The NAHB is out this morning with a chart that gives some perspective on apartment building investment starts. The Census Bureau reported 285,000 unit starts in October for 5+ unit buildings. At that rate it looks like we’re just returning to what was a sustainable level of starts in the ’97-’06 period.
Very nice piece from Joseph Y. Calhoun over at Alhambra Investment Partners covering some of the unexpected good things that could happen to our economy entitled Looking For Silver Linings. He includes this nugget with its implication of a good apartment building investment climate continuing:
In the ten years prior to the recession, household formation averaged 1.5 million per year. From 2007 to 2010 that rate was cut by 2/3. Household formation recovered to a bit over 1 million in 2011 and probably rose more this year. Still there is a gap of about 2.5 million households between the number formed in that period and what would be expected based on demographic trends. There is pent up demand for housing (although probably primarily rental housing) that only awaits some job growth to be realized. [Emphasis mine]
Tom Barrack of Colony Capital on what’s really happening in US real estate from an investor’s perspective. The clearest, most cogent look at the state of commercial, multifamily and single family markets today and where the opportunities are. The first five and a half minutes is about Europe and the bottom line there is don’t but after that it is all gold. If Tom wanted to be one of those real estate ‘gurus’ he could package this video with a big notebook and some advertising and sell it for $10,000- and it would be better than any of the other stuff out there. And you get it for free. I’ve watched three times and get an extra little nugget each time.
Are you reviewing the property tax assessments on your apartment building investments every year? In Seattle apartment research providers Dupre+Scott found that “this year almost 20% of the sales were assessed for more than they sold for. They were over-assessed by an average of 22%”.
In their video narrated by the xtranormal sounding ‘Kate Gardens’ she says: “With apartment prices climbing so much in the past year, we didn’t think many properties would be assessed for more than they sell for”. But their research shows that’s not entirely the case.
“… between 2000 and 2008 the average apartment was assessed for only 70 to 80% of what it sold for. Then things changed. In 2009 and 2010, the average property sold for less than its assessed value. And even though assessed values make more sense today, compared to prices, they are still higher than they used to be”.