Friday, May 31, 2013

Households Still Haven’t Rebuilt Lost Wealth via WSJ

Americans have recovered only 45% of the wealth they lost during the recession, adjusted for inflation, the Federal Reserve Bank of St. Louis estimated.

The findings were released as part of the St. Louis Fed’s 2012 annual report, which was made public on Thursday. In the report, the Midwestern bank announced the launch of a new Center for Household Financial Stability, which will track the nation’s effort to dig itself out of the hole it found itself in during the financial crisis.

In the report, the bank said data shows a near complete recovery in total aggregate wealth is misleading. The analysts argue aggregate household net worth data isn’t adjusted for inflation, population growth or the nature of the wealth. They noted a lot of the recovery in net worth has been tied to the stock market, and is thus concentrated in holdings of wealthy families.

Read more...Households Still Haven’t Rebuilt Lost Wealth - Real Time Economics - WSJ

10 reasons why so many people are moving to Texas via BBC News

Every way you look at it, there are a lot of people moving to Texas.

Five of the 10 fastest-growing cities in the country between 2011 and 2012 were in Texas, according to new figures from the US Census Bureau. New York is way out in front in terms of added population, but Houston is second with San Antonio and Austin fourth and fifth.

In terms of percentage growth, it's even more Texas, Texas, Texas. Among the five cities that grew most, as a proportion of their size, between 2011 and 2012, three are Texan. San Marcos is out in front with the highest rate of growth among all US cities and towns - 4.9%.

Some of this Texan population boom is due to a natural increase - more births than deaths - but the numbers moving into the state from elsewhere in the US and from abroad far outstrip every other American state. Why?

Read more...BBC News - 10 reasons why so many people are moving to Texas

Apartment renovation trends via Dupre Scott Apartment Advisors

Some apartment buyers plan to renovate and sell within a year or two of their purchase. They expect to cash in the capital gains their effort created. Others plan to renovate and hold the property for the long-term. They see this as a way to increase cash flow. Either way, these buyers expect to force gains. They actively take steps to increase rents and values. They won’t sit back and either wait for, or gamble on a rising market.

This article looks at apartment renovation trends over the past 25 years and includes a Renovation cost & benefit forecaster. There is also information about two renovations, and a discussion of some of the newer flooring options investors are looking at for renovations.

Read more...Dupre Scott Apartment Advisors - Apartment renovation trends

Investors scope Houston for real estate deals via HousingWire

Investors scoping for returns in real estate seem to have their hearts set on the Lone Star state — Houston in particular.

Houston ranked as the No. 4 city in the U.S. — fifth globally — in terms of real estate investment dollars overall in 2012. Over the past 18 months, the Houston buyer pool has gained steam, witnessing $8.8 billion of investment, up 32% from 2011, said a recent report by Jones Lang LaSalle.

The Houston market continues to draw an array of foreign and domestic capital sources. The 2012 employment boost saw gains of nearly 4% above its previous peak and approximately 100,000 new jobs were added from October 2011 to October 2012.

Experts believe that further expansion in healthcare, distribution facilities and energy services are indicators of long-term fertility in the market.

Read more...Investors scope Houston for real estate deals | HousingWire

Thursday, May 30, 2013

Q1 2013 Bank Lending and Default Report via Chandan Economics



Bank lending on multifamily and commercial properties continues to recover as market and balance sheet conditions improve. New lending is diluting non-performing legacy loans, pushing default rates lower for the eighth consecutive quarter. The apartment default rate is now less than one-third of its peak level during the financial crisis. The construction default rate is less than half its peak.

Read more...Q1 2013 Bank Lending and Default Report | Chandan Economics

US CMBS special servicing balance drops dramatically via HousingWire

U.S. commercial mortgage-backed securities loans in special servicing fell below $70 billion for the first time in three years and now make up less than 10% of all outstanding CMBS, Fitch Ratings said in a new report.

The specially serviced CMBS loan universe declined to $64.2 billion in late March.

Despite the overall balance of CMBS loans in servicing edging lower, fewer loans transferred out of special servicing during the first quarter, Fitch said.

Read more...US CMBS special servicing balance drops dramatically | HousingWire

How to Choose a Green Certification Program via Multifamily Executive Magazine

So you’ve decided to have your next building certified green, but with all the different programs out there, how do you decide which one to use? As with most questions, the answer is “it depends.”

It depends on your building—new or existing; low- mid-, or high-rise. Each program addresses building types differently, and understanding these differences will help determine the best program to fit your needs.

It also depends on your investors: Do they prefer one program over another? It depends on your area: Are there local programs that have strong market recognition, or should you use a national program? It depends on your team’s experience: If your architect and contractor have certified several projects through one particular program, it may make sense to stick with what they already know well. It depends on the cost: Certification incurs costs for field inspections and fees to certifying organizations, which can vary greatly. Finally, it depends on local requirements and available incentives: Some jurisdictions require or promote specific green certifications by offering tax credits, utility rebates, expedited permitting, or other bonuses for certifying green.

Read more...How to Choose a Green Certification Program - Green Standards, Green Building - Multifamily Executive Magazine

Bubbles as Far as the Eye Can See via the Blog of the Real Estate Center

Thanks to the “accommodative” stance of the Federal Reserve, low interest rates have created highly priced assets as far as the eye can see. When does a highly priced asset class become a bubble? Nobody knows the answer to that question. I do know that you usually don’t make much money buying assets at record high prices.

As I surveyed the investment alternatives available to anyone with money to put to work, I immediately started thinking about one of my favorite TV shows, “The Lawrence Welk Show.” Of course,+ I watched it for the edgy avant-garde musicians, but I also clearly remember the cascade of bubbles.

Most of the investment asset classes in America currently look to me like one big Lawrence Welk Show. How much return do you usually get when you buy an asset at a record high? How much return on investment do you get when you buy an asset way above previous record highs?

Read more...Bubbles as Far as the Eye Can See | the Blog of the Real Estate Center

Job Growth in Key Industries Spurs Multifamily Renaissance in San Antonio via Multi-Housing News Online

With projects stemming from the Eagle Ford Shale and other industries fueling economic growth across the region, San Antonio is to beginning to see job growth two percentage points higher than the national average. As such, vacancy is set to fall to 5.5 percent by the end of the year—the lowest rate since well before the recession.

Marcus & Millichap reports that employers are set to add 31,800 jobs in 2013, amounting to an annual growth rate of 3.6 percent. Much of the growth will be concentrated in the transportation, education and leisure and hospitality sectors, while companies such as Halliburton will also significantly expand operations.

Halliburton, the oilfield services company headquartered in Houston, recently announced it will complete construction of a 400,000-square-foot facility in the southern area of the metro and ultimately hire 1,500 new workers. Marcus & Millichap notes that 75 percent of the new positions will be local hires with salaries averaging $70,000.

Read more...MARKET SNAPSHOT: Job Growth in Key Industries Spurs Multifamily Renaissance in San Antonio | Multi-Housing News Online

Apartment and Condominium Market Remains Strong after Small Correction in the First Quarter of 2013 via Multi-Housing News Online

The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), inched down two points to an index level of 52. It is the fifth straight quarter with a reading over 50.

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

The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums.

Read more...Apartment and Condominium Market Remains Strong after Small Correction in the First Quarter of 2013 | Multi-Housing News Online

How Green Construction Pays via Multifamily Executive Magazine

Albert Berriz wouldn’t have invested just under $6 million to use green construction to rehabilitate an affordable property without an incentive.

Through the U.S. Department of Housing and Urban Development’s (HUD’s) Green Retrofit program, Berriz’s team at Ann Arbor, Mich.–based McKinley was able to secure a $5.99 million loan with 1 percent interest to make the property environmentally friendly.

The competitive loan called for creative proposals from developers across the nation and awarded Berriz, CEO, and the team at McKinley with the second-largest retrofit loan in 2012 for a rehabilitation project in Taylor, Mich.

The $5.9 million loan was awarded to the Ponds at the Villages of Taylor and helped to renovate the community to be more sustainable and environmentally friendly.

Read more...How Green Construction Pays - Green Building - Multifamily Executive Magazine

Wednesday, May 29, 2013

Investors Bet Tiny Micro Apts. Can Yield Outsized Returns via CoStar Group

In keeping with the current 'small can be beautiful' trend in corporate office space and storefronts, studio micro apartment units are getting a long look from developers and investors hoping to maximize returns in several of the nation's most heated multifamily markets.

From Boston, New York City and Washington, D.C., to San Francisco and Southern California, builders are proposing new apartment projects with significant mixes of ultra-small units measuring as little as 220 square feet -- smaller than some single-family residential kitchens and bathrooms and an average of 40% smaller than the average studio apartment.

Driving the apartment market trend, as always, is shifting demographics. Analysts have noted, especially since the recession, that many of those in the Millennial/Y Generation favor smaller, more affordable apartments or condominiums near the downtown urban core.

Read more...Investors Bet Tiny Micro Apts. Can Yield Outsized Returns - CoStar Group

Fort Worth Multifamily Market Report via REBusiness

There appears to be no sign that the recent growth experienced by many Texas metropolitan areas is slowing down anytime soon, and Fort Worth is no exception. Substantial job growth, solid multifamily fundamentals, low interest rates and a pro-business climate have put many eyes on the Fort Worth market.

The Fort Worth-Arlington MSA is experiencing positive job growth, and is listed as one of the best performing metros in the nation. The MSA added 36,700 jobs, an expansion of 4.2 percent year-over-year ending February 2013. The MSA also experienced an unemployment improvement of 0.8 percent. This was the largest year-over-year percentage increase in employment among all metropolitan divisions and good enough to be ranked 13th nationally in job addition.

Read more...Fort Worth Multifamily Market Report via

Agencies team up to aid thousands of homeless vets via HousingWire

The Department of Housing and Urban Development teamed up with the Department of Veteran Affairs to provide 9,000 homeless veterans a permanent place to call home.

The supportive housing assistance announced will provide $60 million to local public housing agencies across the country to provide permanent supportive housing to homeless veterans.

The HUD-Veterans Affairs Supportive Housing (HUD-VASH) program combines rental assistance from HUD with case management and clinical services provided by the VA.

HUD-VASH is a critical component of the Obama Administration’s commitment to end veteran and long-term chronic homelessness by 2015.

Read more...Agencies team up to aid thousands of homeless vets | HousingWire

Disposition Watch: Is Now the Best Time to Sell? via Multifamily Executive Magazine

It sometimes seems like every day, another apartment building is sold for a record price. But is now the best time to sell?

A 250-unit building in Chicago’s Old Town neighborhood recently went for $158 million, or $632,000 per unit, a new record for the Windy City. In Washington, D.C., the 125-unit District Apartments recently sold for $76 million, the highest per-unit sale in the city’s history. In that same market, a 914-unit building sold in March for $322.4 million, one of the highest prices ever registered in the area.

The record prices being paid for these and other “trophy” apartments aren’t likely to subside any time soon, either, as new and established investors look to capitalize on a sector in which interest rates remain low, yields are immediate, and new supply is trying to catch up with rising demand.

Read more...Disposition Watch: Is Now the Best Time to Sell? - Dispositions And Transactions - Multifamily Executive Magazine

Tuesday, May 28, 2013

Cap Rates Inch Up for B & C Apartments via

In pockets across the country, the cap rates behind apartment lending are inching up. But it’s not for the reasons that keep investors up at night. For institutional buyers and lenders, the top-end of the market has not shaken its luster, even where rent growth has slowed. Nor have price pressures ebbed significantly. Instead, the metrics are drifting higher because the range of assets trading in the market has broadened. For a growing share of non-institutional buyers, pricing at the median is too steep. At the lower bound of the investable universe, rents on higher-yielding properties are now rising at faster clip. Yield-hungry investors with ample access to debt are responding in kind — just not at the current pace of fundamentals.

To the great relief of the institutional ranks’ recent buyers (and the equal dismay of many credit risk officers), cap rates and debt yields on strongly contested, high-value assets declined in the first quarter (see our Q1’13 summary). For properties valued above $25 million – either by sale price or appraisal at refinancing – the national average cap rate fell to 5.6 percent. Debt yields for this cohort slipped to a record-low of 8.3 percent. Reflecting a more crowded marketplace of lenders, investors were able to secure more than $12 in financing for every dollar of NOI.

Read more...Cap Rates Inch Up for B & C Apartments - Chief Economist Article -

Eight Great Green Building Trends via

In 2013, Green Building continues to grow and expand in all corners of the globe. More importantly, things such as client and market demand, lower operating costs, and public relations opportunities are being cited as reasons for this growth, according to the Global Green Building Trends Report.

This certainly leads one to conclude that green building is taking hold and will continue to influence building in the years ahead. With this in mind, here are eight green building trends to be aware of:

Read more...Eight Great Green Building Trends | GreenBuildTV

Commercial Real Estate Fundamentals Improving, Lending Tight for Small Business via

With vacancy rates modestly falling and rents moderately rising in commercial real estate sectors, market fundamentals have improved, but financing remains a challenge for small business, according to the National Association of Realtors® quarterly commercial real estate forecast.

Lawrence Yun, NAR chief economist, said the market is showing an uneven recovery. “The wheels appear to be greased for the big players, but not so much for small business,” he said. “Overall, the commercial sectors are firming nicely, with multifamily continuing to show the best performance.”

Read more...Commercial Real Estate Fundamentals Improving, Lending Tight for Small Business |

Bed Bug Epidemic Not Waning Survey Shows [Infographic] via Property Management Insider

The bed bug epidemic that has plagued the multifamily and rental housing industries over the past few years isn’t going away any time soon according to the latest Bugs Without Borders Survey conducted by the National Pest Management Association (NPMA) and the University of Kentucky.

The survey of U.S. pest management professionals found that 99.6 percent of respondents encountered bed bug infestations in the past year and that they continue to be the most difficult pest to treat. As expected, bed bugs are most commonly found in residences, including apartments/condominiums and single-family homes, with 98 percent and 96 percent of pest professionals reporting that they treated bed bugs in these locations respectively.

Read more...Bed Bug Epidemic Not Waning Survey Shows [Infographic] | Property Management Insider

Q1 2013 Apartment Trends via Multi-Housing News Online

Reis Reports Chief Economist Dr. Victor Calanog covers Q1 2013 Apartment Trends and provides an outlook for the coming months in the sector.

Some highlights include:

* Apartment vacancy hit 4.3 percent at the end of the first quarter.
* Asking and effective rents grew by 0.5 percent
* Multifamily development is continuing to surge, bringing 150,000 units online in 2013.

Watch video...Q1 2013 Apartment Trends | Multi-Housing News Online

San Antonio 1Q 2013 multifamily market statistics via Real Estate Center at Texas A&M

The rental market remains robust in San Antonio, according to first quarter 2013 report issued by Transwestern.

Read more...San Antonio 1Q 2013 multifamily market statistics

Secondary Markets Win Multifamily Investors via National Real Estate Investor

Multifamily investors are finding lower prices and higher yields in secondary markets. “Markets that people gave up on are now markets that people are going back to,” says Walter Page, director of research for Property and Portfolio Research, a division of the CoStar Group. “In most primary markets the average price per sq.ft. is twice what it is secondary markets.”

CoStar now expects to see the lowest average returns on real estate investments in prime markets like New York City and Washington, D.C. The highest average returns will come from investments in secondary markets, including the East Bay near San Francisco; Raleigh, N.C.; Portland, Ore. and Austin, Texas, says Page.

Read more...Secondary Markets Win Multifamily Investors | Multifamily content from National Real Estate Investor

Texas Manufacturing Outlook Survey 5/28/13 via Dallas Fed

Texas factory activity increased sharply in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from -0.5 to 11.2, indicating a notable pickup in output.

Stronger manufacturing activity was reflected in other survey measures as well. The new orders index rebounded to 6.2 after falling to -4.9 in April. Similarly, the shipments index bounced back to 3.1 after dipping to -0.4. The capacity utilization index came in at 6.4, up from 2.7 last month.

Perceptions of broader business conditions continued to worsen in May. The general business activity index remained negative but moved up five points to -10.5. The company outlook index declined from -2.2 to -6.8, reaching its lowest level since July 2010.

Read more...Texas Manufacturing Outlook Survey - Dallas Fed

How much do Fannie and Freddie still owe us? via CBS News

Fannie Mae and Freddie Mac took a lot of money from U.S. taxpayers during the Great Recession, but now they're giving it back.

The two mortgage giants are again reporting record profits this quarter. Fannie Mae, the larger of the two, reported an $8.1 billion pretax profit, the largest quarterly pretax income in the company's history. Meanwhile, Freddie Mac took in $4.6 billion, the second largest in its history.

And all that money, along with a $50.6 billion Fannie Mae tax credit from years ago, will be paid to the federal government. That's about $63 billion filling Uncle Sam's coffers so far -- and we're only halfway through the year.

But they still owe us. The question is how much.

There are really two answers.

Read more...How much do Fannie and Freddie still owe us? - CBS News

Thursday, May 23, 2013

America's Biggest and Fastest-Growing Cities via The Atlantic Cities

According to new population numbers from the U.S. Census Bureau, Texas's cities are expanding -- fast. The state houses eight of America's 15 fastest-growing cities. San Marcos, Texas, had the largest percentage increase, at 4.91 percent.

This map plots the top fast-growing large cities (any city or town with 50,000 people or more) between July 2011 and July 2012.

Read more...America's Biggest and Fastest-Growing Cities - Sara Johnson - The Atlantic Cities

Wednesday, May 22, 2013

Will Building Boom End the Party for Apt. Investors? via CoStar Group

Wave of New Construction Affecting Everything From Rent Concessions to Cap Rates to Where Investors Place Capital.

Apartment developers and investors likely can look forward to enjoying another year or two of high occupancy and pricing power in a strengthening economy. But the music may stop by 2015 when the full brunt from the growing wave of new supply is expected to be felt across U.S. markets.

For now, the good times continue to roll. Multifamily pricing continued to post the strongest results of all product types during the first quarter, though there are signs of a deceleration in apartment fundamentals, mainly as a result of growing new supply, according to the latest CoStar Commercial Repeat Sale Indices (CCRSI).

The multifamily index gain of 0.8% in the first quarter was the best of the four major property types - but a notable decline from its quarterly average of 3.2% over the last two years, according to the CCRSI.

Read more...Will Building Boom End the Party for Apt. Investors? - CoStar Group

Mezzanine Lenders Face Greater Competition via National Real Estate Investor

Mezzanine lending is getting caught up in the same frenzy for yield that is sweeping the broader commercial real estate market.

Competition is ramping up as new players―and more capital―continue to enter the sector. “I wouldn’t label it as abundant, but there are definitely quite a few folks looking to make those investments across all property types,” says Jeffrey Erxleben, a senior vice president, managing director at NorthMarq in Dallas. In the past 12 months, NorthMarq has closed $250.2 million in mezzanine loans.

Even typically conservative lenders such as life insurance companies are pursuing mezz lending in order to capture higher yields. Life companies are making those investments on both existing assets and new construction. “We first saw that activity come in maybe 24 months ago, and we have seen more join the ranks, both for general account money for their own balance sheet and for their third party accounts,” adds Erxleben.

Read more...Mezzanine Lenders Face Greater Competition | Bridge & Mezzanine Finance content from National Real Estate Investor

Fed Stimulus Still Needed to Help Recovery, Bernanke Says via

Despite recent improvement in the job market, the Federal Reserve needs to continue its stimulus efforts to avoid endangering the recovery, the Fed chairman, Ben S. Bernanke, told Congress on Wednesday.

While acknowledging the risks of historically low interest rates and the Fed’s aggressive policy of buying government bonds to help stimulate the economy, Mr. Bernanke said in testimony that “a premature tightening of monetary policy could lead interest rates to rise temporarily but also would carry a substantial risk of slowing or ending the economic recovery.”

After his opening statement, however, Mr. Bernanke seemingly opened the door a bit wider to tapering down.

Read more...Fed Stimulus Still Needed to Help Recovery, Bernanke Says -

Downtown Austin apartments bubbling up via Real Estate Center at Texas A&M

The area loosely bounded by I-35 and Mopac Expy. to the east and west, and by 12th St. and Ben White Blvd. to the north and south, is seeing one of the largest apartment construction booms in recent memory.

Six projects totaling 1,682 units were recently completed or are near completion, and another 13 projects totaling 3,402 units are projected for completion in 12 to 24 months, according to data from Austin Investor Interests LLC.

Whitley at Brazos and East Third streets delivered 75 of 266 units in early April 2013, with published lease rates in excess of $3 per sf — or $3,000-plus for a two-bedroom, 1,000-sf apartment. Other units scheduled to be delivered soon are expected to garner rents of $2 or more per sf.

Read more...Downtown Austin apartments bubbling up via Real Estate Center at Texas A&M

Tuesday, May 21, 2013

Monthly Review of Texas Economy, May 2013 via Real Estate Center at Texas A&M University

The Texas economy gained 331,100 nonagricultural jobs from April 2012 to April 2013, an annual growth rate of 3.1 percent compared with 1.6 percent for the United States (Table 1 and Figure 1). The state’s nongovernment sector added 312,200 jobs, an annual growth rate of 3.5 percent compared with 2 percent for the nation’s private sector (Table 1).

Texas’ seasonally adjusted unemployment rate fell to 6.4 percent in April 2013 from 7 percent in April 2012. The nation’s rate decreased from 8.1 to 7.5 percent (Table 1).

Table 2 shows Texas industries ranked by employment growth rate from April 2012 to April 2013. Table 3 shows the relative importance of the state’s industries based on number of employees..

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

How to Help with Tornado Relief Efforts via Property Management Insider

My part of the country has been hard hit by severe weather over the past few days. Last Wednesday (May 15), as many as three tornadoes slammed into the lakefront town of Granbury, which is outside of Dallas. And we’re all aware of the horrible tragedy that is unfolding in Oklahoma after a massive tornado roared through the suburbs of Oklahoma City this past Monday.

If you wish to aid the efforts of national and local disaster relief organizations and charities as they offer support and healing in communities in Moore, Oklahoma, and the Dallas/Fort Worth area, you have a number of options.

The American Red Cross
People who wish to make a donation can support American Red Cross Disaster Relief, which helps provide food, shelter and emotional support to those affected by disasters like the recent tornadoes in Oklahoma and Texas, as well as disasters big and small throughout the United States, by visiting, dialing 1-800-REDCROSS, or texting REDCROSS to 90999 to make a $10 donation.

Read more...How to Help with Tornado Relief Efforts | Property Management Insider

Rents Up, Concessions Down in MF via

A hot multifamily market has greatly influenced rental rates and concessions for tenants. In Part 2, of’s exclusive interview with Laura Khouri, president of Western National Property Management, Khouri explains how these factors have affected each other and how her firm stays competitive. Multifamily has been a hot product type for investors over the past 12 to 24 months. How has this activity affected property management?

Laura Khouri: The increased investor activity over the past year has had a major impact on the way in which rents are established and concessions are applied. The key is that multifamily property owners who want their communities to be considered for sale are focused on being able to demonstrate the greatest possible return for potential buyers.

Read more...Rents Up, Concessions Down in MF - Daily News Article -

Monday, May 20, 2013

Fiscal Policy. Oy! (With Reference to Ben Bernanke, Ken Arrow, Thomas Jefferson, William Shakespeare and the Oracle of Omaha) via Dallas Fed

Speech by Richard W. Fisher

Thank you, Ken (Simonson). I am delighted that the National Association for Business Economics (NABE) has chosen the Dallas Fed’s Houston Branch as the venue for this meeting on the oil and gas boom as a possible engine for “Reigniting the Economy.” As you will shortly hear from my Dallas Fed colleague, Mine YĆ¼cel; my wise old colleague from my days at Treasury in the 1970s, Phil Verleger; the incoming chairman of our San Antonio Branch, Curt Anastasio; and others, this is an intriguing proposition. The technical and entrepreneurial genius of Houston and Texas is playing a key role in unlocking our nation’s energy potential. Indeed, there are many here in Texas and abroad—in places as distant as Illinois, Michigan and New York—who argue that reigniting their local economies and the nation’s economy calls for more “Texification,” above and beyond the frontiers of energy.

But I am not here today to discuss oil and gas or engage in “Texas brag.” I have been asked to provide a broader perspective on the nation’s economic and monetary policy.

Current Predicament of Monetary Policy: A Grand Experiment
I’ll begin with a summary of the current predicament of monetary policy.

The Federal Reserve has undertaken a grand experiment to reignite the economy through unprecedented monetary accommodation. We cut to zero the base rate that anchors the yield curve and have pursued a policy aimed at driving rates throughout the curve to historic lows by buying Treasuries and mortgage-backed securities (MBS). Our portfolio totals about $3 trillion, which we have recently been expanding at a rate of $85 billion per month.

Read more...Fiscal Policy. Oy! (With Reference to Ben Bernanke, Ken Arrow, Thomas Jefferson, William Shakespeare and the Oracle of Omaha) - Dallas Fed

Texas adds 33,100 jobs in April (more than any other state) via Real Estate Center at Texas A&M

Texas added 33,100 jobs in April — more than any other state — despite the federal payroll tax increase, U.S. spending cuts and a global slowdown.

The state also added the most jobs nationally — 326,100 — over the last 12 months, the Texas Workforce Commission reported.

“Texas was the No. 1 state again in job creation,” said Jason Frederick, a senior economist for BBVA Compass bank.

Read more...Texas adds 33,100 jobs in April (more than any other state) via Real Estate Center at Texas A&M

April 2013 Apartment Market Summary via Axiometrics

As 2Q 2013 began, national effective rent growth softened to its slowest pace in the past 32 months. The growth rate had held fairly steady between 3.53% and 3.84% from June 2012 to February 2013, slowed to 3.22% in March 2013, and declined to a low of 3.11% in April 2013. While effective rent growth was weaker than in prior periods, the occupancy rate continued to strengthen, with a national average of 94.60% in April and with 44 of the top 88 Metropolitan Statistical Areas (MSAs) generating an average rate above 95.0%.

Class A properties continue to be a drag on national rent growth. Annual effective rent growth for these properties slowed to 2.8% in April though occupancy increased from 95.0% in March to 95.12% in April. There was very little separation between Class A occupancy (95.13%) and Class B occupancy (94.96%) in April. However, Class B properties increased effective rents at a slightly better pace–3.2%–than Class A properties over the past year, but fell behind Class C properties, which produced a growth rate of 4.0%. Class C properties also have the best absorption rates, and this trend will likely continue as the occupancy rate still averages just 93.2%.

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

Classy Apartment Assets, Apartment Assets by Class via Axiometrics

In a previous blog, we delved into the overall story behind the national effective rent growth in the apartment markets. Just as instructive when discussing effective rent growth is an analysis of rent growth by asset class.

The news here is that class C assets have been experiencing a higher effective rent growth in recent quarters than their class A counterparts.

Our recent statistics show that, for example, class A effective rent growth stood at just under 2.8%, while class C effective rent growth stood at 4.0%. Take a look at the chart and you’ll see this changed greatly from 2010.

So let’s examine what’s going on, from a class perspective.

Read more...Classy Apartment Assets, Apartment Assets by Class via Axiometrics

NAR Speculates on Future of Housing at Realtor Expo via

The National Association of Realtors (NAR) offered up its predictions on housing as the market deals with the effects of low inventory.

At the Realtors Midyear Legislative Meetings & Trade Expo, NAR’s chief economist Lawrence Yun projected further increases in existing-home sales.

According to a release, Yun expects existing-home sales to increase to nearly 5 million this year, then grow to an annual rate of 5.3 million sales in 2014, and rise up to 5.7 million in 2015.

Dramatic price increases are also expected to continue this year.

Read more...NAR Speculates on Future of Housing at Realtor Expo

Friday, May 17, 2013

Renters Face a Housing Squeeze via Businessweek

The housing market may be recovering, but for many renters, things aren’t looking up. Owning a home has become more affordable, renting less so. From 2008 to 2011, renters’ housing costs increased almost 6 percent, while their income fell 3.2 percent, according to a recent report from the Center for Housing Policy. More than 26 percent of working renters spent at least half their income on housing in 2011, up from about 23 percent in 2008. One reason: There just aren’t enough affordable rental units to go around. In 2010, there were 5.1 million more low-income families than there were affordable units.

Federal policy has long focused on supporting homeownership, most notably with the mortgage interest tax deduction. In about two-thirds of the country’s largest cities, owning a home is less expensive than renting within three years or less (accounting for the upfront costs of buying), Zillow says. Down payments and other upfront costs, combined with tight lending standards, put owning out of reach for many lower-income families. And President Obama’s proposed budget reduces funding for construction of affordable housing and put restrictions on public housing vouchers, the Wall Street Journal reports.

Read more...Renters Face a Housing Squeeze - Businessweek

Here We Go Again via

In April, CMBS issuances worth $5.5 billion hit the market. Observers wondered if bond buyers had enough appetite to hoover up that demand. But it turned out there was no need for concern. Investors devoured the bonds with spreads narrowing from one issuance to the next.

That episode sent a strong message to conduit lenders: the secondary market is in place. Bond buyers are willing to buy CMBS securities. Yields are attractive compared with alternatives. So it’s time to ratchet up the securitization machine.

Through the end of April, there had already been more than $30 billion in CMBS issuances in 2013, according to industry publication Commercial Mortgage Alert. When it’s all said and done, observers think the industry will originate between $90 billion and $100 billion this year—double last year’s volume.

Read more...Here We Go Again | First Word

Multifamily: Still Nifty After All These Years via

In the period following the Great Recession, the multifamily sector came into its own. Constrained supply combined with huge demand meant apartments were a desirable product from a commercial real estate investment point of view.

And according to Terry Gwin, president of locally based SWBC Real Estate LLC, the investors are still out in droves. "There are more buyers out there for product than there is product available," Gwin says during a recent interview for Real Estate Forum's "Is Infill Tapped Out?" article. "None of the products we recently sold actually went to market."

He points out that the investment community views apartments as lower risk and lenders seem to be following suit. Basically, it costs less to borrow money these days. Furthermore, in various markets around the country, specifically, in Texas, job and population growth are driving rental occupancies.

Read more...Multifamily: Still Nifty After All These Years - Daily News Article -

Multifamily Growth via Yardi Corporate Blog

Renter households increased from 34.1 percent in 2009 to 35.4 percent in 2011 according to a recent report released by the U.S. Census Bureau. A consistent pattern may be observed countrywide, with nearly a quarter of the metro areas seeing a rise in renting households, while less than 3.0 percent of the nation’s metro areas saw a decline.

Continued urban population growth combined with a healthy job market and a change in occupant mindset has sparked the creation of a vigorous multifamily sector which has now become the engine behind the recovery of the real estate industry. The desire to retain mobility to pursue employment opportunities as well as a preference for urban lifestyles among many households is expected to support strong operations in the apartment market throughout 2013.

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

Thursday, May 16, 2013

M&M Sees Healthy Multifamily Sector via

The US multifamily market should remain healthy for some time, thanks to an ongoing economic recovery, the availability of capital and a good rate of return compared to other investments.

However, investors need to be wary that new multifamily construction doesn’t outstrip demand, that the Federal Reserve may raise rates, and that pent-up desire for home ownership doesn’t cause a shift in vacancy rates.

That was the consensus derived from Marcus & Millichap’s Apartment Market Overview and Outlook, a webcast presentation that took place today.

Read more...Marcus & Millichap Touts Sector Outlook in Webcast - Daily News Article -

Fitch Ratings Says CMBS Delinquencies Lowest in Five Years via

Commercial mortgage-backed securities (CMBS) delinquencies in the United States fell in April to their lowest level in five years, according to the latest data from ratings agency Fitch Ratings.
Late payments for CMBS declined 19 basis points in April, going down to 7.44 percent from 7.63 percent in March, according to Fitch Ratings. Furthermore, the total amount of new delinquencies reported in April, $747 million, dropped below the $1 billion mark for the first time since February 2009.

The Fitch Ratings report noted that the last time new delinquencies were lower was in October 2008, when they came in at $458 million. At that time, the overall late payment rate for CMBS was 0.51 percent. The firm said it expects that the current delinquency numbers for CMBS will continue to move downward as real estate conditions improve.

Read more...Fitch Ratings Says CMBS Delinquencies Lowest in Five Years

Austin multifamily 1Q 2013: Austin Investor Interests via Real Estate Center at Texas A&M

Multifamily occupancy in Austin rose .22 percent during first quarter 2013 to reach 95.1 percent, according to Austin Investor Interests. Rental rates were up 2.3 percent, bringing the current average to $1.12 per sf. Absorption figures recovered as well, with 1,093 more units occupied.

Currently, there are over 16,400 units already under construction throughout the Austin area.

While the first quarter saw the addition of 1,101 new units, developers anticipate adding approximately 9,300 new units over the next 12 months. Here are some quick facts from the Austin multifamily market:

Read more...Austin multifamily 1Q 2013: Austin Investor Interests via Real Estate Center at Texas A&M

Farewell to the Punch Bowl via the Blog of the Real Estate Center

The Fed lowers rates to rescue the economy from recessions. Then it raises rates to “take away the punch bowl” just when the party starts to get rowdy. While the U.S. economy is far from raucous and rowdy, it is recovering enough to start pondering the inevitable. If you own bonds, get ready to say goodbye to the punch bowl.

As you can see from the red line in the chart below, the interest rate on ten-year Treasury securities during more normal times between 2003 and 2007 ranged from 3 to 5 percent. Fed bond buying has driven the yield down to 1.8 percent in recent weeks.

Read more...Farewell to the Punch Bowl | the Blog of the Real Estate Center

Five Takeaways From the Latest Housing Starts Report via WSJ

Housing bears and housing bulls each had something to boost their spirits in Thursday’s report on new-home construction. Housing starts fell by 16.5% in April to their lowest level since last November, but as is often the case, the headline number masked a few important nuances. Here are five takeaways:

1. The April drop was due primarily to the often-volatile multifamily sector. Starts of single-family homes fell by 2.1% from March’s level, and stood 20.8% above the year-earlier level. Multifamily construction, which had posted a 26.9% gain in March from February, posted an even larger 37.8% drop in April from March. The drop-off in multifamily construction should, for the moment at least, ease fears of an apartment-construction bubble.

Read more...Five Takeaways From the Latest Housing Starts Report - Developments - WSJ

San Antonio multifamily 1Q 2013: Austin Investor Interests via Real Estate Center at Texas A&M

First quarter 2013 saw San Antonio’s multifamily occupancy increase .04 percent to reach 92.4 percent, according to Austin Investor Interests. Rents were a bit more aggressive, gaining $.02 per sf, or 1.8 percent, to reach an overall average of $.96 per sf.

If rental rates continue the pace set over the last year, experts expect the market to see them average $1.00 per sf by the end of 2013, as new construction pushes prices up and healthy occupancy keeps concessions (currently offered in 53 percent of properties at a loss of 2.1 percent) down.

There are currently over 8,000 units still under construction, while an additional 3,400 are anticipated to start during next quarter. Here are some quick facts from the San Antonio multifamily market:

Read more...San Antonio multifamily 1Q 2013: Austin Investor Interests via Real Estate Center at Texas A&M

Recovery In CRE Sales, Pricing Up Year over Year, Despite Sluggish First Quarter via CoStar Group

Just like clockwork, after ending 2012 on an upswing, commercial real estate pricing softened in the first three months of 2013, according to the latest findings from the CoStar Commercial Repeat Sale Indices (CCRSI).

Despite uneven performance in the first quarter, CRE prices have still increased appreciably from year ago levels and the recovery continued to widen, with all regions and property types experiencing year-over-year pricing gains.

Also boding well for investment activity through the balance of 2013, lending volume accelerated across all capital sources in the first three months.

Read more...Recovery In CRE Sales, Pricing Up Year over Year, Despite Sluggish First Quarter - CoStar Group

Outlook: All U.S. Real Estate Sectors to Post Gains in 2013 – Yes, Even Retail via National Real Estate Investor

Although 2013 isn’t a blockbuster year for real estate performance, landlords across an array of commercial property types are gaining pricing control and increased rental income from their assets, according to Jones Lang LaSalle’s First Quarter 2013 Cross Sector Outlook, distributed during the Urban Land Institute’s 2013 Spring Meeting, in San Diego, on May 14th to 17th. The report tracks and compares the relative health of property sectors nationally and by local markets. Keys to the equation for property types other than apartments are construction volumes near 40-year lows and incremental job gains from a handful of growth sectors, including energy and technology.

“The lack of new construction has been a saving grace since the beginning of the recession,” said Jay Koster, Americas president for capital markets at Jones Lang LaSalle. “We’re also seeing accelerated obsolescence among older buildings as tenants upgrade to higher quality and more efficient space, and that is helping to fill marketable properties and drive up rents, even with only slow underlying growth.”

Read more...Outlook: All U.S. Real Estate Sectors to Post Gains in 2013 – Yes, Even Retail | National content from National Real Estate Investor

Wednesday, May 15, 2013

Apartment Market Effective Rent Growth: Down, But Definitely Not Out via Axiometrics

We’ve been saying it for the past few quarters: National effective rent growth continues to decline. During the summer of 2011, effective rent growth topped out at around 5.75%. From that point, we saw a gradual decline in effective rent growth — as of April 2013, rent growth was hovering around the 3.1% mark.

There are many reasons for this, and we’ll examine them in upcoming blogs. But before pushing the panic button and declaring that the apartment sector is dead, let’s look at a few salient facts.

Not all markets are created equal. The 3.1% effective rent growth mentioned above refers to the national average.

Read more...Apartment Market Effective Rent Growth: Down, But Definitely Not Out

CMBS sector will post modest growth this year: Moody’s via HousingWire

The performance of the overall commercial real estate sector will continue to improve throughout the year, but at a slower pace due to persistent economic concerns, analysts noted.

Sector fundamentals will drive improving market conditions, making a significant rise in losses on loans backing CMBS unlikely, according to Moody’s Investors Service.

"Commercial real estate continues to benefit from limited construction and positive absorption, which have supported a positive market dynamic despite lingering concerns about the strength of the economic recovery," said Michael Gerdes, Moody's Managing Director and Head of US CMBS & CRE CDO Surveillance.

Read more...CMBS sector will post modest growth this year: Moody’s | HousingWire

M-F Investment: Are Caps Rates the Best Indicator in Today’s Market? via Commercial Property Executive

During the boom in multi-family housing, we have seen a large compression in what we consider very aggressive cap rates. Why is this happening? The Fed continues to keep rates artificially low in an effort to stimulate the economy and promote growth in gross domestic product (GDP). Many investors are left to wonder what all of this means for them, especially as it relates to multi-family property investment.

That said, these low rates make the multi-family market – which currently yields a much better return on investment (ROI) than almost any other product – attractive to investors. Not only will low interest rates make multi-family real estate the favored product, but in select markets, the high demand and low supply will also give investors better operating fundamentals and returns. The key will be, picking the “right” markets.

Read more...M-F Investment: Are Caps Rates the Best Indicator in Today’s Market? | Commercial Property Executive

Multifamily Quarterly: Is Infill Tapped Out? via

In the days, months and even years following the Great Recession and the financial aftermath, it seemed as though multifamily was the rising star of commercial real estate. The coming-of-age of Echo Boomers, combined with disillusionment with home ownership, caused a good chunk of the population to flee to rentals. Added to the issue was constrained supply from lack of construction. The result was a commercial real estate sector at which investors eagerly threw money and bid against one another for ownership rights.

However, the multifamily assets over which investors fought was primarily infill, core product—projects and developments located in central business districts or bustling urban submarkets. Even as developers started ramping up again and bringing units on line to meet the apparently insatiable demand, “coming out of the recession, the only areas in which we saw new development were those core, infill locations,” comments M. Patrick Carroll, founder and CEO of the Carroll Organization in Atlanta.

Read more...Multifamily Quarterly: Is Infill Tapped Out? - Real Estate Forum Article -

Houston Economic Update May 2013 via FRB of Dallas

The Houston Business-Cycle Index slowed to an annual growth rate of 1.8 percent in March from a revised 13.9 percent in February. This implies a deceleration in economic activity in the region, though the index advanced 7.1 percent over the first quarter. While energy-related activities continue to drive the region’s performance, activity is broadening across other industries. The U.S. fiscal and regulatory situations cloud the horizon, but fundamentals in many area industries remain sound.

Total Houston payroll employment was unchanged in March on a seasonally adjusted basis. However, major industry categories varied considerably. Financial activities had a strong reading, with employment up an annualized 6.8 percent in March, whereas leisure and hospitality registered a 7.3 percent decline. Services were mixed in March as professional and business services contracted and health and other services expanded.

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

Tuesday, May 14, 2013

Fitch: New U.S. CMBS Delinquencies Haven't Been This Low Since 2008 via MortgageOrb

Fitch Ratings reports that the rate of new U.S. commercial mortgage-backed securities (CMBS) delinquencies declined 19 bps in April to 7.44%, from 7.63% in March. The dollar volume of new delinquencies, $747 million, represents the first time the figure has dropped below the $1 billion mark since February 2009.

The last time new delinquencies were lower was in October 2008, when they came in at just $458 million and the overall late-pay rate stood at 0.51%, Fitch says.

In April, resolutions of $1.5 billion outpaced new additions to the index by nearly two-to-one. However, Fitch-rated new issuance volume of $1.8 billion fell short of runoff of $2.1 billion.

Read more...MortgageOrb: Fitch: New U.S. CMBS Delinquencies Haven't Been This Low Since 2008

Renter’s Insurance: Educating Residents about the Realities via Property Management Insider

Natural disasters have a way of shining a light on the necessity and value of renter’s insurance. Over the past three years, the east coast alone was hit with two hurricanes and a series of as powerful winter storms. And yet, it is surprising to learn that the majority of renters are probably not carrying a current renter’s insurance policy or have one at all.

A 2012 Insurance Information Institute (III) poll conducted by ORC International found that only 31 percent of renters had renters insurance. That’s a surprising number when compared to the findings from the National Multi Housing Council’s 2012 Apartment Cost Risk Survey that states 84 percent of apartment companies say they require residents to buy renter’s insurance. (Fifty-five leading apartment companies that among them operate more than a million apartment units responded to the 2012 survey.)

Unfortunately, that mandate is not widespread. Of the respondents that said they require renter’s insurance, 40 percent do not require it at all of their properties.

Why is that? What is causing renter’s to pass on such a valuable way to protect not only their belongings but their bank accounts?

Read more...Renter’s Insurance: Educating Residents about the Realities | Property Management Insider

ALN Monthly Newsletter May 2013 via ALN Apartment Data

ALN Data just released their April 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 May 2013 via ALN Apartment Data

Monday, May 13, 2013

Sustainability and "Living Cities" via National Real Estate Investor

What is the responsibility of real estate owners, investors and developers to the future of our planet’s environment, given that buildings create more than 40 percent of the world’s carbon dioxide emissions?

At Grosvenor, a privately-owned property group active in some of the world’s most dynamic cities, we know that our future success is tied to the sustainable growth of cities, which already account for over 50 percent of the global population, and in which the global population is projected to double by 2050. We have a vested interest in helping create and manage attractive and vibrant places where people choose to live, work and raise families.

During the next few decades, cities will need to adapt to the unprecedented challenges of rapidly urbanizing populations, the effects of climate change, and the distribution of natural resources.

Read more...Sustainability and "Living Cities" | Sustainability content from National Real Estate Investor

Best Estimate: The Art and Science of Forecasting Fundamentals via Multifamily Executive Magazine

Nobody really saw the Great Recession coming.

But if there’s anything that economists have collectively done since their forecasts were trumped six years ago, it’s becoming more cautious in the way they frame the future.

For New York-based Reis, Inc. there are two things that economists focus on from an external point of view. Their modeling looks at household formation and its rates, which says plenty about the drivers of demands for multifamily units at a submarket and metro level.

Further, their models allow them to make more accurate predictions thanks to utilizing historical data.

Read more...Best Estimate: The Art and Science of Forecasting Fundamentals - Rent Trends - Multifamily Executive Magazine:

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Bank Lending Increasing, Except for Real Estate via the Blog of the Real Estate Center

Credit is the life blood of a capitalistic system. When consumers borrow money to buy things, it creates growth in America. When business owners can borrow money for growth, that creates jobs too. The good news is that credit is beginning to flow through most sectors of the American economy. The bad news for real estate is that it is one of the only sectors that is still waiting for credit expansion.

Let’s take a look at the charts. Commercial and industrial loans are made to business owners. They use these funds to buy other businesses, vehicles or other buildings and equipment and to hire more people. This is very bullish for the outlook for business growth and expansion. Since the trough in October 2010, C&I loans have increased by 28.3 percent.

Read more...Bank Lending Increasing, Except for Real Estate | the Blog of the Real Estate Center

Fannie Mae, Freddie Mac: 10 Years Under Conservatorship or IPO? via

Here's the financial equivalent of the popular Twilight vampire franchise: Politicians are sucking the blood out of resurgent mortgage guarantors Fannie Mae and Freddie Mac rather than returning them in good health to the private sector, where they belong. Washington is using their money in its budget-cap games, leaving the duo in a state of perpetual weakness, like the living dead, imprisoned in the government's ill-named "conservatorship" program.

A number of profit-minded investors that have taken positions in the preferred shares of the formerly distressed mortgage companies are pushing an alternative. The politicians, they claim, are blowing an opportunity both to generate at least $100 billion in deficit reduction from a spinoff to the public and to significantly limit the government's footprint in the mortgage market. Recall that in last month's budget, President Barack Obama took a huge political risk in calling for the sale of the government-owned Tennessee Valley Authority for about $25 billion to help reduce the deficit.

Read more...Fannie Mae, Freddie Mac: 10 Years Under Conservatorship or IPO? -

Multifamily Still Hot, but Slows in Auctions via

For Thought Leader, multifamily is still an important sector, as made apparent by its recent three-day event that resulted in $125 million in transactions. However, Eric Paulsen, the firm's president, says apartments are on the the third-most popular product type it is selling so far this year, behind retail and office. He tells us why he thinks this is and overall trends he is seeing the commercial real estate auction arena. Is multifamily the hottest sector for auctions right now?

Eric Paulsen: Believe it or not, in 2012 we sold more apartments than any other product type, but so far in 2013, it is a different story. Apartments are actually third, coming in behind retail and office. Whether that’s because our clients are more weighted in other product types or because they are just now getting around to selling their other product, multifamily has been replaced as the largest volume asset class so far this year with us. I anticipate by year end that multifamily will be back up in the ranks, though, as yes, it is still a very desirable asset class and one that we achieve very good pricing on.

Read more...Multifamily Still Hot, but Slows in Auctions - Daily News Article -

Friday, May 10, 2013

Apartment Amenities: Understanding What Gen Y Wants via Property Management Insider

The multifamily industry spends considerable time and money targeting Gen Y renters through property management, apartment development, and marketing. And when 72% of people under 30 years old live in rental housing, its easy to understand why.

But do multifamily professionals really know what Generation Y wants when it comes to their apartment home? And do the 20-somethings employed within the industry think we actually understand them?

Here’s an idea: let’s ask them.

At the 2013 Crittenden Multifamily conference in Dallas this past March, Property Management Insider contributor, and resident Millennial, Jay Parsons moderatred a panel discussion with Generation Y multifamily professionals to debunk some myths about this particular generation of renters.

Read more...Apartment Amenities: Understanding What Gen Y Wants | Property Management Insider

Energy Efficiency Equals Resident Retention via

If you were to ask most property owners and managers if energy efficiency is important to resident retention they would probably say yes! The savings to renters or owners who pay for the energy costs, could be as much as 46%. When resident receives this kind of a break in cost, they are more likely to resign their lease. The problem is that many owners and managers of apartment communities do not know how to implement a plan of action for energy efficiency.

Each year, more than $1 billion in rebates and incentives is available for you to make your income properties more energy efficient and profitable. These are available through federal and state agencies, not-for-profits, and many other sources. To gain this “free money,” you need to consider projects that are not your typical “retrofits”. These would include:

Read Blog » Energy Efficiency Equals Resident Retention

Thursday, May 9, 2013

Student debt is a ’roadblock’ to opportunity for millions, report says via

Crushing student debt is not only killing dreams, it’s hurting the broader economy.

The Consumer Financial Protection Bureau (CFPB) is warning of the “potential domino effects” to the economy of high student debt. A just-released report from the consumer watchdog highlights the ways this debt can deplete savings, limit spending, and shape choices about a graduate’s career path and where to live.

“College can open up many opportunities, and we do not want that college degree to become more of a burden than a blessing for those saddled with unmanageable debt in a tough employment market,” said CFPB director Richard Cordray in a statement. “So we are concerned that unmanageable student loan debt may be harmful to recovering consumer markets and may be dragging down borrowers’ lives.”

Read more...Student debt is a ’roadblock’ to opportunity for millions, report says via

Crowd Control: Planning for Texas Population Growth via Real Estate Center at Texas A&M University

Rapid population growth and urbanization are nothing new to Texas. It is the fastest growing state in the country by numbers and the fifth fastest by percentage. Between 1940 and 2010, Texas averaged an astounding 21.6 percent rate of growth per decade, compared with only 13.3 percent for
the country.

During the first decade of the new millennium, Texas added more than four million new residents, more than any other state. And projections are for growth to continue just as strong
during the next several decades. This growth will be fueled by economic success, relatively low-cost housing, comparatively lower tax structure, a favorable climate and transportation

Read more...Crowd Control: Planning for Texas Population Growth via Real Estate Center at Texas A&M University

North Texas home sales surge 30 percent via Real Estate Center at Texas A&M

North Texas home sales continued to rebound in April 2013 as the number of homes sold jumped 30 percent from a year ago.

In the 29-county region 8,288 houses were sold in April, according to the Real Estate Center at Texas A&M University. Median sales prices in April 2013 also rose 14 percent, to $176,000, from April 2012.

Read more...North Texas home sales surge 30 percent via Real Estate Center at Texas A&M

Freddie Mac Reports $4.6B Profit in Q1 via

Freddie Mac’s first-quarter earnings came in slightly ahead of last year’s final quarter, the company revealed in its quarterly filing.

First-quarter net income at Freddie Mac was $4.6 billion, barely above the $4.5 billion recorded in Q4 2012 but well above the $577 million in last year’s first quarter—and the second largest in company history.

First-quarter comprehensive income was $7.0 billion, up from $5.7 billion quarter-over-quarter.

Read more...Freddie Mac Reports $4.6B Profit in Q1

Wednesday, May 8, 2013

Multifamily GSE Lending Reform: Potentially Disruptive and Inherently Valueless via CoStar Group

Without some form of government guarantees, the multifamily lending businesses of Fannie Mae and Freddie Mac have little inherent value, so conclude Fannie Mae and Freddie Mac in reports prepared for their conservator, the Federal Housing Finance Agency (FHFA) and released this week.

The reports further conclude that the sale of these businesses would return little or no value to the U.S. Treasury or taxpayers, while potentially being highly disruptive to the commercial real estate markets.

The reports highlight the fundamental tensions inherent in the government-sponsored enterprise model that policymakers will have to consider as part of housing finance reform.

Read more...Multifamily GSE Lending Reform: Potentially Disruptive and Inherently Valueless - CoStar Group

Why You Should Green Certify Your Apartments via Multifamily Executive Magazine

Many certification programs are available that add value to multifamily communities.

Almost everyone involved in building or rehabilitating apartment buildings is aware, at some level, of the various green building certification programs available. But many may not be aware of just how important certification is and the value it can add to a multifamily property.

Understanding Certification and Its Benefits
Although green certification programs define green building in slightly different ways, all include the following as either requirements or recommendations: energy efficiency, durability, indoor environmental quality, water efficiency, efficient use of materials and resources, waste reduction, sustainable site development, and walkable communities.

Read more...Why You Should Green-Certify Your Apartments - Green Building - Multifamily Executive Magazine

Q1 2013 Apartment Financing Trends via Chandan Economics



The cost of financing apartment acquisitions and refinancing maturing apartment loans held to record-lows in the first quarter, exerting upward pressure on asset values. 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, depending on asset quality and location. For long-term amortizing fixed-rate debt, the average interest rate on new originations was 4.0 percent. Spreads narrowed during the quarter, reflecting a marginal increase in the underlying Treasury yield.

Read more...Q1 2013 Apartment Financing Trends | Chandan Economics

Saving Thousands of Dollars Through Energy Efficiency via Appfolio

Energy efficiency and going green continue to be focal points of property owners. While there are clearly environmental benefits to more efficient use of natural resources, there are also significant dollar savings you can realize by improving the energy efficiency of your properties.

A good first step is to have an energy audit performed by a trained professional. The cost of such an audit can usually be easily recouped by implementing a few of the recommendations it yields.

A common recommendation suggests a simple weatherproofing plan. One Department of Energy study estimated the average cost of such work to be $2,500. The savings from such projects were 2.2 times what was spent on weatherization.

Read more...Saving Thousands of Dollars Through Energy Efficiency via Appfolio

Tuesday, May 7, 2013

Dallas could see boost as Texas ranked Best State for Business via Dallas Business Journal

Texas was ranked as the best state to do business in the ninth year in a row in Chief Executive magazine's Best and Worst state's survey of more than 700 top CEOs.

What does this mean to Dallas?

Well, it certainly helps the city tell its story, which includes the business-friendly Lone Star state, said Hammond Perot, assistant director for business services for the Dallas Economic Development office.

Read more...Dallas could see boost as Texas ranked Best State for Business - Dallas Business Journal

Uneven Global Growth Suggests Fragile Recovery via Dallas Fed

Uneven growth across countries is contributing to a fragile recovery, with some short-term risks easing and the focus shifting toward medium-term risks. With the euro-area crisis remaining a pressing risk to the global economy, developments in the region are closely watched. Interest has also shifted to Japan, where a new round of quantitative easing has begun.

Global Economic Activity Soft Patch

The world economy is expected to grow at a moderate 3.3 percent rate in 2013, revised down from the January forecast of 3.5 percent from the International Monetary Fund (IMF). The outlook for 2014, however, appears more solid, with global growth accelerating to 4 percent. Emerging economies continue to bolster world growth as advanced economies lag behind (Chart 1).

Read more...Uneven Global Growth Suggests Fragile Recovery - Dallas Fed

Creative Revenue via Multi-Housing News Online

What’s the best way to generate ancillary income at a multifamily community? The tried-and-true methods come to mind, such as telecommunications and submetering. But the buck doesn’t stop there.

“Some of the more traditional avenues [to generate income] include: application fees, late fees, one-time pet fees, monthly pet fees and non-refundable move-in fees,” says Mike Brewer, vice president of operations at M Brewer Group.

“I think the chief reason why these are effective is that they are largely universal across the nation with both small and large operators,” adds Brewer. “The amounts may vary, but the practice of charging is commonplace in the eyes of the renter.”

Read more...Creative Revenue | Multi-Housing News Online

Trulia: Asking House Prices increased in April, "Rent growth has slowed" via Calculated Risk

Press Release: Asking Home Prices Soared 8.3 Percent Year-Over-Year Nationwide, While Rents Rose Only 2.4 Percent

With the Spring house hunting season well underway, asking home prices rose 8.3 percent nationally year-over-year (Y-o-Y) in April. This time last year, asking prices fell 1.6 percent Y-o-Y. Seasonally adjusted, asking prices rose 1.3 percent month-over-month and 4.3 percent quarter-over-quarter. Regionally, asking prices were higher than one year ago in 95 of the 100 largest metros.

Strong job growth and the housing recovery go hand-in-hand. Nationally, job growth increased 1.5 percent Y-o-Y in March. In San Jose, Orange County, San Francisco, and Phoenix – where asking prices rose more than 18 percent Y-o-Y – job growth was well above the national average. In fact, only the Detroit suburb of Warren-Troy-Farmington Hills, MI was among the list of top 10 markets with the highest price gains without above average job growth.

Read more...Calculated Risk: Trulia: Asking House Prices increased in April, "Rent growth has slowed"

Monday, May 6, 2013

GSE Pullback via Multi-Housing News Online

What will be the effects on the multifamily sector if Fannie Mae and Freddie Mac reduce their financing levels by 10 percent? Will multifamily property values fall? Will it become more difficult for borrowers to obtain financing? The answer may depend on the type of multifamily property in question.

On March 4, the GSEs’ regulator—the Federal Housing Finance Agency (FHFA)—released its plan to reduce Fannie and Freddie’s “new multifamily business relative to 2012 by at least 10 percent by tightening underwriting, adjusting pricing and limiting product offerings.” Under FHFA’s scorecard, this goal received a substantial weight of 50 percent. FHFA’s directive is, in fact, consistent with one of the three goals announced in 2012 under its Strategic Plan for Enterprise Conservatorships—to “contract Fannie Mae and Freddie Mac’s dominant presence in the marketplace.”

That FHFA has now announced a concrete goal that seems to indicate the government is serious about reducing the financing volumes of Fannie and Freddie. Perhaps the industry has been lulled into a sense of security until now. “Until recently, many market participants believed the multifamily businesses would emerge relatively unscathed from conservatorship,” says Fitch in a statement. “The recent goal contradicts the notion and reaffirms that the multifamily sector could be negatively affected by the far-reaching strategic and structural changes regarding the GSEs.”

Read more...GSE Pullback | Multi-Housing News Online

Moody’s Warns Against High Leverage via National Real Estate Investor

Commercial properties are taking on larger and larger loans relative to their stabilized income—and that could mean trouble down the road, according to a review by Moody’s Investors Service of commercial mortgage-backed securities issued in the first quarter.

“We are beginning to see some signs of credit slippage,” says Tad Philipp, Moody’s director of commercial real estate research. However, Moody’s also found some good news in the short-term for these loans: Because of low interest rates and strengthening property fundamentals, they shouldn’t have much trouble making their monthly mortgage payments.

Conduit loans are now getting dangerously large compared to the income from the properties, according to Moody’s, which rated four of the nine CMBS issuances in the first quarter. The loans Moody’s rated (excluding Freddie Mac) had an average Moody’s loan-to-value (MLTV) ratio of 98 percent. “Conduit loan leverage is now poised to bounce back to just above 100 percent MLTV in the second quarter based on the 11 transactions in our pipeline,” Philipp says.

Read more...Moody’s Warns Against High Leverage | Commercial Banks content from National Real Estate Investor

Need for Government Guarantee in GSEs' Multifamily Business via

Without a government guarantee, Fannie Mae’s and Freddie Mac’s multifamily businesses would be less viable and “have little inherent value,” according to the Federal Housing Finance Agency (FHFA), the entities’ conservator.

As the FHFA works toward its goal of winding down the GSEs’ presence in the market, the conservator required each GSE to determine whether its multifamily business could operate without a government guarantee.

Both GSEs suggest without a government guarantee, their multifamily units would not be able to support affordable housing programs.

Read more...Need for Government Guarantee in GSEs' Multifamily Business

HUD Notice: Assistance Animals and Reasonable Accommodations for Persons with Disabilities via NMHC

On April 25, 2013 HUD published a notice clarifying the distinctions between “assistance animals” and “service animals” for purposes of compliance with the Fair Housing Act, Section 504 and the American with Disabilities Act (ADA).

Specifically, the notice indicates that the recently amended ADA’s more narrow definition of a “service animal” – “a dog trained to do work or perform tasks,” does not apply when determining compliance with the Fair Housing Act or Section 504, which requires reasonable accommodations for residents needing more broadly defined “assistance animals.”

Apartment properties are required to comply with both laws; places open to the public, such as leasing offices, are subject to the ADA while residential areas are covered by Fair Housing and Section 504.

Read more...HUD Notice: Assistance Animals and Reasonable Accommodations for Persons with Disabilities - NMHC - National Multi Housing Council - NMHC

Friday, May 3, 2013

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

Back in January I wrote: The Future's so Bright .... I started by writing that "It looks like economic growth will pickup over the next few years", although for 2013, I was expecting "another year of sluggish growth" due to fiscal policy.

I also argued that the "key short term risk is too much additional deficit reduction too quickly". Unfortunately I was expecting some sort of agreement to delay or reduce the sequester budget cuts - so there will be more fiscal drag this year than I expected - but I still think the future is bright.

The following is an update to the graphs and text in the earlier post:

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

April job gains dampened by weaker outlook for young Americans via HousingWire

Despite overall growth in the employment situation in the month of April, employment for 18- to 34-year olds slipped to 75.2% from 75.6% in December, creating the potential for drag on the housing market.

"Employment in this age group is now only slightly higher than a year ago (75.1% in April 2012). Having a job is important for household formation: just 12% of employed 25-34 year-olds live with their parents, compared with 20% of 25-34 year-olds who aren’t working," Jed Kolko, chief economist for Truliab, stated.

Posting a meager change for March, the unemployment rate edged down to 7.5% from 7.6% in March, the Department of Labor said.

Read more...April job gains dampened by weaker outlook for young Americans | HousingWire

Mandatory Recycling: A Tale of Two Texas Cities via Property Management Insider

As the adoption of mandatory reporting for energy benchmarking in the multifamily industry continues to grow in cities across America, it should come as no surprise that mandatory recycling programs are also becoming more popular.

But getting everybody onboard with such a program is easier said than done. Some of the burden for cost and compliance falls in to the hands of property management companies and apartment communities—and neither is particularly pleased about it.

We spoke with representatives of two Texas apartment associations to learn about the growing pains and headaches they are encountering in the face of mandatory recycling programs.

Dallas in Early Stages of Mandatory Recycling

Read more...Mandatory Recycling: A Tale of Two Texas Cities | Property Management Insider

The ABC’s of Raising Rents and Keeping Tenants via Appfolio

According to the latest Bureau of Labor and Statistics Report, the rent index is rising at an annualized rate of 3.6%. Is it time to raise your rents?

Probably. But generating increased rental income without suffering significant tenant loss can be a tough balancing act. It doesn't have to be if you follow these common sense ABC’s.

Step one is to do your homework on two fronts: the current rental market in your area and the value of your specific tenants. Ask these questions as you develop your plan.

Read more...The ABC’s of Raising Rents and Keeping Tenants

Regional Economy Continues to Grow but Decelerates Slightly via Dallas Fed

The regional economy grew at a moderate but slightly slower pace over the past six weeks amid mixed signals. Survey indicators dipped for both manufacturing and services in April, although the Dallas Fed’s Beige Book pointed toward stronger growth. Labor shortages and price pressures have become slightly more pronounced but remain mild.

Labor Market Expands at Moderate Pace in First Quarter

Texas’ first-quarter payroll employment growth was 2.1 percent annualized, almost exactly matching the state’s 2 percent trend growth level (Chart 1). However, growth has been very volatile over the past three months: up 0.5 percent in January, up 7 percent in February, down 0.9 percent in March.

Read more...Regional Economy Continues to Grow but Decelerates Slightly - Dallas Fed

Thursday, May 2, 2013

Six of the Worst Real Estate Investments via Forbes

As any experienced real estate investor will tell you, not all investment properties are created equal. Homes that might be perfect for a primary residence, for example, might not yield positive cash flows — and without positive cash flows, you’re losing money, not making it.

Here are a few things to think about and properties to avoid when you are ready to invest your hard-earned cash equity capital.

1. Anything that doesn’t generate rental income

Read more...Six of the Worst Real Estate Investments - Forbes

ONCE BURNED: Low Rates, Cheap Capital Raise Concerns Over Possible Return of Bubble-Era Pricing via CoStar Group

Even as the economy appears to be gaining traction thanks to the flood of low-cost stimulus money that has flowed through U.S. capital markets, commercial real estate executives and economists vacillate between wonder and dread.

In DLA Piper’s annual temperature-taking of the CRE industry, 85% of senior executives at commercial real estate firms surveyed reported having a bullish outlook for the year ahead, reversing a far more pessimistic view two years ago at the dawn of the economic recovery. Driving that optimism for 56% of the executives is a combination of current low interest rates and abundant debt and equity capital.

At the same time, just 40% named the improving U.S. economy as a reason for their bullishness.

Read more...ONCE BURNED: Low Rates, Cheap Capital Raise Concerns Over Possible Return of Bubble-Era Pricing - CoStar Group

Report: More than 1 in 4 Working Renters Face Severe Housing Costs via DSNews

While home affordability has reached record high levels, for renters, housing cost burdens have been steadily increasing.

According to the annual Housing Landscape report from the Center for Housing Policy (CHP), 26.4 percent of working renters spent more than half of their household income on housing costs in 2011. The share is an increase from 2008 when 22.8 percent of working renters had a severe housing cost burden.

Working households included households with members who worked at least 20 hours per week and earned no more than 120 percent of the median income in the area.

Read more...Report: More than 1 in 4 Working Renters Face Severe Housing Costs

Wednesday, May 1, 2013

Rentals: The New American Dream? via CNBC

Renting could be the new status symbol

Renting may be associated with "high status lifestyle" in the future, says Robert Shiller, professor at Yale and founder of the Case-Shiller index. "It connotes mobility," he explains. This trend is apparent in Manhattan, N.Y., and may spread to other areas, he says.

Watch Video...Rentals: The New American Dream? via CNBC

Trepp CMBS Delinquency Rate Drops to Lowest Level in More than Two Years via PRNewswire

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

The delinquency rate for U.S. commercial real estate loans in CMBS fell 47 basis points to 9.03% in April – the lowest since November 2010. Moreover, in a significant departure from the upward movement in March, April's numbers log the biggest one-month drop in the delinquency rate since 2009 when Trepp began releasing its report.

A confluence of factors contributed to significant downward pressure across the board. Loan resolutions of $1.6 billion, payoffs of $800 million, and loans that cured as a result of several large loan modifications put downward pressure of 80 basis points on the rate.

Read more...Trepp CMBS Delinquency Rate Drops to Lowest Level in More than Two... -- NEW YORK, May 1, 2013 /PRNewswire/ --

Austin commercial is hot via Real Estate Center at Texas A&M

Commercial real estate in Austin has come back in a big way. Commercial vacancies across market types continue to drop, investor interest is intense, and speculative office development is in the works.

Even retail development and investment, which often lag behind the other sectors, is clicking along on all cylinders. Multifamily development and investment continues its torrid pace.

Read more...Austin commercial is hot

Wichita Falls: Area jobless rate falls tick to 5.9% via Times Record News

The city’s metropolitan statistical area unemployment rate (not seasonally adjusted) was down a tick — 5.9 percent from 6.0 percent — in March from February, the Texas Workforce Commission reported.

The state’s seasonally adjusted rate remained unchanged at 6.4 percent, the TWC said.

Texas’ seasonally adjusted nonagricultural employment fell by 4,100 jobs in March, following the addition of 79,600 jobs in February. Employers added 14,900 jobs across five major industries in March, but these gains were offset by the loss of 19,000 jobs in six other industries. The state’s annual growth rate continued to be positive, with 329,500 jobs added since last year.

Read more...Area jobless rate falls tick to 5.9% » Times Record News