Can the Multifamily Boom Last? via Multifamily Executive Magazine

Home starts of structures with five or more units, which rose 56% and 38% respectively in the past two years, are expected to be up again, by 22% to 299,000 units, in 2013, according to NAHB estimates. But several builders in the audience of a seminar at which the association presented its projections during the International Builders' Show last Thursday openly challenged NAHB’s 2013 and 2014 forecasts as being too low and not adequately reflecting what they saw as the increasing share of total starts that rental properties are likely to capture.

Robert Dietz, NAHB’s assistant vice president, tried to put NAHB’s findings within a larger context of events that are driving the housing market’s recovery. Housing, he noted, is contributing positively again to the nation’s GDP growth. The country has also recovered 5 million of the 9 million jobs it lost during the economic recession, and household formation has been rising over the past six quarters to an annualized rate of 850,000. “We see these trends as moving in the right direction,” Dietz said.

Read more...Can the Multifamily Boom Last? - Multifamily, Housing Data, Housing Starts, Housing Trends - Multifamily Executive Magazine

Shift Toward Rental Slowed in Fourth Quarter, Census Bureau Finds via Multifamily Executive Magazine

Both the U.S. homeownership rate and residential vacancy rate slipped lower in the 12 months ended in the fourth quarter of 2012 as a growing number of households shifted to rentals, though that shift slowed in the fourth quarter, according to data released today by the U.S. Census Bureau.

The national vacancy rate among rental units stood at 8.7% during the quarter, a gain of 0.1 percentage points from the previous quarter and a drop of 0.7 percentage points year-over-year. Among homeowner housing, 1.9% stood vacant, virtually unchanged from the previous quarter and down 0.4 percentage points year-over-year.

Read more...Shift Toward Rental Slowed in Fourth Quarter, Census Bureau Finds - Housing Data, Housing Trends, Rents - Multifamily Executive Magazine

Houston Number 1 in 2012 via GlobeSt.com

Local research firm AXIOMetrics Inc. released its results for multifamily construction permits issued in 2012. After analyzing 4,147 locations throughout the United States that had issued permits for housing of five units and above, Houston was solidly at the top, having issued permits for 8,942 units. Following behind was Austin, TX (at 7,545 units), with Dallas coming in fourth at 6,028 units.

Other top locations included:

Seattle 6,575 units
Los Angeles 5,540 units
Denver 4,356 units
Raleigh, NC 3,549 units

Read more...Houston Number 1 in 2012 - Daily News Article - GlobeSt.com

Freddie Mac sets new record for multifamily loan purchase and guarantee volume via HousingWire

Freddie Mac's multifamily business volume — including both loan purchases and bond guarantees — reached a record of $28.8 billion, or a 42% increase, compared to $20.3 billion in 2011.

This volume includes the government-sponsored enterprise's targeted affordable housing products.

The previous multifamily business activity record was $24 billion in 2008.

Read more...Freddie Mac sets new record for multifamily loan purchase and guarantee volume | HousingWire

Guess Who's Driving the Demand for Rental Apartments? via CNBC.com

The housing market is supposedly roaring back. Home prices are seeing their biggest annual gains since 2006.

Renters must be rushing back to buy, right?

Not exactly.

In fact, even as housing and the greater economy improve, a shift in demographic trends will likely favor the rental apartment market for the foreseeable future. It is all about women.

Read more...Guess Who's Driving the Demand for Rental Apartments? via CNBC.com

Lower Rates Stoke Borrower Demand for CMBS Loans via NREIonline.com

The slow recovery in the CMBS market got a big boost in the second half of 2012 thanks to more competitive financing rates. The beleaguered financing niche is hoping that momentum will carry over into 2013.

U.S. CMBS issuance hit a post-crisis high of nearly $48.2 billion in 2012. That volume is still a fraction of the volume that occurred at the peak of the market in 2007 when U.S. issuance topped $228 billion. Yet the industry has made significant strides in rejuvenating a sector that virtually ground to a halt in 2008 when the financial crisis hit.

“I am very optimistic about the CMBS business in 2013. I think volumes will grow substantially. You will continue to see high-quality loans, and you will see more capital raised for the B-piece community,” says Anthony Orso, CEO of New York–based Cantor Commercial Real Estate (CCRE). The real estate finance company, an affiliate of Cantor Fitzgerald & Co., completed five securitizations that amounted to $3.1 billion in 2012 and originated a total of nearly $5 billion in 2012.

Read more...Lower Rates Stoke Borrower Demand for CMBS Loans via NREIonline.com

Job Growth Rate Rises, Unemployment Falls via Real Estate Center at Texas A&M

The Texas economy gained 265,500 nonagricultural jobs from December 2011 to December 2012, an annual growth rate of 2.5 percent compared with 1.4 percent for the United States.

The Real Estate Center's latest Monthly Review of the Texas Economy reports that the state’s nongovernment sector added 258,500 jobs, an annual growth rate of 2.9 percent compared with 1.7 percent for the nation’s private sector.

The state’s seasonally adjusted unemployment rate fell to 6.1 percent in December from 7.4 percent the year before. The nation’s rate decreased from 8.5 to 7.8 percent.

Read more...Job Growth Rate Rises, Unemployment Falls via Real Estate Center at Texas A&M

Housing markets: The return of the bubble? via The Economist

AMERICAN housing markets are at long last recovering from the epic bust that began in 2006. Sales, prices, and construction all seem to have reached a cyclical bottom. Some analysts reckon that a new boom and, possibly, bubble could be inflating, born of tight supply and low interest rates. Robert Shiller is sceptical, noting that while indicators are strengthening, there is little reason to think that short-run momentum must lead to a more sustained price boom. Karl Smith disagrees:

"Shiller and I agree that nothing drastically different occurred in the the economy from March to September. What I do think happened is that the housing market passed a critical point – similar to the notion of “tipping points”, popularized by Malcom Galdwell.

Prior to the Winter of 2011/2012, weakness in the housing market was creating conditions which fostered further weakness in the housing market. During that winter we crossed a point where conditions in the housing market were fostering increased strength in the housing market...

Read more...Housing markets: The return of the bubble? | The Economist

U.S. homeownership rate continues to slip via HousingWire

Fewer Americans are becoming homeowners as the U.S. homeownership rate continues to slip ever so slightly each year, government data shows.

Overall, the U.S. homeownership rate slipped to 65.4% in the fourth quarter of 2012, down 0.6 percentage points from 66% in the fourth quarter of 2011 and a slight drop from a homeownership rate of 65.5% the previous quarter.

Read more...U.S. homeownership rate continues to slip | HousingWire

Eco-Education: Getting Residents Involved in Green Initiatives via Multifamily Executive Magazine

Bruce A. Percelay owns several apartment buildings within two blocks of Boston’s city limits, so he decided to make the area his own green oasis.

Percelay’s Boston-based company, The Mount Vernon Company, owns and manages seven buildings at the heart of the city’s Allston Green District, the city's first environmentally-focused neighborhood.

Percelay said besides doing something good for the environment, he wanted to attract good people to the area. “The tenant that is sensitive to green living is a more sensitive tenant and is, perhaps, a better tenant,” he said.

Read more...Eco-Education: Getting Residents Involved in Green Initiatives - Green Communities - Multifamily Executive Magazine:

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Experts: ‘Apartment Bubble’ a Myth via GlobeSt.com

Despite talk of an “apartment bubble” at conferences on each coast and in closed-door investor meetings, the multifamily market is in no danger of being overbuilt, according to research from Jones Lang LaSalle and other industry experts. JLL’s Jubeen Vaghefi, international director and leader of JLL’s multifamily capital-markets group, spoke to GlobeSt.com during last week’s NMHC Apartment Strategies Conference here and reassured us that the so-called apartment bubble was not likely to burst any time soon.

JLL’s research shows that development of multifamily space across the US has been unabashedly robust over the past year, leaving many anxious about the impact it will have on market conditions, and with nearly 200,000 multifamily units delivered nationwide in 2012, it’s a legitimate worry. But the number necessary to sustain demand fell short by 100,000 units, and a study of historical delivery levels points to a healthy outlook for 2013 and well into 2016.

Read more...Experts: ‘Apartment Bubble’ a Myth - Daily News Article - GlobeSt.com

America's Moving: Hello Texas, Bye-Bye Wyoming via Businessweek

If America’s moving patterns can be considered an accurate economic indicator, then Atlas Van Lines, one of the nation’s largest movers, has some good news: The U.S. economy is rebounding.

Atlas Van Lines has been collecting data on the origins and destinations of interstate moves for 10 years. According to its 2012 study, there are more “balanced” states in the Midwest than in recent times. (For a state to be considered balanced, nearly as many people have to move into the state as leave.) That hasn’t been the case for the last few years as more people have left Midwestern states in search of jobs.

Jack Griffin, president of Atlas World Group, told the San Francisco Chronicle that the shift from more people leaving Midwestern states “is a promising sign that the economy could be stabilizing.”

Read more...America's Moving: Hello Texas, Bye-Bye Wyoming - Businessweek

Houston's Galleria area Multifamily heating up via Real Estate Center at Texas A&M

The Galleria/Uptown submarket has come roaring back in a big way. Houston’s population growth due to its healthy economy has drawn in thousands of young professionals from other large U.S. cities. This, in turn, has led to a tight multifamily market.

Developers have taken note of this opportunity, and the result is 3,200 new units being added to the area in the next two years, according to the Uptown Houston District.

Below is a list of projects under construction on Post Oak Blvd.

Read more...Houston's Galleria area Multifamily heating up via Real Estate Center at Texas A&M

The Outlook for Investing in Secondary and Tertiary Markets via Commercial Property Executive

Follow the job growth. That was the key takeaway during “Secondary and Tertiary Markets: Identifying, Finding and Investing in Commercial Real Estate Opportunities,” the recent Multi-Housing News and Commercial Property Executive webinar sponsored by Yardi and moderated by Executive Editor Keat Foong. Panelists, which included Gary Ralston, managing partner, Coldwell Banker Commercial Saunders Ralston Dantzler Realty LLC; John S. Sebree, vice president, national director, National Housing Group, Marcus & Millichap Real Estate; Albert M. Berriz, CEO, McKinley; and Ernie Katai, senior vice president, Berkadia, looked into commonly overlooked markets and provided insights for investors.

Focusing on the commercial property sector, Ralston said that investors are still concentrating on safe investments, and on an aggregate basis in secondary markets, the prices are still down. The annual population growth of the United States is almost 1 percent, so, according to Ralston, the goal of investors is to focus on states that are growing above that, such as Florida, Texas and Nevada. Additionally, investors and developers should pay attention to areas of employment growth, which he says has shifted to port-driven areas.

Read more...The Outlook for Investing in Secondary and Tertiary Markets | Commercial Property Executive

Dallas Fed: Regional Manufacturing Activity "Strengthens" in January via Calculated Risk

From the Dallas Fed: Texas Manufacturing Activity Strengthens in January

Texas factory activity rose sharply in January, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 3.5 to 12.9, which is consistent with faster growth.

Other measures of current manufacturing activity also indicated stronger growth in January. The new orders index jumped 13 points to 12.2, its highest reading since March 2011. The capacity utilization index shot up from 2.1 to 14.0, implying utilization rates increased faster than last month. The shipments index rose 9 points to 21.9, indicating shipments quickened in January.

Read more...Calculated Risk: Dallas Fed: Regional Manufacturing Activity "Strengthens" in January

Multifamily Financing - The Seller Carry-back via Multifamily Insight Blog

Seller carry-back financing. So simple, so eloquent. So screwed up so often. This article will discuss seller carry-back from the sell side perspective. Most buyers are of the opinion that obtaining a seller carry-back is a good thing. Most sellers are confused on the matter thus refrain from its’ consideration (as a confused mind always says no- to everything).

I recently drove by a national burger chain advertising their latest fare: a Turkey Jalepeno Burger. Now that’s creative! Not very appetizing in my book, but creative. No doubt this offering is the product of hundreds of hours of market research and taste test. It was probably first offered in just a few stores. If it has legs the store expansion will continue.

Mortgage loan products are developed in a similar way. If you recall, CMBS (Commercial Mortgage Backed Securities) is a relatively new mortgage product. The first tranche was not a billion dollar portfolio, more likely one hundred million, then tinkered with until deemed viable to sell to institutional investors.

Read more...Multifamily Financing - The Seller Carry-back | Multifamily Insight Blog

Research Points to Strong Multifamily Sector This Year via DSNews.com

The industry seems to agree the multifamily housing market is recovering well and will continue to show positive signs this year. Both Fannie Mae and the National Association of Home Builders report low vacancies and climbing rents for 2012 and anticipate a strong market in 2013.

“Last year was a banner year for the multifamily market, and our baseline forecast calls for further steady growth in the rate of multifamily production,” said NAHB chief economist David Crowe at the association’s recent show.

Fannie Mae expects asking rent prices to increase about 2.5 percent this year and expects vacancy rates to increase to about 6 percent, keeping in line with historical norms.

Read more...Research Points to Strong Multifamily Sector This Year via DSNews.com

Rental demand to grow by 6.6 million through 2016 via HousingWire

The demand for rental housing is expected grow by nearly 6.6 million units through 2016, with about 4.2 million new renters attributing to the total.

Many factors will play into the rental housing growth trend including more inventory going into rentals as well as an attractive single-family rental sector for large institutional grade investors – national providers that are present in multiple states and/or cities, said chief marketing officer Jim Warren of FirstService Residential Realty.

FirstService Residential Realty is the largest, residential single-family property management company in North America. The company manages residential, ranging from affordable housing to luxury multifamily communities.

Read more...Rental demand to grow by 6.6 million through 2016 | HousingWire

Some Assembly Required: FCRC Builds Modular Apartment Tower via NREIonline.com

The latest high-rise tower under construction in Brooklyn, N.Y., will be largely built in a factory.

Workers broke ground December 18 on B2, the first of several residential towers planned at Forest City Ratner Cos.’ (FCRC) Atlantic Yards development near Downtown Brooklyn, next to FCRC’s newly completed Barclays Center arena.

“This will be the tallest building in the world using modular technology,” says Bruce Ratner, chairman and CEO of FCRC. “And I must tell you that it will also be beautiful." The new, 32-story tower will be LEED-certified, with better air-quality and more efficient insulation than conventional construction. Modular construction techniques create this high quality of construction at a significant cost savings, according to FCRC.

Read more...Some Assembly Required: FCRC Builds Modular Apartment Tower via NREIonline.com

Utility Management Improvements Add $10 Million to Property Value [Case Study] via Property Management Insider

Through a series of retrofit and design changes and utility management improvements, the Fillmore Center apartment building reduced water consumption and lowered energy costs to save the property about $500,000 annually and enhance property value by $10 million, based on today’s cap rates.

Combined with enhancements to recycling and transportation accessibility, the downtown San Francisco property, managed by the Laramar Group, became the largest multifamily property on the West Coast to earn a Leadership in Energy and Environmental Design (LEED) certification.

By working with public utility companies, Laramar Group was able to get a return on the improvements in less than two years. That success has fueled other projects within the company’s $1 billion portfolio of properties from replacing existing water fixtures with low-flow models to replacing appliances with those that have EnergyStar ratings. A high-rise in Chicago is currently going through similar renovations.

Read more...Utility Management Improvements Add $10 Million to Property Value [Case Study] | Property Management Insider

Value-Add Focus for Multifamily During 2013 via GlobeSt.com

Presenters at the 24th annual Tarrant County Commercial Real Estate Forecast on Jan. 24 offered a consistent message to the 575 participants who showed up: Fort Worth is doing fine with jobs and the economy, as is Texas. Trends and predictions did differ between sectors, however.

Drew Kile, associate director with Institutional Advisors, a Marcus & Millichap Co. and Cypress Equities and SRS Real Estate Partners CEO Chris Maguire discussed multifamily and retail trends, respectively. The trends shared between these two sectors included higher demand for mixed-use and urban infill assets. Another trend these sectors shared was a tightening of available units and/or space. These were the only trends these two sectors shared in common, however.

One interesting issue introduced by Kile involved actual multifamily starts. "There were more developments announced in 2012, but fewer starts due to increasing construction costs," he says. The example he cited was sobering – at the beginning of 2012, construction costs had increased approximately 5%. "As the year went on," Kile says, "we were seeing 15% increases."

Read more...Value-Add Focus for Multifamily During 2013 - Daily News Article - GlobeSt.com

Apartment Investment: New Paradigm or Wishful Thinking? via Multifamily Executive Magazine

Few asset classes can boast a convergence of favorable circumstances to rival that of the apartment sector. Whether by choice or necessity, record numbers of American families have swelled the rental ranks since the onset of the housing market collapse, fueling the robust property fundamentals that undergird the sector’s post-crisis investment thesis.

Absent stronger economic foundations for space demand, no other property sector has evinced a similar pattern; and so, nearly four years after the economy’s return to expansion, apartments continue to define the recovery in commercial real estate. But the sector’s outperformance cannot persist indefinitely. In 2013, firming housing market conditions will coincide with the cycle’s first measurable increases in apartment supply, moderating property income trends and reinforcing the need for risk management in new lending.

Read more...Apartment Investment: New Paradigm or Wishful Thinking? - Apartment Trends - Multifamily Executive Magazine

Financial Stability: Traditional Banks Pave the Way via Dallas Fed

A "back-to-basics" approach to banking that restores market discipline and allows the largest financial institutions to fail could help the nation realize financial stability, according to this special report.

This report features a series of five essays by Dallas Fed financial experts focused on rethinking America's banking system:

* Community Banks Withstand the Storm
* A Lender for Tough Times
* Small Banks Squeezed
* Regulatory Burden Rising
* Leveling the Playing Field

Read more...Financial Stability: Traditional Banks Pave the Way - Dallas Fed

Banking Sector Getting Healthier but Still Dealing with Non-Performing Notes and OREO via NREI Readers Write

The U.S. banking industry has recovered steadily from its doldrums during the Great Recession; however, many lending institutions are still faced with a significant amount of troubled real-estate loans.

That was the view of a panel of experts on a recent episode of the “Commercial Real Estate Show” radio program. Guests provided an enlightening look at the banking sector and outlined a wide array of strategies and valuable tips for banks and other lenders faced with problem loans.

Numbers Improving

As of September 2012, 91 percent of U.S. banks were profitable, according to Christopher Marinac, managing principal and director of research for FIG Partners. “[Still], if you go back seven years, the industry was making 14 to 15 percent returns on equity. That no longer is the case. We’re closer to 8 or 9 percent, as a general rule.”

Furthermore, 51 banks failed in 2012, a notable decline from the preceding years, Marinac added. He predicted that number to drop to approximately 30 this year.

Read more...Banking Sector Getting Healthier but Still Dealing with Non-Performing Notes and OREO | NREI Readers Write

Dirty Data Can Cost Properties Thousands in Utilities Overcharges via Property Management Insider

Something very dirty is happening within the apartment industry. It’s called dirty data.

It’s nothing that will prompt a high-level internal affairs investigation, but this polluted energy consumption information should be of concern to property owners who are watching the bottom line. Dirty data simply is incorrect electricity, gas or water information associated with a property’s utility bill.

Dirty data comes in all sizes and shapes. For example, the read dates are extended so the billing doesn’t reflect a typical 30-day read period. Or the consumption doesn’t match the expense. Or rates are calculated by a multiplier of 100 instead of 10. Before you know it, what should have been a $10,000 bill passes unnoticed through a property’s accounting system at double, triple or, even 10 times the rate. Maybe a month, two months, or a year later, if and when the error is found the cleanup can begin.

By then, the damage has been done.

Read more...Dirty Data Can Cost Properties Thousands in Utilities Overcharges | Property Management Insider

New Rules for CMBS Draw Closer via NREIonline

In the wake of the financial crisis, policymakers and regulators have introduced a slew of new and proposed rules and regulatory requirements aimed at banks and other financial institutions—most notably through the Dodd–Frank Wall Street Reform and Consumer Protection Act.

Reforms that have been years in the making are still a work in progress with the details and timing of the new rules a constant moving target. Yet key issues that will move to the forefront in 2013 are new risk retention requirements, particularly those changes proposed through the Premium Capture Cash Reserve Account (PCCRA) provision.

Read more...New Rules for CMBS Draw Closer via NREIonline.com

Rental market remains robust in San Antonio, RealFacts reports via San Antonio Business Journal

While the national numbers may be somewhat lackluster, the San Antonio figures for the apartment market are at least a little more promising, according to a recent analysis by San Francisco-based multifamily research firm RealFacts.

As of fourth quarter 2012, the citywide rent for the apartment market in the San Antonio MSA was $785 a month — up from $760 a month as of fourth quarter 2011.

Read more...Rental market remains robust in San Antonio, RealFacts reports - San Antonio Business Journal

5 Reasons Why People Rent Multifamily Apartments via Multifamily Insight Blog

Many believe the only reason people rent multifamily apartments is because of housing affordability, meaning; people only rent because they cannot afford to be home owners. This is simply not true. There are a myriad of reasons why people rent apartments. Following are just a few of those reasons.

Convenience. Apartments homes can provide varying types of convenience; close to work; easy commute to the city center, proximity to parks, etc. People define convenience in many ways. Convenience can be as simple as having the ability to make only a short-term commitment (one year lease versus owning forever). Convenience can be keeping one’s options open to other opportunities by being mobile.

Read more...5 Reasons Why People Rent Multifamily Apartments | Multifamily Insight Blog

LIHTC's 50-50 Outlook - Lihtc, Equity, Tax Credits via Multifamily Executive Magazine

The low-income housing tax credit (LIHTC) has less than a 50 percent chance of survival 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 tough odds for the industry to consider.

Read more...LIHTC's 50-50 Outlook - Lihtc, Equity, Tax Credits - Multifamily Executive Magazine

Survey: Buying a Home Beats Renting in Most Markets via CBS News

Home values continue to take it on the chin. The latest update of the S&P/Case-Shiller home price index for 20 large metro areas says values fell 3.3 percent over the 12 months through February. Not great for homeowners to be sure, but soft home prices are in fact creating an interesting conundrum for renters. New data from real estate research firm Trulia says buying rather than renting, is now a far better financial deal in about 80 percent of the largest cities.

There's no guarantee when housing will finally bottom, but four plus years into the reset, we're much closer to the end than the beginning. If you've got your eye on ownership and live in an area where renting isn't a roaring deal, maybe it's time to start sniffing around the open houses. That is, if you think you'll be able to scale today's tougher mortgage lending standards.

Where Buying is the Best Deal
Trulia calculates a rent-vs.-buy ratio by comparing the median list price of homes in the 50 largest cities with the median rent for two-bedroom apartments, condos, and town homes. A ratio below 15 means buying is much less expensive than renting, after accounting for the total costs of home ownership. According to Trulia's second-quarter data run, buying is the better financial deal than renting in 39 of the 50 cities. No surprise, markets with a large foreclosure inventory (and thus soft prices) such as Las Vegas, Phoenix, and Miami top the list of cities where buying beats renting by the widest margin.

Read more...Survey: Buying a Home Beats Renting in Most Markets - CBS News

Revenue Growth Slows for Dallas/Fort Worth Apartments in Q4 via Property Management Insider

Employment growth remains very strong in North Texas. That’s triggered big increases in both home sales and in apartment construction. As a result, apartment revenue growth levels have eased.

Watch video...Revenue Growth Slows for Dallas/Fort Worth Apartments in Q4 | Property Management Insider

Forecasts Continued Growth Across Most Apartment Market Areas in 2013 via Axiometrics

Axiometrics Inc., the leading provider of apartment data and market research, reported today that the national apartment market averaged a healthy 3.85% effective rent growth rate in 2012, down slightly from an average of 4.75% in 2011. While Axiometrics expects some moderation across different markets this year, especially as new supply begins to come online in much larger numbers, it is forecasting effective rent growth to remain positive in 2013 at an average rate of 3.6%. The firm is also tracking almost 164,000 new units that are scheduled for delivery in 2013, nearly double the 2012 delivery total of approximately 86,000 units.

"The apartment market produced steady, solid results in 2012, though many MSAs were down from the peak rent growth levels seen in the summer of 2011," said Ron Johnsey, president of Axiometrics. "Overall rent growth in 2013 is forecasted to be relatively the same as it was in 2012, but we expect to see more variation across MSAs as effective rent growth increases in some markets but moderates in others. As always, the numbers can change depending on key factors such as continued job growth, consumer acceptance of rent increases for a fourth consecutive year, and absorption of new supply."

Read more...Axiometrics Forecasts Continued Growth Across Most Apartment Market Areas in 2013

Special Servicing: How Likely Are Loan Extensions Today? via Commercial Property Executive

Beware. Rather than “extend and pretend,” special servicers and bank asset recovery groups may have no qualms today about moving to take back underwater properties if they do not see satisfactorily improved circumstances in future.

“Where the property is fully leased but it was over-levered to begin with or because the rents have dropped and there really is no near-term prospect for the rents to rise, we will liquidate, as the situation will not get any better than it is today. There is no reason to (extend the loan),” explained E.J. Burke, executive vice president & group head of KeyBank Real Estate Capital and Corporate Banking Services. Burke was referring to CMBS loans under special servicing.

Read more...Special Servicing: How Likely Are Loan Extensions Today? | Commercial Property Executive

Why Number 275 is Essential to Lease Renewals via Property Management Insider

Within every property management company, there are people known as “Manager Makers.” These individuals possess the skills to hire the right people, train them on the ins and outs of managing a community, and set them on the fast track for promotions. I was fortunate enough to work with such a person at the beginning of my property management career. This manager was constructive in her criticism and generous with her praise.

Upon my first day at the community, I noticed a frame on her desk with the number 275. That’s it; nothing but the number 275. Intrigued by the symbol, but too intimidated to ask, I wracked my brain trying to figure out what that number stood for. Number of apartment homes at the community? No – we had over 500. Number of evictions year to date? Impossible. What about the number of people she had fired throughout her career? Goodness, I hope not! The more I thought about it, the more bizarre the possible solutions became.

Read more...Why Number 275 is Essential to Lease Renewals | Property Management Insider

The Future's so Bright ...via Calculated Risk

It looks like economic growth will pickup over the next few years. I've written about this before - a combination of growth in the key housing sector, a significant amount of household deleveraging behind us, the end of the drag from state and local government layoffs (four years of austerity nearing the end), some loosening of household credit, and the Fed staying accommodative (with a 7.8% unemployment rate and inflation below the Fed's target, the Fed will remain accommodative).

The key short term risk is too much additional deficit reduction too quickly. There is a strong argument that the "fiscal agreement" might be a little too much with the current unemployment rate - my initial estimate was that Federal government austerity would subtract about 1.5 percentage points from growth in 2013 (Merrill Lynch estimate up to 2.0 percentage points including an estimate for the coming sequester agreement). This means another year of sluggish growth, even with an improved private sector (retail will be impacted by the payroll tax increase). But ex-austerity, we'd probably be looking at a decent year.

Read more...Calculated Risk: The Future's so Bright ...

Early Warning for Multifamily: Growth May Be Too Much of a Good Thing via NREIonline

The real estate analysts at the CoStar Group worry that the continuing growth in multifamily development may be too much of a good thing.

“Apartment construction has been on a tear in certain markets,” reads the latest CoStar report. “With the inventory growing at more than four or five times the national rate, vacancies will most likely increase.”

CoStar has picked out the apartment markets with the highest levels of construction currently underway compared the existing inventory of apartments. Raleigh, N.C., is at the top of the list, followed by two Texan cities: San Antonio and Austin. In all three of these cities, the number of apartments underway is more than 5 percent of the total existing inventory.

Read more...Early Warning for Multifamily: Growth May Be Too Much of a Good Thing via NREIonline

Analysis: More Americans leave parental nest in boost for housing via Reuters

Americans are feeling increasingly confident in the future and more and more are striking out to set up their own homes, a move that is helping propel the housing recovery.

The deep financial crisis and recession of 2007-2009 kept many Americans from leaving their parents' nests and drove others back into them, putting a sharp brake on the pace at which new households formed.

Household growth averaged about 500,000 per year from 2008 through 2010 - less than half the rate seen at the height of the housing boom in the years just before that. The pace in 2010 was the weakest since 1947.

Read more...Analysis: More Americans leave parental nest in boost for housing | Reuters

2012 Apartment Market Summary via Axiometrics

The apartment market produced steady, solid results throughout 2012. While many MSAs moderated from peak rent growth levels achieved during the summer of 2011, national effective rent growth still averaged a healthy 3.85% over 2012. Also in 2012, the occupancy rate averaged 94.2%, as compared to an average of 93.9% in 2011. Because of seasonality, the December rates are lower than the full-year average, but not by much. Annual effective rent growth was 3.72% in December while the occupancy rate was 94.1%.

For 2013, Axiometrics is forecasting effective rent growth of 3.6% at the national level. While the overall growth is forecasted to be relatively the same as 2012, effective rent growth is forecasted to improve in some MSAs while moderating in others. In addition, the national average occupancy rate for stabilized product is forecasted to rise in 2013 to an average rate of 94.9%. For the national average to achieve that occupancy rate, Class C properties will need to build on the momentum they generated during 2012. The main factors in the validity of the forecasts are continued job growth, acceptance of rent increases by consumers for a fourth consecutive year, and absorption of new supply.

Read more...2012 Apartment Market Summary via Axiometrics

Tenant Trends: 5 Tips On What Renters Want via Appfolio.com

A successful property manager knows that keeping up with tenant needs and expectations is important and ultimately benefits the property management firm’s strength in the market. Tenants’ tastes and priorities change over time, so it is critical to keep updated on the latest trends. To that end, you can capitalize on the following five tenant trends to focus your marketing, guide new investments, and structure rules in your leases. When you have what tenants want, word will spread, your reputation will be enhanced, and your business will benefit.

5 Tenant Trends

Bigger Is Not Always Better
In a recent survey, 60% of the participants said they would move to a smaller unit for a more convenient location. The era of oversized dining rooms and extra living rooms is over. People are overloaded by work and life commitments. They are overwhelmed with information overload. As a result, they are looking to be more efficient nowadays in everything they do, including their apartments. Focus on nearby amenities in your marketing, as that will help you to attract new renters looking for convenience and efficiency.

Read more...Tenant Trends: 5 Tips On What Renters Want via Appfolio.com

Five Facts on the Housing Construction Rebound via WSJ

Housing construction ended 2012 on a high note, with new units in December rising 12% from November and 37% from a year ago.

The boom in construction shouldn’t be too surprising, given that permits have risen in recent months and that builder confidence has risen. But it is a clear indication that rising household formation and sharp drops in the number of homes for sale are finally benefitting home builders. Five facts help to put today’s report in context:

1. Multifamily housing starts accounted for the highest share of overall housing starts, at 30%, since 1986, when the U.S. experienced overbuilding in the apartment sector. Of course, back then, there were more than double the number of apartments being constructed. (The multifamily share of construction fell to just 15% in 2005, the peak year of new home construction).

Read more...Five Facts on the Housing Construction Rebound - Developments - WSJ

Mandatory Renter's Insurance on the Rise via Multifamily Executive Magazine

Smoke pouring from broken windows. Fire trucks in the parking lot. It’s frightening to experience a fire at your property. Even if no one’s hurt, the cost to repair the damage from a simple fire from a resident’s stove can easily top $50,000. And if the resident responsible for the fire doesn’t carry renter's insurance, the nightmare may just be beginning.

You might think your property insurance policy would cover the cost of damage to your apartment community. But insurance companies are getting tougher. Rising deductibles can often reach $25,000, or even $100,000.

“Property insurance companies don’t want to get into these attritional losses,” says Steven Sachs of the Willis Group, an insurance brokerage firm based in New York City.

Read more...Mandatory Renter's Insurance on the Rise - Property Management - Multifamily Executive Magazine

Texas Apartment Market Update December 2012 via www.poconnor.com

December 2012 Texas Apartment Market Stats for DFW, Houston, Austin and San Antonio from O'Connor & Associates. They are a great resource for apartment data in Texas.

Read more... Texas Apartment Market Update December 2012 via www.poconnor.com

Long-Term Renting: A Homeownership Alternative via Multi-Housing News Online

The nation’s homeownership rate is the lowest in 50 years, estimated at 62.1 percent, as reported by the Examiner. With 3.8 million homeowners 90 days or more delinquent on their mortgage payments and a wavering single-family housing market, long-term renting appears a much more viable solution to deal with the economic uncertainties that affected the residential real estate during the recession.

The overall U.S. apartment sector gained considerable momentum in the first two quarters of 2012, spurred by an increased demand of urban living and a shortage of new residential development. The improved multifamily market conditions allowed landlords to raise rents and continue on a path of steady recovery, though at a slower pace than earlier this year.

Read more...Long-Term Renting: A Homeownership Alternative | Multi-Housing News Online

Dallas Beige Book January 2013 via Dallas Fed

The Eleventh District economy expanded at a modest pace over the past six weeks. Reports on manufacturing activity remained mixed. Real estate and construction activity continued to improve. Retailers said holiday shopping boosted sales, and automobile dealers reported that sales were above year-ago levels. Staffing, accounting and legal services firms noted steady demand, while reports from transportation service firms were mixed, but improved overall. Energy activity remained at high levels despite a decline in the rig count, and financial firms reported modest growth in loan demand. Agricultural conditions remained dry. Prices were mostly stable, and wage pressures remained limited. Employment levels were steady to up. Many responding firms' outlooks reflected fiscal uncertainty during the reporting period.

Read more...Dallas Beige Book January 2013 - Dallas Fed

Houston Economic Update January 2013 via FRB of Dallas

The Houston Business-Cycle Index decelerated to a 4.4 percent growth rate in November, implying a slowing expansion in the region. Energy-related activities, construction and international trade continue to propel growth. Regulatory uncertainty, the U.S. fiscal situation and stresses in the global economy cloud the horizon, but area industry fundamentals are firmer than they were in much of 2012.

2012 is shaping up to be a banner year for Houston employment growth. Although it slowed in November, monthly employment growth averaged 3.7 percent over the year. Construction, health care, and leisure and hospitality continued to lead growth in November.

Read more...Houston Economic Update January 2013 via FRB of Dallas

M-F Construction Could Approach '99 Peak Levels by Year End via Commercial Property Executive

The multi-family sector will continue to be the darling of the commercial real estate industry throughout 2013 according to panelists on the “2013 Kick-Off Webinar for Apartment Development” hosted by Humphreys & Partners Architects. Although rental rate growth is slowing down, construction rates are on the rise and could approach peak levels of the past cycle by the end of 2013.

Apartment development will remain hot due to the combination of supply constraints, demographics and the availability of capital, according to Doug Bibby, president of NMHC. He said that capital is flowing heartily to the ‘A’ markets and ‘A’ properties, and that there is a continued interest from foreign capital sources.

Read more...M-F Construction Could Approach '99 Peak Levels by Year End | Commercial Property Executive

Facing Few Investment Alternatives, Senior Lenders Seek CRE Deals via NREIonline.com

Under pressure to find good use for their money and encouraged by gradually improving property fundamentals, banks and life insurance companies upped their investments in commercial real estate in 2012. A stronger than expected thaw in CMBS lending has created a further incentive for senior lenders to become more aggressive on commercial mortgages, leading to hopes of even more robust lending activity in 2013.

While the Mortgage Bankers Association (MBA), an industry trade group, reported a 7 percent year-over-year drop in all commercial/multifamily loan originations in the third quarter of 2012, commercial banks increased their origination volume by 8 percent. Through the first three quarters of the year, banks increased their lending volume by 44 percent, according to the MBA, though life insurers’ loan volume fell 6 percent.

Read more...Facing Few Investment Alternatives, Senior Lenders Seek CRE Deals

Green Building Trends for 2013 via SustainableBusiness.com

Green building will continue its rapid expansion around the world in 2013, even in the face of continuing economic difficulties in the US and Europe, says consultant Jerry Yudelson.

By the latest count, there are 50,000 LEED projects underway.

Here's what Yudelson sees as the most important trends this year in green building:

Green Renovations lead in North America. The fastest growth will be in green retrofits at universities at non-profits.

In fact, the focus of the green building industry is changing from new buildings to greening existing buildings. LEED for Existing Buildings Operations and Maintenance (LEED O+M) has been seeing the most certifications in the past three years, and now exceeds new construction certifications by cumulative floor area.

Read more...Green Building Trends for 2013 via SustainableBusiness.com

What Will Happen With Apartment Rents in 2013? via Property Management Insider

In part 3 of our What to Watch for in 2013 series, we discuss which markets performed best and worst for rent growth in 2012, and we also take a look at national expectations for 2013. Which markets offer upside potential, and which bring downside risk?

Watch video...What Will Happen With Apartment Rents in 2013? | Property Management Insider

Construction Pipeline Forecast: 2013 and Beyond via Multifamily Executive Magazine

A healthy volume of new supply will start hitting the streets this year.

Given the two-year lead time on new construction projects, and the fact that construction lenders awoke from recessionary slumber roughly two years ago, the flood gates are starting to crack open.

Dallas-based Axiometrics is currently tracking close to 1.4 million units in varying stages of the construction pipeline, across 328 metro statistical areas (MSAs) and 833 submarkets. Of this total, the firm expects more than 164,000 units to deliver during 2013, nearly double the number delivered in 2012.

Read more...Construction Pipeline Forecast: 2013 and Beyond - Multifamily Building - Multifamily Executive Magazine

ALN Monthly Newsletter January 2013 via ALN Apartment Data

ALN Data just released their December 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 January 2013 via ALN Apartment Data

Small Properties, Big Challenges via CCIM Institute

Investors who manage their own small properties have only three small problems: tenants, money, and time. And for professional third-party property managers who handle small properties, add landlords to that list.

Those challenges cropped up most frequently in an informal survey of CCIM members who are owners/managers or third-party managers of properties under 20,000 square feet or, in the case of multifamily, fewer than 50 units. While not comprehensive, the anecdotal, self-reported survey provides a snapshot of the landscape small-property owners and managers occupy in a still-struggling economy.

Read more...Small Properties, Big Challenges | CCIM Institute

Commercial Real Estate Vacancies Slowly Declining, Rents Rising via Realtor.org

Commercial Real Estate Outlook is produced quarterly by NAR's Research division and includes the latest market information on five major commercial real estate sectors — industrial, office, multi-family, retail and hospitality real estate.

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 published on November 26, 2012.

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

Could You be in Violation of Fair Housing Laws Without Even Realizing It? via Multifamily Blogs

As we all well know, the Fair Housing Act prohibits any type of discrimination from Real Estate Professionals when choosing who to rent their property or unit to in regards to race, gender, sexual orientation, disability, family status or national origin, and in some counties: section 8 voucher status (tenantsunion.org). But what about disparate impact?

Disparate impact is the legal theory that people of certain races and ethnicities are disproportionately represented in the criminal justice system. This theory was previously used in regards to employment, but in recent years has moved into the real estate industry as well. The theory states that the use of criminal records for tenant screening purposes has a disparate impact on certain minorities who have been disproportionately represented in the legal system, and who therefore have criminal records that could be used to determine that they should not be rented to. Fair Housing Advocates argue that in effect, while you may be following all Fair Housing Laws, and screening every applicant, you could be inadvertently discriminating against certain minorities (Wikipedia).

Read more...Could You be in Violation of Fair Housing Laws Without Even Realizing It? - Multifamily Blogs

Rents in America, 2010 Midterms to 2012 Election via Multifamily Executive Magazine

Overall, rents in the United States increased by 9.7% in the two-year period.

Read more...Rents in America, 2010 Midterms to 2012 Election - Rent Trends - Multifamily Executive Magazine

5 Multifamily Rental Revenue Growth Strategies via Multifamily Insight Blog

Every operator wants rent growth. Rent growth, rent growth, rent growth. Ok, ok, ok. I understand. Year over year rent growth is the most important driver of revenue growth. How do you get it?

1. Renewals. Always at the top of the list. Nothing keeps income ticking like retaining in-place residents. Start the renewal process early. Recognize this as your number one tool for maintaining stabilized occupancy.

2. Resident screening. Our customers make or break our business. Set your standards, stick to your standards. This ‘great recession” has created the need for some changes in credit underwriting but not so much as to bend past the point of reasonableness.

Read more...5 Multifamily Rental Revenue Growth Strategies | Multifamily Insight Blog

Torrid CMBS Rally Seen a Bit Too Much, Too Soon via WSJ

The commercial mortgage bond rally may be getting a bit long in the tooth.

After gains of 4% so far this year and 13% since mid-November, some of the riskier commercial mortgage-backed securities that have led the market higher are at danger of a reversal, warns Deutsche Bank DBK.XE -0.76% strategist Harris Trifon.

Mr. Trifon on Friday told investors in a research note that “those who have benefited from the recent price appreciation would be wise to take profits.”

Read more...Torrid CMBS Rally Seen a Bit Too Much, Too Soon - Developments - WSJ

Houston: Job growth, wage increase predictions via Real Estate Center at Texas A&M University

More Houston employers are expecting to hire this year, continuing the trend of job growth in the area. A report by Houston-based Murray Resources Ltd. indicates that 78.7 percent of companies expect to hire this year — up 10 percent from 2012.

Of the companies surveyed, 70 percent report they will hire more full-time workers — an indication of confidence since employers tend to hire part-time and temporary workers when they are less confident about the economy.

Local marketplace trends, such as increased worker hours in manufacturing, indicate Houston is still in full recovery mode due to the robust energy industry.

Read more...Houston: Job growth, wage increase predictions via Real Estate Center at Texas A&M University

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

Total returns for commercial real estate and apartment investment fell in the third quarter, according to statistics from the National Council of Real Estate Investment Fiduciaries.

Financing volume has increased this year, as reflected in the Mortgage Bankers Association’s (MBA) originations volume index. Compared to the same period a year ago, the third quarter financing index is 30 percent higher.

The New York City multifamily foreclosure rate has returned to the second quarter level with respect to the number of properties scheduled for foreclosure auctions.

The seasonally-adjusted September starts of 260,000 units represented the highest level in four years, and a 25 percent gain from last month, according to the National Association of Home Builders (NAHB). Moreover, this rate is likely to be sustainable, according to NAHB. And permits for the same month are at the highest reading since June of 2008.

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

Realtypin.com Releases Top 5 Places to Live in 2013 with Dallas / Fort Worth Area Topping the List via MultifamilyBiz.com

So you've decided it's time for a change of scenery, and you're ready to move to a new town with new opportunities - but you haven't decided where to go yet! A quick internet search will bring up dozens of "best places to live" lists, but how do you know which list you should trust and which ones you shouldn't?

Realtypin.com's top 5 list takes several factors into consideration - including median listing prices, average number of days a home is on the market, inventory, home value stability, and the local unemployment rate (since the economy dictates home buying). After analyzing these statistics, we think these are your five best bets when it comes buying a home in 2013:

Read more...Realtypin.com Releases Top 5 Places to Live in 2013 with Dallas / Fort Worth Area Topping the List - Multifamily News Headlines – Breaking News, Stories, Top Headlines :: MultifamilyBiz.com

Units Under Construction Could Approach 1999 Peak Levels by Year End via Multi-Housing News Online

The multifamily sector will continue to be the darling of the commercial real estate industry throughout 2013 according to panelists on the “2013 Kick-Off Webinar for Apartment Development” hosted by Humphreys & Partners Architects. Although rental rate growth is slowing down, construction rates are on the rise and could be back to peak levels of the past cycle end of 2013.

Apartment development will remain hot due to the combination of supply constraints, demographics and the availability of capital, according to Doug Bibby, president of NMHC. He says that capital is flowing heartily to the ‘A’ markets and ‘A’ properties, and that there is a continued interest from foreign capital sources.

Read more...Units Under Construction Could Approach 1999 Peak Levels by Year End | Multi-Housing News Online

U.S. CMBS delinquencies finish 2012 below 8%; office & retail struggle via Reuters

U.S. CMBS delinquencies closed out 2012 with seven straight months of declines, while late-pays on office and retail loans bear close watch this year, according to the latest index results from Fitch Ratings.

CMBS delinquencies fell 18 basis points (bps) last month to 7.99% from 8.17% a month earlier. In December, resolutions of $1.7 billion outpaced additions to the index of $1 billion. In addition, $4 billion in new Fitch-rated deals closed in December. No loans over $100 million transferred into the index last month, the second straight month this has occurred.

Read more...TEXT-Fitch: U.S. CMBS delinquencies finish 2012 below 8%; office & retail struggle | Reuters

Surprise, Surprise: Multifamily Remains Hot via GlobeSt.com

The bad news offered at the 2013 Kick-Off Event for Apartment Development on Jan. 9 is that Congrss, and Washington DC, are still a mess, rife with postponement of mandatory cuts and yet another proposed confrontation over the debt ceiling in early March. The good news? It doesn't seem to be impacting the multifamily sector all that much.

The webinar, hosted by locally headquartered Humphreys & Partners Architects offered experts sharing everything from insight, to design trends, to whether the money and capital are out there to develop new multifamily product. According to Vic Clark, managing director, originations with Centerline Capital Group, the answer to this latter question is an unqualified "yes."

Read more...Surprise, Surprise: Multifamily Remains Hot - Daily News Article - GlobeSt.com

Chandan: Don’t Bank on Low Interest Rates via GlobeSt.com

The fact that the economic baseline for 2013 looks better than last year’s is important, Dr. Sam Chandan, president and chief economist of Chandan Economics, said Wednesday at a forecast breakfast cosponsored by his firm and Avison Young. Domestic GDP growth, for example, is projected at 2.2%, ahead of the 1.9% achieved in 2012. However, he said, “The fundamentals are not keeping pace with what we see happening with investment.”

Apartments, for example, have been the “poster child” among the major property sectors, but multifamily’s success is tied in part to a “complex relationship” with the single-family housing market, Chandan said at Wednesday’s event, held at the Cornell Club in Midtown. Once housing starts and prices begin picking up, as they eventually will, apartments’ luster may start to dim.

Read more...Chandan: Don’t Bank on Low Interest Rates - Daily News Article - GlobeSt.com

Economic Outlook | The Texas Economy via Texas Comptroller

Job 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.

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

As New Supply Picks Up in 2013, Will Apartment Demand Follow? [Video] via Property Management Insider

Is apartment demand expected to increase in 2013? The short answer: Yes. Job growth is expected to strengthen some in 2013, while the loss of renters to home purchase is unlikely to be the big headwind that some fear it will be. We’ll explain why in the second part of our series, “What to Watch for in 2013.”

Watch video...As New Supply Picks Up in 2013, Will Apartment Demand Follow? [Video] | Property Management Insider

Texas Multifamily Hugely Active in 2012 via GlobeSt.com

There's little doubt that 2012 was a highlight year for the multifamily sector in Texas. Occupancy throughout the four major cities (and the state, for that matter), was well above 90% to 92%, with limited product coming online (though more is under construction in Dallas and Austin than in Houston). Thanks to investment and renter activity in the multifamily sector this past year, "most brokers and principals are smiling," comments Ed Nwoediki senior director, Apartment Brokerage Services at Cushman & Wakefield of Texas Inc.

Richard Campo, chairman of the board and CEO with Camden Property Trust also didn't mince words concerning 2012. "It's probably the best business environment we've had in Texas for the past 20 years," he remarks.

Read more...Texas Multifamily Hugely Active in 2012 - Daily News Article - GlobeSt.com

Energy Benchmarking Key to Realizing $9 Billion in Savings in Apartments and Condos: Benefits for Owners and Renters via GreenBuildingElements.com

Almost 40 million Americans live in apartments and condominiums in multifamily buildings (those containing five or more units). Over the past decade, these Americans have seen their energy costs rise by 20 percent — more than three times the average rate of rent increases. A new report from the Institute for Market Transformation (IMT), Energy Transparency in the Multifamily Housing Sector, finds that the nation’s multifamily housing stock holds potential for major energy efficiency gains, which would improve housing affordability by keeping renters’ utility bills down. Transparency about buildings’ energy use can drive these gains.

New laws in major cities require owners of multifamily buildings to measure (or benchmark) and disclose their properties’ energy consumption. These laws will give owners much better information about their buildings’ energy use — and how to reduce it — while policymakers, utilities, and lenders will be able to use the resulting data to craft new programs and incentives for energy-efficient buildings. Potential energy savings from America’s multifamily buildings have been estimated at $9 billion, with carbon reductions equivalent to shutting down 20 coal power plants.

Read more...Energy Benchmarking Key to Realizing $9 Billion in Savings in Apartments and Condos: Benefits for Owners and Renters via GreenBuildingElements.com

Multifamily Industry Faces Mandatory Participation in Energy Benchmarking Programs via Property Management Insider

The day may be coming when an apartment community’s strongest marketing tool is how much energy and water its units consume each year. And that day may be coming sooner than you think.

A growing list of U.S. cities are already participating in energy and water usage benchmarking and reporting on public and commercial buildings, and apartment buildings seem to be the next likely target. Expect multifamily properties to come more into focus in 2013, says John Lis, president of Velocity, an energy management solutions provider.

Rather than volunteering data for energy benchmarking programs like the Environmental Protection Agency’s ENERGY STAR and U.S. Green Building Council’s LEED, property management companies may find themselves anteing up information that has been required in the past only for office high rises and other structures.

Read more...Multifamily Industry Faces Mandatory Participation in Energy Benchmarking Programs | Property Management Insider

REO-to-rental market quickly becoming asset class via REwired

The REO-to-rental market is expected to grow robustly over the next two years, firmly establishing itself as a potential institutional asset class. At least that’s what Keefe, Bruyette & Woods ($15.48 0.01%) is saying, and the market is showing.

Traditionally, the single-family rental market receives its funding from retail or smaller institutional investors. However, as the inventory of bank owned properties increases, so does the interest of investors towards a larger-scale investment in this space.

KBW estimates cash returns on investments in REOs are in the 5% to 7% range, with total returns hitting 15% to 20%. The asset class seems like a perfect fit with secondary market players at first glance because REO-to-rentals offer more tangible cash flow than other distressed properties.

Read more...REO-to-rental market quickly becoming asset class | REwired

Real Estate Is Far From a Free Market, Report Says via WSJ

The federal government spends about $450 billion a year on real estate, a sum that includes direct spending, loan guarantees and tax breaks like the mortgage-interest deduction, according to a report released today by Smart Growth America, an organization that pushes for so-called smart growth that centers around denser neighborhoods and public transit. Smart Growth came up with the $450 billion estimate by tallying up the $2.23 trillion in federal real estate spending from 2007 to 2011 (that equates to $450 billion a year over five years).

Here’s the breakdown of the $2.23 trillion:

Read more...Real Estate Is Far From a Free Market, Report Says - Developments - WSJ

Fiscal Package Brings Victory for LIHTC via Housing Finance

The new year began with a major victory for the low-income housing tax credit (LIHTC). Congress’ fiscal cliff package, agreed upon late Jan. 1, included an extension of the 9 percent floor for the LIHTC. The 9 percent floor, originally set in 2008 by the Housing and Economic Recovery Act, had effectively expired. But now, any projects receiving allocations by the end of 2013 may use the minimum 9 percent credit rate instead of the monthly floating rate, which is closer to 7.36 percent. This extension will ensure more equity can go into any one given project and increase the financial viability of LIHTC deals.

The fiscal cliff legislation also prevents income taxes from increasing on those earning less than $450,000, ends tax breaks for top earners, delays sequestration (the approximately $109 billion in automatic across-the-board spending cuts) until March 1, continues expanded unemployment benefits for one year, and includes a number of other tax extenders.

Read more...Fiscal Package Brings Victory for LIHTC - Legislation, Lihtc - Housing Finance

Rents Up 16 % in Houston, But More Hikes to Come – Everywhere via Realty News Report

The Trulia organization reported that Houston led the nation last year with a 16.2 average gain in apartment rents.

But Houston’s not alone. There are rent hikes more to come in 2013, for most markets in the nation, according to new projection released by The MORE Group.

The MORE Group is projecting overall nationwide apartment rental rate increases of 3 to 5 percent in the year ahead, although certain markets will see larger rent gains.

Rising rents, declining vacancies and an expansion of construction activity will prevail in most of the nation’s multifamily markets in 2013, according to The MORE Group, a real estate organization specializing in developing, rehabilitating and marketing apartment properties.

Read more...Rents Up 16 % in Houston, But More Hikes to Come – Everywhere | Realty News Report

Time Is Money: Reducing Unit Turnover Time via Multifamily Executive Magazine

Once a unit is vacated, the clock starts ticking. On a portfolio-wide scale, units being turned over can add up to thousands, and even millions, of dollars every day.

“This will vary greatly by market, as vacancy loss is driven by average rents. However, I would say that each vacant unit could cost an owner anywhere from $1,500 to over $5,000 per month when you factor in make-ready costs, advertising, and incentives to get the unit leased,” says John Rials, managing director of real estate for Charleston, S.C.–based Greystar.

There's no getting around the fact that turnover rates hover around the 50 percent mark nationwide, as that’s just a result of demographic trends, employment, and renter mobility driven by Gen Y and its adaptive approach to seeking employment and finding somewhere to live. But having control over move-out dates can be a crucial factor in cutting maintenance costs during the time between tenants. And apparently it’s not as hard as one might think when common sense is applied.

Read more...Time Is Money: Reducing Unit Turnover Time - Occupancy And Vacancy Rate - Multifamily Executive Magazine

Reis: Apartment Vacancy Rate declined to 4.5% in Q4 via Calculated Risk

Reis reported that the apartment vacancy rate fell to 4.5% in Q4, down from 4.7% in Q3 2012. The vacancy rate was at 5.2% in Q4 2011 and peaked at 8.0% at the end of 2009.

Some data and comments from Reis Senior Economist Ryan Severino:

Vacancy declined by another 20 bps during the fourth quarter to 4.5%. This exceeded performance during the third quarter when vacancy declined by 10 bps. On a year-over-year basis, the vacancy rate declined by 70 bps.

There was a bit of a resurgence in demand for apartment units during the fourth quarter when 45,162 units were absorbed. This represents an increase versus the 24,951 units that were absorbed during the third quarter but a slight decrease versus the 47,396 units that were absorbed during the fourth quarter of 2011.

Read more...Calculated Risk: Reis: Apartment Vacancy Rate declined to 4.5% in Q4

Apartment Construction Ramps Up Again [Video] via Property Management Insider

We kick off our series on What to Watch for in 2013 with a discussion on perhaps the industry’s biggest buzz topic at the moment — apartment development, which is climbing back upward quickly.

Watch video...Apartment Construction Ramps Up Again [Video] | Property Management Insider

DFW foreclosures lowest since 2005 via Real Estate Center at Texas A&M Universiity

Monthly foreclosure filings have reached a low that hasn’t been reached in North Texas since mid-2005.

Just under 2,400 area homes are threatened with forced sale by lenders next month. That’s a 42 percent decline from January 2012, according to Foreclosure Listing Service. The all-time high for monthly foreclosures was in April 2010, when 6,168 filings were recorded.

Annual home foreclosure postings in the DFW area peaked in 2010 with almost 64,000 residential filings. For 2012, foreclosure postings fell to less than 49,000.

Read more...DFW foreclosures lowest since 2005 via Real Estate Center at Texas A&M Universiity

Demographics and Real Estate Demand via NREIonline.com

Demography is a critical driver of real estate demand. Population growth in the world rapidly accelerated in the 20th century and is still increasing. While the growth may be leveling off in some industrialized countries, it is still robust in most countries.

Increased population requires more housing, shopping, places to work (which includes both factories and office buildings) and more hotels for travel and recreation. But sheer numbers are only one facet of the growing global population. As people become wealthier, per capita consumption in all goods and services rises, which includes, and sometimes is especially reflected in, real estate.

Read more...Demographics and Real Estate Demand

Multifamily Quarterly: ’13 Unlucky? Not for Apartments via GlobeSt.com

If anyone thought the red-hot multifamily sector was cooling going into 2013, the activity of the past few weeks would certainly prove them wrong. Take, for instance, Equity Residential and AvalonBay Communities’ $16-billion buy of Archstone Inc.’s assets. The deal, which hasn’t officially closed, not only quenched long-circulated rumors and speculation of a potential Archstone IPO, but it also marks the largest deal in the sector since 2007.

If that’s not enough, take a look at some of the latest data. CoreLogic, for one, recently reported that residential rental income grew 12% year-over-year in September. What’s more, the firm says the growth “shows no signs of slowing down.”

That’s pretty much on par with what most in the industry have been saying for months. At the RealShare Apartments 2012 conference in Los Angeles in late October, concerns over slow job growth and tepid economic recovery did little to dampen optimism of the 1,700-plus multifamily professionals that attended the event.

Read more...Multifamily Quarterly: ’13 Unlucky? Not for Apartments - Real Estate Forum Article - GlobeSt.com

Houston Tops MSA for Multifamily Property Permitting via GlobeSt.com

Dallas-based Axiometric's jobs/multifamily permitting report showed that Houston topped the 10 MSAs for multifamily property permitting for trailing 12 months ending November, 2012. According to the report, permits for 11,192 units were issued.

The other nine MSAs were

New York (13,664 units)
Dallas (12,574 units)
Austin (10,242 units)
Los Angeles (8,582 units)
Washington, DC (8,415 units)
Seattle (8,309 units)
Denver (6,799 units)
Raleigh (5,919 units)

Nationally, November saw an increase in jobs and a decrease in the unemployment rate, while on the multifamily property permitting side, the number stood at 261,232, the 13th consecutive month during which that figure has topped 200,000.

Read more...Houston Tops MSA for Multifamily Property Permitting - Daily News Article - GlobeSt.com

Top 10 Apartment Markets for Rent Growth in 2012 via Property Management Insider

Yesterday, MPF Research released their preliminary numbers for the U.S. apartment market for 2012. While down from last year’s result, 2012’s 3.0 percent increase topped the long-term norm.

But what I’m always interested in is the list of top 10 performing apartment markets for rent growth. And once again, one of the three Bay Area markets takes home the honor of the country’s rent growth leader in 2012.

Which apartment market tops the chart? Without further ado, here’s the list:

Read more...Top 10 Apartment Markets for Rent Growth in 2012 | Property Management Insider

DFW MF Rent Growth Slows in 2012 via GlobeSt.com

A report just released by local research firm MPF Research notes the good news: multifamily rents in North Texas are continuing their upward trek. The other side of the coin, however, is that the pace has slowed – effective rates for new leases were up 2.8% during the past year, versus the 4.7% growth that took place in 2011.

Still, no one should panic at the slowdown. MPF Research, a division of RealPage Inc., points out that rents have jumped 8.5% in the past three years, following mild drops that occurred in 2008 and 2009. “The overall slowing in growth relative to 2011’s performance mainly came at the top end of the market, as the best properties had been posting price increases of 5% to 6%," explains MPF Research vice president Greg Willett in a press release. "The leasing environment has gotten a bit more competitive in the top tier because new supply is starting to come on stream at more significant levels at the same time loss of renters to purchase, while still low by long-term historical standards, is beginning to increase a little.”

Read more...DFW MF Rent Growth Slows in 2012 - Daily News Article - GlobeSt.com

Renters Looking to Own Are Ready to Buy, PulteGroup Survey Says via AOL Real Estate

Among renters who one day hope to own a home, a poll finds a dramatic increase in the number who now say that they intend to buy in the near future. Offering more evidence of a swing toward homeownership as the housing market continues to recover, the survey by PulteGroup reports that about 6 in 10 of those renters plan on buying a home in the next two years.

That's a 60 percent increase among those potential homebuyers in the past year, PulteGroup reports. "We're definitely seeing a renewed sense of optimism," said PulteGroup spokeswoman Jacque Petroulakis.

The PulteGroup survey's results fit other findings in 2012 that bode well for home prices and sales in 2013, according to Jed Kolko, chief economist of listing service Trulia.

Read more...Renters Looking to Own Are Ready to Buy, PulteGroup Survey Says | AOL Real Estate

MPF Research Reports Slowing U.S. Apartment Market Rent Growth in 2012 via Property Management Insider

By historic standards, U.S. apartment market fundamentals remained very healthy going into 2013. But the peak growth period of this cycle is now in the rear-view mirror.

Watch video...MPF Research Reports Slowing U.S. Apartment Market Rent Growth in 2012 | Property Management Insider

US CMBS Delinquency Rate Unchanged in December via SYS-CON MEDIA

The Trepp CMBS delinquency rate in December was unchanged from the previous month at 9.71%. After months of continued volatility, the delinquency rate for US commercial real estate loans in CMBS has regained some stability. From early 2012 through the end of the summer, the CMBS delinquency rate bounced around considerably.

Large movements in the delinquency rate during the first six months of the year were caused primarily by the high number of five-year loans securitized in 2007. As these loans reached their maturity dates and were unable to refinance, the rate was pushed to record highs. With these troubled loans now behind the market and the next wave not coming due until 2014, rate movements should be modest in the near future.

Read more...US CMBS Delinquency Rate Unchanged in December | SYS-CON MEDIA

12 CRE Predictions for 2013 via CoStar Group

The last few weeks of 2012 revealed a lot about what 2013 could hold in store for the commercial real estate sector, and it appears to be shaping up to look a lot different (i.e., better) than the last couple of years.

Deal flow increased notably after the presidential election as the uncertainty ended over what policies would shape the U.S. economy for the next four years and as the housing market recovery seemed to take hold.

Also, the fiscal cliff proved to be a political hallucination - a compelling hallucination, but a cliff that nevertheless that could be pushed off in time rather than us being pushed over the ledge.

So, with the prospect of another Washington-induced recession seeming more imaginary than authentic, it also appears that 2013 will be a year when the CRE markets see a return to more normalcy.

Following are a dozen outlooks for 2013 encapsulated from forecasts offered by respected industry participants and observers.

Read more...12 CRE Predictions for 2013 - CoStar Group

2013 Apartment Marketing: 3 Internet Trends to Watch via Property Management Insider

In December, Mary Meeker, the highly respected Web and technology analyst and partner with venture capitalist firm Kleiner Perkins Caufield & Byers, released her end of year 2012 report on Internet trends. The main takeaway is that mobile devices such as smartphones and tablets are driving new levels of connectivity.

But you knew that, right? That’s what I thought but after digesting more than 80 slides of data about Internet trends, I’m still trying to wrap my mind around what the new reality of mobile computing and connectivity will look like in the very near future.

The report is a must read for anybody in the multifamily industry and I’ve embedded the slides at the end of the article. In the meantime, here are three trends from the report that I believe will have a major impact on your current apartment marketing plans as well as the multifamily industry as a whole.

Read more...2013 Apartment Marketing: 3 Internet Trends to Watch | Property Management Insider

Investment Forecast via MHNonline.com

As the dust settles from one of the most contentious elections in recent memory, multifamily professionals are looking ahead to new challenges—ones presented by both politics and market trends. While some are concerned about the level of government involvement in the overall economy, others are hopeful that a new level of bipartisanship can translate into renewed confidence and continued gains for the industry. Joe Greenblatt, CPM and president-elect of the Institute of Real Estate Management (IREM), is less hopeful about the divided government’s ability to work together and believes that new obstacles will continue to arise due to a marked reluctance on the part of elected officials to make tough choices, ones that could ultimately jeopardize their electability.

“I expect continued stalemate,” says Greenblatt. “I don’t know that there exists in this government, in its current and future incarnation, the courage to confront the issues. There’s probably more of an inclination to defer dealing with deficits and chip away at the margins.” Greenblatt adds: “You look at the direction that the incumbent administration is going to carry forward—it’s not going to bode well for the economy.”

Read more...Investment Forecast via MHNonline.com

Investment Sales Bode Well for 2013 via GlobeSt.com

Maybe the uncertainty that seemed to permeate 2012 wasn’t all that pervasive after all. Investment sales posted gains throughout the year, in figures just released by Real Capital Analytics, with November alone showing a 40% hike year over year. November volume hit $19.5 billion, bringing the year-to-date total to $225 billion.

What’s more, with December not yet officially tallied, RCA expects 2012 to show a slight increase over 2011’s activity, which the data firm put at $229 billion. “With the expected surge in December, full-year 2012 volume should reach $260 billion,” the firm projected. All in all, it's a good if not stellar way to kick into the new year.

But an anomaly remains, in that this will be the first year in more than a decade, according to RCA, when multifamily will replace office as the top investment sector. No surprise there, really, given the bulletproof stability of the apartment market and the office sector’s entrenched status as poster child for the recession. Multifamily logged $75 billion in sales volume this year.

Read more...Investment Sales Bode Well for 2013 - Daily News Article - GlobeSt.com

Austin economic breezes riding tailwind via Real Estate Center at Texas A&M University

For 2013, all signs suggest Austin's economic breezes will keep riding the tailwind it has enjoyed the past few years. Fueled by its steady population growth and strong job market growth, the Central Texas economy should continue to outpace most other areas of the country.

Local economic consultant Angelos Angelou, head of Angelou Economics, estimated that the region will add 28,800 new jobs in 2013, growth of more than 3 percent.

The mobile technology revolution swept across the tech industry like a tsunami in 2012 and it could have a similarly profound effect in high-tech companies in Austin and elsewhere in 2013.

Read more...Austin economic breezes riding tailwind via Real Estate Center at Texas A&M University