Archive for the ‘Housing Headlines’ Category

Report: Rent growth, occupancy suggest 2012 to be strong for rental housing

April 28th, 2012

Rental properties experienced significant growth of both occupancy rates and rents in February, a real estate analysis firm reports.

The rent and occupancy improvements extend to less-valued properties which lagged behind last year, according to Axiometrics, while top-tier housing may be slowing down to an extent as demand is met. Combined, occupancy and rent growth data suggest that monthly revenues for landlords and rental managers may also have increased. These improvements all surpassed those of recent months.

The firm notes that development of new rental housing remains limited, suggesting that availability will not change too much. As a result, Axiometrics vice president of research, Jay Denton, indicated that rent and occupancy levels throughout 2012 may be as strong as projected.

“Our analysis of the pipeline, as well as how much rents have already been pushed in some markets, indicate that growth will remain strong in the next one to two years, but the double-digit increases from last summer will be unsustainable long-term,” said Denton.

While national numbers appear sound, the firm did note regional differences remain pronounced. Investors should carefully assess an area’s local conditions as well as broader trends.

Government statistics show lower unemployment

April 27th, 2012

Only three states had unemployment in double-digits this February, down from nine a year before, according to data from the Bureau of Labor Statistics.

California, Nevada and Rhode Island posted unemployment levels of 10.9, 12.3 and 11 percent during the second month of 2012, respectively. Those levels are at least 2 percent lower year-over-year for California and Nevada, but Rhode Island’s recession-high level of unemployment was 11.9 percent. While not as high as some other states have experienced, the subsequent improvements have been more restrained, the federal agency reports.

The report also indicated California added more than 127,300 jobs in the last year, behind only New York at 141,300 and Texas with 273,000. Meanwhile, the states which saw unemployment drop below 10 percent include Florida, Georgia, Kentucky, Michigan, Oregon and South Carolina. Their current levels are between 9.4 and 8.7 percent. With national unemployment stable at 8.3 percent in February, they remained above average, but nevertheless showed substantial improvement.

Landlords and property management companies in these states may see an increase in qualified rental applicants as the employment situation stabilizes. More Americans in these parts of the country may be able to afford the rent increases that have marked the rental housing business in recent years.

American cities strive to attract new interest

April 27th, 2012

Despite the recession, many of the nation’s cities are continuing to engage in efforts to revitalize their downtown areas and reinvent themselves, a real estate magazine reports.

This trend began in the 1990s, according to National Real Estate Investor. Investors may wish to watch these markets to assess their efforts and the degree of success they are experiencing when considering possible areas to devote their time and resources to.

For the most part, practical considerations mean that these metro areas are attempting to court redevelopment investment and attract new businesses and residents. Rehabilitating or renovating residential properties may fit well with the goals of officials in these areas and be easier to accomplish if they incentivize such activities.

Part of the effort involves attempting to create a new identity for markets that are perceived in a negative light, or which no longer fit the common perceptions. In these areas, owners and rental managers may be able to play a role in ?shaping the community and determining its direction as well as providing housing for those attracted by successful campaigns.

Housing market, rentals may see activity rise as employment grows

April 26th, 2012

Recent employment data from the government indicates the country is experiencing a stronger recovery and the housing market may soon reflect that.

One expert told GlobeSt.com that rental demand and job creation correlate heavily, and others have cited employment as the main limiting factor on household formation and rental demand. Similarly, what rental prices the market can support depend largely on income growth, even in competitive times.

Some industry stakeholders were cautious, indicating that the strong employment growth recently witnessed may be partially a local phenomenon, centered around specific markets while others remain lethargic rather than spreading. They noted that previously leading markets such as New York and D.C. are seeing the pace of business slow somewhat.

Despite this outlook, others indicated the data appear heavily positive. The Department of Labor reported more than 200,000 new jobs have been created in four of the past six months, a trend which may continue. At the same time household incomes grew in the fourth quarter, according to the Commerce Department, and the Federal Reserve Bank of New York determined in a study that unemployment might drop from the current level of 8.3 percent to 6 percent during the first half of 2013.

Office of Planning moves toward environmental, zoning regulation changes

April 10th, 2012

Many rental properties in Washington, D.C. may need to follow new regulations, dedicating space to landscaping or permeable surfaces. Local authorities are concerned with sustainability, including concerns about stormwater drainage.

The changes are also meant to combat the urban heat island effect and enhance air quality, Multifamily Executive reports. The proposal, put forward by the city’s Office of Planning, is based on a program implemented in Seattle and similar regulations in some European cities. The specific regulations may vary somewhat depending on zoning and other concerns.

Representatives from the Office of Planning told the news source that developers should not experience substantial cost increases in their work. Some real estate experts noted concerns that the changes could be more costly than expected, and that rental managers, owners and developers could end up passing the cost to tenants.

Washington, D.C. may be the second in a long line of markets to adopt similar regulatory changes, according to Urban Land Institute senior vice president Uwe Brandes. Many urban areas are becoming more concerned with stormwater drainage, he told MFE, and zoning code are being increasingly linked to sustainability and environmental issues.

Many Wall Street investors looking to become landlords, purchase REO properties

March 28th, 2012

While numerous small-time property investors attempt to snatch up some of Fannie Mae and Freddie Mac’s real estate-owned homes, the Wall Street Journal reports many large-scale investors are also looking to become landlords and purchase several of these properties.

One factor that is luring numerous big-time Wall Street investors is the potential for buying bulk amounts of homes for sale from Fannie and Freddie at a discount, according to the newspaper.

Sean Dobson, CEO of Amherst Securities Group, told the WSJ that the firm is moving into real estate ventures because it sees the federal government’s REO program as something that could pay considerable dividends.

“We’re investing a lot of capital, a lot of time, with the expectation that this is a very small beginning to a very big movement,” he told the paper.

Financial services company Credit Suisse, which is advising Fannie on its REO deals, estimates the current supply of REO inventory totals roughly $320 million in value.

Despite major investors’ seemingly growing interest in bulk REO sales, the Journal states the government-sponsored enterprises are hesitant to do too many of these deals, as they would likely lose too much money on them.

Many rental management companies would likely be brought in by both small and big investors to operate the day-to-day business at several REO properties.

Analyst finds fault with federal housing program

March 21st, 2012

The efforts of the Federal Housing Finance Agency and the government-sponsored enterprises it manages to sell foreclosed properties are unlikely to be very beneficial to the housing market, one analyst recently wrote.

According to Paul Dales, senior U.S. economist for Capital Economics, the fact that the first phase of the initiative is selling largely properties that already have tenants will limit the impact of the program. About 85 percent of the 2,490 REO assets being sold are occupied, according to the report. Supporters of the program say that it is easier to price units with tenants.

As a result, they will not contribute materially to housing availability or reduction in vacant inventory, Dales notes. The assets slated for sale so far represent about 1 percent of the total held by Fannie and Freddie.

Despite these criticisms, the program could still be successful in encouraging private involvement in real estate and beginning to decrease the government role in the housing sector, which has grown in recent years. Many lawmakers, officials and private individuals have stated that the federal government should be seeking to reduce its activity in the housing sector.

This program will still shift holdings to private investors and property management companies, among other stakeholders, decreasing federal housing inventory. It is also true that the first phase of the program is meant partly as a test, and subsequent sales of REO assets may focus more heavily on vacant units.

Report: LA rental market defined by slipping incomes, substantial property choices

March 20th, 2012

Property managers and apartment owners in metro Los Angeles are likely seeing two main trends in the area’s rental market, according to a report by The Economic Roundtable.

The nonprofit’s findings indicate there has been an 8 percent rise in the city’s housing inventory since 2007, with many of these added properties converted to rental units to meet the considerable local demand.

However, the report shows dwindling household incomes are keeping many residents from even being able to afford a number of these units, despite rents remaining relatively even during the past few years.

In the decade ending in 2010, the median rent as part of the median household income rose from 29 to 36 percent, indicating numerous LA residents are spending more of their money on housing. A bright spot for the local rental sector is a marked reduction in severe overcrowding at rental properties.

A different source states growth in employment in the Los Angeles area could lead to more demand for rentals. Coupled with lower projected construction of these properties this year, Marcus & Millichap reports property managers and landlords are expected to raise rents nearly 2 percent from a year earlier.

Fannie properties for sale as bulk REO initiative begins

March 19th, 2012

The first phase of the federal program to sell real estate-owned properties in bulk to investors will focus on Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida, the Federal Housing Finance Agency announced.

Participating investors can bid on the entire pool of almost 2,500 properties or choose to bid on all the ones in a particular area. As part of the purchase agreement, the units are required to be managed as rentals for a specific number of years, rather than sold.

“We believe that this initiative holds promise for providing support to local neighborhoods that were especially hard hit by the housing crisis and will help meet the rising demand for rental housing in many communities,” said Michael Stegman, counselor to the secretary of the Treasury for Housing Finance Policy.

Experts say the sales could take months, the Wall Street Journal reports. The initiative is meant to test the viability of bulk sales and their impact. The properties being sold in this phase are held by Fannie Mae, and include a variety of different housing types.

Investors and rental managers operating in designated areas may benefit from the opportunity this program represents. In markets where rental demand exceeds supply, the availability of these units could limit rent growth. Supporters of the plan say it will help encourage private capital and involvement in housing and combat the poor market conditions which are causing low home prices.

New York tops London, Tokyo for top commercial market in 2011

March 6th, 2012

By the end of 2011, it was a major North American city, not one in Europe or Asia, that was noted as the top commercial real estate market in the world, according to a report, thanks in large part to a considerably strong apartment sector.

The report, by real estate services firm Cushman & Wakefield, indicates New York City beat out London and Tokyo as the premier CRE market in the world last year. Slightly more than $28 billion was invested in the Big Apple during the year.

Including NYC, Greg Vorwaller, global head of capital markets for C&W, stated the biggest markets in the U.S. saw the most activity in 2011.

“Consistent with what we saw globally, there was a flight to quality in the Americas with investors focusing on best-in-class assets in flagship markets (New York, Washington, D.C., San Francisco, Boston, Los Angeles and Chicago),” he said.

In total, $53.6 billion was put into multifamily property investment in the Americas, making up a substantial portion of the $235.7 billion in CRE investment during the year.

The news of a continually growing multifamily market in many areas around the country could yield significant returns for rental management companies.