Tuesday, September 30, 2014

Austin Investor Interests 2Q 2014 apartment facts via Real Estate Center at Texas A&M

The second quarter continued to reflect the health and vitality of the local apartment market, according to Austin Investor Interests.

Rental rates soared, rising another 2.6 percent over the quarter to reach 6.9 percent annually, while occupancy remained steady despite seeing the largest number of completions in five years hit the market over the last six months.

Prevalent new trends include the addition of outdoor enhancements involving common social/entertainment areas, pet related features and social/music venues poolside or in the lounging community center.

Read more...Austin Investor Interests 2Q 2014 apartment facts

New Apartment Supply Levels Surge to a 14-Year High in Q3 via Property Management Insider

New supply is now hitting the U.S. apartment market at the largest levels in 14 years. Is demand for apartments keeping pace? And was the apartment sector able to sustain the rent growth momentum from the first half of 2014? Greg Willett and Jay Parsons discuss in this video edition of Apartment Market Dynamics from MPF Research.

Watch Video...New Apartment Supply Levels Surge to a 14-Year High in Q3 | Property Management Insider

Q3 Numbers Display Strength of MF via GlobeSt.com

US multifamily continues to gain strength—more than expected, in fact. In a report provided exclusively to GlobeSt.com, Dallas-based Axiometrics says annualized rent growth nationally reached 4.0% in the third quarter for the first time in nearly two years, while quarterly effective rent growth increased significantly over Q3 2013.

Occupancy also notched north of 95%, breaking the record of 95.0% set last quarter, which had been the highest since Q1 2001. Q3’s quarterly growth in effective net rents increased to 1.6% from 1.2% the year prior, continuing a pattern of year-over-year improvements established at the start of 2014.

Read more...Q3 Numbers Display Strength of MF - Daily News Article - GlobeSt.com

Monday, September 29, 2014

Monthly Review of Texas Economy, September 2014 via Real Estate Center at Texas A&M

The Texas economy gained 381,600 nonagricultural jobs from August 2013 to August 2014, an annual growth rate of 3.4 percent compared with 1.8 percent for the United States (Table 1 and Figure 1). The state’s nongovernment sector added 347,200 jobs, an annual growth rate of 3.7 percent compared with 2.1 percent for the nation’s private sector (Table 1).

Texas’ seasonally adjusted unemployment rate fell to 5.3 percent in August 2014 from 6.4 percent in August 2013. The nation’s rate decreased from 7.2 to 6.1 percent (Table 1).

Read more...Monthly Review of Texas Economy, September 2014 -- Real Estate Center at Texas A&M

Texas Manufacturing Outlook Survey - September 29, 2014 via Dallas Fed

Texas factory activity increased again in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose markedly from 6.8 to 17.6, indicating output grew at a faster pace than in August.

Other measures of current manufacturing activity also reflected significantly stronger growth in September. The new orders index climbed 5 points to 7.5. The capacity utilization index surged to 20.2 after dipping to 3.6 in August, with nearly a third of manufacturers noting an increase. The shipments index rebounded to 15.9 after falling to 6.4 last month.

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

Texas Jobs Up, Unemployment Down via Real Estate Center at Texas A&M

The Texas economy gained 381,600 nonagricultural jobs from August 2013 to August 2014, an annual growth rate of 3.4 percent compared with 1.8 percent for the United States.

According to the Real Estate Center’s latest Monthly Review of the Texas Economy, the state’s nongovernment sector added 347,200 jobs last month, an annual growth rate of 3.7 percent compared with 2.1 percent for the nation’s private sector.

Texas’ seasonally adjusted unemployment rate fell to 5.3 percent from 6.4 percent a year ago. The nation’s rate decreased from 7.2 to 6.1 percent.

Read more...Texas Jobs Up, Unemployment Down via Real Estate Center at Texas A&M

Thursday, September 25, 2014

Renting “Preferred” Theory a Fallacy via Multifamily Executive Magazine

“America’s housing market is becoming more European.”

The above sentence, or some derivation of it, has been uttered numerous times over the past few years. Those who make this assertion typically mean that America is moving from a housing market dominated by homeownership to one where renting is not only less stigmatized but often preferred. To support this theory, they cite the declining homeownership rates and the near-record–high apartment occupancy rates.

As the shocks from the housing-led recession continue to reverberate, it seems logical this contention must be true. However, the statement is false, not only because there is no single European housing market (the homeownership rate in Europe varies by country significantly), but also because there’s no serious retreat from homeownership in favor of renting in the United States.

Read more...Renting “Preferred” Theory a Fallacy - Multifamily Executive Magazine

San Antonio Economic Update September 2014 via Dallas Fed

Economic activity in San Antonio gained strength in August. Job growth increased at a rapid annual rate of 8.6 percent, the fastest single month of growth in nearly a decade. While the unemployment rate ticked up to 5 percent from 4.9 percent in July, other indicators such as help-wanted advertising continue to point toward increasing labor demand in San Antonio. Housing strengthened despite a drop in housing starts, and construction employment and new residential permits continued to rise rapidly.

Read more...San Antonio Economic Update September 2014 via Dallas Fed

Top 10 most expensive Houston neighborhoods to rent an apartment, according to Zumper via Houston Business Journal

Houston apartment rents can vary widely, depending on the neighborhood.

While the median rent for a one-bedroom apartment in Houston is $1,071, rents can more than double in some neighborhoods, according to a new report.

Zumper, a San Francisco-based apartment rental website, analyzed August rent prices in 25 major cities across the country. Houston was ranked the 15th most expensive city nationally to rent a one-bedroom apartment, according to Zumper’s inaugural monthly rent report.

Read more...Top 10 most expensive Houston neighborhoods to rent an apartment, according to Zumper - Houston Business Journal

DFW Economic Indicators September 2014 via Dallas Fed

The Dallas–Fort Worth economy grew at a slower pace in August, following stronger growth in previous months. So far this year, DFW employment has grown an annualized 3.5 percent, matching the state’s 3.5 percent pace. Job creation remains broad-based across sectors. Activity in the housing sector is healthy, and home prices are rising at a more moderate pace than earlier in the year. The unemployment rates for Dallas and Fort Worth ticked up in August but remain below that of the U.S. The Dallas Fed business-cycle indexes point to continued expansion for the metroplex.

Read more...DFW Economic Indicators September 2014 via Dallas Fed

Multifamily Texas Update: Apartment Executives Focus on the Next Wave in Texas via Property Management Insider

With a strong cycle behind, apartment executives focus on the next wave in Texas.

The Texas apartment industry’s recent turn signaled optimism that high demand will continue for the next few years.

Industry leaders offered updates on leasing, management, and operations at September’s 3rd Annual Interface Multifamily Texas Conference in Dallas. Discussions centered on new supply delivery, healthy rents and fast lease-ups that many are experiencing, and what the next wave of apartments will bring.

Read more...Multifamily Texas Update: Apartment Executives Focus on the Next Wave in Texas | Property Management Insider

Wednesday, September 24, 2014

Milllenials Maintain Multifamily Momentum, Spur Sustained Investment via CoStar Group

The multifamily sector, especially rental apartment buildings, continues to be a hot sector for commercial real estate investors as it demonstrates sustained underlying strength.

Even as construction of new apartment buildings hit the highest monthly construction pace since the beginning of 2006, the latest absorption rates for unsubsidized, unfurnished, newly built apartments have kept pace. The Census Bureau reported that the latest 3-month and 6-month absorption rates for apartments had risen to 64% and 83%, respectively.

Driving this strong demand is an increase in the number of tenant households, which have pushed apartment vacancy rates down to the lowest level since 2000, and on average, inflation-adjusted rents in the U.S. have returned to their prior peak levels of 14 years ago, according to Freddie Mac’s latest U.S. Economic and Housing Market Outlook issued this past week.

Read more...Milllenials Maintain Multifamily Momentum, Spur Sustained Investment - CoStar Group

Tuesday, September 23, 2014

Measuring the Supply/Demand Relationship by Metro (Part 4 of 4) via Property Management Insider

The recent surge in apartment construction nationwide has given rise to concerns of building too much new product too quickly. In essence, the concerns are centered around how quickly the new product in each market can be absorbed. This recent four-part series aimed to explore that question by examining the supply and demand relationship in various ways and across specific metro areas. In the first part, construction volumes in certain metros were compared to recent demand trends in those metros. The second part explored the extent to which demand drives supply. And the third part examined which metros might be susceptible to supply overhang. The fourth and final piece in our supply series builds upon that the proportionate view of supply and demand.

Read more...Measuring the Supply/Demand Relationship by Metro (Part 4 of 4) | Property Management Insider

Monday, September 22, 2014

What Metros are Vulnerable to a Short-Term Supply Overhang? (Part 3 of 4) via Property Management Insider

The consensus is that the current multifamily supply is manageable at the national level due to primarily two reasons. First, pent-up demand (due to a lack of available product at the same time we have strong demographic drivers) is evident in the marketplace. Second, following very light completions totals from 2010 through 2012, the current supply pipeline is still catching up, even though total starts exceed the long-term average. While the overall state of the market is evident, let’s explore which metros could be vulnerable to a near-term supply overhang.

For this article, we viewed supply and demand using a common size approach in select markets. By this measure, we looked at the number of units under construction today as a percentage of existing units for a given market.

Read more...What Metros are Vulnerable to a Short-Term Supply Overhang? (Part 3 of 4) | Property Management Insider

Fort Worth had top apartment market in August via Sandy Baker

Fort Worth had the top apartment market in the state in August, which marked the city’s best showing in three years, according to a report by Axiometrics, a provider of apartment market research and analysis.

Rents grew 5.6 percent last month in the Fort Worth-Arlington area, compared to 3.7 percent in August of 2013, the report said.

“In the past two months, Fort Worth’s effective rent growth surpassed that of Austin, and then Houston, to take the lead among Texas markets,” said Stephanie McCleskey, Axiometrics vice president of research, in a statement. “Tarrant County landlords will be happy to know their apartment market has been stronger than Dallas’ since March.”

Read more...Fort Worth had top apartment market in August | Sandy Baker | News from Fort Worth, Dall...

Regional Growth: Full Steam Ahead via Dallas Fed

The regional economy is surging, with the Texas Business Outlook Survey (TBOS) production and revenue indexes at multiyear highs and annualized job growth of 3.6 percent year to date. Second-quarter job growth was 4.6 percent annualized, and July job growth was just as fast. Energy production continues to increase, and the rig count has risen since early August in spite of a decline in oil prices. Texas exports rebounded in July.

Housing markets have cooled off just enough to slow the frenetic pace of house price appreciation the past three years; however, prices are still rising, construction is increasing and sales volume is rebounding.

Read more...Regional Growth: Full Steam Ahead - Dallas Fed

DFW had sixth highest GDP in the nation in 2013 via Dallas Business Journal

In 2013, Dallas-Fort Worth-Arlington had the sixth largest gross domestic product among the nation’s largest metropolitan statistical areas.

For the year, the region brought in nearly $448 billion in GDP, according to information released Tuesday by the U.S. Department of Commerce’s Bureau of Economic Analysis. Those figures reflect an increase of more than $15 billion over 2012 and $70 billion more than 2008.

Only one other Texas MSA beat DFW. Houston-The Woodlands-Sugar Land ranked fourth with more than $517 billion.

Read more...DFW had sixth highest GDP in the nation in 2013 - Dallas Business Journal

High Uptown property prices pushing Dallas development to new urban neighborhoods via Dallas Morning News

Is there life after Uptown for real estate developers?

For the last decade, the district north of downtown has been the hottest development market in Dallas.

But with prime land prices soaring past $200 per square foot and fewer empty lots to build on, commercial property companies are looking at nearby neighborhoods.

West Dallas, the Design District, the Farmers Market, South Side and near East Dallas are now at the top of apartment builders’ shopping lists.

Read more...High Uptown property prices pushing Dallas development to new urban neighborhoods | Dallas Morning News

Thursday, September 18, 2014

What Comes First: Supply or Demand? (Part 2 of 4) via Property Management Insider

To what degree does demand drive supply, and is there a point of equilibrium?

Several years into the recovery from the Great Recession, apartment development activity has picked up across the country. In the core 100 U.S. metros, about 195,000 apartment units were completed in the year-ending Q2 2014. That’s about two and a half times the number of completions seen just two years ago, when rent growth was peaking. Since then, there have been widespread declines in rent growth levels, especially in the Midwest and Northeast regions, where weak employment growth adversely affected apartment demand. On the flip side, some of the nation’s hottest construction markets (particularly in the West and the South) are still posting big rent growth due to strong demand for lease-ups. Because of that, the U.S. apartment market overall has generally seen demand increase with supply for more than a year.

Read more...What Comes First: Supply or Demand? (Part 2 of 4) | Property Management Insider

Exploring Supply and Demand via Property Management Insider

After years of healthy demand for new apartment units, development activity has ramped up. Nationally, roughly 355,000 new units were under way at the end of 2014’s 2nd quarter. But what does this figure tell us, besides that there’s been a lot of brick and mortar flying around?

Rather than focus on traditional metrics such as inventory expansion as a percentage of existing stock, MPF Research will explore construction levels in terms of future supply relative to recent demand trends. In this article, the first in our four-part series, we looked at the number of units under construction in a given market at the end of 2nd quarter 2014 relative to the average annual absorption during the previous three years. It should be noted, however, that this point-in-time analysis alone is not intended as a predictor of the amount of time it will take a market to absorb all of the units under construction.

Read more...Exploring Supply and Demand | Property Management Insider

Tuesday, September 16, 2014

Market Trends August 2014: Fantastic 4% via Multifamily Blogs

It's the grade-point average parents wish for their children. It's an earned-run average Major League pitchers strive to be under. And in the current apartment cycle, 4% represents an effective rent growth rate not seen in more than two years.

Until August.
Annualized effective rent growth for the United States apartment market was 4.1% in August 2014, the first time the rate surpassed the 4% barrier since May 2012. While not at the heady 5% levels of mid-2011, the national apartment market is four years into the sector's recovery from the Great Recession, and there hasn't been any notable deceleration in rent growth.

Read more...Market Trends August 2014: Fantastic 4% - Multifamily Blogs

'Year of the Apartment' Gets Hotter via GlobeSt.com

Having already declared 2014 to be the “Year of the Apartment,” locally based Axiometrics now says the sector has gone one better, by posting annualized effective rent growth not seen in more than two years. It’s against this backdrop of continued strength, as well as challenges, that the multifamily industry will convene next month in Los Angeles for the annual RealShare Apartments conference, scheduled for Oct. 15 and 16.

Rent growth nationwide was 4.1% in August, the first time the annualized rate broke the 4% barrier since May 2012, Axiometrics says. Although renrt growth is not at what the research firm calls “the heady 5% levels of mid-2011,” the national apartment market is now “four years into the sector's recovery from the Great Recession, and there hasn't been any notable deceleration in rent growth.”

Read more...'Year of the Apartment' Gets Hotter - Daily News Article - GlobeSt.com

Houston 'boom is not over': 112,000 jobs created via Real Estate Center at Texas A&M

Houston leads the nation in job growth with 112,200 new jobs created for the 12 months ending in July, according to the Texas Workforce Commission.

"I am no economist. But take my word for it: The Boom Is Not Over," says Ralph Bivins, editor of Realty News Report.

That represented a 4 percent gain for Houston’s job market to top the nation’s major metropolitan areas, followed by Dallas-Fort Worth at 3.9 percent and Miami at 3.3 percent.

Read more...Houston 'boom is not over': 112,000 jobs created via Real Estate Center at Texas A&M

Rise and Fall: How Interest Rates Impact Real Estate Values via Property Management Insider

It’s no secret real estate property values have benefitted from capitalization rate (cap rate) compression, due at least in part to declining interest rates. But investors worry that historically low interest rates could soon be a rearview mirror reality, leading to cap rate expansion. While forecasting future interest rate movement is tough, it is crystal clear that real estate returns moving forward will be much more reliant on improving fundamentals rather than further cap rate compression.

For multifamily, an early recovery sector, some folks worry that in addition to potentially unfavorable cap rate movement there could be another whammy around the corner — namely, slower NOI growth resulting from any future slowdown in rent growth. However, even with new completions rising, the national occupancy rate remained strong at 95.6% as of Q2 2014. So the overall U.S. market remains full, and pricing power remains with operators. In fact, since dipping to below 3% in 2013, annual rent growth among the MPF Research top 100 U.S. metros has actually reaccelerated (see Exhibit 1). While this may sound good on the surface, let’s dive into the question of “what if”.

Read more...Rise and Fall: How Interest Rates Impact Real Estate Values | Property Management Insider

ALN Monthly Newsletter September 2014 via ALN Apartment Data

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

In DFW, demand and rent are rising together via Real Estate Center at Texas A&M

Apartments are now prime investment opportunities.

Part of the reason for the demand is the number of jobs being added to North Texas.

DFW is one of the fastest-growing regions in the United States, with 120,800 jobs added from July 2013 to this July, according to the U.S. Bureau of Labor Statistics.

Read more...In DFW, demand and rent are rising together via Real Estate Center at Texas A&M

Tuesday, September 9, 2014

No, There Aren’t Really Any Rent Concessions in the Apartment Market Right Now via Property Management Insider

It’s September, and that means the apartment sector’s big-time clustering of industry events that occur seasonally in the fall has now begun. Some of MPF Research’s analysts participated in the InterFace Multifamily Texas conference last week and were struck by a fairly odd discussion that suggested rent concessions are beginning to creep into the picture for top-tier apartments. Here’s our take on the topic:

MPF Research’s info shows that use of concessions in the market overall continues to dwindle. Across the 7+ million units that are tracked on a routine basis, the share of product featuring any rent discounts came in at just 8.9% as of Q2. That’s down from figures that had been running at 10% to 12% over the previous year or so.

Read more...No, There Aren’t Really Any Rent Concessions in the Apartment Market Right Now | Property Management Insider

Quantitative Uneasing via the Blog of the Real Estate Center

For the past six years, many people have asked me why we don’t have runaway inflation in this country. They tell me how the Fed has printed trillions of dollars and that it is only a matter of time before we see the dollar collapse and prices spiral. Here is my opinion on why this hasn’t happened.

When the U.S. economy gets sluggish, the Federal Reserve lowers interest rates. When the U.S. economy is nearly dead, they lower interest rates and then leave them low for many years. Part of the plan the Fed has used to stimulate economic growth has been labelled “quantitative easing” (QE).

Read more...Quantitative Uneasing | the Blog of the Real Estate Center

Dallas-area third in nation for new apartment permits via Dallas Morning News

The Dallas area is hanging onto its position as one of the country’s top apartment building markets.

Dallas ranked third in the nation behind New York City and Houston in a July comparison of the top multifamily housing construction cities, according to a new report by Axiometrics.

The Dallas-based apartment market research firm compared building permits for apartments and condominiums for the 12-month period ending in July.

Read more...Dallas-area third in nation for new apartment permits | Dallas Morning News

Friday, September 5, 2014

The Banks are Back: How Should Multifamily Lending Strategies evolve as the Industry Gets More Crowded? 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 last six years. Multifamily as a share of overall lending is now at a 20-year high. In Part 2, we outlined how most of the megabanks have sat on the sidelines of this wave. Instead, it’s the second-tier banks (by asset size) driving the trend. In Part 3, we examined evidence showing that the apartment industry isn’t exhibiting any clear signs of reaching “bubble” status.

Read more...The Banks are Back: How Should Multifamily Lending Strategies evolve as the Industry Gets More Crowded? | Property Management Insider

Decomposing Apartment Returns and Strategic Implications via Property Management Insider

For real estate investors, it doesn’t get any better than owning assets in an environment where cap rates are compressing. You know what I’m talking about. We all aspire to experience the euphoria that comes with a quick strike. These feelings soon become the main topic at cocktail parties as conversation shifts from breaking the ice to that of killer IRR returns. While pricing effects from cap rate movement can have a major impact on total returns, it is not the historical norm. In fact, historically speaking, 70% of positive returns have been driven by income while a mere 30% came from appreciation, according to NCREIF data. The tables turned only in the past decade.

Read more...Decomposing Apartment Returns and Strategic Implications | Property Management Insider

Transactions in Tertiary Markets Jump in July via Multifamily Executive Magazine

The apartment sales market remained hot in July, totaling $7.8 billion in volume, which was a 14 percent year-over-year increase according to New York-based research firm Real Capital Analytics (RCA).

While there were volume gains in garden and mid/high-rise transactions, as well as portfolio and individual transactions, the real story was in tertiary markets. In those areas, sales activity jumped 31 percent year-over-year. These gains could be taken as a sign that investors have cooled on pricey primary metros and are looking further out for yield.

Read more...Transactions in Tertiary Markets Jump in July - Multifamily Executive Magazine

Dallas Beige Book 9/3/2014 via Dallas Fed

he Eleventh District economy grew at a moderate pace over the past six weeks. Reports on manufacturing activity were largely positive, without the scattered reports of weaker demand noted in the last report. Retail and automobile sales strengthened, and demand for nonfinancial services was stable or improved. Both home sales and commercial real estate leasing activity remained solid. Demand for oilfield services remained robust, and agricultural conditions improved. Prices increased modestly or held steady, as did employment levels. Outlooks remained optimistic.

Read more...Dallas Beige Book - Dallas Fed

Ripples from Apartment Supply Wave Beginning to Impact Market Fundamentals via CoStar Group

New apartment completions and construction starts continue to trend upward, and the new supply of units is beginning to show up in rising vacancy rates in a number of high-growth U.S. markets.

Multifamily construction increased 8% in July, continuing a yearlong upward trend, with several large new projects starting last month, including a $350 million multifamily tower in Queens, NY; a $260 million condominium tower in Honolulu and the $160 million residential portion of the $300 million mixed-use building in Los Angeles.

According to U.S. Census Bureau numbers released this week, multifamily spending in the residential sector increased a slender 0.2% between June and July, rising from $43.2 billion to $43.3 billion. But the most significant story is the year-over-year comparison: spending improved 41% from July 2013.

Read more...Ripples from Apartment Supply Wave Beginning to Impact Market Fundamentals - CoStar Group