Two quick links- you decide. From the Seattle Times: Urban Land Institute finds Seattle among most attractive real-estate markets and from Dupre + Scott ( The leading Seattle area apartment market research firm): Apartment development pipeline (video)
When I see this:
Axiometrics was out with their National Monthly Apartment Trends report which includes a couple of cool charts, one is a map of their top 88 markets coded by rent growth (below). The one that caught my eye though was showing Occupancy, Effective Rents and Revenues:
From the chart it looks like the national average of Continue reading Apartment Building Occupancy, Effective Rents and Revenues Charted. How are yours?
What comes after primary, secondary, tertiary apartment building investment markets? I got to thinking about this after I read that MPF Research classifies a tertiary market as one with up to 100,000 units…. so I looked it up on the intertubes:
The sequence continues with quaternary, quinary, senary, septenary, octonary, nonary, denary. Words also exist for `twelfth order’ (duodenary) and `twentieth order’ (vigenary) according to www.answerbag.com
Good presentation on the current national apartment building investment sector from Marcus & Millichap. New supply remains constricted except for a few cities, they didn’t mention any names *cough Seattle cough* but if you’re in one of them and tracking the pipeline it’s easy to read between the lines.
Another interesting trend is that Continue reading Good News and News: Apartment Q3 update web conference replay now posted from Marcus & Millichap
Good charts on long term returns in this piece from Glenn R Mueller, PhD.:
I recently met with my financial advisor to “rebalance” my … retirement portfolio. Based on my “age and stage of life” his allocation model showed a 50% bond allocation. I laughed and asked him if the company allocation model assumed interest rates would rise over the next 10 years? His answer was “yes- of course.” I showed him the graph below which shows lower than average TOTAL returns in a rising interest rate environment and he checked his long-term data and found that bond holders between 1953 and 1980 had actually lost money. We all know that as interest rates rise, bond values decline and thus the total return can be small or negative. Not to mention that a 10-year treasury at 1.5% is below expected inflation and thus a NEGATIVE REAL RETURN. He agreed that a bond allocation did not make much sense, but since my investor profile was conservative what was the alternative?
Dr. Mueller is Continue reading What do I do with my retirement money, one investor’s answer (with charts). Think apartment building investment-
Dividend Capital’s latest Market Cycle Charts have been posted for the four commercial real estate sectors they follow, office, industrial, apartments and retail. These are published quarterly and back in June I expressed serious reservations about where they had placed the Seattle apartment market in the cycle on their last report. This quarter they still have Seattle at the bottom which is striking because of all the reasons mentioned in my June post but also because occupancy has fallen below 5% (see here).
I really don’t think that this market is at the bottom of the cycle and it leads me to wonder if Seattle apartments are the only market out of sync with reality in their reports or if there are others too. Is it bad data on one market or is it more widespread? Is it bad methodology?
Please have a look at their chart for your market and let us know if you think it’s accurately placed in the cycle. Thanks in advance, I really appreciate your help on this.
Mark Hanson of MHanson Advisors, researchers and strategists focused on North American and Australian real estate and finance markets, has a very good piece out questioning the recent calls of a housing bottom. His research shows that 20-30 million current homeowners (half the market) either cannot sell and net enough for a downpayment on another house or could not qualify for a new mortgage if they did have a downpayment.
He also charts that out in relation to the over all supply:
Here’s Mark’s breakout of the zombies:
1) “Effective” Negative Equity – 25 million borrowers / houses. These borrowers are dead to the housing market, as they don’t have the equity to pay a Realtor 6% to sell and put 20% down on a new house. They were once the most active participants, the repeat buyers. Now they are “zombie homeowners”.
2) Impaired Credit – 28 million borrowers. These are borrowers with Continue reading Zombie homeowners are 50% of the single family move up market and they can’t buy. Good for Apartment Building Investment?
Research out from CBRE Econometric Advisors shows that the typical risk-free benchmark rate, the 10 year Treasury, does not accurately reflect the cost of capital risks in asset pricing for commercial real estate. The whole yield curve or ‘term structure’ should be used instead. Highlights from their report:
In an update to our earlier update on top markets, Axiometrics has put out a report on the top 5 apartment building investment markets for rent growth by asset class.
San Francisco is rocking in class A and B, and in class C it’s….. San Francisco! Interestingly A and C properties there are showing rent growth of almost twenty percent while class B is just under ten percent. Any thoughts on why A and C are double the class B rent growth in SF? Note that 9.3% in class B still leads the US- Continue reading Top 5 Apartmentment Building Investment Markets for Rent Growth, by Asset Class.
Main bullet points from Reis Report’s Q2 Apartment Highlights:
How are vacancy and effective rents trending in your market?
