Archive for the ‘Rental Market’ Category

Denver rental vacancies falling

March 11th, 2012

New jobs, particularly in the energy and technology sectors, are expected to number more than 15,000 in Denver this year.

Projections call for 1.3 percent growth, according to Marcus & Millichap, which would be a stronger employment improvement than the past two years combined. Job creation in the city is reaching a level that supports significant new household formation, the firm reports, which in turn is filling rental properties in the metro area.

Homeownership in the city has been falling at the same time, and the foreclosure rate is relatively high. While many of the city’s renters are moving into apartments, projected construction in 2012 is low enough that rent growth is still projected.

This suggests savvy investors may have an opportunity to profit from conditions in the area, with appropriate rental property services. Condominium and single-family rental vacancy rates are below 2 percent, according to Marcus & Millichap, as a result of strong renter demand throughout the recession. Rental properties as a whole are projected to reach a 4 percent vacancy rate this year, the lowest since 2012.

Investors snatching up numerous low-priced properties

March 10th, 2012

Home prices have practically never been lower in several areas of the U.S. than in early 2012, which is not only helping homebuyers afford these properties, but investors looking to make big money of low-priced homes for sale, Reuters reports.

According to the source, many markets in California, as well as hard-hit metros such as Detroit and Atlanta, are seeing the bulk of this investor activity, as prices for homes in these cities are some of the most affordable nationwide.

“They aren’t just buying one rental property. This is a frenzy. They are loading up,” Oak Park, Illinois, Realtor Kyra Pych told the news source. Pych added many investors are buying up multiple properties from her this year.

While buying affordable homes from these investors, many of whom fix up the properties, Reuters states numerous consumers remain intent on signing leases with rental property management firms than entering the for-sale market.

The source added that apartment management companies are becoming more prevalent in markets where investors are buying homes in bulk, meaning business could improve markedly for these companies during the year.

Young adults renting as job growth improves

March 9th, 2012

The ranks of renters have grown in recent years, and may continue to do so as many families that would have been expected to purchase a home in the past choose not to. At the same time, improvements in national employment are now encouraging household formation among young adults, which was previously stalled.

Many who lived with their parents or as roommates during the financial crisis are striking out on their own, according to the New York Times News Service. Job growth in the past two years has been especially beneficial for 20- to 34-year-olds, a demographic traditionally likely to rent rather than buy housing. Some experts are considering the possibility that the nation’s financial and housing situation has permanently changed their outlook compared to that of previous generations.

“I think it?s going to be interesting to see whether there?s been a fundamental sociological shift in that 20-35 year old cohort, where they literally say ‘this American dream just doesn?t work for me,’” said one apartment industry executive.

If so, they may choose to rent single-family homes rather than purchase them as they grow older. Property management companies can help owners operate such properties however the national housing market develops in coming years.

FHFA floats strategic GSE plan

March 8th, 2012

Edward DeMarco, acting director of the Federal Housing Finance Agency, recently sent a proposal to Congress outlining a possible path toward privatizing Fannie Mae and Freddie Mac.

The proposal suggests separate examinations of the potential for the single-family and multifamily portions of the two enterprises. For the multifamily segments, researchers would start by analyzing whether their business models are viable when not backed by a government guarantee.

These studies could eventually lead to major changes and the elimination of the GSEs’ multifamily components, or their conversion into private companies. Apartment Finance Today notes that such changes would likely take years as lawmakers and officials decide what to do, limiting the impact of DeMarco’s proposal.

It does serve as a potentially useful starting point in an issue that many have seen coming, but not been prepared to tackle, however. For the time being, the industry will likely see Fannie and Freddie continue in their present forms. When they do come, however, changes will likely impact the market substantially, altering the landscape in which investors and rental managers work.

Rental boom in New Orleans

March 8th, 2012

New Orleans is experiencing a surge in multifamily construction driven by increased tourism and job growth, a national apartment company noted recently.

According to the apartment research firm Hendricks & Partners, more than 3,300 are planned, proposed or already in progress, with 900 expected to be finished within two years. Demand is being driven by population growth, which reached 2 percent in 2011, and a relatively low 7 percent unemployment level.

Property management companies and investors may find the conditions favorable. In the short-term, it will take some time for the new rental housing units to come online. In the long-term, Hendricks & Partners projects that the current construction will not halt dropping vacancy rates, already at 6.1 percent and expected to fall further to 4.9 percent in 2013.

Employment growth projections are favorable, 3 and 3.5 percent for this year and 2013, respectively. Rents for the market as a whole averaged $880 a month in 2011, with different submarkets posting values ranging from $724 to $1,180. The overall figure is expected to climb to $929 by late 2013.

D.C. rental market may slow soon

March 7th, 2012

The nation’s capital is also its third-largest apartment market, with 533,000 units. Only New York and Los Angeles have more.

The D.C. metro area has experienced a period of strong apartment and rental activity recently, with low vacancies allowing landlords and rental managers to raise prices while remaining competitive.

This trend may be slowing, according to Multifamily Executive. There are some indications that the federal government may reduce staff in the city, which is one major reason. Another is that developers are bringing new housing online to meet the demand which has driven the improvements, increasing the amount of available living space.

Experts told the source that the recent gains are unlikely to disappear, but owners and property management companies may find themselves less able to raise rents as they have been.

If private employers step into the employment gap that government policy changes are expected to create, then the change will be smaller and may have less of an impact.

Family-sized apartments lacking in Brooklyn

March 1st, 2012

Changes in the demographics in neighborhoods throughout Brooklyn are leading many apartment developers to rethink what types of units they should be producing borough-wide, according to a report by the Wall Street Journal.

For example, citing data from real estate company MNS, the newspaper states few apartments in many of Brooklyn’s neighborhoods, such as Williamsburg, have 1,500 square feet or more, leaving many families hoping to live in the area to look elsewhere.

“When we started developing, Williamsburg was pretty much recognized as a creative community – artists, musicians, galleries, cafes, vintage clothing,” Jeffrey Levine, of Douglaston Development, told the WSJ. “As time passed, years turned hipsters into parents.”

Despite this lack of available large apartments throughout Brooklyn, more units that could fit small families are being developed or converted citywide, the paper reports.

Property management firms in the borough may have a considerable number of opportunities for business in the coming years should more units come online during that time.

NMHC, NAA comment on federal government’s housing plan

February 29th, 2012

Representing both the National Multi Housing Council and the National Apartment Association, NMHC senior vice president of government affairs Cindy Chetti praised the Federal Housing Finance Agency for proposing separate fixes for the single-family and multifamily housing markets.

The comments came after the FHFA announced its intentions to unwind its conservatorships of Freddie Mac and Fannie Mae. Chetti noted the differing initiatives to fix both the for-sale and rental housing sectors is vital to the overall goal of repairing the nation’s real estate crisis.

“We commend FHFA for recognizing that the GSEs’ multifamily programs are working well, were not part of the housing meltdown and require a separate solution from single-family housing finance reform,” said Chetti.

One suggestion Chetti made on behalf of the NMHC and NAA was for the FHFA to implement separate timetables for the winding down of Freddie and Fannie, citing the different states of the single-family and multifamily markets.

One way in which Freddie is working to help fix the housing market is to continue offering real estate-owned properties to investors for conversion to rentals. Once purchased, these investors would likely hire property managers, thus providing a boost to the rental management industry.

Investors’ eastern interests evolve as D.C. conditions change

February 29th, 2012

Experts are becoming concerned about the potential for oversupply in the rental market around the nation’s capital, they indicated at the RealShare Apartments East conference.

Some remain positive when they look at the near future of rental housing, citing strong fundamentals, available debt and equity and the currently limited development pipeline for multifamily properties, GlobeSt.com reports.

At the same time, panelist Wistar Wood told conference attendees he thinks the D.C. metro area in particular may see less of a strong trend due to a large number of units scheduled to open soon, a concern he indicated applies to some other areas of the East Coast as well.

Enough time has passed since the demand for rental housing began to rise that developers are beginning to complete units in significant numbers. If demand is met in some submarkets, those areas may experience downward pressure on rents due to the increased competition.

At the same time, other markets in the region were cited as stronger areas drawing more of the panelists’ attention. In particular, Boston, Nashville, New Jersey, North and South Carolina and New York City were all mentioned as areas that might be ripe for investment as D.C. begins to cool.

Owners and prospective investors in these areas may wish to investigate rental property management companies to find one suitable for helping them make the most of this opportunity.

The panelists also indicated that, whatever the conditions in specific areas, the industry’s overall trend is expected to be a positive one.

This year’s rental market carrying momentum from 2011

February 28th, 2012

Despite some issues caused by low job growth and stagnant incomes, rents may continue to increase during the coming years in the nation as a whole.

Low supply, high demand and cheap debt made 2011 an exceptional year for the apartment sector, real estate finance firm Green Street Advisors told the National Association of Real Estate Investment Trusts.

The sector experienced about 40 percent returns in the past three years, as Americans flocked to rental properties and chose not to pursue homeownership, and fundamentals remain strong. Rent growth has begun to slow, but is expected to be between 3 and 7 percent. It may be higher in markets that have barriers to new construction.

Those areas which do experience new construction are likely to see rent growth slow faster as supply increases, but the amount of time it takes for construction to finish could delay that result in some cases.

With the limits on supply and the number of single-family homes currently vacant, many experts suggest this year is a good time for rental managers and owners to raise rents, whether they hold apartments of single-family rentals.