Archive for the ‘Real Estate Market’ Category

Investors excited for federal REO rental conversion

February 10th, 2012

Federal plans to market 200,000 foreclosed homes as rentals are drawing major interest among investors including private equity firms, Bloomberg reports.

More than one firm plans to invest $1 billion or more in the opportunity from now to 2016, according to the news source, as they vie for the chance to be involved in a move that is expected to exercise a significant positive impact on the national housing market.

GTIS Partners indicated it expects to invest largely in the hardest-hit states, such as California, Nevada and Arizona. Investors and property management companies in harder-hit states should expect the largest changes, while those in areas with fewer foreclosures will likely experience less of a difference as these new rental homes become available.

Proponents of this move believe it will stem the tide of dropping home prices and reduce lender losses on foreclosed and distressed properties. Proposals for how to go about converting REO properties to rentals have been under discussion since September, and now officials and investors are preparing to move forward.

Rental construction up in Twin Cities

February 9th, 2012

Property management companies and landlords in the Twin Cities may be benefiting from high rental demand.

The Keystone Report for the Builders Association of the Twin Cities shows permits were issued for construction of 465 new units in the are during January, the organization reports, more than double the number begun during the same month in 2011. Curt Christensen, Builders Association president, stated that 2012 is expected to be a good year, based partly on this beginning.

While the number of permits issued was actually lower by about 10 percent at 185, this is because the new units are being distributed throughout fewer buildings. Almost two-thirds of the units are located within just five buildings. One is in St. Paul and one is in Hudson, with each of the two holding about 44 units.

The other three have a combined 177 units, and are all located in Minneapolis, showing that builders perceive high demand for rental housing there. Rental managers may find opportunities in the area, while investors should note that this indicates unmet demand exists there.

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.

Loan approvals more efficient under new rules

February 8th, 2012

Rules announced in December by the Federal Housing Administration (FHA) have sped up the process of reviewing and approving many of the federal agency’s loans, according to Apartment Finance Today.

The rules changed the criteria for having market-rate construction and rehabilitation loans reviewed by FHA regional and national loan committees, so that loans for less than $25 million and fewer than 250 units are now exempt from the national committee review process. Previously, any loan for more than 150 units or $15 million had to be reviewed before approval.

According to the source, these reviews were slowing loan approvals significantly before the new rules were implemented. Some other changes were also made. One executive told the source a deal saved at least four to six weeks because of the change, allowing construction to begin.

Rental managers and property investors may want to keep an eye on these loans, since this change means that competing properties or investment opportunities might be begun and completed more quickly. The changes were made in response to the FHA’s increased role in industry lending.

Renter residents flock to Long Island City

February 4th, 2012

Multi-Housing News reports that Long Island City has attracted enough residents in the past six or seven months to decrease the area apartment vacancy rate from 3.5 to 2 percent, according to a report from brokerage and marketing firm Modern Spaces.

Many of the new residents are first-timers, according to the report. Modern Spaces president Eric Benaim told the source that residents weer likely drawn by the variety of cultural attractions and restaurants, noting that the neighborhood hosts many galleries and museums.

The report suggests that the location is also good for many commuters, suggesting short travel times to get to work from the area are an appealing characteristic for the neighborhood’s new renters.

Additional rental properties are planned to open in the near future, while a number of businesses have opened in recent years to meet residents’ needs. Similarly commuter-friendly areas may be strong investment opportunities, especially with the help of property management companies in operating a rental residence.

Overall, the report indicates 2011 was a good year for the area, partly due to the rising rents in other parts of the city.

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.

Real Estate Rental Business Growing, Adding Jobs

January 27th, 2012

rental business growing

The multifamily sector has strong prospects for growth and job creation, according to the National Apartment Association Education Institute (NAAEI).

With a growing number of Americans renting, the demand for property managers is rising rapidly. Investors have been drawn in by the industry’s strong fundamentals, according to the NAAEI.

Overseeing rental properties can require a mix of customer service, management, maintenance, accounting and other expertise to create an effective team, the NAAEI notes. The most recent data from the Census Bureau indicates that about 35 percent of the nation’s households are renters already, a number which most experts expect to rise over the coming decade.

In 2004, only about 31 percent of households rented. The NAAEI considers this change and momentum a promising sign for the rental sector of the real estate industry.

Rental property services can help an investor get the most out of his or her property, and the growth of the sector is likely to attract many who are seeking employment, given the status of the rest of the economy.

Fix Housing, Fix the Economy…

October 25th, 2011

 

There are two factors that are currently plaguing the housing market and ultimately hampering the economy as a whole. The first is clearly an excess in supply of owner-occupied housing. Excess supply leads to a reduction in housing values as there is underutilized capacity. Second, there is a serious problem with “negative equity” in the homes that are currently owned. This is the classic case of the underwater mortgage that is so prevalent in America right now. Peter Orszag, former CBO and OMB Director in the Obama Administration, says, “Dealing with excess inventory by shifting vacant properties into the rental market would help to stabilize prices and thereby mitigate, to some degree, the negative equity issue.”

A novel way to stimulate demand for home purchases proposed by Kyle Jividien of Alamo Appraisal Group in San Antonio and economist William Wheaton of MIT among others would be to “provide a tax write-off to investors who buy vacant houses and rent them out.” The catch here is that investors would have to hold on to the properties as rentals for an extended period of time. Fostering this kind of investor behavior will most likely spur demand for the rental market and encourage the use of professional property managers. This type of creativity that seeks to incentivize investors is what the economy needs right now.

You can read more about this here: Peter Orszag’s article on Bloomberg.

Noteworthy Trends in the Rental Arena

October 21st, 2011

Here is a recent article from DSnews.com regarding the multifamily sector. There are several interesting facts about the overall trend of the rental market in this piece. Below are a few noteworthy points that deserve mention:

There has been a reversal in homeownership trends, and as this rate falls, demand for rental properties increases. As a result, apartment vacancy rates have declined and rates for rentals have increased.

Vacancy rates among professionally managed buildings are at their lowest levels since 2007.

Freddie Mac’s chief economist Frank Nothaft states, “The improvement in the economics of apartment management has prompted an increase in structure values, property sales, and new construction for larger buildings.”

Decline in homeownership has been greatest among the under-30 demographic.

An increased demand for apartments has pushed up the price of rents since the recessionary period of 2008-2009.

(Image sourced from DSnews.com)

“Homeownership Decline Spells Good News for Rental Market”

October 17th, 2011

2010 census data released last Thursday highlights an important trend in the rate of homeownership not seen since the Great Depression. Patrick Newport, an economist with IHS Global Insight said, “The changes now taking place are mind-boggling: The housing market has completely crashed and attitudes toward housing are shifting from owning to renting. While 10 years ago owning a home was the American Dream, I’m not sure a lot of people still think that way.” (See the full related article here: Hope Yen of the Associated Press)

The question to ask now is, “What does this mean for the rental market in the short to medium-term?” For starters, the existing national level of homeownership rests at 65% vs. 35% for rentals. Given that Americans will likely be facing the burden of a harsher economic environment comprised of prolonged unemployment, decreased government involvement in housing, and limited credit with tougher lending standards, we can safely assume that the 35% share for rentals will increase over the coming years.

Based on this, we at All Property Management foresee an increased demand for rental properties that will lead to a demand for professional management services. With economists predicting conversion to rental properties rather than sales as a way to stabilize the housing industry and position it for future growth, All Property Management is well positioned to address what will be an increasing need to access professional property managers.