Thursday, August 28, 2014

U.S. Apartment and Condominium Housing Index Posts Positive Gains in Q2 via WORLD PROPERTY CHANNEL

According to the National Association of Home Builders' latest Multifamily Production Index (MPI), an economic indicator for the U.S. multifamily market, posted a gain of five points to a reading of 58 for the second quarter. It is the 10th straight quarter with a reading of 50 or above.

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 market-rate rental units, low-rent units and "for-sale" units, or condominiums.

ReaU.S. Apartment and Condominium Housing Index Posts Positive Gains in Q2 - WORLD PROPERTY CHANNEL Global News Center

The Banks are Back: Is Multifamily the Next Bubble for Lenders? via Property Management Insider

In the first of our four-part series on bank multifamily lending, we highlighted the remarkable growth in multifamily loans issued by commercial banks. Among all bank lending categories, none has grown faster than multifamily over the past six years. Multifamily as a share of overall lending has surged to a 20-year high. In the second part, we outlined how most of the megabanks have sat on the sidelines of this wave. Instead, it’s banks outside the nation’s top 35 by asset size.

Given the rapid growth in multifamily lending on the tails of a major recession, it’s appropriate to ask the obvious question: Is multifamily reaching a bubble?

Read more...The Banks are Back: Is Multifamily the Next Bubble for Lenders? | Property Management Insider

Wednesday, August 27, 2014

MF Ticks Ahead; Home Price Gains Slow via

Even as this month’s reports on single-family housing sales show deceleration in price increases, the fundamentals for multifamily remain solid. That’s the word from the National Multifamily Housing Council and the National Association of Realtors, both of which reported that vacancies ticked downward in the second quarter.

Citing two recent reports, the NMHC noted that vacancy rates “decreased to pre-recession levels by one measure and remained unchanged by another” Specifically, the Census Bureau’s Q2 apartment vacancy rate for all rental properties was 9.5%, unchanged from both Q1 of 2014 and from a year ago. Conversely, MPF Research’s national vacancy rate for investment-grade apartments fell 60 basis points from Q1 and 30 bps year-over-year to 4.4%.

Read more...MF Ticks Ahead; Home Price Gains Slow - Daily News Article -

Tuesday, August 26, 2014

The Banks are Back: Commercial Banks Now Biggest Lenders in Multifamily via Property Management Insider

Financial benchmarks in most areas of real estate remain below pre-recession highs, but the apartment industry is one exception to the rule. Apartment sales volumes are back to peak levels. Prices have jumped to all-time highs. Cap rates have dropped to long-time lows. And with demand high and funds uniquely accessible, apartment construction has surged to the highest levels since the 1980s.

The boom has hardly gone unnoticed. Nor is it necessarily unjustified – given that apartment fundamentals are at historically strong levels due to a confluence of robust tailwinds.

Read more...The Banks are Back: Commercial Banks Now Biggest Lenders in Multifamily | Property Management Insider

Commercial Real Estate Outlook via

NAR’s latest Commercial Real Estate Outlook offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets. Historic data for metro areas were provided by REIS, Inc., a source of commercial real estate performance information.

Read more...Commercial Real Estate Outlook |

Apartment Cap Rates Reached Historic Lows in H2'14 via Real Capital Analytics

Multifamily Executive reports: Cap rates in the U.S. apartment sector reached historic lows in H1’14 as competition fueled the major markets, specifically in New York, Boston, Washington, Los Angeles, Northern California, and Seattle.

“There is so much capital pouring into those big six markets that even if many investors are concerned about valuations, there are plenty of investors still competing fiercely for those properties that the investors with concerns have passed on,” says Ben Thypin, Director of Market Analysis at Real Capital Analytics (RCA), a global data and analytics firm focused exclusively on commercial real estate.

Read more...Apartment Cap Rates Reached Historic Lows in H2'14 | Real Capital Analytics

Houston rents increasing at the fastest pace on record, recent data shows via Houston Chronicle

Recent data shows that apartment rents are increasing at the fastest pace on record in the Houston region, at the same time households are shifting from owning to renting.

CBRE, a Los Angeles-based real estate brokerage firm with offices in Houston, analyzed second-quarter data that rank Houston among the markets with a growing demand for multifamily developments. Others include Dallas, New York City, Los Angeles, Austin, Atlanta, Washington, D.C., Seattle, Denver, Orlando, Raleigh, N.C., Tampa, Fla., and Boston.

According to the firm, Houston’s multifamily market is seeing positive absorption, fast rent growth, plenty of new construction, and strong investor interest.

Read more...Houston rents increasing at the fastest pace on record, recent data shows - Prime Property

Improving Economy Slowly Brightens Outlook for Commercial Real Estate via

The strong rebound in economic growth during the second quarter and ongoing job creation are gradually improving the outlook for all of the major commercial real estate sectors, according to the National Association of Realtors® quarterly commercial real estate forecast.

Lawrence Yun, NAR chief economist, says after many false starts, the economy finally appears to be turning a corner to firmer ground. “The job market has been the bright spot of the economy this year as employers are feeling more confident about their growth prospects and adding to their payrolls,” he said. “This gradual turnaround from being overly cautious to more optimistic should slightly boost the demand for leasing and purchase activity as well as new construction projects in the upcoming year.”

Read more...Improving Economy Slowly Brightens Outlook for Commercial Real Estate |

Monday, August 25, 2014

Texas Manufacturing Outlook Survey 8/25/14 via Dallas Fed

Texas factory activity increased again in August, albeit at a slower pace than in recent months, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, fell from 19.1 to 6.8, indicating output growth slowed from July.

Other measures of current manufacturing activity also reflected notably slower growth in August. The new orders index fell 11 points to 2.2 after surging in July. The capacity utilization index also posted a sharp decline, moving down from 18 to 3.6. The shipments index experienced the largest fall, from 22.8 to 6.4, reaching its lowest reading in eight months.

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

Dallas-area apartment rents up by more than 4 percent in July via Dallas Morning News

Dallas-area apartment renters are seeing significant rent increases this year, the latest survey shows.

In July, average apartment rents in the Dallas-area were 4.3 percent higher than a year ago, according to a new report by Axiometrics Inc.

That’s ahead of the 3.8 percent nationwide apartment rent growth rate, the research firm said.

Read more...Dallas-area apartment rents up by more than 4 percent in July | Dallas Morning News

Wednesday, August 20, 2014

Apartment Landlord Shares Soar to New Highs, But Will Demand Keep Rising? via WSJ

Shares of the nation’s biggest apartment landlords are trading at all-time highs as the economy recovers and construction of new multifamily residential buildings surges.

But some apartment REIT executives are cautioning investors that demand, as well new development, may be leveling off.

Read more...Apartment Landlord Shares Soar to New Highs, But Will Demand Keep Rising? - Developments - WSJ

Tuesday, August 19, 2014

Multifamily housing starts soar while single-family permits remain flat via HousingWire

After plunging in June, housing starts and housing permits recovered in July, printing at 1,093,000 and 1,052,000, respectively.

This represents a 15.7% gain in starts and permits, which is the good news that will make headlines, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

The bad news is that almost all of those gains from June to July in starts and permits are in multifamily rental housing.

Read more...Multifamily housing starts soar while single-family permits remain flat | 2014-08-19 | HousingWire

Rising Construction Costs Vs Interest Rates. Which is Worse? via

Expect the talk at this year's gathering of financial luminaries in Jackson Hole, WY to be all about interest rates and not just because its theme for 2014 is "Re-evaluating Labor Market Dynamics."

Simply put, the direction of interest rates—and when will they finally start to rise—is among the most important economic issues for the year. Interest rates, of course, could be called a perennial issue of importance, but 2014 is a shade difference as a contingent of economists, businesspeople and policymakers become more worried that the Federal Reserve Bank is waiting too long to pull the trigger.

Read more...Rising Construction Costs Vs Interest Rates. Which is Worse? - Daily News Article -

APARTMENT MARKET STATISTICS: August 2014 via Multi-Housing News Online

Multifamily housing starts of buildings with five or more units rose by 42.9 percent over the month of April 2014 to a seasonally adjusted annual rate of 413,000 units, according to the National Association of Home Builders (NAHB). The three-month moving average of multifamily housing starts, now exceeds 301,000 units‑the average recorded between 2000 and 2007, according to NAHB.

Metropolitan area statistics compiled by Marcus & Millichap shows that apartment completions increased 15 percent in the top metros in the first quarter, compared to the first quarter 2013. Effective rents in top metros rose by 3.4 percent, and vacancies fell by 0.1 percent, during the first quarter compared to a year ago.

Read more...APARTMENT MARKET STATISTICS: August 2014 | Multi-Housing News Online

Monday, August 18, 2014

Houston Economic Indicators August 2014 via Dallas Fed

The Houston Business-Cycle Index advanced an annualized 1.6 percent in June after rising 6.6 percent in May. This pullback was driven by a surprisingly steep fall in the number of jobs added in June relative to May. Housing and construction-related activity remains at healthy levels, though construction employment growth has tapered off. Total trade growth in the region improved on increased imports. Overall, the outlook for Houston remains positive, though not as robust as earlier indicators may have suggested.

Read more...Houston Economic Indicators August 2014 via Dallas Fed

Texas creates 46,600 jobs in July via Dallas Business Journal

Texas continues to beat the national unemployment rate, tacking on 46,600 jobs in July, according to data from the Texas Workforce Commission.

The state’s unemployment rate held at 5.1 percent for the month, more than a percentage point lower than the nation’s at 6.2 percent. The number is a reflection of the 396,200 jobs the state has added over the past year.

“Texas employers continue to propel the Texas economy’s expansion by adding 396,200 jobs over the last year, a 3.5 percent annual growth rate,” TWC Chairman Andres Alcantar said.

Read more...Texas creates 46,600 jobs in July - Dallas Business Journal

Friday, August 15, 2014

Generation Rent via The Balance Sheet - Yardi Corporate Blog

The apartment industry has played a major part in the revitalization of the real estate sector while also significantly contributing to the American economy.

Rental market activity has grown at a moderate yet constant pace in most metros around the country, with up to seven million new renter households forming the last decade—almost half of all new households, according to data from the National Apartment Association (NAA) and the National Multi Housing Council (NMHC).

The post-recession slowdown in construction has translated into a tight housing market with low inventory levels and climbing rental rates. Corroborated with the massive influx of new renters entering the market, the multi-family sector is poised for more growth in 2014. It would take approximately 300,000 to 400,000 new apartments each year to meet current demand, yet just 158,000 apartments were delivered in 2012.

Read more...Generation Rent | The Balance Sheet - Yardi Corporate Blog

CBRE 2Q 2014: Texas multifamily big four metros via Real Estate Center at Texas A&M

Amid strong job and population growth, the apartment market remains strong across all four of Texas’ major metro areas, according to CBRE’s 2Q 2014 Texas Multifamily MarketView.

Texas remains one of the nation’s leaders in new apartment construction. Almost 9,000 new units were delivered in 2Q 2014 across the four major metros and 59,916 units remain under construction.

The combined occupancy rate for Austin, Dallas-Fort Worth, Houston and San Antonio was 91.6 percent, an increase of 20 basis points from 1Q 2014.

Read more...CBRE 2Q 2014: Texas multifamily big four metros

CRE Prices Show Broad-Based Gains via

Although sales of large, core-like assets have pushed commercial property pricing back to pre-recession levels last seen in 2007 in some markets, investors have also been going farther out on a limb with regard to risk. Those are two of the key takeaways from this month's CoStar Commercial Repeat Sale Indices, which found a 9.7% year-over-year increase in the US Composite Index. On a value-weighted basis, the US composite is up 59% over the trough.

CoStar Group notes that broad gains across all of the property sectors over the 12 months ended June 30 demonstrate “the extent of the recovery in commercial real estate prices.” Drilling down, the firm notes that pricing in the overall market has increased more rapidly than in the CCRSIs for prime markets over the past year.

Read more...CRE Prices Show Broad-Based Gains - Daily News Article -

The Right Timing on Peak Apartment Completions? via Property Management Insider

Lots of apartments you’ve been watching come out of the ground over the past year or two are about to hit the market. Properties scheduled to finish construction in the nation’s 100 largest apartment markets during the last half of 2014 total some 167,000 units, with targeted delivery timing split about evenly between the 3rd and 4th quarters.

Deliveries scheduled for the last half of 2014 top the tally from the first half of the year by roughly two-thirds. Furthermore, anticipated completions through the end of 2014 are virtually identical to the new supply total for all of calendar 2013.

Read more...The Right Timing on Peak Apartment Completions? | Property Management Insider

Wednesday, August 13, 2014

Latest Commercial Property Prices: July 2014 via NAR Research

• There is an all-time high in commercial property prices, according to Green Street Advisors. The price index in July was unchanged from the record-high set in June. It is up 6.0 percent from one year ago and up a whopping 76 percent from the cyclical low five years ago.

• For those who took the plunge to buy during the scary times in 2009, the returns on their investments have been quite spectacular. Warren Buffet’s adage – “buy when others are fearful and sell when others are greedy” – appears right-on regarding recent cycle of commercial real estate. But given the likely rising interest rate environment, the opportunities for further price gains could be limited. That is, there will be less chasing of yields and chasing after commercial real estate if alternative investments like the U.S. Treasury offer higher interest rates.

Read more...Latest Commercial Property Prices: July 2014

Investors Eye Inflation-Protected Opportunistic Deals via

Results from the Q2 2014 United Realty/Zogby Real Estate Confidence Index suggest that commercial real estate investors expect opportunistic and value-add properties will better weather a rising interest rate environment.

Namely, some 77% of respondents expect interest rates to remain flat or rise over the next twelve months, with 45% anticipating a 50 basis-point increase, and 15% anticipating increases of more than 100 basis-points in the 10-Year Treasury.

At the same time, over the next twelve months respondents believe that value-added opportunities will be most attractive (88%), closely followed by opportunistic assets (70%). Core investments were seen as the least attractive of the three property types surveyed, on a relative basis, with 63 percent of respondents considering core investments attractive.

Read more..Investors Eye Inflation-Protected Opportunistic Deals - Daily News Article -

ALN Monthly Newsletter August 2014 via ALN Apartment Data

ALN Data just released their July 2014 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 August 2014 via ALN Apartment Data

CBRE: Houston multifamily 2Q 2014 MarketView via Real Estate Center at Texas A&M

Multifamily construction activity remained strong in second quarter 2014 delivering 3,722 apartment units to the market. This was down slightly from 1Q 2014 when 4,143 units delivered.

At the end of 2Q 2014, 23,722 units remained under construction across the Houston metro area.

Average rental rates increased to $1.03 per sf during 2Q 2014 from $1.00 per sf in 1Q 2014. Rental rates in Houston are at an all time high after a couple of years of rapid growth. Rental rates increased 7.6 percent year-over-year in 2Q 2014.

Read more...CBRE: Houston multifamily 2Q 2014 MarketView

Tuesday, August 12, 2014

Demand for Apartments Proves Stronger Than Thought, Driven by Millennials via National Real Estate Investor

Good news for multifamily housing—demand for space is likely to be even stronger than experts estimated, helping the sector keep ahead of new construction for the immediate future, according to the Mid-Year Outlook 2104 from Freddie Mac Multifamily Research.

“For a majority of the markets… new supply will continue to be absorbed as it enters the market and rents will continue to rise,” the agency’s researchers note.

Read more...Demand for Apartments Proves Stronger Than Thought, Driven by Millennials | Multifamily content from National Real Estate Investor Survey Reveals Pet Ownership Among Renters Reaches All-Time High via

Findings from a recent survey reveal more than half of pet-owning renters got their pet through an animal shelter, adoption or rescue agency, which should come as good news as International Homeless Animals' Day approaches on Aug. 16, 2014. A significant majority of renters surveyed own a pet, and most of these renters also believe they share their building with fellow animal lovers. This year, 72 percent of renters surveyed said they are pet owners; a slight dip from 75 percent in 2013, but still much higher compared to just 43 percent in 2012.

More than 80 percent of pet-loving renters surveyed by believe their fellow residents either like pets or are indifferent to them living in the building. These findings closely align with the views of renters who don't own pets. Three quarters of renters without pets said they either enjoy living in a pet-friendly building or they do not have a specific preference.

Read Survey Reveals Pet Ownership Among Renters Reaches All-Time High - Multifamily News Headlines – Breaking News, Stories, Top Headlines ::

Dallas-Fort Worth leads in pay raises, too via Dallas Morning News

Feeling richer yet?

For many workers in Dallas-Fort Worth, Texas’ growth is finally paying off personally. Wages and salaries rose 4.4 percent in the past 12 months, according to a federal index of employment costs.

The increase is twice as high as the national figure and the highest among large metro areas.

It’s also the biggest gain for D-FW since at least 2006, when the government began reporting separate indexes for the metros.

Read more...Dallas-Fort Worth leads in pay raises, too | Dallas Morning News

Monday, August 11, 2014

The 10 Most Active Apartment Markets of 2014 via Multifamily Executive Magazine

In the first half of 2014, the hottest apartment sales markets were, coincidentally, among the hottest places in the county. With Los Angeles leading the pack and Orange County and San Diego round out the Top 10, Southern California was well represented in the first half of 2014, according to New York research firm Real Capital Analytics. Manhattan and the surrounding boroughs were also strong, finishing second and third, respectively.

Read more...The 10 Most Active Apartment Markets of 2014 - Multifamily Executive Magazine

Austin area apartment 2Q 2014: Marcus & Millichap via Real Estate Center at Texas A&M

Austin remains a magnet for new and expanding tech firms and for young professionals, according to Marcus and Millichap's most recent quarterly report.

In 2013, individuals between 20 and 34 years old accounted for more than a quarter of the metro’s new residents, versus a 10 percent share nationally. This year should be no different, as hiring by notable tech companies attracts renter-age professionals to the area.

Multifamily completions will surge to an estimated 14,120 apartments in 2014, resulting in a 7 percent increase in Austin’s apartment stock. In 2013, apartment deliveries totaled 5,500 units.

Read more...Austin area apartment 2Q 2014: Marcus & Millichap

Tuesday, August 5, 2014

Regional Economic Growth Builds Momentum via Dallas Fed

The regional economy picked up pace in the second quarter, with payroll employment growing at a faster rate than in the first quarter. The Texas Business Outlook Surveys (TBOS) point to an uptick in activity in June and July. The July Beige Book continued to note healthy growth and optimism in outlooks. A strong energy sector, brisk activity in commercial real estate and lower economic uncertainty all seem to be helping Texas.

Read more...Regional Economic Growth Builds Momentum - Dallas Fed

Q2 2014 GDP Details on Residential and Commercial Real Estate via Calculated Risk

The BEA has released the underlying details for the Q2 advance GDP report.

Investment in single family structures is now back to being the top category for residential investment (see first graph). Home improvement was the top category for twenty one consecutive quarters following the housing bust ... but now investment in single family structures is the top category once again.

However - even though investment in single family structures has increased significantly from the bottom - single family investment is still very low, and still below the bottom for previous recessions. I expect further increases over the next few years.

Read more...Calculated Risk: Q2 2014 GDP Details on Residential and Commercial Real Estate

Friday, August 1, 2014

U.S. Commercial, Multifamily Lending Jumps 34% Over Q1 via WORLD PROPERTY CHANNEL

According to the Mortgage Bankers Association's (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, second quarter 2014 commercial and multifamily mortgage loan originations were two percent lower than during the same period last year, but 34 percent higher than the first quarter of 2014.

"Year-to-date borrowing by commercial and multifamily real estate owners is running at the same pace as last year," said Jamie Woodwell, MBA's Vice President of Commercial Real Estate Research. "Low interest rates and improving property fundamentals are prompting borrowers to act, but the relatively low volume of loans hitting maturity is checking overall demand.

Read more...U.S. Commercial, Multifamily Lending Jumps 34% Over Q1 - WORLD PROPERTY CHANNEL Global News Center

Is Raising Rents Really The Most Profitable Option In The Short Term? via Multifamily Blogs

Years ago, when I was just entering the industry and trying to understand pricing dynamics, at first I couldn't understand why strong communities ever struggled for prospects. It seemed that a really good community would be awash in prospects because, frankly, there are plenty of really bad communities out there they are competing with. But I quickly realized that as that strong community's occupancy went up, so did its pricing, which reduced demand. The decision to raise rents seemed completely logical to me at the time - a great community should be able to charge more, and it would be foolish to leave money on the table by not charging more. But what that did was put the community in a constant marketing push. As occupancy went up, rents went up, and the pool of prospects who would/could pay that level of rent went down. So we always had to push marketing to find those prospects who would fit that new requirement.

After thinking on the issue for years, however, I am unconvinced this solution is necessarily ideal or most profitable.

Read more...Is Raising Rents Really The Most Profitable Option In The Short Term? - Multifamily Blogs

2Q Data Hint at Potential Market Peak via Multifamily Executive Magazine

During the post-recession recovery, two apartment-transaction indicators have clearly been positive: the percentage of the asking price at which properties closed has increased steadily; and the number of months to close has gradually declined. In the past year, though, these two indicators appear weaker, as the CoStar apartment data show (see chart below).

After 2010, average transaction prices rose from about 92 percent of the asking price to more than 100 percent. While this happened, the average number of months to close declined from roughly 2.6 to 2.3. These changes were consistent with the strong multifamily recovery and the increased liquidity associated with it. But, beginning in 2013, the number of months to close went back up to 2.6. Similarly, in the first two quarters of 2014, the average ratio between the transaction and asking prices dropped below 99 percent.

Read more...2Q Data Hint at Potential Market Peak - Multifamily Executive Magazine

Texas Economic Update August 2014 via Dallas Fed

Mine K. YĆ¼cel, Dallas Fed senior vice president and director of research, provides updates on the Texas economy.

Watch video...Texas Economic Update - Dallas Fed

San Antonio Apartment Market Update June 2014 via

Market Summary

Most key metrics of the San Antonio area multifamily sector recorded positive and negative changes in June 2014.

The occupancy figures recorded both positive and negative values for all the classes. For Class A properties, occupancy increased by 0.01% over the month to close at 91.91%; and decreased by 1.40% over the year. The largest increase on monthly basis was noted for Class C properties with an increase of 0.47%.

Read more...San Antonio Apartment Market Update June 2014

Apartment Market Update from MPF’s Greg Willett: Apartment Demand Kicks Up in San Antonio via Property Management Insider

Demand for apartments in San Antonio came in at a whopping 3,251 units during 2014’s second quarter. That’s the biggest quarterly demand figure seen since MPF Research began tracking the metro market more than 20 years ago. Furthermore, the result marked an abrupt upward shift in momentum, as San Antonio previously was not registering the strong leasing activity seen in the other big apartment markets across Texas. Emphasizing just how lackluster demand had been Q2’s absorption tally represents 89% of all the demand posted in the metro over the past year.

While new properties moving through the initial leasing process accounted for the majority of San Antonio’s apartment demand during Q2, meaningful absorption also occurred in the existing product base’s middle-market and bottom-tier properties.

Read more...Apartment Market Update from MPF’s Greg Willett: Apartment Demand Kicks Up in San Antonio | Property Management Insider