Houston Economic Indicators January 2017 via Dallas Fed

Improved conditions in the energy industry continue to affirm an increasingly positive outlook for Houston, although a broad-based recovery remains elusive. Total employment in the metropolitan area is growing moderately. Oil prices and the rig count are recovering, but energy jobs have yet to follow.

2016 Marked a Decline in Investment Sales Volumes via National Real Estate Investor

Investment sales volume in the commercial real estate sector for 2016 fell about 11 percent year-over-year, but sources say the decline in transactions was skewed by a “gangbuster” 2015 marked by significant platform and portfolio sales.

Figures from real estate research firm Real Capital Analytics (RCA) show approximately $488.6 billion in 2016 transactions, with $366 billion of that figure flowing from single asset sales. Seeing a decline in portfolio and corporate-level activity, RCA Senior Vice President Jim Costello notes that “in 2016, people pulled back from making the biggest bets.”

Read more...2016 Marked a Decline in Investment Sales Volumes

Apartment Renters Are Getting Older via GlobeSt.com

One-third of Millennials aren’t even looking for apartments yet, which bodes well for the future of the industry, Steadfast Cos.’ president Ella Shaw Neyland told attendees during the packed CEO panel portion of the general session at NMHC’s Annual Meeting here yesterday. While still admitting a degree of uncertainty with the Trump administration, overall the panelists had strong predictions for the future of this sector.

Bob Faith, founder, chairman and CEO of Greystar Real Estate Partners LLC, said he has “given up trying to predict” what will happen with the Trump administration. “All we know at this point is that we don’t know.” Still, he added, he does take some “comfort that he is a real estate guy.”

Read more...Apartment Renters Are Getting Older | GlobeSt.com

NMHC Special Report: 2017 Market Outlook via Multi-Housing News Online

The National Multifamily Housing Council hosted the 2017 Apartment Strategies Outlook Conference on January 24, 2017, covering topics ranging from value-add properties and maximizing returns to driving investor sentiment and dealing with issues in development. Throughout the conference, industry experts shared their data and strategic planning for what to expect this year in the multifamily industry as well as what changes might arise within the coming months. Market research was a large topic of discussion among the various panels, including talks of supply and demand, rent growth opportunities and the impact of these topics on the multifamily industry.

Read more...NMHC Special Report: 2017 Market Outlook

Takeaways on Tax Reform from NMHC Annual Meeting via National Real Estate Investor

The 2017 National Multifamily Housing Council Annual Meeting opened on Tuesday, January 24, in San Diego. Among the first sessions was a joint finance and tax committee discussion of the impact of the Better Way tax reform “blueprint” proposed by Republican House Speaker Paul Ryan. Representatives from the multifamily industry met with members of the House recently to learn about tax code changes proposed and to inform lawmakers about elements of the current tax code important to the industry.

While this blueprint is not yet set in stone, proposed changes in tax code would have both positive and negative effects on the multifamily sector. Here are some takeaways based on what is known so far:

Read more...Takeaways on Tax Reform from NMHC Annual Meeting

DFW Economic Indicators January 2017 via Dallas Fed

The Dallas–Fort Worth economy expanded in December. While job growth was lackluster and unemployment rose during the month, DFW employment grew a vigorous 2.7 percent in 2016—more than a percentage point faster than the state at 1.6 percent and the nation at 1.5 percent. Dallas and Fort Worth business-cycle indexes decelerated in December, though growth remained positive. The DFW office and industrial markets ended the year on a strong note.

Multifamily Execs See Market Retreating via GlobeSt.com

For the consecutive second quarter, apartment conditions as measured by the National Multifamily Housing Council’s quarterly survey showed signs of ebbing. All four indexes in the survey remained below the break-even level of 50, and two of those indexes retreated considerably from the previous quarter.

“Weaker conditions are evident across all sectors as the apartment industry adjusts to changing conditions,” says Mark Obrinsky, SVP and chief economist with NMHC. “Rising supply—particularly during a seasonally weak quarter—is causing rent growth to moderate in many markets.”

Read more...Multifamily Execs See Market Retreating | GlobeSt.com

Peak Millennial? Cities Can’t Assume a Continued Boost From the Young via The New York Times

Over the past decade, many American cities have been transformed by young professionals of the millennial generation, with downtowns turning into bustling neighborhoods full of new apartments and pricey coffee bars.

But soon, cities may start running out of millennials.

A number of demographers, along with economists and real estate consultants, are starting to contemplate what urban cores will look like now that the generation — America’s largest — is cresting.

Read more...Peak Millennial? Cities Can’t Assume a Continued Boost From the Young - The New York Times

Yardi Matrix Winter Outlook: Moderation on the Horizon? via Multi-Housing News Online

Experts have been maintaining an “all good things come to an end” mentality when it comes to the extraordinary growth experienced by the real estate industry in the past several years. While it’s clear that rent growth is due for a slowdown, the analysts at Yardi Matrix predict that the “good times” the industry has been experiencing aren’t due to end just yet. In its Winter 2017 Market Analysis, Yardi Matrix reports that while transaction yields have bottomed and oversupply is a genuine concern for many metros, fundamentals are expected to continue to be positive. “Demand for units will remain strong,” the report states, “even if the growing amount of supply pushes occupancy rates down slightly.”

Read more...Yardi Matrix Winter Outlook: Moderation on the Horizon?

NMHC: Apartment Market Tightness Index remained negative in January Survey via Calculated Risk

From the National Multifamily Housing Council (NMHC): Apartment Markets Soften in the January NMHC Quarterly Survey
— Apartment markets continued to retreat in the January National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions. All four indexes of Market Tightness (25), Sales Volume (25), Equity Financing (33) and Debt Financing (14) remained below the breakeven level of 50 for the second quarter in a row.

Read more...Calculated Risk: NMHC: Apartment Market Tightness Index remained negative in January Survey

Texas Employment Forecast via Dallasfed.org

Incorporating December employment growth of -0.1 percent and an increase in the December leading index into the Texas Employment Forecast suggests jobs will pick up from 1.6 percent in 2016 to 1.9 percent this year (December/December). Based on the forecast, 233,000 jobs will be added in the state this year and employment in December 2017 will be 12.3 million (Chart 1).

Read more...Texas Employment Forecast - Dallasfed.org

What the Jump in 10-Year Rates Did to Pricing via GlobeSt.com

Has the dramatic post-election upward movement of interest rates on the 10-year Treasury affected commercial real estate pricing? It has, but “modestly,” although greater impact may yet occur, CBRE Group said Friday.

In a study, CBRE examined 189 transactions valued at a total of more than $10 billion that have either closed since this past November or are in negotiation. The study focused most closely on the 116 deals that either have closed or have a non-refundable deposit and are proceeding to closing.

Read more...What the Jump in 10-Year Rates Did to Pricing | GlobeSt.com

Demographics, Destiny & Multifamily: The 2017 Outlook via Commercial Property Executive

To borrow a quote that popped up frequently during the latest election cycle, “Demographics are destiny.” As we approach the ten-year mark of the post-recession recovery, concerns over population growth and its impact on real estate markets continue to cast a shadow over the economy. The U.S. population exceeded 324 million in 2016, a 9.1 percent increase over the past decade. The curve has trended steadily upward, even through the Great Recession.

Even as the population has grown, the number of households has declined, especially in the wake of the recession.

Read more...Demographics, Destiny & Multifamily: The 2017 Outlook

ALN Monthly Newsletter January 2017 via ALN Apartment Data

ALN Data just released their December 2016 stats on occupancy and rents for over 80 markets. In Texas, it includes DFW, Austin, Houston, San Antonio, Lubbock, Amarillo, Abilene, Corpus Christi and more. It is a must read from a great provider of apartment data.

Read more...ALN Monthly Newsletter January 2017 via ALN Apartment Data

Dallas Beige Book 1/17/2017 via Dallas Fed

Economic activity in the Eleventh District expanded moderately over the past six weeks. Manufacturing activity increased, and demand for nonfinancial services strengthened. Retail and automobile sales rose, although there were some reports of weakness. Housing demand grew and commercial leasing activity expanded in most markets. Loan demand was stable, and the energy sector saw further improvement. Agricultural producers faced mixed conditions, as record grain yields pressured prices, despite firm demand. Prices, employment and wages increased. Outlooks generally improved.

Read more...Eleventh District Beige Book - Dallasfed.org

New from MPF Research: Construction Slowdowns via Property Management Insider

We’d like to catch you up on some of the most interesting updates that have been released by MPF Research since our last update! While MPF carries out extensive research on specific metros as well, the following are summaries of some recent findings with national implications:

Frenzied apartment construction slows timetables
MPF Research reports that over 750,000 new units have been added to the U.S. apartment stock over the past three years. This represents the highest number ever recorded since MPF began tracking the data, and the number probably will not peak until the latter part of 2017.

Read more...New from MPF Research: Construction Slowdowns

Multifamily’s Good Times Keep Rolling via GlobeSt.com

Even as rent growth continues to slow, multifamily market fundamentals in most metro areas will remains positive, Yardi Matrix said Monday. The firm’s new report, Can the Good Times Keep Rolling?, provides a mainly affirmative answer to that question, albeit with some caveats. Aside from the tapering rent growth, “transaction yields have likely bottomed and oversupply is going to negatively impact some locales,” in particular when it comes to occupancy rates, according to the Yardi Matrix report.

Read more...Multifamily’s Good Times Keep Rolling | GlobeSt.com

Multifamily Gets Tighter, But Still More Reliable via GlobeSt.com

For the past several years, Capital One has surveyed multifamily industry participants at the RealShare Apartments conference to assess market sentiment for the coming year. The results, shared exclusively with GlobeSt.com show that multifamily is getting tighter but is still a more reliable choice than other asset classes. Brian Sykes, Boston-based SVP of Capital One Multifamily Finance, reviews the implications of the findings and adds his own perspective on the subject in the commentary below.

Read more...Multifamily Gets Tighter, But Still More Reliable | GlobeSt.com

2017 Outlook: A New Era via Commercial Property Executive

If 2016 taught us anything, it’s that nothing is certain. The past year came with its share of surprises—the results of the Brexit vote and the U.S. presidential election, to name just a couple—creating global economic uncertainty across industries. The real estate sector was no exception. Many investors took a more cautious approach, with real estate transaction volume down in each of the first three quarters of 2016, according to Real Capital Analytics Inc., following a record year of deals in 2015. Despite the jitters, the U.S. economy and real estate market continued to grow and strengthen, as they have since coming out of the Great Recession, and that will likely be the case again in 2017. But with the U.S. entering its eighth year of this recovery, how much longer can the good times roll?

Read more...2017 Outlook: A New Era

Austin Economic Indicators January 2017 via Dallas Fed

The Austin economy expanded at a moderate pace in November. The Austin Business-Cycle Index continued to decelerate, though growth remains positive. Jobs grew at their fastest pace since July, while the unemployment rate fell below its prerecession levels. Following a sharp recovery and expansion from 2010 to 2015, growth moderated last year due primarily to persistent labor market tightness and softness in some large sectors such as health care and hospitality.

Reis: Rent Growth, New Completions Slow, but Demand Should Stay Strong via Multifamily Executive Magazine

According to data presented in Reis' Apartment Sector Preliminary Trends report, 13 metros recorded a decline in rent growth during the fourth quarter of 2016. Boston led the drop, with rents falling by 1.7%, while Washington, D.C.; San Jose, Calif.; and Austin, Texas, experienced rent declines of 0.9% each, followed by other tech markets, including Oakland, Calif., and San Francisco. Palm Beach, Fla., saw the highest rent growth in the last quarter, at 1.9%, followed by Salt Lake City and Sacramento, Calif., each at 1.6%.

Nationwide, rent growth slowed to 0.3% in the fourth quarter, the lowest quarterly result recorded by the New York City–based market research firm since 2009. (Reis economist Barbara Denham notes that 4Q growth rates are usually the lowest of the year.)

Read more...Reis: Rent Growth, New Completions Slow, but Demand Should Stay Strong | Multifamily Executive Magazine

What's ahead: Fewer apartment starts forecast for 2017 via Dallas News

Almost 50,000 apartments are being built in North Texas.

And nationwide, developers got permits to start an estimated 383,000 multifamily housing units in 2016.

Still, after a half-dozen years of rising construction, the apartment building binge shows signs of flattening in 2017, top housing economists say.

Read more...What's ahead: Fewer apartment starts forecast for 2017 | Real Estate | Dallas News

7 Trends Driving Commercial Real Estate in 2017 via Multifamily Executive Magazine

Overall, 2016 was another strong year for U.S. commercial real estate markets despite some forecasts claiming the bubble would burst, and we have reason for continued optimism in 2017. Still, with the impact of the recent elections on commercial real estate markets, the industry is anticipating possible changes in regulations and tax structures that could lead to some new uncertainty and volatility this year while opening new growth opportunities.

1. Renewed Confidence to Drive CRE Strategy

Read more...7 Trends Driving Commercial Real Estate in 2017 | Multifamily Executive Magazine

The End of the Low Interest Rate Environment? via National Real Estate Investor

Fed officials raised the target for short-term interest rates by 0.25 percentage points on December 14. The Fed’s most recent forecast projects U.S. economic growth in 2017 to be 2.1 percent, slightly better than the Fed's previous projection in September.

Trump’s expansionistic policy rhetoric—pledging significant spending on new infrastructure, higher exports, higher import tariffs, lower taxes and reduced regulation—could spur inflation and lead to higher interest rates. Many have predicted the end of the 35-year bond bull run and the end of record-low interest rates.

Read more...The End of the Low Interest Rate Environment?:

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Apartment Building Owners Face Higher Rates on Loans via National Real Estate Investor

It has suddenly gotten a lot more difficult to borrow money for an apartment property.

“The overall cost of borrowing has gone up undoubtedly,” says Peter Smyslowski, managing director in the San Francisco office of capital services provider HFF. “But the interest rates spreads offered by lenders are very similar to the spreads they offered last year.”

Long-term interest rates rose by well over 50 basis points in the last months of 2016, as the yield on the benchmark U.S. Treasury bonds took off after the victory of Donald Trump in the presidential election. That will make it tougher for borrowers to make deals work. Meanwhile, lenders have not shifted the terms they offer or bent their underwriting requirements to help close deals.

Read more...Apartment Building Owners Face Higher Rates on Loans

While Experts Expect Apartment Market to Moderate in 2017 via CoStar Group

Last year, most prognosticators for the multifamily sector predicted a record number of new units would cause rents to moderate and vacancies to increase. Sales of multifamily properties would dip below the record high levels of 2015, and price growth would slow down.

But that’s not what happened. Sales volume for 2016 is on pace for another record year and per unit sale prices were once again rocketing up in the fourth quarter after holding fairly steady most of the year.

So one can understand if market experts are a bit hesitant to hazard a prediction this year.

Read more...MULTIFAMILY OUTLOOK: While Experts Expect Apartment Market to Moderate in 2017… - CoStar Group

Matrix Monthly: Summing up 2016 via Multi-Housing News Online

As the year came to a close, rent growth in December mimicked the chilly winter weather. According to Yardi Matrix’s monthly rent survey of 124 markets, last month’s growth continued to cool as average U.S. rents decreased by $4. On a year-over-year basis, rents increased by 4 percent, resulting in a 30-basis-point drop from November, and a 270-basis-point decline from the recent spike of 6.7 percent, recorded in October.

Read more...Matrix Monthly: Summing up 2016

Dallas is one of rare U.S. areas where it's cheaper for residents to rent than buy via Dallas News

Even with the recent run-up in apartment rents, Dallas-area residents will find it's more affordable to rent than buy a home, a new nationwide report says.

Dallas runs counter to the national trend in a just-released study by Attom Data Solutions.

Researchers found that buying is cheaper than renting in 66 percent of the 540 U.S. counties they studied.

Read more...Dallas is one of rare U.S. areas where it's cheaper for residents to rent than buy | Real Estate | Dallas News

2017 Predictions: What’s Ahead for the Affordable Housing Industry? via Affordable Housing Finance

As we head into the new year, Affordable Housing Finance asked its Editorial Advisory Board members to weigh in with their predictions for the affordable housing industry for 2017. Overwhelmingly, the responses focus on the potential for tax reform and the unsettled low-income housing tax credit (LIHTC) market post-election.

“The top affordable housing story for 2017 is not yet written, and everyone reading this will play a part in what occurs, especially what tax reform and the federal budget put forward by president Donald Trump and Department of Housing and Urban Development secretary Ben Carson will do for affordable and workforce housing preservation and production,” says Bart Mitchell, president and CEO of nonprofit The Community Builders.

Read more...2017 Predictions: What’s Ahead for the Affordable Housing Industry? | Housing Finance Magazine | Affordable Housing

Rush of DFW apartment renters fuels record fourth-quarter leasing via Dallas News

Apartment landlords were mobbed with Dallas-Fort Worth renters in the final months of 2016.

North Texas' apartment market saw net leasing of 10,485 units in the fourth quarter — the highest demand on record for a fourth-quarter period, apartment analyst MPF Research said Tuesday.

The year-end leasing rush pushed total net leasing for 2016 to more than 27,120 units. That's a huge increase from 17,000 units in 2015.

Read more...Rush of D-FW apartment renters fuels record fourth-quarter leasing | Real Estate | Dallas News

New from MPF Research: 2017 Crystal Ball via Property Management Insider

MPF Research is constantly pumping out data to keep you on top of what’s going on in the multifamily industry.

We’ve summarized the top predictions from MPF Research for 2017, based on a recent multifamily webcast featuring RealPage Chief Economist Greg Willett and MPF Research Vice President Jay Parsons, with special guest Philip Martin of Chicago-based property management and investment group Waterton.

Permit volumes and somewhat stingier lenders signal a slowdown on the horizon, but development levels remain well above historic norms, with over half a million units under construction in the nation’s largest 100 markets at the end of 3Q 2016.

Read more...New from MPF Research: 2017 Crystal Ball

How Will Rising Interest Rates Affect CRE? via Multi-Housing News Online

Commercial real estate has had an almost uninterrupted run of increasing values since bottoming in the wake of the global financial crisis in 2010. Acquisition yields have persisted at historical lows for several quarters, and many question how long the asset class can remain priced to perfection.

As we head into 2017, a potentially bigger impediment has emerged: rising interest rates. The 10-year Treasury rate increased more than 65 basis points between the election and Christmas as investors react to the prospect for more robust domestic output during a Trump’s administration, the potential for reduced oil output and more aggressive monetary policy by the Federal Reserve.

Read more...How Will Rising Interest Rates Affect CRE?

RealPage® Reports Robust Apartment Demand and Occupancy, While the Rent Growth Pace Cools Mildly via Business Wire

Near-record demand for rental apartments registered in 2016, according to rental housing technology and analytics firm RealPage, Inc. (NASDAQ: RP). In turn, occupancy remained tight, despite rising numbers of completions. The rent growth pace is slowing a little, but pricing power remains above the historical norm.

“The apartment sector’s winning streak has run seven full years so far,” RealPage chief economist Greg Willett said. “Job production continues at solid levels, encouraging new household formation. While apartment construction is substantial, significant building is justified by the very strong demand tallies.”

Read more...RealPage® Reports Robust Apartment Demand and Occupancy, While the Rent Growth Pace Cools Mildly | Business Wire

Are Apartment Renters Ready to Own? via National Real Estate Investor

Rental apartments continue to face little competition from for-sale condominiums, but that can’t last, according to market experts.

“We expect homeownership to return to favor, likely in the form of entry-level condos that offer the same amenities many urban apartment dwellers prefer,” says John Affleck, research strategist with CoStar.

Currently, demand for rental apartments is high. Relatively few renters are tempted to leave their apartments for homes or units that they would own themselves. But as the economy improves, economists are watching for signs that may be about to change.

Read more...Are Apartment Renters Ready to Own?