Wednesday, July 31, 2013

Q2 GDP: More Weakness, Data below FOMC June Projections via Calculated Risk

Overall this was another weak GDP report although slightly above expectations.

It appears that the drag from state and local governments might be ending, although the drag from Federal government spending is ongoing.

Residential investment (RI) remains a bright spot (increasing at a 13.4% annualized rate), and RI as a percent of GDP is still very low - and I expect RI to continue to increase over the next few years.

For the FOMC meeting today, the data showed all indicators are still below the June projections (see bottom three graphs).

Read more...Calculated Risk: Q2 GDP: More Weakness, Data below FOMC June Projections

REALTOR® Commercial Markets Post Solid Growth in Second Quarter via NAR Research

The second quarter marked a noticeable improvement in the recovery trajectory of commercial REALTOR® markets. Based on the results of the July Commercial Real Estate Market Survey, commercial practitioners reported solid leasing activity and a double digit rise in sales volume. Nationally, 60 percent of REALTORS® reported completing a sales transaction during the quarter.

On a year-over-year basis, sales increased 12.2 percent in the second quarter, as prices rose 2.3 percent. Cap rates declined 50 basis points, from an average of 9.2 percent in the first quarter to 8.7 percent in the second. Multifamily properties recorded the lowest average cap rates, at 7.5 percent, followed by industrial spaces, at 8.2 percent. Office and retail spaces posted cap rates of 8.3 percent and 8.5 percent, respectively.

Read more...REALTOR® Commercial Markets Post Solid Growth in Second Quarter

Texas Service Sector Outlook Survey July 2013 via Dallas Fed

Texas service sector activity expanded in July, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, rose from 6.8 to 12.7, indicating activity picked up pace this month.

Labor market indicators were mixed. The employment index moved up from 4 to 9.7, suggesting hiring increased. With more staff on hand, average workweeks shrunk. The hours worked index dipped from -0.6 to -2.7.

Perceptions of broader economic conditions reflected more optimism in July. The general business activity index rose from 12.2 to 15.3. The company outlook index advanced from 3.4 to 10.8, with 18 percent of respondents reporting that their outlook improved from last month and 8 percent noting it worsened.

Read more...Texas Service Sector Outlook Survey - Dallas Fed

Dallas, Houston Tops in Sales Volume via

Real Capital Analytics' "Big Picture" 1H 2013 market update saw Dallas and Houston taking spots 4 and 5 in commercial real estate sales volume in the top markets. During the first half of the year, the Dallas-Fort Worth area traded $4.2 billion worth of real estate, while the Houston region's sales volume stood at $3.9 billion. DFW's year-over-year change was 33%, while Houston's change was 32%.

Read more...Dallas, Houston Tops in Sales Volume - Daily News Article -

Tuesday, July 30, 2013

Multifamily originations are on the rise via HousingWire

Commercial and multifamily mortgage origination volumes during the second quarter of 2013 rose 36% from the first quarter of 2013 and jumped 7% year-over-year, the Mortgage Bankers Association said.

"Commercial and multifamily mortgage lending and borrowing continued to grow during the second quarter," said MBA Vice President of Commercial Real Estate Research Jamie Woodwell.

"The apartment market continues to be the belle of the ball, with multifamily mortgage originations running 31% ahead of last year’s first half total. And after a slow start to the year, lending by life insurance companies surged in the second quarter to record the highest quarterly volume on record for that sector," added Woodwell.

Read more...Multifamily originations are on the rise | HousingWire

CMBS liquidation hits record high, loss severity rate drops via HousingWire

The month of July brought a significant jump in the volume of commercial mortgage-backed securities loans liquidated and a concurrent drop in the overall loss severity rate, according to CMBS analytics firm Trepp.

July's liquidation volume neared record highs when compared to the volumes recorded since Trepp began tracking results in 2010. Loan liquidations totaled $2.05 billion, which compares to the 12-month moving average of $1.35 billion.

Read more...CMBS liquidation hits record high, loss severity rate drops | HousingWire

CPE 100 Quarterly Sentiment Survey: A Bubble is Forming, but Status Quo Prevails for Now via Commercial Property Executive

A resurgent investment market is raising an inevitable question: is a bubble forming in commercial real estate? According to the midyear CPE 100 Quarterly Sentiment Survey, the answer is definitely “yes.”

Asked about the likelihood that a bubble would appear in the next 12 months, a solid majority of executives surveyed–62 percent—agreed. The finding is a highlight of the quarterly poll of the CPE 100, a select group of leading commercial real estate executives.

Another response underscores the impression that years of overachievement by multi-family properties may be coming to a close. Half of the executives surveyed half identified the multi-family sector as the asset category where a bubble is most likely to appear. By contrast, only 21 percent named single-family homes as most likely to experience a bubble, followed by hospitality and office properties, each cited by 14 percent.

Read more...CPE 100 Quarterly Sentiment Survey: A Bubble is Forming, but Status Quo Prevails for Now | Commercial Property Executive

Monday, July 29, 2013

Fort Worth Finds Itself Among the Nation’s Rent Growth Leaders via Property Management Insider

Fort Worth rarely ranks among the nation’s elite apartment markets, but it is coming on strong of late thanks to two big factors: The strong economy is boosting middle- and lower-tier submarkets, while top-end headwinds are less significant here than elsewhere in Texas.

Typically you’ll find Forth Worth on lists such as Best Places to Raise a Family, Fastest Growing Metros, or Most Boots Per Capita. Rarely will the metro make a top ten list for apartment metrics but in Q2 2013 it did just that.

Rent Growth: Rents in Cow Town grew a terrific 3.6% year over year, landing it in the number ten spot of the top ten apartment market rent growth leaders for second quarter 2013. That quarterly performance was also good enough for Fort Worth to outperform the Dallas apartment market for the first time in three years.

Read more...Fort Worth Finds Itself Among the Nation’s Rent Growth Leaders | Property Management Insider

Texas Manufacturing Outlook Survey July 29, 2013 via Dallas Fed

Texas factory activity continued to expand in July, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 17.1 to 11.4, suggesting output growth continued but at a slower pace than in June.

Some other measures of current manufacturing activity also indicated slower growth in July. The new orders index was positive for the third month in a row, although it edged down from 13 to 10.8. The capacity utilization index also slipped slightly, falling three points to 12.2. However, the shipments index inched up to 17.7, reaching its highest reading in six months.

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

Climate Change, Commercial Real Estate and Common Sense via National Real Estate Investor

The real estate industry is often accused of having deep pockets and short arms—it’s the reason some say real estate is slow to adapt to technological change. Unless there is a clear profit advantage to changing, or government regulation requires change, the reinvention and adoption of new technology often comes slowly to our industry.

But right now, those two irresistible forces are converging and may force our industry to change. We may be forced to lengthen our arms or shorten our legs, so to speak. And we may even like our reinvention.

We’re ultimately going to have to spend on capital improvements, make building design changes, and even find new vendors to ensure our real estate is technology smart, both energy and water efficient and sustainably designed. And if we do it well, the profit margins can be compelling.

Read more...Climate Change, Commercial Real Estate and Common Sense | Commentary content from National Real Estate Investor

Texas Land Market Prosperity Returns via the Blog of the Real Estate Center

It’s déjà vu all over again in Texas land markets. Statewide prices in the first half of 2013 increased a remarkable 8 percent over 2012 prices.

Contributing to this trend, prices in many local land markets soared to rates seen in the 2004-05 heyday. Regional prices in South Texas and the Austin-Waco-Hill Country region of Central Texas bucked the trend and drifted slightly lower after strong increases in 2012.

The statewide price of $2,479 per acre compared with the 2012 year-end price of $2,295 per acre, marked an extremely strong uptick for the first half of 2013. However, the market continued to focus on small properties for the most part.

Read more...Texas Land Market Prosperity Returns | the Blog of the Real Estate Center

Friday, July 26, 2013

Satisfied Renters via The Balance Sheet - Yardi Corporate Blog

In the aftermath of the Great Recession, the fluctuating economic climate along with a staggering housing market resulted in a shift in priorities for many Americans. Younger people don’t rush into home ownership as their parents used to, and continue to delay major life decisions like getting married and having kids.

By the numbers, the share of Americans who own their homes was 65 percent in the first quarter of 2013, down 0.4 percentage points from the first quarter 2012 and the lowest level since the third quarter of 1995, according to the latest data from the U.S. Census Bureau. The ongoing decline in the home ownership echoes the rising demand for rental units and increasing investor interest in multifamily assets.

Read more...Satisfied Renters | The Balance Sheet - Yardi Corporate Blog

A Climate Action Plan for Affordable Multifamily Housing via Center for American Progress

President Barack Obama’s Climate Action Plan, announced at Georgetown University in June, outlined an ambitious agenda to address the increasing dangers of climate change. Although the proposed regulatory standards on existing and new power plants have taken center stage in public discussion, the president’s agenda also included several noteworthy proposals to support the important aim of increasing access to energy efficiency and clean energy technologies in affordable multifamily housing.

To reduce the deadly threat of climate disruption, it is essential to rein in polluting energy use, especially the wasteful conventional consumption of electricity in buildings. Currently, large multifamily residential buildings represent a huge source of energy inefficiency, but they also hold the promise of being smart and cost-effective places to make deep savings. Low-income affordable housing in particular can help open this market, improving financial security for building owners, saving tenants needed dollars, and building the demand for clean energy, thereby driving down costs for the entire economy.

Read more...A Climate Action Plan for Affordable Multifamily Housing | Center for American Progress

Thursday, July 25, 2013

CMBS delinquency rate hits 3-year low via HousingWire

The delinquent unpaid balance for commercial mortgage-backed securities decreased to a 12-month low, reflecting the lowest level of CMBS delinquency activity reported in three years, according to Morningstar Credit Ratings.

While $1.66 billion in newly delinquent loans were reported with June remittance, a much higher $3.86 billion in loan resolutions were also noted, resulting in a net decrease to the delinquent unpaid balance.

Overall, the total unpaid principal balance for CMBS available for review decreased slightly to $737 billion, down from $740.34 billion a month earlier.

Read more...CMBS delinquency rate hits 3-year low | HousingWire

Impact of Homeownership Rate & Household Formation on Apartment Demand via Axiometrics

Several factors have combined to increase the demand for apartments over the last few years. Since the collapse of the housing bubble, both people and banks have become more averse to financial risk, especially for mortgages. Homeownership became harder to obtain and coupled with the sharp increase in foreclosures, many renters were back in the market for apartments at a time when the supply of new apartments was decreasing. Job losses, decreased incomes, reduced asset values and other financial hits that occurred as a result of the Great Recession have forced others to downsize as well. Another wave of former homeowners may be entering the rental market soon as a recent Inspector General report indicates that nearly half of the mortgages modified in 2009 under the Home Affordable Modification Program (HAMP) are in default again.

Homeownership rates have steadily declined from a historical high of 69.2% in 4Q 2004 to 65.0% in 1Q 2013. For each one percentage point decline in homeownership, there is a shift of approximately 1.1 million households to the rental market. As seen in the chart below, homeownership by age cohort has declined across the board since 2005 and more noticeably for the younger cohorts.

Read more...Impact of Homeownership Rate & Household Formation on Apartment Demand

Student Debt’s Impact on Apartment Housing via Axiometrics

We’ve focused a great deal about the Millennials in recent articles, pointing out that this particular demographic is one reason why the apartment market continues doing well. This is true – as long as those Millennials are lucky enough to be hired after graduating from a college or university.

However, in an article written for the Financial Times about a year ago, reporter Shannon Bond points out that a well-paying job isn’t guaranteed following graduation from an institution of higher learning. In fact, the outlook is somewhat dismal; in 2011, the share of 18- to 24-year-olds who were employed fell to 54% in 2011. This is the lowest level since the US Labor Department’s Bureau of Labor Statistics began tracking that data in 1948.

Bond writes that youth unemployment worldwide has fallen – this is part of what has led to unrest in the Middle East. But the problem in the United States is that this unemployment comes with record levels of student loans. The average graduate has to pay off an average of $25,000. And without high-paying jobs available – or any kind of job – paying off that debt becomes insurmountable.

Read more...Student Debt’s Impact on Apartment Housing via Axiometrics

Top Seven Reasons to Use Rental Payment History Data to Identify High Quality Residents via

Experian RentBureau, the leading provider of rental payment history data to the multifamily industry, recently released the findings of an analysis examining the financial risk posed by residents and the most effective screening metrics to employ to avoid lost revenue from risky residents.

The analysis, Risk versus reward: identifying the highest-quality resident using rental payment history, provides unique, industry-specific insights regarding the use of rental payment data in conjunction with credit scores in screening to produce a superior prediction of a resident’s propensity to default. The analysis also includes first-of-its-kind data regarding late payments, nonsufficient funds (NSF), write-offs and rental collections.

Here’s a look at the top seven takeaways from the analysis that offer multifamily owners and property managers a look into the best applications of resident payment history data:

Read more...Top Seven Reasons to Use Rental Payment History Data to Identify High Quality Residents - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

San Antonio apartment 2Q 2013: Marcus & Millichap via Real Estate Center at Texas A&M

Strong job and population growth across the San Antonio metro will accelerate demand for apartments, tightening vacancy and pushing rents higher in the coming months.

Investors have been targeting properties built in the 1980s for value-add potential, and will begin targeting a broader range of investments as revenue stream increases throughout all asset classes.

In 2013, developers will deliver 4,000 apartments to the market, which reflects a 33 percent increase from last year. The Far North Central and Far Northwest submarket will account for the most new units this year. Last year, builders added nearly 3,000 apartments to inventory.

Read more...San Antonio apartment 2Q 2013: Marcus & Millichap via Real Estate Center at Texas A&M

NMHC Survey: Apartment Market Conditions Tighten slightly in July via Calculated Risk

From the National Multi Housing Council (NMHC): Second Quarter Apartment Markets Mixed in Latest NMHC Survey

While demand for apartment homes remained strong, rising interest rates exerted negative pressure on the industry’s ability to secure debt financing according to the National Multi Housing Council’s (NMHC) July Quarterly Survey of Apartment Market Conditions. Only the Market Tightness Index (55) remained above the breakeven line of 50 this quarter. Sales Volume (46) and Equity Financing (49) dipped, with Debt Financing dropping sharply to 20.

“Debt costs for apartment firms have been rising. In addition to the 90 basis point increase in interest rates from the April survey, spreads over Treasuries have also gone up, likely dampening transactions somewhat.

Read more...Calculated Risk: NMHC Survey: Apartment Market Conditions Tighten slightly in July

Wednesday, July 24, 2013

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

The Texas economy gained 290,500 nonagricultural jobs from June 2012 to June 2013, an annual growth rate of 2.7 percent compared with 1.7 percent for the United States (Table 1 and Figure 1). The state’s nongovernment sector added 275,800 jobs, an annual growth rate of 3 percent compared with 2 percent for the nation’s private sector (Table 1).

Texas’ seasonally adjusted unemployment rate fell to 6.5 percent in June 2013 from 7 percent in June 2012. The nation’s rate decreased from 8.2 to 7.6 percent (Table 1).

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

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

EPA Upgrades Portfolio Manager via EcoBuilding Pulse

Can upgrades to the U.S. Environmental Protection Agency's (EPA) Portfolio Manager tool help make commercial buildings at least 20 percent more efficient by 2020? That's the goal, according to the agency, who recently updated the online tool with a more user-friendly interface, enhanced data sharing capabilities, better reporting, and the ability to manage buildings through their lifecycle from design through occupancy. Custom tabs now let users plan and set goals for current and future projects, and data entry has been made easier.

Will the upgrades help more buildings curb their energy use? Yes, according to the EPA. "You can't manage what you don't measure," says Janet McCabe, principal deputy assistant administrator for the Office of Air and Radiation.

Read more...EPA Upgrades Portfolio Manager - Energy Efficiency, Building Technology - EcoBuilding Pulse

Tuesday, July 23, 2013

How Rising Interest Rates Are Impacting Multifamily via

From Miami to Tampa and beyond, there is a significant new pipeline of multifamily units on the Florida horizons. At the same time, sales transactions continue to move quickly for rightly-priced properties. Will that change in the face of rising interest rates? caught up with Nat Barganier, managing director of Investment Services, and John Stone, principal and managing director of Multi-Family Housing, of Colliers International Tampa Bay, to get their take on that question. Barganier and Stone recently produced a report on “Rising Interest Rates and Multifamily Values." Have higher interest rates had an impact in recent weeks on multifamily sales or development?

Read more...How Rising Interest Rates Are Impacting Multifamily - Daily News Article -

Houston apartment 2Q 2013: Marcus & Millichap via Real Estate Center at Texas A&M

Developers will deliver 9,250 apartments in 2013, up 77 percent from 2012. The Downtown/West Inner Loop area will record the most significant inventory growth, followed by the Greenway Plaza/Upper Kirby, Galleria/Uptown and Medical Center/University submarkets.

Read more...Houston apartment 2Q 2013: Marcus & Millichap via Real Estate Center at Texas A&M

Why Texas is a Good Place for Real Estate Investment via the Blog of the Real Estate Center

I recently participated in a Bloomberg panel in Dallas. The Alternative Investments Conference was at the new George W. Bush Library. I find it interesting that some people view real estate as an “alternative investment.” I’ve just always thought it was a “great investment.”

Pension funds and endowment associations are the most likely to view real estate as an alternative. Historically they have invested largely in stocks and bonds. In recent decades, they have invested in “alternatives,” which include:

Read more...Why Texas is a Good Place for Real Estate Investment | the Blog of the Real Estate Center

DFW apartment leasing continues surge through 2Q via Real Estate Center at Texas A&M

Net apartment leasing in the DFW area totaled 5,843 units in the just-completed quarter — the best showing in a year.

Overall, monthly rents were up more than 3 percent from the middle of 2012.

Analysts at Carrollton-based MPF Research credit the apartment sector’s recent gains to the area’s growing business environment.

At the end of June there were 24,697 apartments under construction in North Texas — just a hair below what was in the development pipeline at the last construction peak before the recession.

Read more...DFW apartment leasing continues surge through 2Q via Real Estate Center at Texas A&M

Was 2Q the Last Stellar Performance We’ll See in Austin Apartments? via Property Management Insider

All of Austin’s apartment performance stats proved great in 2nd quarter. Net demand for about 2,300 units during the three-month period more than doubled the completion volume, so occupancy climbed a notable 70 basis points to 95.4%. And quarterly rent growth came in at an impressive rate of 1.8%, taking the total price increase from mid-2012 through mid-2013 to 4.1%.

But the road does get bumpier starting basically right now. That shift in general momentum reflects the much more aggressive new product delivery volumes that are about to hit, with the first really big block of completions coming in 3Q.

Read more...Was 2Q the Last Stellar Performance We’ll See in Austin Apartments? | Property Management Insider

Fannie Mae Expects Rates to Continue Higher via Mortgage News Daily

Fannie Mae said today in its July Economic and Strategic Report that the view expressed in these reports since the first of this year has not changed; growth will pick up in the second half of 2013. Consumer fundamentaks - steady job creation, recovery highs in consumer confidence - are supporting an improving picture of economic activity. That said, Doug Duncan, Orawin T. Velz, and Brian Hughes-Cromwick of Fannie Mae's Economic and Strategic Research area report, "Disappointing growth during the first quarter was followed by anticipated weakening economic activity in the second quarter."

The economy will face challenges from rising long-term interest rates because of expections for future Federal Reserve monetary actions, but the economists still expect the improving fundamentals, ongoing housing recovery, and receding fiscal drags should help boost growth and inflation adjusted GDP should average about 2.5 percent for the rest of the year and 2.0 percent for the entire year.

Read more...Fannie Mae Expects Rates to Continue Higher via Mortgage News Daily

Friday, July 19, 2013

The Top Four Drivers of Resident Retention via Property Management Insider

According to the most recent SatisFacts Index, 43% of annual survey respondents said they were “very likely” to renew. So, what about the other 57%? What’s going on with them?

We know that no matter how great you are with residents, and no matter how much they enjoy living at your community, there will be a certain percentage that chooses not to renew every year. These residents are typically experiencing some sort of a life change such as buying a home, relocating for work, losing a job, etc.

We also know that the number of those going through such changes is far smaller than those who are on the fence about their renewal. On our survey, any resident who answers other than “very likely” to renew is met with a simple follow up question: “Why didn’t you answer very likely to renew?” From there, they are given the opportunity to select as many reasons from a list as applicable as to why they are not secure in their renewal decision.

Read more...The Top Four Drivers of Resident Retention | Property Management Insider

Lifetime middle-class renters make multifamily attractive to investors via REwired

In today’s economy, Americans making anywhere from $30,000 to $70,000 a year continue to struggle to qualify for mortgages in the midst of economic and job uncertainty, says Alan Feldman, CEO of Resource Real Estate.

After analyzing this particular segment of the marketplace, Feldman realized this group is more likely to rent, making multifamily properties a natural investment for his firm.

"We touch real estate two main ways, we put equity capital towards investing, and we lend across a number of asset classes," he says.

Right now, multifamily is getting a lot of focus from the firm, with Feldman still looking for properties that are the 'right buy'.

Read more...Lifetime middle-class renters make multifamily attractive to investors | REwired

June 2013 Apartment Market Summary via Axiometrics

After a slowdown in April 2013, when annual effective rent growth appeared to be headed below 3.0%, the growth rate increased for the second consecutive month in June. For the month, annual effective rent growth measured 3.51% while the occupancy rate increased 41 basis points (bps) from its level a year ago. Despite the recent slowing trend in effective rent growth at the national level, growth rates continued to rise from May to June, even with the approximately 70,000 units that have already been delivered nationally this year.

All three asset classes (A, B, and C) increased effective rent growth from May to June. Many Metropolitan Statistical Areas (MSAs) also followed the national trend, showing an increase in annual effective rent growth across all asset classes. When comparing June 2013 to June 2012 results; however, Class A decreased 79 basis points (bps); Class B increased 9 basis points; and Class C showed the best annual growth of 62 basis points.

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

Vacancy Tight in Apartment Market via

As the metro area continues creating jobs and attracting population, the demand for housing continues increasing. According to Marcus & Millichap Real Estate Investment Services' Q3 2013 Apartment Research Market Report, new units coming online aren't making a dent in demand.

The report notes that 9,250 units will be delivered in 2013 -- a 77% increase from 2012 – and area-wide vacancy will top out at 7.9%. This vacancy rate, incidentally, is an increase of 40 basis points from the year before.

Other interesting vacancy statistics from the report were that:

Read more...Vacancy Tight in Apartment Market - Daily News Article -

Thursday, July 18, 2013

CFO Survey Preview: Cap Rates to Rise Next Year via Multifamily Executive Magazine

Jay Hiemenz is hopeful that the first markets into the recession are now, finally, making their way out.

The Alliance Residential CFO is keeping a close eye on specific markets that may have room for growth. Phoenix-based Alliance is using a green movement to attract potential residents while employing aggressive research and development and marketing tools to keep NOI in the black.

The company, which owns and operates market rate, affordable and student housing units, has seen a wide spectrum of improvement across the board with markets that were hit hardest by the recession making a comeback behind the hot primary metro areas.

Read more...CFO Survey Preview: Cap Rates to Rise Next Year - Finance, Finance - Multifamily Executive Magazine

CoreLogic Releases Q1 2013 Renter Applicant Risk Index Report Showing Improved Applicant Quality via

CoreLogic, a leading residential property information, analytics and services provider, today released its CoreLogic Renter Applicant Risk (RAR) Index Report for the first quarter of 2013. The index shows a two-point year-over-year increase to a value of 104. The rise in the index is a sign of improving ability to meet lease obligations among prospective apartment renters nationwide.

Published quarterly, the RAR Index Report provides market-based benchmarks for evaluating credit quality and risk of default among renters applying for apartment homes in multifamily housing units and single-family rentals. Using a mean of 100, an index value above 100 indicates improved applicant credit quality and decreased lease default risk, and a value below 100 indicates declining applicant credit quality and increased lease default risk.

Read more...CoreLogic Releases Q1 2013 Renter Applicant Risk Index Report Showing Improved Applicant Quality - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Wednesday, July 17, 2013

Rate Lock Agreements: Timing is Key via Commercial Property Executive

Location is often described as the key to a successful real estate transaction. While generally true, timing also plays an important role, especially when entering into an interest rate lock agreement as part of a financing transaction. Locking an interest rate usually occurs when negotiation of the loan documents is concluding and the parties are ready to close. However, at this point, the borrower has lost most of its leverage to request any changes to the rate lock agreement. The lender knows it is unlikely that the borrower will walk away from the transaction because of a disagreement over the terms in the rate lock agreement.

In addition to losing leverage, borrowers should also be conscious of market factors. As has recently occurred, interest rates can sometimes spike up quickly, which, depending on the magnitude, and the size of the loan, may make it impractical to close a loan that was otherwise about to close. Requesting a copy of the rate lock agreement early on in the transaction and proposing modifications as soon as possible affords the borrower the opportunity to better understand the terms in the rate lock agreement in the event rising interest rates cause the borrower to want to quickly lock an interest rate, as well as providing time to negotiate provisions that are often not negotiated due to time constraints on locking a favorable rate. A few types of provisions that, given time, can be negotiated, but often are not, are:

Read more...Rate Lock Agreements: Timing is Key | Commercial Property Executive

Construction to drive job growth in Texas, U.S. via Real Estate Center at Texas A&M University

Construction will continue to be the main driver of job growth in Texas and across the country.

“Construction is only getting started,” IHS Global Insight economist Steven Frable said about the employment and housing market rebound. “As the housing rebound continues and housing starts increase this year and in all of 2014, we expect the construction sector to start posting double-digit gains in most states.”

Nine states, including Texas, already are at or above their pre-recession peak employment. IHS ranked Texas No. 3 for its annual job growth rate of 3 percent as of May.

Read more...Construction to drive job growth in Texas, U.S. via Real Estate Center at Texas A&M University

Houston Economic Update July 2013 via FRB of Dallas

The Houston Business-Cycle Index slowed to a 2.8 percent growth rate in May, down from a revised 7.4 percent in April. Still, energy-related activity and improvement in construction and real estate continue to be dominant forces in the region. Area industry fundamentals remain firm, though not as robust as in much of 2012.

Houston payroll employment grew an annualized 0.8 percent in May and 1.4 percent over the three months ending in May. Financial activities and trade, transportation and utilities posted the fastest employment growth over both time frames.

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

Dallas Beige Book July 17, 2013 via Dallas Fed

The Eleventh District economy generally expanded at a slightly stronger pace over the past six weeks than during the previous reporting period. Manufacturing activity increased somewhat overall, with stronger reports from metals and petrochemical producers. However, retail sales were flat after rising in the previous six weeks, and auto sales softened slightly. Nonfinancial services firms noted a continued rise in activity, and demand for accounting services grew at a stronger pace. The housing sector continued to improve, with a rise in new construction. Office and industrial leasing activity remained strong. Financial institutions noted growth in loan demand was stronger than six weeks ago, and energy activity remained at high levels. Drought continued to dampen the agricultural sector. Prices held steady at most Eleventh District reporting firms, and employment levels were flat overall with scattered reports of hiring.

Read more...Dallas Beige Book - Dallas Fed

A Shale Game: Energy Industry Triggers Demand for Prime Real Estate via CoStar Group

Growth in the domestic energy industry is driving heated demand for prime real estate, predominantly in a handful of cities where the oil and gas industry is booming. That growth is expected to create more than 3.5 million American jobs by 2035, including 700,000 in the next two years alone.

While energy production is the direct growth driver, much of the commercial real estate demand is coming from affiliated industries and thus driving growth in office, retail, industrial and multifamily demand.

New research from Jones Lang LaSalle (JLL) indicates that the majority of commercial real estate opportunities resulting from this job growth will be concentrated in Dallas, Denver, Houston, Philadelphia and Pittsburgh.

Read more...A Shale Game: Energy Industry Triggers Demand for Prime Real Estate - CoStar Group

Bernanke Seeks to Divorce QE Tapering From Interest Rates via Bloomberg

Federal Reserve Chairman Ben S. Bernanke will have a chance to use testimony to Congress today to drive home his message that winding down asset purchases won’t presage an increase in the Fed’s benchmark interest rate.

Bernanke has said the Fed may start reducing $85 billion in monthly bond purchases later this year, assuming economic growth meets the Fed’s predictions. At the same time, policy makers’ forecasts have indicated the federal funds rate won’t rise until 2015, long after Bernanke’s second term ends Jan. 31.

“The Fed’s bifurcated message will continue,” said Michael Gapen, senior U.S. economist at Barclays Plc in New York and a former Fed economist. “Their outlook is for an environment where we can start tapering -- so a hawkish tone on tapering switching to a dovish tone on rate hikes.”

Read more...Bernanke Seeks to Divorce QE Tapering From Interest Rates - Bloomberg

Tuesday, July 16, 2013

ALN Monthly Newsletter July 2013 via ALN Apartment Data

ALN Data just released their June 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 July 2013 via ALN Apartment Data

Conditions are ripe for household formation via HousingWire

A sharply positive turn in U.S. household formation has caused a rising demand for all types of housing over the last two years, including multifamily and single-family rental and ownership, according to data from a number of analysts.

"We believe steady, if unremarkable, monthly job growth is creating a similar household formation environment for 2013 which should support our positive housing outlook," the analysts said in a report on housing demand.

"You’re just seeing a lot more people getting reengaged," said Sterne Agee analyst Jay McCanless. "Housing demand, whether its rental or ownership, is a positive indicator," he added.

Read more...Conditions are ripe for household formation | HousingWire

Craig: Fed policies affecting cost of capital, property values via

Scott Craig, portfolio manager with Eaton Vance Investment Managers, joined for a video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.

Craig discussed the Federal Reserve’s monetary policy and its impact on REITs and their cost of capital.

“There’s no question that Bernanke’s policies have significantly reduced the cost of capital in the commercial real estate business, including for REITs. That includes the cost of debt, the cost of preferred equity, and the cost of common equity,” he said. “Capital is very inexpensive and that has driven property values and has driven NAVs (net asset values) higher.”

Read more...Analyst says REIT M&A Activity Lags Due to Lack of Sellers

Texas Apartment Market Update June 2013 via O'Connor & Associates

Multifamily market updates for Austin, Dallas/Ft. Worth, Houston and San Antonio for June 2013.

Read more...Texas Apartment Market Update June 2013 via O'Connor & Associates

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

Multifamily housing starts averaged 325,000 in the first quarter—exceeding the annual average observed in any year since the 1980s, according to the National Association of Home Builders. Housing starts increased in March to a seasonally adjusted annual rate of 392,000 units. Permits fell to seasonally adjusted rate of 283,000, however.

Price indices for gymsum and softwood lumber have returned to approximately 93 percent of their highs registered during the housing boom. Coop and prices continue to power up in March.

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

Monday, July 15, 2013

The Tsunami of Government Stimulus via

The training wheels are coming off the economic bike as the Fed begins its phase-out of quantitative easing this fall. Locally based Tom McNearny, chief investment officer at Transwestern, has just issued his Briefing, the National Economy at a Glance, in which he likens the “unwinding” of the government stimulus to a global tsunami and explains how that is “finally at the forefront of the capital markets discussion.”

In his report, he notes: “The landscape changed suddenly and dramatically when Ben Bernanke announced that the Fed would be maintaining its low interest rates indefinitely, but is expected to start removing the quantitative easing sometime late this fall with full anticipated phase-out by mid-2014.”

What does all of that mean for commercial real estate?

Read more...The Tsunami of Government Stimulus - Daily News Article -

Thursday, July 11, 2013

Top Ten Apartment Market Rent Growth Leaders for Second Quarter 2013 via Property Management Insider

Earlier this month, MPF Research released highlights for the apartment market’s performance in the second quarter of 2013 and reported strong demand and accelerating rent growth.

When MPF releases these quarterly numbers I always look at the leader board to see which metro secures the top spot for rent growth. During the past few quarters, the top spot has been held by one of the Bay Area metros.

Did a Bay Area market once again claim the title as top annual rent growth leader? Did a metro from the Pacific Northwest challenge for the top spot? Let’s have a look.

Read more...Top Ten Apartment Market Rent Growth Leaders for Second Quarter 2013 | Property Management Insider

The Amazing Rate via Real Estate Center at Texas A&M

Texas’ population has grown at an amazing rate over the past 40 years, and the Texas State Demographer projects an even higher growth rate between now and 2050. The state’s four major metros will double or even triple their populations.

Read more...The Amazing Rate via Real Estate Center at Texas A&M

Top 10 Resident Complaints in the Multifamily Industry via Multifamily Executive Magazine

Complaints come with the territory in the multifamily world. After all, you can't please all the people all the time.

But what are the common threads in everybody's complaint box? After analyzing 10,000 customer satisfaction surveys from residential communities nationwide, J Turner Researchhas provided a list of complaints that are most likely to be on the tip of your tenants' tongues.

The surveys were completed over the last two years, and not surprisingly, rental rates are the No. 1 tenant complaint. Here are the top 10 results from the survey:

Read more...Top 10 Resident Complaints in the Multifamily Industry - Property Management, Resident Life - Multifamily Executive Magazine

Wednesday, July 10, 2013

Multifamily Occupancy Gains Grind to a Halt via National Real Estate Investor

In our last column on the multifamily sector, we noted that improvements in the apartment sector slowed a bit in the first quarter. Preliminary second quarter data from Reis indicates a decline in the rate of net absorption and a stalling of declines in vacancy. While this seems to show a continuation of this trend into the second quarter, the reality is more of a mixed bag.

Vacancy was unchanged during the first quarter at 4.3 percent. This marks the first time that the quarterly vacancy rate has not fallen since the first quarter of 2010. Over the last four quarters national vacancies have declined by 50 basis points, a bit slower than last quarter's year-over-year decline in vacancy of 70 basis points. However, this dynamic is somewhat to be expected and not necessarily indicative of a slowing market. As the market gets tighter and tighter, it becomes increasingly difficult for vacancy to continue falling at a high rate as vacant units, or at least palatable vacant units, disappear from the market.

Read more...Multifamily Occupancy Gains Grind to a Halt | Multifamily content from National Real Estate Investor

195,000 Jobs added in June: Celebrate or Consternate? via Axiometrics

The U.S. Bureau of Labor Statistics (BLS) released their latest employment numbers on Friday, July 5th and they were significantly higher than consensus forecasts had predicted. The figure for June – 195,000 jobs – outpaced economist’s forecasts of 165,000 jobs. At the same time, the change in total nonfarm payroll employment for April was revised from 149,000 to 199,000, and the change for May was revised from 175,000 to 195,000; adding 70,000 jobs to the economy. But is it time to celebrate? A look inside the numbers reveals several reasons for continuing concern or perhaps, cautious optimism.

The 195,000 figure for June comes from the BLS’s Current Employment Statistics (CES) or establishment survey which provides a reliable gauge of monthly change in nonfarm employment while the Current Population Survey (CPS) or household survey provides a broader picture of employment including agriculture and the self employed. The household survey is a count of people that have jobs while the establishment survey asks employers how many jobs they have filled. Multiple job holders in the household survey are counted only once so those workers holding down two or more part time jobs are possibly over counted in the establishment survey.In fact, the number of persons employed part time for economic reasons (involuntary part-time workers) increased by 322,000 to 8.2 million in June.

Read more...195,000 Jobs added in June: Celebrate or Consternate? via Axiometrics

Houston Leads the Nation for Apartment Demand in Q2 via Property Management Insider

Houston recorded a record number of home sales in May 2013. Yet that had no apparent effect on apartment demand, as Houston led the nation in apartment absorption in 2nd quarter 2013 – reflecting the strength of the local economy.

Houston is the nation’s leading job producer so it should come as no surprise that the metro is also leading the nation in apartment demand.

In recent months, we’ve seen a rebound in single-family home sales. So what does that mean for the apartment sector? Will we see less demand for apartments because so many people are buying new homes? In a market with strong job growth, a rising tide tends to boost all ships. And Houston is exhibit A.

Read more/Watch video...Houston Leads the Nation for Apartment Demand in Q2 | Property Management Insider

CFO Survey Preview: Rent Growth Momentum in 2014 via Multifamily Executive Magazine

James Duncan knows not all markets are created equal.

The CFO of Jefferson Apartment Group (JAG) is seeing strong growth in some while others are slowing down, but he isn’t writing the slower markets off just yet.

And while some institutional investors are scaling back their appetites in potentially overheated markets, Duncan believes it hasn’t affected the liquidity for multifamily developers looking to strike a deal.

“I think they’re being more cautious relative to their investment in markets that could have some supply issues,” he said. “And where we’ve seen others get too cautious or pull back a little bit, we’ve seen other equity providers step in.

Read more...CFO Survey Preview: Rent Growth Momentum in 2014 - Finance, Finance - Multifamily Executive Magazine

Lending for Small Investors in Commercial Real Estate Markets Records Slight Improvements in 2013 via

For most commercial REALTORS®, investment activity registered slight improvements over the past year. Members posted gains in transactions of office properties, which took the top spot. Industrial, multifamily and retail/land deals followed close behind.

In terms of valuation, most properties exchanged hands at the $2 million mark and below. The figures indicate that a significant segment of the commercial market is flying below the radar of the established data aggregators, such as Real Capital Analytics. In addition, commercial REALTORS® handled a wide range of properties, from free standing buildings and mixed use, to churches, restaurants and self-storage.

Read more...Lending for Small Investors in Commercial Real Estate Markets Records Slight Improvements in 2013 via

Tuesday, July 9, 2013

Apartment Investment Strategy: Value-Add Investments or Ground-Up Construction? via Axiometrics

In July 2012, Realtor Magazine pointed out that investors were starting to seek out both secondary markets and value-add plays that would provide more yield through renovation and repositioning as opposed to ground-up construction.

A recent article in Real Estate Forum magazine (in which Axiometrics was recently quoted) underscored this trend, while also pointing out that that infill is no longer the sole investment target for buyers and builders. The article noted that public investors and private equity companies are also taking interest in both secondary markets and vintage renovations.

Read more...Apartment Investment Strategy: Value-Add Investments or Ground-Up Construction? via Axiometrics

Texas Economic Indicators July 2013 via Dallas Federal Reserve

The Texas economy continues to expand, with employment growing at a 1.2 percent annual rate in May. Texas existing-home sales and housing starts increased in May, while single-family construction permits declined. Texas exports ticked up in April. Manufacturing activity increased sharply in June, according to the Texas Manufacturing Outlook Survey.

Texas gained 11,500 jobs in May after adding 27,700 jobs in April. Current Texas employment stands at 11.12 million.

The Texas unemployment rate edged up to 6.5 percent in May from 6.4 percent in April. The Texas rate remains lower than the U.S. rate, which was 7.6 percent in May.

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

U.S. apartment vacancy rate flat in second quarter, but rents rise via Reuters

The U.S. apartment vacancy rate was unchanged in the second quarter, the first time in two years that the vacancy rate failed to tighten, in a sign that a wave of new properties may be easing market conditions, according to real estate research firm Reis Inc.

The national vacancy rate was 4.3 percent, unchanged from the prior quarter though down from 4.8 percent a year earlier, according to preliminary figures Reis released on Monday. The vacancy rate is 3.70 percentage points below the cyclical peak of 8.0 percent at the end of 2009.

Read more...U.S. apartment vacancy rate flat in second quarter, but rents rise | Reuters

Dallas-Fort Worth sees burst of new home construction via Dallas Business Journal

As the home industry rebounds, Dallas-Fort Worth home builders are back in business putting up 5,861 new homes, which is a nearly 27 percent jump year over year.

In the past 12 months, North Texas builders put 20,339 new homes on the ground.

Even though there's a surging demand for new homes, builders are constrained by shortages of skilled labor and rising prices in certain construction materials, said Ted Wilson, principal with Residential Strategies Inc., which tracks and measures North Texas' residential market.

"The home building industry has experienced significant price increases during the past year," Wilson said. "Builders have had to digest higher construction and lot costs. Many of those costs have been passed on to the consumer this past quarter in the form of price increases."

Read more...Dallas-Fort Worth sees burst of new home construction - Dallas Business Journal

Monday, July 8, 2013

The Significance of the Apartment Sector’s Strong Q2 Performance [Video] via Property Management Insider

The return of some traditional headwinds, which had disappeared in recent years, made 2nd quarter 2013 a critical period for the U.S. apartment industry. And the robust results provided evidence that the apartment sector is still in strong shape.

The U.S. apartment market faced a point of vulnerability in Q2 2013 and it passed with flying colors. The immediate outlook is that the market will sustain the momentum it gained in Q2 through Q3 and then register only a mild backslide during the fourth quarter of 2013.

Watch video...The Significance of the Apartment Sector’s Strong Q2 Performance [Video] | Property Management Insider

Report: Rent Growth Picks Up in Q2 via

Rent growth in the apartment sector experienced a revival in the second quarter, according to a market report form MPF Research, a division of Texas-based Real Page, Inc.

Over the last year, rents for new leases grew at an annual pace of 3.1 percent following a slowdown in the previous quarter. In the first quarter of this year, annual rents were up by just 2.6 percent, marking the weakest growth since late 2010, according to MPF Research. On a quarterly basis, rents inched up by 1.6 percent.

At the same time, the national apartment occupancy rate also moved higher, increasing to 95.3 percent from 94.9 percent in previous quarter.

Read more...Report: Rent Growth Picks Up in Q2

Job Growth, Supply Top Concerns in Apartment Sector, Analyst Says via

Dave Bragg, managing director with Green Street Advisors, joined for a video interview in Chicago at REITWeek 2013: NAREIT’s Investor Forum.

Bragg covers the multifamily sector for Green Street. He discussed the effect of the housing recovery on apartment REITs.

“The housing recovery is starting to have an impact on the multifamily sector,” he said.

Bragg pointed to a key indicator that illustrates the impact. Exit surveys shows that the percentage of apartment residents who are moving out to by homes is on the rise, according to Bragg. However, Bragg also noted that the current share of apartment residents leaving to buy homes still trails the historical average.

Read more...Job Growth, Supply Top Concerns in Apartment Sector, Analyst Says

Why North Texas is being targeted for real estate investment via Dallas Business Journal

Dallas-Fort Worth, along with other areas of the southwestern U.S., is being targeted by real estate investors intent on investing in the region's strong growth and strong real estate assets.

"Everyone has become optimistic as we continue to recover in the industry and there's been favorable financing," Greg Williams, national leader of KPMG LLP's real estate practice, which is based in Dallas, told the Dallas Business Journal. "The southwest U.S., in particular Dallas and North Texas, has seen stronger job growth, which drives real estate fundamentals. When people are looking at opportunities, the Southwest is the No. 1 region for job growth."

Read more...Why North Texas is being targeted for real estate investment - Dallas Business Journal

Wednesday, July 3, 2013

North Texas apartment market sees 'renewed pop' via Dallas Business Journal

The Dallas-Fort Worth apartment market showed a "renewed pop" in the second quarter, with a rise in apartment occupancy and jump in rental rates, despite a surge in apartment construction.

"We expected to see a strong performance in second quarter, but we were a little surprised by just how strong it was -- given the huge wave of new apartments under construction, plus the rebounding single-family sales market," said Jay Parsons, the national market analysis manager at Carrollton-based MPF Research.

MPF Research, along with Dallas-based Axiometrics Inc., released its second quarter data and market research in North Texas.

Read more...North Texas apartment market sees 'renewed pop' - Dallas Business Journal

Favorable multifamily climate predicted to last through 2014 via HousingWire

Rent gains accelerated to 2.8% year-over-year in June, the largest annual increase since January, according to Trulia’s latest rent monitor.

However, what’s interesting is that, despite the gains in rent cost, rents are outpacing home prices in only 3 out of the 25 largest rental markets: Houston, Philadelphia and New York.

So with home asking prices up between 1.2% and 1.5% per month, according to Trulia ($31.70 0.08%), will more potential buyers be forced to rent instead of buy?

According to MPF Research, a division of RealPage, Inc., annual rent growth is accelerating yet again after cooling a bit throughout 2012 and early 2013. Typical monthly rent across the nation’s 100 largest metros now is at $1,110.

Read more....Favorable multifamily climate predicted to last through 2014 | HousingWire

Are Multifamily Investor Preferences Shifting? via Multifamily Executive Magazine

Recent multifamily investment volumes indicate an early but potentially growing emphasis on low-rating properties. Indeed, as the chart below shows, from the first quarter of 2010 through the first quarter of 2013, Class B and C sales transactions were substantially higher than those for Class A properties. (The data do not reflect the recent, $16 billion Archstone–AvalonBay–Equity Residential transaction, in order to avoid skewing the results.)

A further look at the Class A and B transactions shows that their shares have changed gradually over time. In 2010, following the recession, the percentage of Class A transactions was close to 30 percent of all sales, and Class B transactions represented close to 40 percent. Between 2011 and 2012, however, the proportion of Class A transactions slipped toward the 20 percent to 30 percent range, while the portion of Class B transactions moved up, fluctuating above 40 percent.

Read more...Are Multifamily Investor Preferences Shifting? - Dispositions And Transactions, Cap Rates, Finance - Multifamily Executive Magazine

Deep Strength for Apartment Fundamentals via National Real Estate Investor

With a few exceptions, apartments developers shouldn’t worry too much about the building cranes looming over hot apartment markets—overall supply is in line with demand for rental housing, according to “The State of the Nation’s Housing 2013,” a report released by the Joint Center for Housing.

“So far, the indicators point to a healthy recovery,” according to the report. The Joint Center’s deep dive into recent housing data was full of good news this year—particularly for apartment experts. Demand for apartments is likely to continue to be strong and healing for-sale markets pose little threat to multifamily, according to the report. However, weak income growth will continue to put pressure on rental housing residents. And a handful of markets face some risk of oversupply.

Strong demand will continue to fill apartments

Read more...Deep Strength for Apartment Fundamentals | Multifamily content from National Real Estate Investor

Tuesday, July 2, 2013

U.S. CMBS Delinquency Rate Plummets, Rate at Lowest Level since October 2010 via PRNewswire | Rock Hill Herald Online

Trepp, LLC, the leading provider of information, analytics and technology to the CMBS, commercial real estate and banking markets, released its June 2013 U.S. CMBS Delinquency Report today (available at

The Trepp CMBS Delinquency Rate posted its lowest level in almost three years in June. The 42-basis-point drop was the second biggest one-month improvement since Trepp began publishing the monthly rate in the fall of 2009. The delinquency rate for U.S. commercial real estate loans in CMBS was 8.65% in June. This was the first time the rate has dropped below 9% since November 2010 and the lowest percentage since October 2010.

Loan resolutions have been the main driver behind the delinquency rate improvement so far in 2013. June was no exception with over a billion dollars in loan resolutions, up sharply from May's total of $858 million. While the removal of these loans from the delinquent category placed a fair amount of downward pressure on the rate, this was completely negated by June's newly delinquent loans, which were approximately half the total posted in May.

Read more...NEW YORK, July 2, 2013: U.S. CMBS Delinquency Rate Plummets, Rate at Lowest Level since October 2010 | PRNewswire | Rock Hill Herald Online

U.S. Apartment Market Posts Strong Demand and Rent Growth for Q2 2013 via Property Management Insider

Big demand, tight occupancy, and accelerating rent growth. MPF Research has lots of good news to share today as it announced highlights for the apartment market’s performance in the second quarter of 2013.

Demand Running Ahead of Deliveries
The market absorbed 88,524 apartment units across the country’s 100 biggest markets in second quarter. That absorption tally, up 69 percent from the second quarter 2012 volume, well surpassed the 33,291 apartments in communities finished during the April-June time frame.

Apartment Market Occupancy Averages 95.3%
With demand running ahead of deliveries in second quarter, the national apartment occupancy rate rose to 95.3 percent, up from 94.9 percent in first quarter 2013 and 95.2 percent as of second quarter 2012.

Read more...U.S. Apartment Market Posts Strong Demand and Rent Growth for Q2 2013 | Property Management Insider

National Rent Growth Slows for Eighth Consecutive Quarter via Axiometrics

Axiometrics Inc., the leading provider of apartment data and market research, reports that at the national level annual effective rent growth slowed to 3.2% in the second quarter of 2013. For comparison, annual effective rent growth in the second quarter of 2012 measured 4.0%. Further, Axiometrics’ data indicates that the effective rent growth rate has slowed for eight consecutive quarters as many Metropolitan Statistical Areas (MSAs) are decelerating from very strong growth the previous three years. Peak annual rent growth at the national level during this current cycle was 5.3% in July 2011.

Despite the slowdown nationally, many individual markets are still generating very strong rent growth rates, with 20 of the top 88 MSAs reporting annual effective rent growth of greater than 4.0%. While the national growth rate has been slowly decelerating over the past eight quarters, it should also be noted that the current growth rate is still above the long-term average of 2.1%.

Read more...National Rent Growth Slows for Eighth Consecutive Quarter via Axiometrics

Creating a Consistent Vision via Multifamily Insight Blog

Remember back in school when the teacher would “teach reading” by having each child read aloud from the book? Well, I was the one who would grow impatient and read ahead so much so that when it was my turn I would have to go back several pages and ask from which paragraph I should start. A bit arrogant, you think? Perhaps, yes. It was certainly not a charming characteristic on which to capitalize, especially not in the third or fourth grade. I always wondered if there wasn’t a more effective way to teach reading fundamentals than by embarrassing those who couldn’t by singling them out in the most humiliating way possible?

I am reminded of this situation again in property management when I often find that Owners/Investors, the Corporate Office and the on site teams are many times not only NOT on the same page, but sometimes not even in the same book in the right chapter. This most happens when a property is in “transition.”

Read more...Creating a Consistent Vision | Multifamily Insight Blog

CMBS Sales to Be Cut in Half as Rates Rise, Bank of America Says via Businessweek

Sales of commercial-mortgage bonds will be reduced by half during the last six months of 2013 as rising interest rates impede new lending, according to Bank of America Corp. (BAC)

The bank reduced its forecast for the year by $10 billion to $65 billion, analysts led by Alan Todd said in a June 28 report. Sales of securities linked to property loans have been rising, with dealers arranging $40.6 billion in new transactions this year, compared with about $41.2 billion in all of 2012, according to data compiled by Bloomberg.

Read more...CMBS Sales to Be Cut in Half as Rates Rise, Bank of America Says - Businessweek

Monday, July 1, 2013

Hot Texas markets draw homebuilders via HousingWire

It seems the Dallas housing market is luring many national homebuilders to the area. At least that’s what Phil Crone, executive officer at the Dallas Builders Association, claimed Monday.

"Obviously home builders are going to flock to where the population growth and, more specifically, job growth is," Crone said. "And the job growth is certainly as strong here in Dallas as it is anywhere in the country."

In fact, eight of the 15 cities with the fastest growth in the U.S. are in Texas, according to data from the U.S. Census Bureau. At the top of the list was the Central Texas town of San Marcos, which saw its population grow by 4.9%, surpassing the 50,000-population mark.

Read more...Hot Texas markets draw homebuilders | HousingWire

Four Mistakes That Will Cost You Gen Y Renters via Multifamily Executive Magazine

Property managers and apartment firms understand the necessity of pleasing prospective residents and developing a good reputation. To further this mission, most have learned to tailor their offerings to the needs of specific demographics, such as seniors, students, and Millennials, also known as Gen Yers.

When it comes to attracting renters, the Gen Y demographic—generally considered those born between 1978 and 1995—is an increasingly hot market. From college students seeking off-campus housing to young professionals unwilling (or unable) to commit to a permanent residence, the Gen Y crowd is an estimated 80 million strong. Recent reports also show that this group may be less interested in homeownership than its counterparts in other generations.

Read more...Four Mistakes That Will Cost You Gen Y Renters - Compensation, Mobile Technology, Special Needs Housing, Construction Management, Demographics, Internet - Multifamily Executive Magazine

Real Estate Is Local; So Are Price, Amenities via CoStar Group

Now that apartment fundamentals have fully recovered and pricing is a mere 3% off prior peak levels, investors playing in this asset class need to be very smart in order to get healthy returns. Those with the best-informed assumptions will make the most successful decisions.

And when calculating top-line revenue potential, it's important to understand what renters appear to be willing to pay for, but also important to know exactly how much they are willing to pay for each individual attribute independent of others.

We have flexed our data muscles and mined nearly half a million apartment data points to quantify just that.

Read more...Real Estate Is Local; So Are Price, Amenities - CoStar Group

Texas Cities on Top With MF Deliveries via

Locally based Axiometrics Inc. released its apartment data for Q2 2013, with three of the major Texas MSAs well-represented when it came to units delivered. The Dallas MSA claimed first place, delivering 3,203 units during the quarter, followed by the Houston MSA, which delivered 2,593 units. Coming in fifth was the Austin/Round Rock area (which introduced 1,692 units to the market). San Antonio came in 10th, with its delivery of 1,138 units.

"Texas markets continue to lead the way when it comes to job and population growth, which will drive demand for the new supply," says Jay Denton, vice president of Axiometrics. The question, however, arises as to whether too much is being delivered, even in the face of positive job and population growth. In addressing this issue, Denton tells that the oversupply question depends on property development in the suburbs.

Read more...Texas Cities on Top With MF Deliveries - Daily News Article -