Archive for the ‘Housing Headlines’ Category

Kansas a prime market for real estate investment in 2012

February 16th, 2012

While the nation’s housing market is largely expected to improve slowly or hold steady during 2012, MainStreet notes there are some exceptions.

In particular, experts are predicting that Kansas will be a good place for real estate investors to look, due to high crop prices boosting the state’s economy. The effect is strong enough that one study pinpointed three of the top five best investor markets in the state.

The “Best Investor Markets for 2012″ study by HousingPredictor.com named Wichita, Topeka and Kansas City to the fifth, third and second spots on its list, respectively. Wichita is known to many as “The World’s Air Capital” for the aviation-parts and airplane operations there.

Topeka is the largest city in the state, and has a relatively low cost of living that may appeal to many. According to the source, it has a fairly diverse economy that provides a degree of stability. Kansas City, on the other hand, is expected to do better than either of the others in terms of price appreciation. The study projects price gains to reach 4.1, 4.7 and 5.8 percent for Wichita, Topeka and Kansas City, respectively.

The analysts project that high crop prices will be a significant boon to the state as a whole, including those investors and rental managers able to take advantage of the situation. The other cities on the list were Charleston, West Virginia, in fourth and Miami, Florida, in the top spot.

Housing policy questioned by analysts

February 16th, 2012

Government housing policy is stuck in a difficult situation as officials and lawmakers attempt to balance homeowner and renter needs with the realities of the current market, CNBC reports.

While the Federal Housing Finance Agency (FHFA) moves forward with plans to sell REO homes held by Fannie Mae and Freddie Mac to investors for rental conversion and attempts to sell to owner-occupants as well, the two GSEs owned 182,212 homes at the end of September and are expected to hold more as paperwork on additional foreclosures is resolved.

“This rental period could provide relief for local housing markets that continue to be depressed by the volume of foreclosed properties, and provide additional rental options to certain markets,” the FHFA said about the program.

According to the source, some experts and officials are taking issue with the plan. Dan Oppenheim of Credit-Suisse reportedly questioned why bulk investors are receiving discounts, but smaller investors are not.

Low buyer demand suggests the plan is a good one, the source notes, since it has the potential to meet demand for rental properties while decreasing the number of homes sitting idle. It is better to let investors and rental managers put them to use and increase rental supply, the source suggests, which will help keep rental housing affordable in the face of high demand.

FHFA pre-qualifying bulk REO rental investors

February 14th, 2012

Because of its position as conservator for government-sponsored enterprises Fannie Mae and Freddie Mac, the Federal Housing Finance Agency announced it will be pre-qualifying investors who wish to participate in the bulk REO rental program.

The FHFA will review potential investors’ financial ability and property management capacity to ensure they have the resources and expertise to effectively make use of properties the program will be selling.

“This is an important step toward increasing private investment in foreclosed properties to maximize value and stabilize communities,” said FHFA acting director Edward DeMarco. “I am grateful for the collaborative effort by the many stakeholders including investors, nonprofit organizations, and state and local government officials, who have worked together on this Initiative.”

Qualifying investors will have the opportunity to purchase pools of foreclosed properties in order to convert them to rentals. Investors may wish to research property management companies in order to ensure they can handle rental management on the scale participation will require.

The FHFA noted that participants will have to sign confidentiality agreements concerning some aspects of the program.

Expert examines market after Obama housing plan announcement

February 14th, 2012

Some real estate industry stakeholders are divided over President Barack Obama’s housing plan, GlobeSt.com reports, as well as whether the Financial Fraud Task Force will have a positive impact.

Some analysts think that attempts to increase regulation will interfere with business and slow the sector’s recovery, though others disagree.

Director Richard Green of the USC Lusk Center for Real Estate told the news source that the number of investment buyers currently involved in single-family home purchases makes it difficult to interpret house price data. Many sellers, according to Green, are likely to make a deal for less with investors because they can sell for cash and avoid waiting and uncertainty.

This is particularly true in states like Florida, Arizona and California, the expert stated, where there are particularly large numbers of foreclosed homes available for purchase and the markets were hit especially hard during the housing crisis.

The conditions have driven rents up, Green notes, but may make apartments less attractive housing for some. In many areas, Americans are not taking advantage of favorable mortgage rates and home prices. This may allow investors and property management companies to cater to those who do not want to live in an apartment, but do not wish to choose homeownership over renting.

Homeownership rate dropped in 2011

February 13th, 2012

The national homeownership rate fell for the seventh consecutive year in 2011, according to the U.S. Census Bureau, reaching a 14-year low of 66 percent.

The last time the homeownership rate was that low was in 1997, when it reached 65.7 percent. It rose from that year until 2005, when the trend reversed, reaching a high of 69 percent. The homeowner vacancy rate was down 0.4 percent in year-over-year in the fourth quarter, though only 0.1 percent from the third quarter of 2011. Meanwhile, the rental housing vacancy rate was stable at 9.4 percent.

During the fourth quarter, HousingWire reports, the overall national housing occupancy rate was 86.1 percent, with owner-occupied units accounting for 56.9 percent and rental units the other 29.3 percent. Analytics firm Capital Economics stated that fewer Americans are owning their own homes.

As a result, rental managers are able to fill more units and rents are increasing, improving the return on investment for property owners. A strong rental management team may be able to take advantage of these circumtances.

Organizations react to housing plan

February 8th, 2012

President Barack Obama’s housing plan represents the federal government’s recognition of the importance of the rental housing market, according to the National Multi Housing Council (NMHC) and National Apartment Association (NAA).

In that respect the organizations support the plan, specifically the initiative to use bulk sales of real estate-owned properties held by the Fannie Mae, Freddie Mac and the government. The organizations did warn against housing policies that emphasize homeownership at the expense of rental housing, noting that preferential policies contributed to the national economic crisis.

With regards to the plan, the organizations also noted that care should be taken to ensure the repurposed homes are maintained in good condition, suggesting that owners and rental managers will need to work together to take advantage of the opportunity.

“Importantly, the president’s proposal underscores our key message that while there might be an oversupply of single-family housing, there is a shortage of rental housing,” NMHC senior vice president of government affairs Cindy Chetti said in the statement. “Demographics and changing lifestyles have led to a structural shift in our nation’s housing preferences to more heavily favor renting. Renters could make up half of all new households this decade, more than seven million new renter households.”

These projections indicate investors may need the help of property management companies and other professionals to meet demand in the years ahead.

2012 will be better than 2011, panelists say

February 5th, 2012

Property managers may be looking at a bright year ahead, if rental housing industry professionals at the National Multi-Housing Council’s (NMHC) recent Apartment Strategies Conference panel “Looking Ahead: What?s Next for the Apartment Recovery” are correct.

According to Multi-Housing News, panelist Jay Lybik predicted that 2012 will be a better year than forecast. He stated that the homeownership rate will rise slightly in the next few years and reach 65 percent in 2014, but suggested this is not a bad sign for rental housing stakeholders.

Lybik noted that there are about 14 million single family rentals in the nation, accounting for 37 percent of the rental market. Partly because of that, he indicated, the success of rental business does not depend on Americans remaining disenchanted with homeownership. He also noted that similar prices for renting and buying housing may favor rental managers, since a large down payment is not needed.

Panelist and NMHC chief economist Mark Obrinsky stated the year will be slightly better than 2011, according to the source, noting that economic recovery is occurring, but it remains to be seen how strong and fast it will be.

Ron Witten, industry professional and panelist, suggested that a major factor in the performance of the rental housing industry this year will be the number of jobs added to the economy for young adults, noting it will be a factor in determining income growth and rent levels.

New York apartment transactions up

February 3rd, 2012

New York Apartments

Continued solid growth in market and stabilized rents is causing apartment industry stakeholders in New York to predict that the trend of high apartment building sales will be ongoing in 2012, The New York Post reports.

Real estate investment trusts and others increased their buying activity. A number of large apartment sales marked 2011, according to the source.

“Sellers chose to take advantage of a low interest rate environment, which exerted downward pressure on cap rates, driving prices up,” chairman Robert Knakal of Massey Knakal Realty Services told the source. “There were nine multi-family sales over $100 million last year as institutional capital came back into the market in a big way.”

He stated the trend was unsurprising, citing “extraordinarily low” vacancy rates in
the city’s multifamily housing. At the same time, executive vice president Paul Leibowitz of Coldwell Banker Real Estate told the source that the past year was influenced by a large, pent-up supply. Based on expectations that rental fundamentals will remain strong, he predicts more significant transactions this year.

Those purchasing these buildings may have need of property management services. Similarly, owners of single-family homes and other residential properties may be able to tap into the strong demand by renting their properties, which are less likely to find buyers in the current housing market.

Chattanooga saw high rent growth in 2011

February 2nd, 2012

Data from Reis analytics firm indicates that Chattanooga, Tennessee ranked third in apartment rent increases during 2011.

Former Chattanooga Apartment Association president Becky Brooks reportedly told the Chattanooga Times Free Press that new business and industry moving into the area is the root cause, bringing jobs and activity. In particular, Volkswagen has hired 2,500 people over the past three years, according to the news source, while local suppliers have added more.

All those workers need somewhere to live, and property management companies and owners in the area have reportedly benefited from a 3.8 percent increase in effective rents during 2011, compared to 2.3 percent for the nation as a whole. There was reportedly an increase of 1.3 percent during the last quarter of the year, which Reis’ Brad Doremus described as strong growth.

The average effective rent was $625 a month, still well below the national average of $1,009 a month despite the growth – according to Reis. This may also have played a part in attracting residents. Brooks also noted that, of those who have the option of buying a home, many see it as an unwise investment and prefer to rent.

Colorado Springs Apartment Construction, Rental Interest Up

February 1st, 2012

Colorado SpringsAccording to the Colorado Springs Gazette, the area has seen seven apartment construction projects planned or begun over the past several months, in response to high local demand for rental properties.

The source attributes this rise in building growth to high demand and rising rents in recent years, noting that recent years were previously marked by a lack of construction. Because of that trend, increases in demand necessitate new construction and existing units have seen more competition for tenancy.

Area rental managers may continue to benefit from this, along with investors and others involved in the residential rental property business. The latest project is still seeking approval for its rezoning and development plan, according to the source. When completed, it is expected to add 272 units.

In addition to the opportunity to invest in apartments, some interested in this particular market may benefit from renting single-family homes or other residences, for those individuals and families in the area who wish to rent but whose housing preferences do not include apartments.