Friday, March 29, 2013

NREI/Marcus & Millichap Investor Sentiment Index Hits New High in First Quarter via National Real Estate Investor

Investor confidence in commercial real estate continues to climb to new heights. The NREI/Marcus & Millichap Investor Sentiment Index rose to another record high in the first quarter of 2013—up 3 points to 174 [Figure 1]. That is a strong vote of confidence, especially given the timing. Respondents were surveyed in late December and early January—in the midst of uncertainty surrounding how the fiscal cliff debate in Washington, D.C., would be resolved. However, those concerns did not derail the enthusiastic outlook for real estate investment that has been building since the fourth quarter 2010.

“The great news is that investors continue to be optimistic about commercial real estate,” says Hessam Nadji, a senior vice president and managing director at Marcus & Millichap in Calabasas, Calif. “That is even better news for the broader U.S. economy, as we know that the Investor Sentiment Index has proved to be a very accurate foreteller of economic direction.”

Read more...NREI/Marcus & Millichap Investor Sentiment Index Hits New High in First Quarter | National Real Estate Investor

Why a Background Check Is So Important via Multifamily Blogs

As a new landlord, you may not realize the importance of getting a background check on a prospective tenant. A rental property is an investment that can pay your mortgage if you rent it to a desirable and responsible person. Using tenant screening services is a reliable way to find someone who respects your property and pays the rent on time. Even if you think that you are a good judge of character based on first impressions, you can benefit from the expertise of professionals to help you make a good decision.

What a Tenant May Conceal
Your primary concerns as a landlord are to find a tenant who agrees to preserve your property and to pay you for the use of it. Your obligations as a responsible landlord are to present the property in good repair when you let it out for lease or rent, to make sure to repair anything that breaks down and to allow your tenants the quiet enjoyment of a rented home. In return, you expect a prospective tenant to provide factual information about personal history items such as these:

Read more...Why a Background Check Is So Important - Multifamily Blogs

B-Piece Investors Back in Buying Mode via National Real Estate Investor

Bond buyers have poured money back into the CMBS sector and the added investor demand is helping drive conduit loan issuance higher. And as investors gain confidence in the revived sector, underwriting terms and rates are becoming more favorable for borrowers.

“There is more than enough capacity for volume projections right now,” says Steven Schwartz managing director and partner with Torchlight Investors, a longstanding investor in commercial mortgage-backed securities (CMBS).

A select group of investors, including Torchlight, still buy the riskiest B-rated CMBS, earning themselves the right to set underwriting standards for conduit loans. Those standards have eased but are still much tougher than the go-go days of the last boom.

Read more...B-Piece Investors Back in Buying Mode | CMBS content from National Real Estate Investor

Top Tier Markets, and Assets, See Slower Rent Growth via Multifamily Executive Magazine

The top-tier assets are seeing a slowdown in rent growth, while a trickle-down effect has given Class C assets a big boost.

And the top-tier metros are starting to slow as well. Boston and San Francisco metro areas’ rent growth rates are both below the national average after consistently ranking in the top tier for the last two years, a new Axiometrics report shows.

Boston’s rent growth rate decreased during the first quarter of 2013 falling to 2.9 percent this February, down from 15.9 percent a year ago.

Read more...Top Tier Markets, and Assets, See Slower Rent Growth - Rent Trends - Multifamily Executive Magazine

Qualifying a CMBS Rebound: What an Explosion of New Deals Implies for Credit Quality via The Commercial Observer

CMBS issuers are on a roll. The best January on record has propelled first-quarter 2013 volume past $20 billion, a milestone that has otherwise eluded the market for more than five years. Few issuers expect a slowdown in activity over the next year. Both for fusion deals and single-asset transactions, securitization has become an increasingly more competitive option as spreads have narrowed. The single-asset market has leapfrogged the recovery in multi-borrower deals and is on track to surpass its previous peak. After years of middling progress, the CMBS market overall is reasserting itself as investors’ tolerance for risk-taking recovers.

Read more...Qualifying a CMBS Rebound: What an Explosion of New Deals Implies for Credit Quality | The Commercial Observer

Thursday, March 28, 2013

Are Electronic Signatures Secure Enough for Property Management? via Property Management Insider

I have sort of a thing about perfecting my electronic signature so that it closely resembles my paper signature from a ballpoint pen. The stylus is a little cumbersome and the round point just doesn’t give me that feel of control with the pinpoint accuracy of a Mont Blanc. I’m a little more deliberate so the real Tim Blackwell is etched in, well, plastic.

You can do so much by signing electronically these days. In my case recently, I made two credit card purchases at a hobby show that required an electronic signature – one on an iPad and another on a smartphone. Both dealers used the little, plastic swipe adapter called Square that plugs into personal devices in a flash. Signing the small iPhone screen was a little difficult but I did a fairly good job of making my mark. And whether my script was on the money wasn’t an issue. Point is the signature was good enough to bind me to the transaction. I trusted both vendors and didn’t have second thoughts about my signature being compromised.

Read more...Are Electronic Signatures Secure Enough for Property Management? | Property Management Insider

A comment on Jobs, Household Formation and New Residential Construction via Calculated Risk

Just a few thoughts based on some recent conversations: The key driver for new residential construction, both single family and rental properties, is household formation. And household formation is mostly driven by jobs. So jobs are the key driver for new residential construction.

But wait ... there are about 3 million fewer payroll jobs now than at the start of the recession. So why do we need any new housing units?

Read more...Calculated Risk: A comment on Jobs, Household Formation and New Residential Construction

Texas economic performance drops slightly in January, Comerica reports via Houston Business Journal

Comerica Bank’s Texas Economic Activity Index dropped 0.4 percentage points to a level of 101.1 for January.

The January reading is 29 points, or 41 percent, above the index cyclical low of 71.7. The index averaged 98 points for all of 2012, eight points above 2011’s full-year average.

Read more...Texas economic performance drops slightly in January, Comerica reports - Houston Business Journal

Rent History Emerging as Key Data via Multifamily Executive Magazine

Rent is the largest expense for most people. Yet, it's usually not even considered in a person's overall credit score.

For some members of the multifamily industry, rent history is the missing piece of information needed to evaluate potential residents.

That's why Experian RentBureau has been collecting rental history data and providing it to rental screening companies to help owners and property managers make better leasing decisions.

Read more...Rent History Emerging as Key Data - Property Management, Rents - Multifamily Executive Magazine

Wednesday, March 27, 2013

3 Energy Management & Environmental Performance Apps Any Organization Can Afford

By Ashley Halligan, Property Management Analyst, Software Advice

Energy management and environmental performance have become an integral part of managing commercial buildings. To meet consumer and regulatory demand, software developers have launched a range of handy standalone applications that perform energy-related tasks and consumption assessments. Whether you’re seeking an official ENERGY STAR score, an air quality analysis, or an overall energy audit, here are three affordable (and even free) applications your organization should know about.

Melon Power Purpose: Calculates an ENERGY STAR benchmark.

Pricing: $500 per building, with a discount for owners of multiple buildings.

Read more...3 Energy Management & Environmental Performance Apps Any Organization Can Afford

Distressed CRE: It’s a Seller’s Market via CoStar Group

It’s a sellers’ market for distressed commercial real estate and Taylor Burke, senior executive vice president and chief lending officer for the $2.62 billion Burke & Herbert Bank in Alexandria, VA, wants to move his inventory.

“I think this is a great time to buy distressed property, especially that which we are selling,” joked the Alexandria-based banker.

More seriously, though he says, the market is good for bad property right now.

"Banks should be cleaning out their inventory this spring," said Burke. "I want to sell all my stuff now and I suspect that my conferees are ready to unload their REO now, too. There is finally some demand in outlying areas where most of our problems are located. Not just income-producing any more - even lots are selling at last. Builders need inventory. There are a lot of troubled suburban strip centers and offices everywhere. There has been a sea change in demand.”

Read more...Distressed CRE: It’s a Seller’s Market - CoStar Group

Class C Multifamily Rents Pick Up via CCIM Institute

Effective rents for class C multifamily assets grew at a rate of 4.3 percent in February, the strongest rate recorded across all property classes, according to an Axiometrics report.

Overall, effective rent growth experienced a slight decline to 3.5 percent last month. The drag on overall growth continues to be class A properties, which declined 1.7 percent year over year to 3.2 percent in February. Class B properties remained steady, posting an annual effective rent growth of 3.6 percent.

Read more...Class C Multifamily Rents Pick Up | CCIM Institute

Renters Are Less Energy Efficient Than Homeowners via EcoBuilding Pulse

Are American renters bigger energy hogs than their homeowner counterparts? Yes, according to data from the U.S. Energy Information Administration (EIA), which found that renters use nearly a third more energy per square foot than homeowners. But the question remains: Why? Taking the EIA data, the Harvard Joint Center for Housing Studies looked into what may account for the difference. Among the reasons recently offered via the center's Housing Perspectives blog, are the thought that because rental units are typically smaller than homes, they are therefore more energy intensive. But, the center also points out that a renter's energy use intensity also varies depending on whether the apartment's utilities are fixed and lumped into the unit's rent or whether they are paid for by the renter. It turns out that those renters who are unaware of their individual energy use because it is bundled into the rent consume much more than those renters who pay for their utilities separately.

Read more...Renters Are Less Energy Efficient Than Homeowners - Energy Efficiency, - EcoBuilding Pulse

The reason behind rising Dallas area home prices via Dallas Business Journal

Dallas area home prices continued to climb year-over-year, matching expectations in the North Texas residential market, says Ted Wilson, principal of Dallas-based Residential Strategies.

The Dallas metropolitan area's home prices rose 7 percent year-over-year in January, according to Standard & Poor's/Case-Schiller Home Price Indices released Tuesday.

Dallas area home prices remained flat in January, compared with the previous month. "Home prices are still trending upward," Wilson said, of the data. "I'm sure it will go on for the next year or so, as long as the rates stay low.

Read more...The reason behind rising Dallas area home prices - Dallas Business Journal

Tuesday, March 26, 2013

How Big Is The Excess Inventory Of Vacant Apartments via Multifamily Insiders Blogs

This report is courtesy of the National Multi Housing Council.

In the aftermath of the Great Recession, absorptions dried up, causing the number of vacant apartments to rise beyond the normal range and creating what are termed “excess” vacant units. This excess inventory signaled a supply-demand imbalance that led to a sharp cutback in new production and lower returns. Over the past three years, however, the increase in apartment demand has outstripped the increase in supply, causing occupancy rates to trend up again and reducing excess apartment inventory. But to what extent has that excess inventory of vacant apartments shrunk?

Unfortunately, public data are too limited to provide a clear and simple answer. What follows is a brief summary of data sources and issues, along with a standard estimate of excess apartment vacancies. Following that is an assessment of the reliability of this sort of estimate. Our best estimate is that there is little excess vacancy nationally. This means that while there is excess vacancy in some metro areas, it is offset by other markets where the number of vacant apartments is below average.

Read more...How Big Is The Excess Inventory Of Vacant Apartments - Multifamily Blogs

Multifamily Demographics: A Clinical Definition of a Submarket via Multifamily Insight Blog

Submarkets are boundaries that define where a property competes. Having specialized knowledge at the sub-market level is a significant strategic advantage over your competitors. What defines a sub-market is:

* An area with similar properties in terms of physical stock and rents
* An area that reflects patterns of locational preference
* Transportation patterns, natural barriers
* The location of competitive properties
* Profiles of residents and workforce

Some things we know to our core, right? The effect of vacancy on revenue; that crime in a neighborhood will eventually impact the reputation of our assets; that a bad loan will be front and center at the absolute worst time in the business cycle.

Read more...Multifamily Demographics: A Clinical Definition of a Submarket | Multifamily Insight Blog

Trepp: Outlook for CMBS Market Remains Optimistic via

Trepp LLC reports that with spreads tightening, delinquency rates falling and new issuances rising, the outlook for the CMBS sector is bullish. In fact, investors expect $80 billion or more in new issuances this year.

If issuances reach that level, 2013 would be almost double the total for 2012 and would therefore reach the highest level since the peak of approximately $230 billion in 2007.

Read more...Trepp: Outlook for CMBS Market Remains Optimistic - Daily News Article -

San Diego Apartment Community Gives Residents Ability to Derive All Electricity from Solar Power via

With the approaching completion of Solterra EcoLuxury Apartments in Scripps Ranch, San Diegans will have their first opportunity to live in a community where all of the electricity they need for daily living is generated by the sun.

The innovative new "smart" community, a development of H.G. Fenton Company, not only allows residents the benefit of "zero" electricity bills, but gives them added conveniences including garages that are pre-wired for electric vehicle charging and in-home Virtual Net Metering displays that let them easily monitor their kilowatt usage.

"We are very proud to offer San Diegans the first market rate, 100 percent photovoltaic apartment community that will provide solar generated electricity for all 114 units as well as common areas," said Mike Neal , H.G. Fenton Company's president and CEO.

Read more...San Diego Apartment Community Gives Residents Ability to Derive All Electricity from Solar Power - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Monday, March 25, 2013

Net Zero Energy: Making Green Look Passé via National Real Estate Investor

Sustainability for commercial properties has come a long way since the start of the new millennium, when developers would chuckle and shake their heads at proposals to spend big bucks on green features. “Too expensive to the bottom line” was a common refrain.

It took a decade for the learning curve to jump. Today, just about every building designed has green features, whether mandated by a local community or a tenant. Going green is becoming almost passé–what really gets attention today is a building that not only saves energy, it gives energy back.

The term for such a property is Net Zero Energy Building, or ZEB. While these structures are designed to maximize every green idea, such as natural lighting and efficient HVAC systems, there is usually at least one energy generator, say, solar panels or fuel cells, which can create enough positive electricity to at least offset the normal annual use.

Read more...Net Zero Energy: Making Green Look Passé | Green Projects content from National Real Estate Investor

Q4 2012 Apartment Debt Trends via Chandan Economics

The cost of financing apartment acquisitions and refinancing maturing apartment loans held to record-lows in the fourth quarter. Across new mortgages made by banks, life companies, CMBS conduit originators, and through the sector-dominant agencies, average interest rates for fixed-rate financing generally ranged between 3 and 4 percent†.

Apart from rock bottom Treasury yields, historically low mortgage rates reflect continued strength in apartment cash flow trends and competition amongst lenders to fund deals. Debt yields, the ratio of property net operating income to origination loan balance, were 9.0 percent in the quarter. For deals backed by loan balances above $25 million, the average debt yield was up to 100 basis points lower.

Read more...Q4 2012 Apartment Debt Trends | Chandan Economics

Are You A Speed Bump? via Manager Labs

Do you make decisions and move forward or do you contemplate things to the point that you become a speed bump? What is a speed bump? A speed bump is the person in an organization that stops progress and/or is afraid to make a decision out of fear of failure.

In an organization, being the speed bump is not always a bad thing. However, day in and day out operations suffer when you are the property manager, supervisor, or property owner and it is your actions that delay or stop momentum. When managing teams, it is important to have a keen sense of judgment, and to be quick on your feet with respect to analysis, so that you are able to make smart decisions.

Read more...Are You A Speed Bump? | Manager Labs - technology for (visionary) property & facility people.

Conduit Lending Gains Momentum via Multifamily Executive Magazine

Lenders expect conduit loan volume to climb as the year continues. However, the market's comeback in the multifamily world isn't expected to reach boom-era levels, at least not in 2013.

Between the third and fourth quarters of 2012, commercial mortgage-backed securities (CMBS) loan volume grew 141 percent, according to a Mortgage Bankers Association report. And with each passing month, more and more CMBS loans are made for apartments: Lenders are reporting a growing pipeline in the first quarter.

Most of the progress and gain for conduits comes from swooping in on deals the government-sponsored enterprises (GSEs) and life companies don’t necessarily want to fight for. And it’s paying off.

Read more...Conduit Lending Gains Momentum - Finance - Multifamily Executive Magazine

Friday, March 22, 2013

Regional Economy’s Growth Broad-Based via Dallas Fed

Over the past six weeks, the Eleventh District economy grew at a moderate pace. Employment growth for January was sluggish; however, the Texas Business Outlook Surveys (TBOS), the Dallas Beige Book and the Texas Leading Index indicated a pickup in activity since the last report. Housing remained strong with inventory levels approaching record lows, the energy sector improved even as oil prices fell, and Texas exports grew in recent months. Employment growth of 2 to 3 percent is likely for 2013.

Texas total nonfarm employment grew at a strong 3.1 percent clip in 2012, with almost every major sector contributing to the expansion. January was sluggish, however, coming in at a 0.4 percent annual rate. The unemployment rate ticked up in January, as well, reaching 6.3 percent. However, the unemployment rate remains far below its peak of 8.3 percent reached in 2010 and well below the current national unemployment rate of 7.7 percent (Chart 1).

Read more...Regional Economy’s Growth Broad-Based - Dallas Fed

San Antonio 2012 apartment sales summary via Real Estate Center at Texas A&M

Sale activity continued to expand in the San Antonio metropolitan area as 62 apartment communities were sold last year, up 44.2 percent from 2011.

The increased transactions were mirrored by dollar volume, which reached $752.7 million by year-end, a 60.5 percent annual increase.

The average price per unit (PPU) increased last year to $55,100, up 16.1 percent from 2011. Positive growth included a 13.3 percent increase in the average price per sf to $63.49 in 2012.

Read more...San Antonio 2012 apartment sales summary via Real Estate Center at Texas A&M

Thursday, March 21, 2013

NAR: Housing inventory growing at woefully slow pace via HousingWire

After Freddie Mac predicted this spring to be the healthiest in six years, the National Association of Realtors confirmed by saying February existing-home sales and prices point towards a healthy housing spring.

According to NAR, sales have been above year-ago levels for 20 consecutive months, while prices show 12 consecutive months of year-over-year price gains.

One of the primary reasons for the strong housing demand is the general lack of prime properties available to homebuyers. The inventory is at low levels not seen in nearly 10 years. However, that number of available homes are inching up, but not at a rate for many homebuyers to capitalize on the historic affordability of today.

Read more...NAR: Housing inventory growing at woefully slow pace | HousingWire

Credit Card Surcharges: What Property Managers Need to Know via Property Management Insider

As more and more renters demand the ability to pay their rent with a credit card, property management companies face the challenge of recovering processing costs. Property managers must balance resident retention by offering convenient electronic payment options while recovering processing costs by passing them on to the resident. Until recently, a convenience fee was the only way to pass along those costs to renters. Now there is a second way: credit card surcharges.

Visa and MasterCard recently announced a settlement to a lawsuit filed in 2005 on behalf of seven million merchants. The suit claimed that Visa and MasterCard colluded to increase credit card rates. As part of the settlement, Visa and MasterCard announced in December of 2012 that merchants could add a surcharge to credit card transactions beginning January 27, 2013.

Surcharges sound appealing on the surface; however, the old adage of “the devil is in the details” applies here. Here are some common questions I get from property management companies about credit card surcharges and transaction fees.

Read more...Credit Card Surcharges: What Property Managers Need to Know | Property Management Insider

Why renters are still driving America's building boom via Fortune

As America's housing market slowly heals, good news is pouring in from homebuilders: They're building more; they're hiring more workers; they're building bigger houses.

Still, some things haven't changed: Renters (as opposed to buyers) are still driving the rebound of the residential construction industry.

Construction of single-family homes rose to a nearly five-year high in February, the Commerce Department reported Tuesday. Single-family home building, which made up about 66% of housing starts last month, rose 0.5% to a rate of 618,000 units -- the highest level since June 2008. This follows a 31.5% rise in single-family construction in the last year.

Read more...Why renters are still driving America's building boom - The Term Sheet: Fortune's deals blogTerm Sheet

Wednesday, March 20, 2013

Austin 2012 apartment sales summary via Real Estate Center at Texas A&M

Multifamily transactions in 2012 exceeded prerecession activity both in number of properties sold and total sales volume.

There were 110 transactions last year, surpassing the 104 sales during the peak in 2006. Last year's sales volume of $1.7 billion was also above 2006 sales volume of $1.3 billion.

Read more...Austin 2012 apartment sales summary via Real Estate Center at Texas A&M

DFW 2012 apartment sales summary via Real Estate Center at Texas A&M

For the third-straight year, transactions and sales volume in the Dallas-Fort Worth metroplex continued to rebound from the market trough in 2009.

The number of properties changing hands totaled 228, an increase of 32.6 percent from 2011.

Sales of properties with at least 100 units increased 19.4 percent, while transactions of smaller assets surged 152.9 percent. Total multifamily sales advanced to $3.0 billion, a 22.1 percent increase from the prior year.

Read more...DFW 2012 apartment sales summary via Real Estate Center at Texas A&M

MHN Interview: Multifamily Lending in 2013 via

What does 2013 hold for multifamily lending? MHN talks to Stephen Rosenberg, CEO, Greystone, about what he expects to see with lending and securitization, and how he thinks the sequester will affect the industry.

MHN: What are your predictions for multifamily lending in 2013?

Rosenberg: One thing that we’re seeing now is that on the agency-lending side, we have gotten notice from Fannie Mae and Freddie Mac that the federal overseer of those two agencies is planning to limit their lending for the coming year. For example, Fannie Mae did about $33 billion [in loans] last year, and the regulator now is limiting them to a 10 percent reduction of only $30 billion, and the way they’re going to get down that far is by tightening up underwriting criteria. It really does seem like there is a serious effort on the administration’s part to limit the market share of Fannie Mae and Freddie Mac, and I think that’s very significant.

Read more...MHN Interview: Multifamily Lending in 2013 via

Houston 2012 apartment sales summary via Real Estate Center at Texas A&M

Houston apartment sales increased 45.2 percent from 2011 with 167 properties sold in 2012. The largest growth was among the sale of apartment communities with 100 or more units, rising 49 percent from the previous year.

For the second year, dollar volume increased by nearly 16 percent to surpass $1.4 billion in 2012.

The average price per unit increased 17.2 percent to $55,100. The average price per sf for all properties increased by 20.9 percent to reach $68.66 by year-end 2012.

Read more...Houston 2012 apartment sales summary via Real Estate Center at Texas A&M

Tuesday, March 19, 2013

Permits, Starts Data Show Shift to Multifamily via

Housing permits rose a sharp 4.6 percent to a seasonally adjusted annual rate of 946,000 in February, to the highest level since June 2008, while housing starts edged up 0.8 percent to 917,000, the Census Bureau and HUD reported jointly Tuesday. Most—almost 62 percent–of the increase in permits came in applications to build multifamily units.

Economists had expected the report to show 919,000 permits (up from the originally January report of 890,000) and 925,000 starts, unchanged from the original report. Permits for January were revised down to 904,000, while January starts were revised up to 910,000. Without the revision, permit activity would have shown a far steeper increase and starts a smaller improvement.

Read more...Permits, Starts Data Show Shift to Multifamily via

Houston Economic Update March 2013 via FRB of Dallas

The Houston Business-Cycle index jumped up from a revised growth rate of 5.4 percent in December to 9.5 percent in January. This implies a very robust acceleration in economic improvement in the region. Direct contributions of energy industries to growth have recently slowed somewhat, but indirectly, energy-related activity is spurring other area industries, sustaining activity. While some stresses from the global economy have dissipated, continued fiscal and regulatory uncertainty clouds the horizon. Overall, Houston area fundamentals remain healthy.

Houston payroll employment grew 5.8 percent in January and 3.2 percent over the last three months. Trade, transportation and utilities; financial activities; and educational and health services were the main drivers of that growth. Information industry jobs also spiked up, but represent a small portion of employment.

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

New Fund To Unlock $150B in Efficiency Savings via

Manufacturers, schools, churches, and clinics throughout the US could cut up to $15 billion a year on their energy bills over the next decade, thanks to a pioneering new financial tool just recently launched by the locally based efficiency-services financer Metrus Energy and CalCEF, an organization focused on accelerating clean energy technologies. The new Efficiency Resource Fund will provide otherwise hard-to-get financing for businesses to make energy-efficiency improvements, with no upfront costs.

How it works is as follows: The Fund signs an Efficiency Services Agreement for up to 10 years with a building owner, and then hires contractors to design, install, measure, and maintain energy-saving improvements. As a result, the customer sees a reduction in its total utility bill, while making buildings more productive and comfortable. The fund recoups its investment by billing customers for their realized efficiency gains.

Read more...New Fund To Unlock $150B in Efficiency Savings - Daily News Article -

Top 10 Rent-Growth Markets via Multifamily Executive Magazine

The top three rent-growth markets of 2013 all happen to be the nation's top technology Meccas: San Jose, Calif.; Seattle; and San Francisco, according to New York–based market research firm Reis. No surprises there, as the Bay Area is a traditional rent-growth powerhouse, and Seattle isn't exactly know for its low cost of living either.

But geeks don't have all the fun. Perennially under-valued Minneapolis charts in the Top 5. And Fort Lauderdale, Fla., once the poster child of distress, ties for eighth place in Reis' tally. The city's inclusion on the list is a welcome and unexpected surprise.

Read more...Top 10 Rent-Growth Markets - Business, Mergers And Acquisitions - Multifamily Executive Magazine

Monday, March 18, 2013

Government Guarantee Essential for Meeting Demand for Multifamily Living via NMHC

Housing finance reform must include a federal guarantee for multifamily mortgages. This was the key message from Peter Donovan of CB Richard Ellis and immediate past chairman of the National Multi Housing Council (NMHC), speaking at the American Enterprise Institute (AEI).

“The elimination of a government guarantee of any sort to avoid a possible crisis, that is not supported by the facts, to be replaced by a private capital market that has not shown itself to be ready, willing, able, disciplined or reliable would truly be a crisis of our own making and for what purpose,” said Donovan.

In stark contrast to their single family programs, the government sponsored entities (GSEs), including Fannie Mae and Freddie Mac, use stringent and standard-setting underwriting for their multifamily programs – leading to a default rate of just .25 percent. Private-market sources of multifamily capital like CMBS have a default rate of 15 percent. In addition, the GSEs ensure that capital is available for apartments in all markets at all times, not just top-tier properties in major markets.

Read more...Government Guarantee Essential for Meeting Demand for Multifamily Living - NMHC - National Multi Housing Council - NMHC

Fed’s Fisher Says Too-Big-to-Fail Banks Should Be Shrunk via Bloomberg

Federal Reserve Bank of Dallas President Richard Fisher said the government should break up the biggest U.S. banks rather than allow them to hold a “too-big- to-fail” advantage over smaller firms.

The 12 largest financial institutions hold almost 70 percent of the assets in the nation’s banking system and profit from an unfair implicit guarantee that the government would bail them out, Fisher said today in a speech at the Conservative Political Action Conference in National Harbor, Maryland. The biggest banks enjoy a “significant” subsidy, enabling them “to grow larger and riskier,” he said.

“These institutions operate under a privileged status,” Fisher said. “They represent not only a threat to financial stability, but to fair and open competition.”

Read more...Fed’s Fisher Says Too-Big-to-Fail Banks Should Be Shrunk - Bloomberg

House Price Gains Signal U.S. Rental Bonanza Ending via Bloomberg

Rents for single-family homes are rising slower than property prices as firms such as Blackstone Group LP (BX) flood the market with homes for lease, posing risks to investors betting billions on the burgeoning market.

Monthly payments for properties in Phoenix rose 1.3 percent in February from a year earlier, compared with a 25 percent jump in for-sale asking prices, according to Trulia Inc. (TRLA), which operates an online listing service. In Atlanta, asking prices climbed 14 percent as single family rents gained 0.5 percent, and in Las Vegas rents dropped 1.7 percent even as asking prices soared 18 percent.

Read more...House Price Gains Signal U.S. Rental Bonanza Ending - Bloomberg

Top and Bottom States for New Freddie Mac Financing via Multifamily Executive Magazine

Freddie Mac’s record year of $28.8 billion in new multifamily loans was spread somewhat equally across the country.

Big states took the largest share, including Texas which came to the top of the list with 13.9 percent of new loan transactions. Hot markets like Maryland also scored a big piece of the action, with loan volumes over $2.1 billion for the year.

Meanwhile, some states, such as Montana and Vermont, didn't see much if any Freddie financing last year.

Here's a breakdown of Freddie's geographic concentration last year:

Read more...Top and Bottom States for New Freddie Mac Financing - Multifamily Executive Magazine

PREA Special Report: Housing Still Surest Bet in CRE via Commercial Property Executive

Despite construction costs on the rise and financing still not being up to par to what it used to be pre-great recession, real estate is still the soundest investment of today and tomorrow, according to commercial real estate high rollers who spoke at Pension Real Estate Association’s 2013 Spring Conference in Washington, D.C.

“Real estate is a great investment, if you have real estate expectations, it’ll raise returns,” said David Rubenstein, chairman & founder of The Carlyle Group during the earlier part of the first part of the two-day conference taking place March 14-15. “Real estate does not appreciate at 20 percent a year, but if you love to touch and feel the asset and you want something that has some stability to it and you’re happy with the rate return that is realistic, at about 15 percent, I think real estate is universally good to invest in.”

Read more...PREA Special Report: Housing Still Surest Bet in CRE | Commercial Property Executive

Friday, March 15, 2013

Foreclosure filings, starts, completions are down in Texas in February via San Antonio Business Journal

Call it the trifecta of the foreclosure market.

Between February 2012 and February 2013, Texas saw double-digit declines in the number of foreclosure filings, starts and completions, according to the latest analysis by Irvine, Calif.-based RealtyTrac.

Over the 28 days ended Feb. 28, 2013, a total of 5,411 foreclosure notices were filed in the state of Texas — down 43.36 percent from the number of filings posted in February 2012.

Read more...Foreclosure filings, starts, completions are down in Texas in February - San Antonio Business Journal

Multifamily survey offers peek at rental market via HousingWire

Renting a property or apartment long-term is the only viable solution for many Americans as lending standards stay tight and potential buyers struggle with downpayments. This in turn makes multifamily ownership and development a bigger issue for the nation's housing agencies.

Approximately 1 in 5 American households reside in multifamily rental buildings, according to data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

The two entities launched a survey to provide more insight into the nation’s multi-family rental properties.

Read more...Multifamily survey offers peek at rental market | HousingWire

Bill Aims to ‘Jumpstart’ Reform of Fannie, Freddie via WSJ

It’s only a baby step, but a bipartisan group of Senate lawmakers has finally found something to agree on about Fannie Mae FNMA +1.03% and Freddie Mac FMCC +3.06%: Congress should stop using the mortgage-finance companies to pay for other things.

A bill introduced by two Republicans and two Democrats would prevent lawmakers from using increases in fees charged by Fannie and Freddie to cover the cost of spending increases or tax cuts. The idea is to prevent any more moves to use the federally controlled companies as a funding source, especially given the companies’ surging profits. Exhibit A in this approach came in 2011, when Congress decided to use Fannie and Freddie to fund a temporary payroll tax cut.

Read more...Bill Aims to ‘Jumpstart’ Reform of Fannie, Freddie - Developments - WSJ

MHN Interview: The State of the Housing Industry via Multi-Housing News Online

The economy is doing better—but is the single housing industry as well? Peter Muoio, head of research at, talks to MHN about housing demand and his predictions for multifamily.

MHN: recently released several housing reports. What were some of the findings?

Muoio: We reacted in our blog post to three releases regarding the single-family sector: two were on the price side—the Case Shiller and the FHFA Index—and the other was on new homes sales. Together they painted a similar story to what we had been seeing, and a similar story to what we had been expecting, which is continued recovery for single-family housing. On the price side, what we would suggest is a long, moderate improvement. And that [trend] continued with both the data from the FHFA and Case Shiller for the fourth quarter, confirming very similar movements in previous data for home prices that we had seen from both the National Association of Realtors and from Zillow.

Read more...MHN Interview: The State of the Housing Industry | Multi-Housing News Online

GSE reforms could hurt multifamily REITs via HousingWire

The Federal Housing Finance Agency’s goal of shrinking Fannie Mae and Freddie Mac’s multifamily originations by 10% could negatively impact the multifamily real estate investment trust sector, Fitch Ratings said.

Multifamily REITs are reducing their dependence on secured debt due to forthcoming strategic and structural changes regarding the government-sponsored enterprises, the ratings firm asserted.

Read more...GSE reforms could hurt multifamily REITs | HousingWire

February 2013 Apartment Market Summary via Axiometrics

The apartment market continued to post positive results in February 2013. Annual effective rent growth was 3.53% and the occupancy rate increased 35 basis points (bps) from a year ago. While rent growth has remained steady the pace has been gradually slowing. February’s annual effective rent growth was the lowest since August 2010.

Breaking the results down by asset class points out a number of differences: slowing growth rates for Class A, steady growth rates for Class B, and improving growth rates for Class C. Annual effective rent growth for Class A properties slowed to 3.2% at the national level in February 2013, after peaking at 5.9% in June 2011. In San Francisco, one of the previous hottest Metropolitan Statistical Areas (MSAs) in the country, Class A annual rent growth actually turned negative, at -2.5%. More details on the San Francisco MSA can be found at the end of the newsletter.

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

How to Keep Vacancy Costs to a Minimum During Downtime via Multi-Housing News Online

Using extra time, money and resources to complete the dreaded move-out process can be detrimental to an apartment manager’s finances if not handled correctly. Vacancy loss days, maintenance fees and marketing efforts for new residents are just a few expenses that add up during apartment turnaround.

In a time when rentals are on the rise, new technologies, strategic thinking and regular maintenance or renovations can make the turnover process more efficient and cost effective. Every time a lease ends, it shouldn’t have to mean 40-plus days of money and time wasted.

Read more...How to Keep Vacancy Costs to a Minimum During Downtime | Multi-Housing News Online

Guest Column: CMBS Loans and the Special Servicer – Resolving Defaults via Commercial Property Executive

Non-performing commercial mortgage-backed security loans and CMBS loans that are approaching maturity will have difficulty securing a workout or refinancing despite today’s historic low interest rates. Underwriting standards are more stringent today than when most CMBS loans were originated and net operating income has, for the most part, not recovered to pre-crisis levels. As a result, many CMBS loans that were originated at the height of the market leading up to 2007 will require significant additional equity to be refinanced or face foreclosure or having their note sold on the secondary market unless a loan modification can be negotiated with the special servicer.

CMBS maturities that fail to qualify for refinancing will remain at elevated levels for the next five years as a result of high issuance volumes leading up to the financial crisis in 2008.

Read more...Guest Column: CMBS Loans and the Special Servicer – Resolving Defaults | Commercial Property Executive

Dallas-Fort Worth-Arlington is 4th-biggest metro area via Dallas Business Journal

he Dallas-Fort Worth-Arlington metropolitan area again is the fourth largest metro area in the nation, according to figures released today by the U.S. Census Bureau.

On Numbers, a feature of American City Business Journals, said that DFW is one of 52 metro areas nationwide that are above the 1 million-resident mark. ACBJ has put up a database of metropolitan areas.

Dallas-Fort Worth-Arlington had 6,700,991 residents according to the Census Bureau, up from 6,426,210 in 2010, when it also ranked fourth.

Read more...Dallas-Fort Worth-Arlington is 4th-biggest metro area - Dallas Business Journal

Top 10 Tax Deductions for Rental Property Owners via

When you own rental property you are essentially running a small business. Here are 10 primary tax deductions for rental property owners that you can use to reduce your rental income for income tax purposes.

1. Mortgage Interest

Just as you would report your mortgage interest on your primary residence on Scheduled A of your income tax return, you can do the same with mortgage interest from rental property. However the interest deduction is reported instead on Schedule E, Supplemental Income and Loss, where the interest is fully deductible against rental income.

2. Real Estate Taxes

Read more...Top 10 Tax Deductions for Rental Property Owners via

Wednesday, March 13, 2013

ALN Monthly Newsletter March 2013 via ALN Apartment Data

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

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

Update: The Recession Probability Chart via Calculated Risk

Last November, I mentioned a recession probability chart from the St Louis Fed that was making the rounds, and that some people were misusing the chart to argue a new recession was starting in the US. Below is an update to the chart.

A few weeks later - also in November - the author, University of Oregon Professor Jeremy Piger, posted some FAQs and data for the chart online. Professor Piger writes:

Read more...Calculated Risk: Update: The Recession Probability Chart

Tuesday, March 12, 2013

Housing Moves Further Out Of Reach via Multifamily Executive Magazine

It is getting harder for low-income Americans to afford a modest apartment.

In no state can an individual working a 40-hour week at the minimum wage afford a two-bedroom apartment for his or her family. A one-bedroom apartment is even out of the worker's grasp.

The 2013 housing wage is $18.79, exceeding the $14.77 hourly wage earned by the average renter by $4 an hour, and greatly exceeding the national minimum wage of $7.25, reports the National Low Income Housing Coalition (NLIHC) in its new "Out of Reach 2013" report.

Read more...Housing Moves Further Out Of Reach - Housing Data, Affordable Housing - Multifamily Executive Magazine

ULI Real Estate Business Barometer - March 2013 via The Urban Land Institute

Industrial and retail property sectors gathered steam as absorption vaulted; retail rents reversed their 4.5-year slide. Commercial property transactions settled down following an impressive end-of-year spike, but buyer appetite otherwise showed strength: prices are at, and CMBS issuance is near, post-recession highs. Apartment rents reached an all-time high. Distress sales continue to drag down existing home prices, but foreclosures are now at 6-year lows.

The top ten trends in this month’s Barometer:

Employment growth in February was almost double that witnessed in January; the unemployment rate inched down to its lowest level since the end of 2008. Consumer confidence jumped sharply; the manufacturing sector expanded for the third-straight month. S&P 500 returns were above the historical monthly average.

Read more...ULI Real Estate Business Barometer -- March 2013

2013 Commercial Property Tax Trends in Texas via

The second quarter of 2013 is quickly approaching which means one thing for commercial property owners—property tax appeals loom ahead. As we approach peak tax season, many owners may be asking themselves how aggressive appraisal districts will be when setting 2013 property values.

It is in an owner’s best interest to determine an effective way to “predict” what values lay ahead. It’s important to look at the market versus assessed values for 2012. If the market value increased in 2012, but the assessed value lagged behind, the appraisal districts might play “catch up” when it comes to 2013 values.

For the benefit of commercial property owners in Texas, we have analyzed three major markets – Dallas, Houston and Austin—comparing 2012 numbers to help give owners a better idea of what to expect in 2013.

Read more...2013 Commercial Property Tax Trends in Texas - Commentary Article -

Monday, March 11, 2013

Fork in the Road via Multi-Housing News Online

It’s so tempting. During a redevelopment project, it’s easy to look at some debris—tattered avocado-green carpet from a 1970s-era lobby, the remnants of a hideously wallpapered wall hiding water-stained stucco—and determine that it has no use, aside from decorating the local landfill. But the landfill does not have to be the end of the line for much of the material that finds its way into garbage bins during the construction or redevelopment of a multifamily property. Trash can indeed be treasure.

It’s really quite simple. “You are actually creating an economic and environmental liability when you landfill or incinerate waste materials and you’re creating an environmental asset when you recover them,” says Marti Matsch, communications director for Eco-Cycle—a non-profit recycling and “zero-waste” organization. Consequences aside, there’s the fact that we just don’t have enough space for it all.

Read more...Fork in the Road | Multi-Housing News Online

Can Multi-Family Energy Efficiency Get Some Love? via Greentech Media

The greater New York-New Jersey area has more than 2,800,000 apartment units that make up 37 percent of the total housing stock. Despite multi-family units being a sizable chunk or real estate in and around the Big Apple, energy efficiency spending in that sector equates to just 2 percent of the total for all energy-efficiency programs.

The meager rate of investment still earned the New York region a title as one of the leaders in multi-family energy efficiency, according to a new report from the American Council for an Energy-Efficient Economy: Scaling up Multifamily Energy Efficiency Programs: A Metropolitan Area Assessment.

The report creates a baseline for the relatively sad state of multi-family energy efficiency programs across the U.S. Boston and Austin were the only two cities where program dollars that go to multi-family accounted for more than 10 percent of the overall spend.

Read more...Can Multi-Family Energy Efficiency Get Some Love? : Greentech Media

Commercial, Multifamily Lending Has Best Quarter Since 08 via American Banker Article

Commercial and multifamily mortgage debt rose by 0.9% in the fourth quarter from a year earlier, to $21.8 billion, marking the highest year-over-year improvement since the second quarter of 2008, the Mortgage Bankers Association said Monday.

Banks and thrifts took on $17.1 billion of the debt, a 2.1% increase from the fourth quarter of 2011. Government-sponsored entities took on $7.6 billion, a 2% rise. The increases were offset by securities issuers, which decreased their holdings of commercial/multifamily debt by $6 billion, or 11.3%.

Read more...Commercial, Multifamily Lending Has Best Quarter Since 08 - American Banker Article

Only 34% of renters have insurance via HousingWire

Renters insurance seems undervalued by both apartment and single-family home dwellers. In fact, only 34% of home and apartment renters have insurance, according to a study from

When surveyed, 60% of people incorrectly guessed $250 to be the annual cost of renter's insurance. About 21% of individuals interviewed thought renter's insurance would cost them as much as $1,000 per year or more. In reality, the true cost of renter's insurance is only $185 per year.

Read more...Only 34% of renters have insurance | HousingWire

Friday, March 8, 2013

Liquid Assets via Multi-Housing News Online

With the nation in the grips of a long-term drought and the prospect of water shortages growing more serious and widespread, water sub-metering has become an increasingly talked-about issue in the multifamily sector.Sub-meters bring consumption decisions home for residents and make water consumption personal, says Thomas R. Davis, senior vice president with Boston’s Recap Real Estate Advisors, a consulting firm focusing on affordable housing issues. Some sub-meter arrangements are merely informative, while others quantify usage in dollars and bill residents for their consumption.“If you’re being charged for your usage, it becomes much more relevant to you than if you’re simply being given information,” Davis says.

Howard Behr, vice president with the Business Development and Sub-metering Services Group at Costa Mesa, Calif.-based NWP Services Corp., agrees water sub-metering is very effective at lowering consumption.

Read more...Liquid Assets | Multi-Housing News Online

Fed mulls putting a not for sale sign on its assets via Reuters

The Federal Reserve is considering jettisoning a plan to eventually sell off the massive haul of bonds it is now buying, a politically defensive strategy that would have the added benefit of supporting the economy for years to come.

In what would be a revision of their blueprint for the eventual tightening of monetary policy, Fed officials have said they could simply allow the trillions of dollars in securities they have bought through three rounds of quantitative easing to mature.

Fed Chairman Ben Bernanke and other officials have said a decision not to sell the mortgage and Treasury bonds would only add about a year to the process of returning the central bank's balance sheet to a more normal size of around $1 trillion, probably around 2020. It is worth some $3 trillion now, and could swell to near $4 trillion by year end.

Read more...Fed mulls putting a not for sale sign on its assets | Reuters

When Will Sustainability Matter to Investors as Much as Location and Quality? via NREI

Sustainable buildings result in lower operating costs, not to mention long-term savings as the cost of energy continues to rise. Many real estate scions are building green—think of the Durst Organization’s Bank of America Tower in New York City and One World Trade Center, which is being co-developed by Durst and the Port Authority of New York and New Jersey—as well as retrofitting green—most famously, Malkin Properties’ newly refurbished Empire State Building.

So it isn’t surprising that some investors and real estate firms are starting to focus on amassing green portfolios. But when will sustainability become as standard a criterion as location and quality in U.S. investors’ acquisitions? According to many within the industry, thanks to a growing awareness of green as well as several benchmarking programs, that day is almost here.

Read more...When Will Sustainability Matter to Investors as Much as Location and Quality?

U.S. Commercial-Property Prices Seen Rising Near Peak via Bloomberg

Prices for U.S. commercial property are expected to climb in the next six months, extending a rebound that has sent values close to levels reached at the market’s peak in 2007, according to Green Street Advisors Inc.

There is an 80 percent likelihood that commercial real estate prices will rise over the next six months, the Newport Beach, California-based research firm said in a report yesterday. Prices climbed 1 percent in February and are within 1 percentage point of their August 2007 high, according to the company, which tracks real estate investment trusts.

“We’re effectively back to peak pricing,” Mike Kirby, Green Street’s director of research, said in a phone interview. “We’re fairly confident that the rebound will continue.”

Read more...U.S. Commercial-Property Prices Seen Rising Near Peak - Bloomberg

The Next Wave 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 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 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...The Next Wave | Multi-Housing News Online

Thursday, March 7, 2013

New Study Highlights the Financial Value of Green Buildings via Multifamily Executive Magazine

A new report from the World Green Building Council (WorldGBC), details the numerous benefits provided by green buildings throughout their life cycles, including more productive workplaces at a price comparable to conventional buildings.

“The Business Case for Green Building: A Review of the Costs and Benefits for Developers, Investors and Occupants,” examines the possibility of attaching a financial value to the cost and benefits of green buildings. It concludes that investments can be recouped through operational cost savings.

Read more...New Study Highlights the Financial Value of Green Buildings - Green Building, Commercial Projects - Multifamily Executive Magazine

2012 Q4 Resident Survey Trends via Kingsley Associates

Approximately 76 percent of renters were satisfied with their apartments during 2012, according to Kingsley Associates' latest resident survey data. For the four quarters ending December 31, 2012, 75.7 percent of renters in multifamily communities reported "good" or "excellent" overall satisfaction. This proportion has now remained within +/- 0.3 percentage points of 76 percent for six consecutive quarters.

Stability in satisfaction comes even as apartment resident demographics—and loyalty—continue to change. Kingsley Associates' long-term trends show that renters in 2012 tended to be older and have higher incomes than at any point in the past few years. They were also somewhat less likely to live alone. And only 57.0 percent indicated they "definitely" or "probably" would renew their leases, a drop of 8.0 percentage points from the recent high observed in the middle of 2010.

Read more...2012 Q4 Resident Survey Trends:

Small Assets via Multi-Housing News Online

Eric Silverman, managing director of Needham, Mass.-based Eastham Capital, is seeing a number of deals in the distressed sector. Between 2011 and 2012, his company fully invested its $34 million Fund II in about 17 properties and 4,500 multifamily units. Silverman has subsequently started Fund III, a $50 million fund that already has a number of properties in the pipeline. “There are a lot of opportunities, and distressed assets absolutely still exist,” says Silverman.Silverman’s experience may seem counter to the trend of disappointment among investors generally with the amount and quality of distressed multifamily opportunities in the past few years. “The expectation coming out of the down cycle is that it would be like the RTC days—a free-for-all. That didn’t happen,” observes Steven Jaffe, executive vice president and general counsel of Los Angeles-based BH Properties LLC. If anything, there may be even fewer distressed properties in the U.S. today. As real estate property performance and values improve, more capital becomes available to the sector, and interest rates drop ever lower.

Read more...Small Assets | Multi-Housing News Online

MF Permitting Increases, Rent Growth, Occupancy Moderate via

AXIOMetric Inc.'s most recent report points to an increase nationally of multifamily permitting over trailing the 12-month period ending in January, 2013. According to the local company's statistics, multifamily permitting increased 44.3% (or 84,308 units) from the January 2012 figure of 274,640 units.

Read more...MF Permitting Increases, Rent Growth, Occupancy Moderate - Daily News Article -

Trepp Releases February CMBS Loss Analysis via National Mortgage Professional

Resolution volume dropped 16 percent in February on the basis of liquidated balance, according to Trepp’s February CMBS Loss Analysis released today. On the basis of loan count, February’s total was less than half of January’s level. February average loss severity ended up at 44.26 percent, 13 basis points lower than January’s 44.39 percent.

February liquidations came in at $965.4 million, relative to the 12-month moving average of $1.36 billion. The 73 loan liquidations resulted in $427.3 million in losses, translating to an average loss severity of 44.26 percent. This is above the 12-month moving average of 41.56 percent. Since January 2010, servicers have been liquidating at an average rate of $1.17 billion per month.

Read more...Trepp Releases February CMBS Loss Analysis | Mortgage News | Daily National and State Headlines

Wednesday, March 6, 2013

Fannie and Freddie: Too Big To Shrink? via CoStar Group

With a clear mandate from the Obama administration to wind down the operations of Fannie Mae and Freddie Mac eventually, the Federal Housing Finance Administration, which oversees their operations, outlined its plans for meeting that objective. For starters, it hopes to cut the two government sponsored entities’ market share of new multifamily lending by 10%.

What's less clear is if that can be done in the current environment, or even if the eventual objective can be met. Both Fannie Mae and Freddie Mac showed operating performance improvements in 2012. These improvements were primarily driven by the higher-quality business written since 2008, a recovery in housing prices, and a more stable interest rate environment, according to Fitch Ratings.

Because of the key roles the two play in the U.S. housing market recovery, there is waning motivation for pursuing more wide-reaching GSE reforms in the near future, Fitch also noted.

Read more...Fannie and Freddie: Too Big To Shrink? - CoStar Group

What a Bunch of Whiners via Commercial Property Executive

I just saw a copy of the latest quarterly Orange Book published by Bloomberg, a compendium of anecdotes and comments made by CEOs and CFOs on quarterly earnings calls. It is patterned after the Fed’s Beige Book, which compiles economic and business anecdotes from banks, businesses, economists and other market experts. I was struck by the opening paragraph in the Orange Book: “There is a growing chorus of commentaries from executives regarding the fiscal situation in Washington and the delay or reluctance of the business community to invest or hire at least until some of those uncertainties have lessened. Economic conditions in the final quarter were called ‘recessionary,’ ‘mixed,’ ‘weak,’ ‘soft,’ ‘muted’ and ‘challenging.’ There was a clear deceleration in the economy during the last three months of the year and many anecdotes point to a continuation into the first quarter of 2013.”

Apparently you can’t have an earnings call these days without bemoaning the economy and blaming the government – which deserves to be criticized for its inability to govern. But I question the impact the legislative stalemate is having on the economy.

Read more...What a Bunch of Whiners | Commercial Property Executive

Affordable Housing Gap Found in Every State via Multifamily Executive Magazine

There are only 30 affordable rental units available for every 100 extremely low-income (ELI) renters, and just 57 affordable and available rental units for every 100 very low-income households, according to a new report by the National Low Income Housing Coalition (NLIHC).

Severe housing cost burdens, which occur when households have to pay more than 50 percent of income on rent and utilities, is a serious problem in every state.

In Nevada, the state with the fewest affordable and available rental homes, 88 percent of ELI renter households experience severe housing cost burdens.

Read more...Affordable Housing Gap Found in Every State - Housing Data, Affordable Housing - Multifamily Executive Magazine

Dallas Beige Book March 2013 via Dallas Fed

The Eleventh District economy expanded at a moderate pace over the past six weeks. Reports on manufacturing activity were mixed. Retail sales were flat to up slightly, while automobile dealers noted a seasonal slowdown in sales. In the nonfinancial services sector, legal and accounting demand increased, and reports from staffing firms were mixed. Rail and cargo firms said activity weakened, but demand was above year-earlier levels. Airlines said passenger demand was flat to up since the last report. Housing demand remained strong and commercial real estate activity improved. Lenders noted flat to moderate growth in loan demand, and activity in the energy sector remained at high levels. Prices remained stable overall, and there were limited reports of wage pressure. Employment levels were steady to up.

Most responding firms noted stable prices, although some transportation service contacts said costs were up due to higher fuel prices. High tech contacts noted downward pressure on prices, particularly for memory devices.

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

Guest Post: How to Encourage Recycling at Multifamily Communities via MHN Blog

Incorporating economically and environmentally friendly practices into multifamily living is a great way to avoid unnecessary waste and improve the community. So when an apartment community actually provides a recycling option, why is it being ignored? Information and motivation are keys on the road to greener living. Here are a few great ways that management can encourage their residents to take advantage of these eco-friendly options.

1. Get the Word Out
Some renters may not even realize recycling is an option at their apartment community. Management can reach out with information on recycling, pick-up dates and the acceptable recyclables via email, mail or door to door. For an easy reminder of when to recycle, distribute refrigerator magnets with the regular and holiday pick-up times. Showing how the apartment community has been going green (for example, LED light bulbs, high-efficiency air filters, Energy Star products, etc.) shows that you are dedicated to this cause. You can motivate residents into action with eye-catching informative door hangers. For effective visuals, try using an interesting statistic from the Environmental Protection Agency like:

Read more...Guest Post: How to Encourage Recycling at Multifamily Communities » MHN Blog | MHN Blog

Texas Economic Indicators March 2013 via Dallas Federal Reserve

The Texas economy continues to expand, with the Texas Business-Cycle Index increasing at a 4.1 percent annual rate in December. Texas single-family construction permits and existing-home sales increased in January, while housing starts declined. Texas exports ticked up slightly in the fourth quarter of 2012. Manufacturing activity increased but at a slower pace in February, according to the Texas Manufacturing Outlook Survey.

Growth in the Texas Business-Cycle Index was strong in early 2012 before weakening in the summer months. Growth accelerated again in the latter part of 2012 and surpassed 4 percent throughout the fourth quarter. The index increased 4.1 percent in December.

The index combines movements in employment, the unemployment rate and state real gross domestic product to provide a broader view of the state’s economic health. Periods of negative change in the index indicate recessions in Texas..

Read more...Texas Economic Indicators March 2013 via Dallas Federal Reserve

Multifamily Finance Readies for a Haircut via

Federal Housing Finance Agency Acting Director Edward J. DeMarco couldn’t have been more specific about his plans for the GSEs' multifamily finance operations: there will be a 10% reduction target in business volume from 2012 levels—achieved through some combination of increased pricing, more limited product offerings, and tighter overall underwriting standards.

This is the first tangible sign that, after years of rumblings, the government means business with its plans to scale back the GSEs. For the multifamily space, this is no small consideration. GSE support has, in part, kept the sector robust even during the recession. With a 10% haircut in financial support, how will the sector fare?

Read more...Multifamily Finance Readies for a Haircut - Daily News Article -

Tuesday, March 5, 2013

Apartment Industry Response to FHFA’s Regulatory Plan for Fannie Mae and Freddie Mac via NMHC

Statement from the National Multi Housing Council (NMHC) and National Apartment Association (NAA) Joint Legislative Program by Cindy Chetti, NMHC Senior Vice President of Government Affairs, in response to the Federal Housing Finance Agency (FHFA) 2013 scorecard outlining its regulatory goals for Fannie Mae and Freddie Mac in the current year.

“NMHC/NAA support returning to a more robust private capital market, but we believe that should be achieved through market-driven solutions and not the arbitrary 10 percent reduction, or more than $6 billion, in multifamily lending volume imposed by the FHFA 2013 scorecard.

Read more...Apartment Industry Response to FHFA’s Regulatory Plan for Fannie Mae and Freddie Mac - NMHC - National Multi Housing Council - NMHC

Texas dominates the best cities for good jobs via Real Estate Center at Texas A&M

Texas cities hold half the spots on Forbes’ most recent “Best Cities For Good Jobs” list. Dallas took the top spot on the list, Austin came in at No. 3, Fort Worth was No. 4, and San Antonio was No. 6.

Read more...Texas dominates the best cities for good jobs via Real Estate Center at Texas A&M

Rental, For-Sale Markets Buck Odds, Rise Together via

The apartment and for-sale housing markets usually compete with each other. Historically, the math has been simple and brutal: If the percentage of people who own homes goes up, then the percentage of people who rent goes down. Good news for housing sales often means bad news for the apartment sector, if the number of households that need homes stays stable.

But what’s happening today is different, according to the economists at the National Association of Realtors (NAR). “Rental demand and housing sales are rising at the same time,” says NAR spokesperson Walter Maloney.

What’s behind the seeming contradiction? The number of households is growing again after years of lagging behind the growth in the population. For years, graduates have been moving back home or sharing dwellings with roommates. Now, more people are striking out on their own. And this formation of new households is creating strong demand for both rental and for-sale housing.

Read more...Rental, For-Sale Markets Buck Odds, Rise Together via

Foreclosures' Silver Lining: They Could Restrain Rent Inflation via Dallas Fed

The U.S. housing market served both as a trigger and a catalyst during the recent financial crisis. Roughly $7 trillion in household wealth was lost as average house prices declined by nearly one-third from their peak (Chart 1). The resulting negative wealth effect—decreased income and deleveraging of consumer balance sheets—suppressed consumption and deepened the recession.

Recent economic indicators suggest that the worst of the housing crisis has passed, with home sales and prices reaching bottom in 2012. Construction, housing prices and homeowner’s equity show early signs of resumed growth.

While these signs are encouraging, a notable disconnect has emerged. Rental inflation has surpassed historic levels despite a supply of housing that partly reflects a persistent inventory of foreclosed, vacant homes. Several impediments have hindered a market-based resolution to the crisis’ lingering effects. Among them, individuals have found mortgages hard to come by due to tougher credit standards, and investors interested in bulk purchases have encountered owners unwilling to enter into these types of sales.

Read more...Foreclosures' Silver Lining: They Could Restrain Rent Inflation - Dallas Fed

Multifamily Permitting, January 2013: Approaching Long Term Average via Axiometrics

The U.S. Census Bureau posted its January residential permitting numbers by metropolitan statistical area (MSA) on Wednesday, February 27. Privately-owned housing units authorized by building permit in January, measured on a seasonally adjusted annual rate (SAAR), were 925,000. This was an increase of 1.8% from the revised December rate of 909,000, and was 35.2% above the January 2012 estimate of 684,000. During January 2013, annual multifamily (MF) permits increased by 44.3% at the national level from the comparable period a year ago. Even with this increase, annual MF permitting activity was 1.9% below the long-term average. With the January 2013 MF permits at 274,640 units, annual MF permitting has now been above 200,000 for 15 consecutive months. The anticipation of moderating but still healthy apartment market fundamentals over the next two years is stimulating developers and investors to start new projects. Even with the first waves of permits issued during this upward cycle being turned into completions this year, completions will still remain slightly below the long-term historical average for the U.S. and most MSAs. By 2014, most MSAs will see their inventory growth pass the historical average. However, there are some MSAs, like Charleston, Raleigh, Washington, DC, Baltimore, Austin, Nashville, Philadelphia, and Seattle, where new supply will outpace the historical average rate this year.

Read more...Multifamily Permitting, January 2013: Approaching Long Term Average via Axiometrics

Fannie, Freddie to form new company via

Fannie Mae and Freddie Mac will build a new joint company for securitizing home loans as a stepping stone toward shrinking the government's role in the mortgage market, the regulator of the U.S. government-controlled firms said on Monday.

"The overarching goal is to create something of value that could either be sold or used by policymakers as a foundational element of the mortgage market of the future," Edward DeMarco, acting director of the Federal Housing Finance Agency, told the National Association for Business Economics.

Fannie Mae and Freddie Mac, which were bailed out by the government in 2008, help finance about two-thirds of new U.S. home loans. DeMarco is seeking to shrink their footprint and reduce risks to the taxpayers that support the mortgage giants.

Read more...Fannie, Freddie to form new company - Business on

Monday, March 4, 2013

Multifamily Development Projected to Reach Four-Year High via

As development in the multifamily sector ramps up, analysts are projecting that 2013 will see the largest wave of new apartment supply come online in four years.

This will be the first year since 2009 that the number of new apartment units added to the market will return to historic average levels, according to estimates from commercial real estate research firm CoStar. Luis Mejia, director of multifamily research with CoStar, said he’s expecting a “significant” increase in new supply in the next three years in the more than 50 metro markets covered by his firm. CoStar is projecting that 140,000 new apartment units will be delivered in 2013, with more that 400,000 to come in the next three years.

Mejia attributed the increase to a number of factors, including growing demand among the prime renting demographic. Also, he said developers can easily finance construction loans.

Read more...Multifamily Development Projected to Reach Four-Year High via

Private Equity Investors Play the “Yield Compression Game" via

Private equity investors may be deploying different strategies, but their end game is the same. They all want higher yields in what remains a highly competitive market.

The quest for bigger returns is prompting private equity investors to expand their target markets and move away from the relative “safety” of core properties in major metros and top secondary markets.

“The trend is that the money all started with a very narrow fairway, and now it is widening—both from an asset class and different markets that people are willing to invest in,” says James Tramuto, managing director, of Jones Lang LaSalle’s Capital Markets in Houston.

Read more...Private Equity Investors Play the “Yield Compression Game" via

CMBS Delinquencies Dropped in February via American Banker Article

Real estate loans that make up commercial mortgage-backed securities that were delinquent by at least 30 days or in foreclosure fell to 9.42% for the month, 15 basis points lower than January and 29 basis points fewer than December, says the report by Trepp, a New York-based data firm.

The delinquency rate has fallen 92 basis points since peaking at 10.34% in July, according to Trepp.

The percentage of loans that were delinquent by at least 60 days or in foreclosure fell 15 basis points from January, to 8.96%

Read more...CMBS Delinquencies Dropped in February - American Banker Article

More Multifamily "Rookies" Mean Possible Oversupply in Some Markets via Multifamily Executive Magazine

The multifamily industry is an attractive, albeit tumultuous industry. With several years of rent growth and an improved financial environment, it seems like the perfect moment to plan future apartment deliveries and set up shop in up-and-coming-markets.

So much so that non-traditional industries are attempting to stake their claim in the multifamily world. But the increased interest will inevitably threaten to oversupply some top markets that are already seeing overproduction in the multifamily world.

“Traditional, multifamily developers might be underestimating the magnitude of the threat of new entrants, which are increasingly announcing their own multifamily development plans,” says Dave Bragg, director of research at Cleveland-based Zelman & Associates.

Read more...More Multifamily "Rookies" Mean Possible Oversupply in Some Markets - Single Family - Multifamily Executive Magazine

Friday, March 1, 2013

For Recent Grads, Student Loan Delinquencies Reach 35% via Businessweek

I am 23 and, thankfully, don’t have any student loans. I got a scholarship in college, and because of this my parents agreed to help pay for my masters degree, but I count myself among a very small proportion of recent graduates that isn’t drowning in student debt. So much debt, in fact, that 35 percent of those of us under age 30 simply won’t—or can’t—make their loan payments anymore, according to a new report from the Federal Reserve Bank of New York.

Since 2004, educational debt has nearly tripled, to $966 billion, surpassing credit-card debt, auto loans, and home equity lines of credit to take second place behind mortgage debt, with a total balance moving steadily toward $1 trillion. Even through the recession, student debt showed no signs of stopping.

Read more...For Recent Grads, Student Loan Delinquencies Reach 35% - Businessweek

Economy and CRE Markets Adapt to “New Normal” via CCIM Institute

As 2013 progresses, the U.S. economy and commercial real estate markets continue to settle into a “new normal,” which is reflected in GDP growth, employment trends, and effects of uncertain fiscal policy changes, according to George Ratiu, manager of quantitative and commercial research for the National Association of REALTORS®, who hosted the CCIM Institute’s Feb. 27 webinar, The 2013 Economy and Its Effect on Commercial Real Estate. However, as 1Q13 nears completion, Ratiu’s projections for continued recovery and momentum are favorable. “I feel more optimistic about the economy’s direction than I did even just a few months ago,” he said.

A mild rebound in the housing sector, moderate employment gains, increasing corporate profits and productivity, and rising equity and debt markets continue to support moderate economic growth, Ratiu said. However, consumer confidence concerns and cautious spending, coupled with still-high unemployment figures and volatile energy costs, continue to weigh heavily on the overall economy’s progress, according to data compiled from NAR, Reis, Real Capital Analytics, the U.S. Federal Reserve, and the Bureau of Labor Statistics, among other sources.

Read more...Economy and CRE Markets Adapt to “New Normal” | CCIM Institute

New trend in Eagle Ford housing via

The 70 brand new apartments being built in Encinal will be made primarily out of recycled shipping containers, in what the developer hopes will be a trend that catches on in the Eagle Ford Shale area.

“We came up with the idea a few years ago, and this set-up of apartments is our first major project,” said David Monnich, the owner and developer behind the project.

They chose Encinal because of the extremely high demand for housing due to expansive growth fueled by the Eagle Ford Shale operations.

Read more...New trend in Eagle Ford housing via

"Customer Service is the New Marketing" via Multifamily Blogs

"Customer Service Is The New Marketing"! Hmm, this seems to be a buzz line I hear more and more, but it certainly is not new. There are articles dating back years with this same tag line. What makes it more important or relative today is the continued ease in which people communicate their experiences.

I think we would all agree that Marketing is important to gain new residents, but I would argue that it's MOST important in keeping the residents you already have. Why is this so? Well, it's really very simple. When you keep the residents you already have your immediate benefit is obviously the savings in turnover expenses and the expense to market the available apartment. Just as valuable if not more though, is the FREE word of mouth Marketing and Customer loyalty you get from your residents.

Read more..."Customer Service is the New Marketing" - Multifamily Blogs