy.

Housing starts rose 3.6 percent to a 894,000 annual rate, the fastest since July 2008 and exceeding all estimates in a Bloomberg survey, Commerce Department figures showed today in Washington. The median forecast of 82 economists called for an 840,000 pace. Permits for the construction of single-family homes also advanced to the highest in four years.

“The housing industry is in a recovery,” said Larry Sorsby, chief financial officer of Red Bank, New Jersey-based Hovnanian Enterprises Inc. (HOV) “Those builders that survived the unprecedented downturn of the last six years are in a good position not only to survive but to thrive.”

Read more...Housing Starts in U.S. Increase to Four-Year High - Bloomberg

APARTMENT MARKET STATISTICS: November 2012 via Multi-Housing News Online

The Apartment Market Statistics section of the November 2012 issue of MHN includes:

-Top Metro Apartment Markets Data (Top Markets Completions, Rents and Vacancies)

-Multifamily Starts, Permits, Rent Growth, Interest Rates, Condo Prices, Interest Rates, Building Materials Prices etc.

-Total Multifamily Mortgage Debt Outstanding

-Apartment Transactions (Volume and Prices)

-Apartment Equity REITS performance

Read more...APARTMENT MARKET STATISTICS: November 2012 | Multi-Housing News Online

Underwriting for Reserves / Replacements and High Abuse Multifamily Properties via Multifamily Insiders Blogs

Estimating expenses is always topical around tax time, when deductions are on everyone’s mind. More broadly, both appraisers and investors find themselves with recurring questions in estimating what to include on the expense side in order to achieve the best possible projections for multifamily property valuations and operations. Below are some basic rules of thumb to keep in mind when estimating reserves and replacements or underwriting potentially high abuse properties. For the latter, due diligence discovery such as careful study of rent rolls and financials would help determine whether or not a given property should be considered ‘high abuse’.

Reserves for Replacements
This category provides for the periodic replacement of short-lived items such as carpeting, window coverings, roof covering, water heaters and appliances. The annual figures are calculated by dividing the replacement cost of an item by its useful life.There are differences in opinion as to whether reserves should be included for newer buildings. For a new building include only those reserve items which will probably be replaced in the first seven years. This is most often limited to carpets, window coverings and garbage disposals. Do not take a reserve for the roof (the roof’s condition is still considered in the final value estimate, however), but some lenders require it. Include a reserve for the water heaters, especially if the water heaters are individual water heaters.

Read more...Underwriting for Reserves / Replacements and High Abuse Multifamily Properties - Multifamily Blogs

Monday, November 19, 2012

Benchmarking Green: The First Investable US Green Property Indexes for REITs via Forbes

FTSE Group, NAREIT, and the U.S. Green Building Council (USGBC) recently announced a jointly developed green property index for both institutional and retail investors. This first of a kind index was a collaborative effort bringing together global market leaders in US real estate indexing, REIT market expertise, and environmental building standards.

The indexes, currently in the final stages of implementation, will give investors a structured and disciplined way to measure and model the risk and reward profile of green property, using the first codified, transparent definition of listed green property. In addition, the indexes will also provide investors with new ways to incorporate principles of sustainability into their property selections and portfolios, and access this investment theme through index-linked financial products.

In a press release last week, the collaborative originators explained,

Read more...Benchmarking Green: The First Investable US Green Property Indexes for REITs - Forbes

FHA doubles distressed loan sales via HousingWire

The Federal Housing Administration doubled its distressed loan sales from 5,000 sales per quarter to 9,000 sales beginning July through the Distressed Asset Stabilization Program.

The current commitment is to now sell at least 10,000 distressed loans per quarter over the next year as a result of the audit report projections, according to the U.S. Department of Housing and Urban Development.

After the release of the actuarial report last week, the FHA implemented a series of steps to turn capital reserve positive within the year, according to a HUD release. This includes the continuation to sell expanded pools of defaulted mortgages through DASP.

Read more...FHA doubles distressed loan sales | HousingWire

Even Amid National Uncertainty, Houston is Hot via

Though uncertainty seems to be dragging down overall U.S. economic growth, Houston seems to be defying the odds of most of the major metro markets. Statistics and information backing the assertion of a hot Houston market were presented at Transwestern's recent Trendlines, an annual event that highlights economic trends and examines various CRE sectors of the Houston market.

In addition to remarks by keynote speaker Ambassador John R. Bolton, Greg Leisch, CEO of Delta Associates (Transwestern's research arm), highlighted opportunities throughout the Houston commercial real estate market. And the broad overview points out that there is plenty of opportunity to be had.

Overall economic growth. The economy added close to 90,000 jobs (trailing Los Angeles, New York and San Francisco) and Houston's employment rose by 3.5% in 2012. A potential slowdown could be in the cards from Europe.

Read - Even Amid National Uncertainty, Houston is Hot - Daily News Article

Market Ahead Looks Brighter for CMBS via WSJ

Some commercial mortgage-backed securities lenders, borrowers and issuers on Thursday predicted the largest jump in issuance in six years for 2013 as low rates and bond risk premiums encourage more borrowing.

Representatives from Blackstone Group LP BX +0.81%, LNR Property and Morgan Stanley sa MS -0.49%id CMBS volume could climb more than 40% from this year, to as much as $65 billion, as they outlined the market’s progress at the Talmage 2012 Credit Conference in New York.

Issuance of privately issued CMBS in 2012 is expected to top out near $46 billion, compared with $33 billion in 2011, according to Commercial Mortgage Alert.

Read more...Market Ahead Looks Brighter for CMBS - Developments - WSJ

Friday, November 16, 2012

Multifamily Growth | The Balance Sheet via Yardi Corporate Blog

This year has no doubt been one for the record books, as exceptional rent increases and vacancy rates have given rise to a multifamily sector that professionals a decade ago might barely recognize. Speakers at the 2012 CREW Network Convention and Marketplace in Chicago took time to reflect on the extraordinary performance assets across the country, while hinting that 2013 might be the year the ceiling is finally hit.

“This is one of our best years ever,” said Debbie Corson, principal, Apartment Realty Advisors. Absorption has accelerated in 2012 and as a result, rents have continued to increase in 2012 even in the Midwest, noted Corson. Transaction levels, meanwhile, have risen significantly from the lows hit in 2009 and 2010. This year, $16.2 billion in sales were registered in the second quarter.

David Schwartz, managing member of Waterton Associates, agrees with Corson, stating the 2012 is “pretty much as good as it gets.” Yet Schwartz also predicts that the rate of rent increases for his company’s properties will decrease from 5 percent in 2012 to 3.5 percent in 2013, a level he noted is closer to historical rent growth averages of 3 percent a year.

Read more...Multifamily Growth | The Balance Sheet - Yardi Corporate Blog

ALN: Atlanta, Austin, DFW, Houston, Phoenix, San Antonio via Real Estate Center at Texas A&M University

ALN Apartment Data has released the October review of occupancy, effective rent and more for Austin, Dallas-Fort Worth (DFW), Houston and San Antonio.

For reference, Atlanta, Ga., and Phoenix, Ariz., are shown. The general overview includes properties in initial lease-up.

Read more...ALN: Atlanta, Austin, DFW, Houston, Phoenix, San Antonio via Real Estate Center at Texas A&M University

Thursday, November 15, 2012

Does Your Company Create an “Easy Button” Customer Experience? via Property Management Insider

Many studies have revealed that customers who have a problem resolved to their satisfaction are more loyal than customers who’ve never had a problem at all.

The 2011 Customer Experience Impact (CEI) Report revealed that 79% of consumers who shared complaints about poor customer experience online were ignored by the company. The 21% remaining who did get a response shared a positive experience.

A company that is unafraid of facing complaints tends to receive fewer, and gets extra points in the customer’s mind for being willing to take the heat. In a strange way a complaint is like a compliment; the customer cares about your company or product enough to say something rather than close the door.

Does your company have an “easy button?” Do you hide your complaint department or is it out in front for all customers to easily access and engage with?

Read more...Does Your Company Create an “Easy Button” Customer Experience? | Property Management Insider

Are REITs Missing Out on Class C Rent Growth? via Multifamily Executive Magazine

The rent report cards are out. But luckily, the REITs' parents don’t have to sign them, because they mightn't like what they see: Many of the major apartment REITs are missing out on the booming effective-rent growth taking place among Class C assets, according to October 2012 data from Dallas-based research firm Axiometrics.

While most REITs remain heavily invested in Class A properties, with 47 percent being rated at B+ or higher on Axiometrics’ A++ to C- 10-point grading scale, the research shows that many firms are overlooking the rent growth of lower-rated asset classes.

In October, Class C annual effective-rent growth was at 3.9 percent, while Class A and Class B came in at 3.7 percent and 3.6 percent, respectively. While that's not a huge disparity, rents among varying asset classes are moving in different directions.

Read more...Are REITs Missing Out on Class C Rent Growth? - Reits - Multifamily Executive Magazine

DFW apartment trends 3Q 2012 via Real Estate Center at Texas A&M University

According to MPF Research, DFW leads the nation in apartment construction with 17,792 units underway, Making DFW one of the few markets where construction levels top the local ten-year average of 13,469 units.

The DFW apartment market should continue to grow in the year ahead, with apartment occupancy remaining near 94 percent through the end of 2013. However, the rate of growth is expected to slow down as the housing market continues to recover.

The biggest share of the apartment construction in North Texas is in Dallas’ center city markets — including Uptown and downtown — and in Las Colinas, Addison, Carrollton and Farmers Branch.

Read more...DFW apartment trends 3Q 2012 via Real Estate Center at Texas A&M University

Financing Loosens Up via RealtorMag

There are many reasons to feel positive about the state of commercial real estate finance. CRE loan originations for the second quarter of 2012 were up 25 percent over the same period in 2011, according to the Mortgage Bankers Association. And a growing number of lenders are looking beyond gateway cities and Class A assets when making loans, says Constantine Korologos, managing director with Deloitte Financial Advisory Services in New York.

Several factors are combining to boost lenders’ confidence. A stabilizing, if sluggish, economy and low mortgage rates, due to a capital flight from Europe, are raising the appeal of financing commercial real estate, says Jamie Woodwell, the MBA’s vice president of commercial real estate research. But improving property fundamentals and rising values in most property types are the key factors making the difference to lenders “all along the capital stack,” says Bill Hughes, managing director of Marcus & Milli­chap Capital Corp. Combined A and B loans can push loan-to-value ratios as high as 85 percent for the right property and an established sponsor, he adds.

Read more...Financing Loosens Up via RealtorMag

Adaptation Costs of Climate Change Risks via UrbanLand

How can climate change risks and adaptation costs be accounted for in real estate investments, especially given the indeterminate nature of the timing of climate change events?

Climate change is the leading environmental issue of our time, one that likely will be around for decades to come. Increasingly, the urban development and real estate industries will be directly affected by the climate problem—and play a key role in achieving solutions.

Much has been written about the importance of green building design and operations in reducing or mitigating the emissions that cause climate change. However, measures are also needed to reduce the physical risks of climate change to buildings and infrastructure so that the built environment will be more resilient—or able to adapt—to anticipated impacts.

Read more...Adaptation Costs of Climate Change Risks via UrbanLand

Wednesday, November 14, 2012

London Investor Sees U.S. Multifamily as Best Positioned for Next 5 Years via CoStar Group

Henderson Global Investors raised another $50 million for its latest U.S. multifamily housing fund - CASA Partners V, taking in a total of $155 million equity to date. It is targeting a total $250 million equity raise before its final closing date at year-end, representing an initial gross portfolio size of up to $750 million (including a maximum loan-to-value of 65%).

CASA V is the fifth in a series of successful US value-add multifamily housing funds that seeks to profit by integrating value-enhancing strategies with low-cost tax-exempt bond financing.

London-based Henderson said it regards the U.S. apartment market as one of the best-positioned sectors over the next five years. Multifamily housing is widely recognized as one of the nation’s largest and healthiest real estate sectors. Apartments are anticipated to have the most favorable occupancy and rent growth conditions of all asset classes.

Read more...London Investor Sees U.S. Multifamily as Best Positioned for Next 5 Years - CoStar Group

DFW is 6th highest among 87 metros with more jobs via Dallas Business Journal

The Dallas-Fort Worth area ranked sixth among the 87 major metropolitan areas that have more private sector jobs now than a year ago, according to an analysis of data from the U.S. Bureau of Labor Statistics by On Numbers.

Dallas-Fort Worth had 48,700 more jobs at the end of September 2012 than it did in September 2011, the analysis found. DFW had 2,604,600 private sector jobs this year compared with 2,555,900 last year, an increase of 1.91 percent.

Read more...DFW is 6th highest among 87 metros with more jobs - Dallas Business Journal

Economic Outlook | The Texas Economy via Texas Comptroller

ob growth, sales tax collections — both from business and consumer purchases — as well as automobile sales, signal that the Texas economy has emerged from the recent recession.

Another indicator that the state’s economy has been comparatively healthy was the U.S. Census Bureau report that Texas added more people (421,000) than any other state from 2010 to 2011. Although Texas has only 8 percent of the nation’s population, the state added nearly 19 percent of the nation’s population growth for the year.

By December 2011, Texas employers replaced all 427,600 jobs shed during the recession as our economy rebounded more quickly than the U.S. as a whole, and continues to add jobs. Nationally, through August 2012 only 48 percent of recession-hit jobs have been recovered.

Texas and the nation returned to economic growth in 2010 and 2011. In 2011, Texas real gross domestic product grew by 2.4 percent, compared with 1.6 percent GDP growth for the nation.

Read more...Economic Outlook | The Texas Economy via Texas Comptroller

Tuesday, November 13, 2012

SA's real estate market headed up via Real Estate Center at Texas A&M University

In the real estate market, recovery has begun for San Antonio. On the residential front, single-family construction is on the upswing, while multifamily development continues to move at a steady clip, according to Kim Gatley, senior vice president for NAI REOC San Antonio.

The industrial real estate sector enjoyed positive space absorption in third quarter 2012. Over the first nine months of the year, the industrial market absorbed more than 940,000 sf of space — well over the city’s annual average for the past decade.

Read more...SA's real estate market headed up via Real Estate Center at Texas A&M University

Those Sun Belt Suburbs Aren’t Going Away via Property Management Insider

When we talk about apartment construction these days, analysis tends to focus on total volume. But we really ought to be digging deeper and asking whether what’s on the way really will match up with future demand.

A key shift from building activity right now relative to what was seen in previous cycles is a much more pronounced emphasis on urban core locations in most metros. That makes sense in the big picture. Most of these properties coming out of the ground are targeted toward Gen Y renters, and the group as a whole certainly likes urban product and the lifestyle that comes with residing in or near downtown.

But let’s not forget that in many cities, especially in the Sun Belt, most jobs are found in the suburbs. Thus, while some renters desiring new apartments will opt for the reverse commute in order to enjoy living in the urban core, many likely won’t. Especially if there’s limited mass transit, as is the case in so many markets across the Southeast and Southwest.

Read more...Those Sun Belt Suburbs Aren’t Going Away | Property Management Insider

ALN Monthly Newsletter November 2012 via ALN Apartment Data

ALN Data just released their October 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 must read from a great provider of apartment data.

Read more...ALN Monthly Newsletter November 2012 via ALN Apartment Data

Multifamily Fundamentals Do Not Face a Cliff via

Much has been written recently about potential risks to overbuilding in multifamily—in fact, I commented on this issue last April in my NREI , column but I noted that analyzing the supply side is not enough. Demand for apartments will remain strong, and will rise further if economic growth quickens.

Apartment fundamentals have bounced back robustly since the recession ended in June 2009. Despite middling economic growth, the national vacancy rate dropped sharply from a peak of 8.0 percent at the end of 2009 to 4.6 percent in the third quarter of 2012. Vacancy rates that are this low have not been observed since late 2001.

Asking and effective rents have risen for 11 consecutive quarters and in many areas have surpassed previous peaks achieved in the third quarter of 2008, before the fall of Lehman Brothers. Landlords face little pressure to offer concessions given how tight rental markets are in most places.

Multifamily Fundamentals Do Not Face a Cliff via

CoreLogic: Rising house prices linked to rental demand via HousingWire

High levels of investor activity and rising home prices put the housing market in recovery mode this year, but the real estate market for first time homebuyers is far from fully recovered, CoreLogic ($24.26 0%) said in its November MarketPulse report.

Mark Fleming, chief economist with CoreLogic and principal economist Sam Khater, put together a housing report that shows short-to medium-term factors driving the improvements in housing.

They find the factors lifting home prices and sales correlate directly to rental demand, since investors are keen to acquire properties for rental purposes. In turn, more demand is fueling prices, helping some negative equity borrowers pull themselves out of an upside-down situation.

Read more...CoreLogic: Rising house prices linked to rental demand | HousingWire

Echo Boomers Important Multifamily Driver via

The multifamily sector is still flourishing as rents continue to rise and renters demand new development. According to Meyers Research, a Kennedy Wilson Co., which just released its latest trend report, national rent for markets covered by RealFacts reached an all-time high of $1,042 per month in the third quarter of this year, an increase of 4.8% from a year ago. Given the lingering effects of the recent housing-market crisis, which continues to push former homeowners into the rental market, demand fundamentals should continue to be strong for rental units, keeping rents growing in the near term, the report reveals.

In addition, more Millennials, a.k.a. Echo Boomers, entering the market should also help boost fundamentals. “In the past year, new developments have been met with strong renter demand, particularly for contemporary product in A+ locations that are heavily favored by today’s Echo Boomers,” Jeff Meyers, president of Meyers Research, tells “This demographic of 95 million is obviously important because they are transitioning into the workforce, and detached shadow inventory is not competitive for this young cohort.”

Read - Echo Boomers Important Multifamily Driver - Daily News Article

Monday, November 12, 2012

Property Management: 10 Ways to Measure Your Success via Multifamily Insight Blog

Have you set the professional bar for your property management team? Do they know when they have hit the mark? Are responsibility centers clear? Let’s discuss some measures that let you identify positive progress with a multifamily asset. Following is a short list of high value areas to commit “thinking time”. We are applying these benchmarks to stabilized assets.

1. The “So what” question? Every PhD student knows about the “so what” question. Having spent months and perhaps years on a very succinct research question, a committee member says to the student - so what? The follow up question being: “why is this relevant”? Keep the “so what” question in your mind as you work through this list. If your answers make you feel warm and fuzzy, look good on paper but have no functional use- so what?

2. Occupancy. Is your occupancy at or higher than competitive assets in your submarket? Whereas we are most focused on “our” asset, we must view the broader submarket and market for intelligence. It is important to know where our competitors are, operationally, to assist in measuring where to place our resources (dollars and manpower).

Read more...Property Management: 10 Ways to Measure Your Success | Multifamily Insight Blog

Friday, November 9, 2012

Fannie Mae Expects Positive Financial Results for Year via Mortgage News Daily

Fannie Mae in reporting net income of $1.8 billion in the third quarter of 2012 from $5.70 billion in net revenue compared to a net loss of $5.1 billion on $5.78 billion in revenue in the third quarter of 2011. Thus far in 2012 the company has reported $9.7 billion in net income and expects to post positive returns for the entire year for the first time since 2006. The company has been operating under federal conservatorship since September 2008.

The higher net income was the result of lower credit-related expenses which the company attributed to an increase in actual and expected home prices, higher sales prices on its real estate owned (REO) properties, and a decline in fair value losses. Credit related expenses were $2.03 billion compared to $4.89 billion one year earlier and the company reported comprehensive income of $2.6 billion in the third quarter of 2012.

Read more...Fannie Mae Expects Positive Financial Results for Year via Mortgage News Daily

Vacation getaways aboard vessels that anchor your wanderlust for waterway stays via DeadlineNews.Com

By Ashley Halligan, an analyst at Software Advice

Vacation rental property owners serve up some unique stays – countryside yurts, cave apartments, sidetracked railway cars, sky-high tree houses, and conch seashell shaped getaways, to name just a few.

Among those offbeat vacation rental owners is a class of property owners who drop anchor and lower the gangplank to welcome guests aboard.

Ahoy! For travelers who fancy a little buoyancy in their getaway, check out these vacation homes that float.

Read more...Vacation getaways aboard vessels that anchor your wanderlust for waterway stays | DeadlineNews.Com

Development: Green, Yes; LEED, Not So Much via

Owners, developers and corporate occupiers are more likely to construct or renovate a building with sustainability in mind than they were two years ago, Turner Construction Co. said Thursday. However, the builder’s Market Barometer survey also found that less than half of respondents would pursue LEED certification from the US Green Building Council.

With energy efficiency and ongoing operations and maintenance costs each cited as key drivers by 84% of respondents, the appetite for sustainable building is greater than in 2010, when Turner last conducted the survey. Sixty-four percent said they expect to undertake new construction projects over the next 12 months, while 71% said they intend to undertake renovation projects during the same period. Those numbers are up from 46% and 58%, respectively, in the ‘10 survey, although concerns remain about the costs and the length of the payback period.

Read - Development: Green, Yes; LEED, Not So Much - Daily News Article

Market Trends: Banks Take It Slow via CCIM Institute

Banks will continue their slow deleveraging act for at least another year, according to Emerging Trends in Real Estate 2013, holding troubled assets while waiting for values to inch up. “As long as loans are current, lenders are better off to extend than sell loans at discounts, foreclose and recognize losses when markets have further room to improve, or refinance at lower rates,” says the Urban Land Institute/PwC report.

Read more...Market Trends: Banks Take It Slow | CCIM Institute

Apartment Hunters via CCIM Institute

Apartment investors are on the hunt. And they’re moving beyond trophy properties into unfamiliar territory in hopes of a rare catch.

In 1H2012, secondary markets posted a 38 percent year-over-year increase in multifamily transaction volume, followed by tertiary markets at 23 percent, according to Real Capital Analytics. Major metros saw only a 9 percent increase during that period.

What’s driving this migration? “It’s primarily a search for yield,” says Ben Thypin, RCA’s director of market analysis. Private investors, equity funds, and some institutional investors have tired of the competition driving down multifamily capitalization rates in core markets.

Read more...Apartment Hunters | CCIM Institute

Freddie Mac sees Continued Healthy Multi-family Market via

Home ownership, which has already dropped 2.7 percent since the start of the current housing crisis, is expected to decline another 1 to 2 percentage points if the current slow recovery continues. This is one conclusion reached by Freddie Mac's Multifamily Research Group in its market demand forecast for the next three years that was released on Monday.

The multifamily housing market defined as buildings with over five units weakened somewhat during the recession but not to the same extent as the single family market and directly benefitted from the decline in the homeownership rate. The shift of households from homeownership to renters increased the demand for rental units and rents have increased (about 4.9 percent in 2011) while vacancies dropped from over 7.3 percent in 2009 about 5 percent today. Supply remains low with only 167,000 construction starts in the sector last year, far below the average volume of 260,000 units in 2001-2010.

It is unclear how long favorable conditions will last. There is more construction on the way, it is always possible that improving conditions will swing the pendulum back in favor of homeownership, and a significant conversion of single-family houses to rental properties could also impact demand.

Read more...Freddie Mac sees Continued Healthy Multi-family Market via

Thursday, November 8, 2012

The Great Debate: Which is Better? On-site or Off-site Property Management? via Multifamily Blogs

Sorry folks, but the answer is: it depends! I know you hate that answer, but here's why it does really depend!

Engineer/Maintenance Staff: The number-one issue for any property manager to evaluate is whether or not there are on-site engineers or maintenance, or if they are in close proximity to the property. As far as what makes it really painful to be off-site, not having on-site maintenance or even a handyman can make or break the assignment. The worst case is to have no on-site maintenance and no on-site manager or leasing agent. This is generally accepted in the smaller properties where this expense is absolutely cost-prohibitive. The rule of thumb would be anything smaller than 20 units. Anything larger than 20 units and you need to consider extremely accessible, outsourced maintenance or a live-in superintendent of some type. It will always be to your advantage to have someone on-site to be a body when there is a service request or a vacant unit to lease. A single vacant unit can gobble up tons of labor in driving back and forth for showings. Also, it is not a good idea to make any prospective tenant wait to see a unit. In leasing, you have to be there to get the job done when the prospect wants to lease. That is probably why so many small properties are self-managed or the owner actually lives there!

For properties of 50 units and up, the following need to be considered as well:

Read more...The Great Debate: Which is Better? On-site or Off-site Property Management? - Multifamily Blogs

Global Recovery Still at Risk via Dallas Fed

The global outlook remains uneven, with emerging economies outperforming advanced economies in terms of growth while registering higher inflation rates (Chart 1A, B).[1] Overall, inflation continues to moderate as commodity prices retreat, although the weak recovery also may be a restraining force.

Indicators of global economic activity—particularly in manufacturing—are raising the prospect of a further slowdown. The Federal Reserve Bank of Dallas’ weighted purchasing managers index (PMI) measures show that manufacturing has staggered since the second half of 2011 in both advanced and emerging economies (Chart 2A). Despite that, the global service sector PMI remains in expansion.

Financial conditions have returned to 2010–11 levels after substantial monetary support and intervention, as evidenced by declining spreads between corporate and government bonds (Chart 2B). However, credit is not equally accessible across countries due to the strained banking systems of some advanced economies.

Read more...Global Recovery Still at Risk - Dallas Fed

LPS: Mortgage Delinquency Rates increased in September via Calculated Risk

LPS released their Mortgage Monitor report for September today. According to LPS, 7.40% of mortgages were delinquent in September, up from 6.87% in August, and down from 7.72% in September 2011.

LPS reports that 3.87% of mortgages were in the foreclosure process, down from 4.04% in August, and down from 4.18% in September 2011.

This gives a total of 11.27% delinquent or in foreclosure. It breaks down as:

Read more...Calculated Risk: LPS: Mortgage Delinquency Rates increased in September

Why Your Renters Will or Won’t Renew via Multifamily Executive Magazine

Believe it or not, tenants care a little less about rental rates and a bit more about property management in 2012.

Over the last year, there has been a slight shift in what weighs more heavily into a renewal decision for multifamily tenants, according to the Q3 2012 Multifamily Industry Trends survey conducted by San Francisco-based research firm Kingsley Associates.

For renters who say they are “unlikely” to renew—the ones who have already been rubbed the wrong way—the top gripe was being pushed too far on rental rates, with 32 percent citing that as the deciding factor. But that figure is down 11 percent from last year. The top factors gaining importance from Q3 2011 to Q3 2102 were community management, up from 25 to 27 percent, community appearance, up from 11 to 15 percent, and location, up from 16 to 18 percent.

Read more...Why Your Renters Will or Won’t Renew - Multifamily Trends - Multifamily Executive Magazine

Wednesday, November 7, 2012

More New Households Sprouting Up via

Americans are setting up house at the fastest rate in more than six years, an indication that recession anxiety, which prompted adult children to move in with their parents and single people to postpone marriage, is starting to ease.

The nation added 1.15 million households in the 12 months that ended in September, according to the most recent Census Bureau data. That is a significant rise from the past four years when an average of 650,000 households were formed annually. While what economists call "household formation" is running a little lower than the average 1.25 million added annually during the boom years, the latest data nevertheless represent an important shift.

Rising household formation, which is tied to employment growth, means more students are finding jobs when they leave college, more adult children are leaving their parents' homes and more couples feel confident enough about the future to tie the knot. It could also mean that immigration is picking up.

Read more...More New Households Sprouting Up -

Texas Building Pro Leads the Nation in LEED Projects via EcoHome Magazine

The state of Texas is on the leading edge of green home building, as much as California, New York, or other more typically eco-friendly markets, says the USGBC's vice president of residential market development Nate Kredich.

To prove it, the organization will bestow its highest honor, the 2012 Leadership in the Residential Sector Award on Texan Steve Saunders during its upcoming Greenbuild International Conference and Expo in San Francisco.

“When people ask me where are the hotbeds of green building, my first answer is Texas,” explains Kredich

Read more...Texas Building Pro Leads the Nation in LEED Projects - Green Builders, Green Building, Leed, Hvac - EcoHome Magazine

Texas Economic Indicators November 2012 via Dallas Federal Reserve

The Texas economy continues to expand, with employment growing at a 3.1 percent annual rate in September. Texas existing-home sales increased, while single-family construction permits and housing starts edged down in September. Texas exports ticked up in August. Manufacturing activity increased again in October, according to the Texas Manufacturing Outlook Survey, although the pace of growth slowed slightly.

Texas gained 27,700 jobs in September after adding 24,600 jobs in August. Current Texas employment stands at 10.93 million.

The Texas unemployment rate edged down to 6.8 percent in September from 7.1 percent in August. The Texas rate remains lower than the U.S.

Read more...Texas Economic Indicators November 2012 via Dallas Federal Reserve

5 Keys to Unlock Effective Leasing Conversations via Multifamily Blogs

Are your leasing professionals drowning potential residents with facts, figures, and product information? So much so that your customers feel like they need to carry a can of “leasing professional repellent?” If so, read on…

Pretty much anyone can memorize sales techniques and strategies, and if you focus on doing only that, then you’ll quickly get lost in the crowd. There are a lot of leasing professionals out there doing the same thing—dancing together to the same music: “check off the list and close the sale.” Then there are the “leasing superstars”—the ones that stand out from the crowd simply because they are actually interested in the well-being of their customer. They are authentic, transparent, and unique. They are not “presenting” they are having “real conversations” with their customers.

Read more...CUSTOMER EXPERIENCE: 5 Keys to Unlock Effective Leasing Conversations - Multifamily Blogs

Tuesday, November 6, 2012

Nadji: Despite Headwinds, Multifamily Still a Choice Investment via Multifamily Executive Magazine

On the face of it, the robust demand the apartment industry has enjoyed lately appears somewhat inconsistent with our economy. But, on closer evaluation, the seeming disparity isn’t so clear after all. Mild job growth and favorable demographic trends actually support the recent performance of multifamily, and issued permits, starts, and construction trends all reflect a sizable upward trend. Nonetheless, investors may question how far the sector has moved in the expansion cycle, as well as the impact of new supply and an improving single-family industry on apartment performance.

Supply Factors
In some markets where new supply has been introduced or rising rents have bumped up against an affordability ceiling, mild leasing incentives have crept back into the marketplace. In addition, single-family sector fundamentals now exhibit consistent improvement, offering a competitive housing alternative.

Read more...Nadji: Despite Headwinds, Multifamily Still a Choice Investment - Economic Conditions - Multifamily Executive Magazine

Sustainable Apartments via Multi-Housing News Online

Greenwashing is pretty much exactly what it sounds like. It’s akin to whitewashing—the utilization of deceptive words in an attempt to embellish or conceal certain features. Greenwashing simply concerns this practice with regard to environmental friendliness. The deceptive practice is out there, taking the shape of claims regarding everything from sustainable development to recyclable content.

When one knows what to look for, greenwashing is somewhat easy to identify. TerraChoice Environmental Marketing Inc. offers a list of the basic abuses, or what it refers to as “the six sins of greenwashing.” The general acts include: the sins of no proof; vagueness; irrelevance; lesser of two evils; hidden trade-off; and perhaps the mother of them all—fibbing.

Read more...Sustainable Apartments | Multi-Housing News Online

Rentonomics Report Reveals One Quarter of American Renters Are Uninterested in Home Ownership via, the fastest-growing apartment search engine that is reinventing the rental market on a foundation of trust and transparency, has released the results of its first quarterly “Rentonomics” Report. Forty percent of American households, or roughly 100 million people, are renters, and based on a new survey of approximately 1,000 apartment searchers, nearly one quarter of renters plan to rent for life.

“There are potentially more than 25 million people who are looking to rent for life and that is a huge win for the multifamily industry,” said John Kobs, CEO and co-founder of Apartment List. “This fundamental shift in the mindset of the ‘American Dream’ opens up a great opportunity for owners/operators to leverage more robust ways to market their communities among this subset of renters.”

Read more...Rentonomics Report Reveals One Quarter of American Renters Are Uninterested in Home Ownership - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

The Dangerous Game of No Money Down Deals via Multifamily Insight Blog

Attempting ye old standard “by the book” cookie cutter tactics lamely taught over and over again for single-family investing and applying this to a commercial multifamily deal is a recipe for disaster. In fact, it is a very dangerous game as the end result is that you, the brand spanking new owner of that apartment property, probably have risk your entire net worth for the privilege. Congratulations, cliff dweller.

When was the last time you were, figuratively speaking, thrown under a bus? With respect to nothing down deals, too often people go willingly- under the bus. Year in and year out we get emails seeking guidance on multifamily deals where the buyer has limited or no capital; the proverbial nothing down deal. Lets me be succinct: DON’T DO IT! There. I said it.

Few people seem to appreciate this response prior to gushing with deal specific particulars. Doesn’t matter- don’t do it. I don’t care if your uncle is giving you the deal of a lifetime. Sounds harsh, doesn’t it? Let me explain.

Read more...The Dangerous Game of No Money Down Deals | Multifamily Insight Blog

Multifamily Still on a Growth Track But for How Long? via

Two organizations, the National Multi Housing Council and Freddie Mac, have released projections about the multifamily market that suggest that demand growth is starting to slacken—but only by a little bit. To be sure, the consensus of both organizations is that demand is still stronger than supply and that supply will find it difficult to play catch up because financing remains constrained.

"Multifamily is still a very solid asset class with strong demand," NMHC chief economist Mark Obrinsky tells Still, the question hovers in the background: When will supply overcome demand? The best back-of-the-envelope calculation: not for a very long time. "Demand for apartments by residents will increase at a moderate rate for the near term, maybe even for the intermediate term," Obrinsky says. "I think we have several years of similar kinds of increases that we are seeing now."

Read - Multifamily Still on a Growth Track But for How Long? - Daily News Article

Monday, November 5, 2012

Freddie Mac Makes Big Prediction for MultiFamily Market: 1.7 Million New Renters Expected by 2015 via LoanSafe

The Freddie Mac Multifamily Research Group today released its multifamily real estate market demand forecast for the next several years. The paper forecasts a base case that entails slow economic growth with an additional 1.7 million new multifamily renter households between now and 2015. In addition, the paper forecasts that the multifamily market and demand for rental housing will remain solid and healthy during the same period of time.The forecast analyzes demographic trends, housing supply and economic data. The scenario-based approach explores rental market conditions under different economic environments: slow growth, no growth and accelerated growth.

Forecast Highlights:

Recent declines in homeownership related to economic stress and high foreclosures in the single-family housing market have benefited the multifamily market.

Read more...Freddie Mac Makes Big Prediction for MultiFamily Market: 1.7 Million New Renters Expected by 2015 | LoanSafe

Latest Resident Survey Shows Apartment Owners and Managers Attract Higher Income Residents via

Higher income households are making up an increasing percentage of apartment renters, according to Kingsley Associates' latest resident survey data. For the four quarters ending on September 30 of this year, 76.5 percent of surveyed residents nationally are earning more than $40,000 annually and 41.2 percent are earning in excess of $75,000. For the same time period in 2010, 65.2 percent of residents reported annual household income of more than $40,000, while only 26.2 percent indicated earnings over $75,000. While this trend is observed across all apartment classes, it has been most pronounced at Class B communities.

"Owners and managers have certainly been adding to NOI through rental increases," comments John Falco, Principal, Kingsley Associates. "That has led to recruitment of higher-income residents, who apparently consider renting a better housing solution than they did a few years ago."

Read more...Latest Resident Survey Shows Apartment Owners and Managers Attract Higher Income Residents - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

CMBS Late Pays See Biggest Drop in 14 Months via

CMBS loans continued to recover some of their luster in October, as Trepp reported Friday that the delinquency rate for securitized CRE loans dipped to 9.69%. The 30-basis-point drop was the steepest in 14 months and the third month-over-month decline in a row, according to the locally based CMBS information provider, led by CEO Annemarie DiCola.

Trepp noted that loan resolutions remained high in October, with more than $1.5 billion in loans resolved with losses during the month. Taking these loans out of the delinquency gene pool accounted for 28 bps of downward pressure on the late-pay rate.

Read - CMBS Late Pays See Biggest Drop in 14 Months - Daily News Article

Friday, November 2, 2012

10 Things Every Buyer Needs - To Close A Commercial Real Estate Loan via

For nearly 30 years, I have represented borrowers and lenders in commercial real estate transactions. During this time it has become apparent that many Buyers do not have a clear understanding of what is required to document a commercial real estate loan. Unless the basics are understood, the likelihood of success in closing a commercial real estate transaction is greatly reduced.

Throughout the process of negotiating the sale contract, all parties must keep their eye on what the Buyer's lender will reasonably require as a condition to financing the purchase. This may not be what the parties want to focus on, but if this aspect of the transaction is ignored, the deal may not close at all.

Sellers and their agents often express the attitude that the Buyer's financing is the Buyer's problem, not theirs. Perhaps, but facilitating Buyer's financing should certainly be of interest to Sellers. How many sale transactions will close if the Buyer cannot get financing?

Read more...10 Things Every Buyer Needs - To Close A Commercial Real Estate Loan

Preparing Your Property For Winter via

It’s that time again. Shorter days and cooler nights mean winter is not too far away. Unless your properties are in the Bahamas (lucky you), it’s time to prepare for the winter months. Even property managers in a mild climate need to prepare for the cooler and wetter months ahead.

Creating a checklist of items that need to be checked, changed, or replaced will ensure that any repairs can be done on a timely basis before winter arrives. Be sure to check both occupied and vacant units for the following:

Read more...Preparing Your Property For Winter |

Five Actions Apartment Firms Can Take Now To Protect Sensitive Data From Being Compromised via

It seems that every other day you read a news story about another major retailer or financial institution hacked and their customer’s data falling into the wrong hands. But data breaches aren’t just a concern for the retail industry. Apartment firms are not immune and are at risk, but many don’t know where to begin to prepare. Here are five actions apartment firms can take now to help protect sensitive data:

1 - Use Reliable Vendors: The apartment industry’s reliance on third party vendors complicates the task of safeguarding its tenants’ information. Steve Bridges, who works in professional risk solutions in the Chicago office of Aon Financial Services Group, urges apartment companies to stick with big third-party providers with large client bases.

Read more...Five Actions Apartment Firms Can Take Now To Protect Sensitive Data From Being Compromised - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Thursday, November 1, 2012

Construction Spending in U.S. Climbs to Highest Level Since 2009 via Bloomberg

Construction spending climbed in September to the highest level in almost three years, led by a rebound in homebuilding that is rippling through the U.S. economy.

The 0.6 percent rise brought outlays up to $851.6 billion, the most since October 2009, and followed a revised 0.1 percent August drop that was smaller than previously estimated, the Commerce Department reported today in Washington. The median estimate of 48 economists surveyed by Bloomberg was for a 0.7 percent gain.

Demand for new homes is boosting residential construction as the real estate market sheds excess distressed properties and borrowing costs remain at record lows. At the same time, concerns about the looming “fiscal cliff” of tax increases and spending cuts set to take effect next year if Congress fails to act may be holding back non-residential projects, which make up about 70 percent of construction spending.

Read more...Construction Spending in U.S. Climbs to Highest Level Since 2009 - Bloomberg

Texas Growth Picks Up via Dallas Fed

Growth in the Texas economy picked up in the past six weeks. Job growth strengthened to a 3.1 percent annual rate in September, and the unemployment rate ticked down to 6.8 percent from 7.1 in August. Construction and housing indicators suggest that real estate activity remained strong in September. The energy sector continues to be robust despite recent declines in the rig count, and exports ticked up in August. Political and fiscal uncertainties persist and pose the most significant challenges to stronger growth in the fourth quarter.

Texas Job Growth Gains Momentum
With total nonfarm employment growing at a 3.1 percent clip, the Texas economy added 27,800 jobs in September. Quarterly job growth for Texas and the U.S. suggests that after a significant slowdown in the second quarter, growth picked up in the third quarter (Chart 1).

Read more...Texas Growth Picks Up - Dallas Fed

Increased Demand for Environmentally Friendly Products Makes Green Job Certifications Crucial via

The increased demand for sustainable and environmentally friendly products and services has led to new opportunities for certified professionals in the green workforce.

The U.S. Bureau of Labor Statistics (BLS) defines green jobs as those that produce goods or provide services that benefit the environment or conserve natural resources. They are also jobs in which workers’ duties involve making their establishment’s production processes more environmentally friendly or reduce the use of natural resources.

In March 2012, the U.S. Department of Labor reported that at least 3.1 million Americans were employed in green jobs, a sector that now accounts for about 2.4 percent of the nation’s total employment, an affirmation that green jobs are a real factor of the nation’s economic growth.

Read more...Increased Demand for Environmentally Friendly Products Makes Green Job Certifications Crucial - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Can the Private Sector Step Up if the GSEs Step Down? via Multifamily Executive Magazine

Fannie Mae and Freddie Mac were there when the industry needed them most, but where will they be during the next downturn?

The government-sponsored enterprises (GSEs) have been the picture of consistency over the last four years, as the private sector—banks, life companies and conduit lenders—hunkered down and licked their wounds.

This counter-cyclical liquidity became the silver lining of conservatorship. During the darkest days of the downturn, every borrower had the agencies on speed-dial. After all, if it hadn’t been for the GSEs, cap rates would’ve risen dramatically, and values would’ve plunged, much as they did in every other commercial real estate sector.

Read more...Can the Private Sector Step Up if the GSEs Step Down? - Debt - Multifamily Executive Magazine

Quarterly Survey of Apartment Market Conditions October 2012 via NMHC

The reported index numbers are based on data compiled from quarterly surveys of NMHC members. Survey responses reflect the change, if any, from the previous quarter. The indexes are standard diffusion indexes, hence are convenient summary measures showing the prevailing direction and scope of changes. They are calculated by taking one-half the difference between positive (tighter markets, higher sales volume, equity financing more available, a better time to borrow) and negative (looser markets, lower sales volume, equity financing less available, a worse time to borrow) responses and adding 50. This produces a series bounded by 0 (if all respondents answered in the negative) and 100 (if all respondents answered in the positive).

Read more...Quarterly Survey of Apartment Market Conditions October 2012 via NMHC

Multifamily Still Rockin' and Rollin' at RealShare Apts.via

Last week’s RealShare Apartments conference in Los Angeles was the place to be for multifamily investors, lenders and brokers. With almost 2,000 attendees, this was one of the best turnouts ever. Enthusiasm continues to be high for multifamily properties, despite signs of a returning single-family housing market. For example, while rent hikes could drive some of the best renters into home ownership, financing for homes is still a challenge as credit requirements are high so this will help sustain apartment demand.

The environmental and engineering due diligence industry has a unique “boots on the ground” perspective on the trends in the multifamily and commercial real estate markets. Our services, such as a Property Condition Report and Phase I Environmental Site Assessment, are typically called into play prior to acquisition or financing, so we can serve as a metric for what is going on in the market. A few trends we’ve seen lately include: large portfolios in the 2nd half of 2012; foreign and institutional investor activity in major markets like NYC and LA; REITs leading the way into secondary markets with others following; very active HUD lenders across the country; and of course busy Fannie Mae and Freddie Mac lenders as well.

Read - Multifamily Still Rockin' and Rollin' at RealShare Apts. - The Science of Real Estate Article