M&M tracks 40 metro apartment investment markets and delivers quarterly reports on occupancy, rents, absorption, new construction and permits (See list below). You may have to register with them to access the reports.
The April 2012 National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions was conducted April 16-23, with 91 CEOs and other senior executives of apartment-related firms nationwide responding.
Capital availability lacks uniformity. Only 17 percent of multifamily firms reported that capital is available for all property types in all markets. By contrast, 36 percent said it is constrained in secondary and tertiary markets and 34 percent said it is constrained for all properties other than top-tier ones – even in primary markets.
The Debt Financing Index declined to 65 from 74. As the only index that dropped below 50 in the past nine quarters (48 in Q4 2010), borrowing conditions continued to improve for the industry. Just four percent believed conditions worsened from last quarter, compared to 34 percent who reported improving conditions.
The Equity Financing Index grew slightly to 62 from 60. One third of respondents reported quarter-to-quarter equity financing as more available, compared to nine percent reporting less availability.
My Exec Sum: Seattle apartment building investment results from Essex Property Trust Q1 call:
Seattle demonstrated exceptional same-store NOI and revenue growth of 11.2% driven by very limited supplies of housing and job growth that exceeds national averages
On operating expenses we expect a 2.3% increase for the second quarter ’12 over the second quarter in ’11
Seattle rents were up 6.5% compared to the first quarter of 2011. So depending on the submarket, we are now 4% below to even with our prior rent peaks.
renewal offers for June and July averaged +6% to 8% in Seattle
As of April 30, its occupancy was 96.1% with a net availability of 5.1%.
We view this turnover activity (50-55% YoY) as healthy because it provides us with more opportunity to grow rents. Additionally, we only saw a nominal increase in move-outs due to home purchases and affordability.
This was an eyeopener for us in the apartment building investing business: Large US cities with falling rents. The table is from TransUnion, I wonder what their sampling methodology is- And I wonder how that breaks out by asset class.
Yes of course there are cities with rising rents but Denver rents down almost 9% in a year? In 2011? Even Chicago down almost 5%? And DC the apartment hotbed has falling rents? Supposedly their data comes from managers supplying info for tenant screening and if that’s the case it seems like there are some serious concessions being given.
Apartment building investment sales continued their ascent in the first quarter of 2012, jumping 31 percent over the same time frame in 2011, according to New York–based commercial real estate research firm Real Capital Analytics (RCA).
Garden properties, totaling $7.1 billion in sales, drove most of the volume
High-rises rose $4.8 billion.
Both sectors jumped 30 percent from a year ago.
Portfolio deals also boosted the first-quarter totals, with 52 transactions involving 185 properties adding $2.6 billion in volume.
Distressed sales provided 13 percent of total sales, a 9 percent increase from the fourth quarter of 2011.
The volume trends are consistent across tertiary, primary, and secondary markets, but cap rate trends vary. In secondary markets, they remain unchanged; in tertiary markets, they’ve increased slightly; and in major markets, they’ve compressed.
Apartments are a little easier to come by in the Portland area, but that’s not slowing down rent increases across much of the market.
According to the Metro Multifamily Housing Association which released its latest survey Wednesday:
Vacancy across the metro area grew to 3.72% from 3.34% late last year.
Rents climbed 3% in the same period, reaching $1 a square foot per month across the metro area.
Average two-bedroom unit now rents for $771, up $28 a month compared with six months earlier.
Greg Willett, VP of research over at Real Page wrote a nice piece on that which covers it nicely; take it away Greg:
Thanks to one sentence uttered by Warren Buffett and some major overplay by the media, single-family rentals are a hot investment choice now. Thus, the analysts at MPF Research are fielding a constant stream of inquiries about whether the bulk sale of bank-owned single-family homes to investors who will operate them as rentals will impact the apartment sector.
Tom is one of my mentors and I follow what he’s doing closely to learn from a pro in apartment building investing. Here’s a video 3fer with Tom on why now is the time, if you have any contrariantestosterone as he puts it (in other words you are a true value investor). See also my notes below with the exec sum in bold.
Tom Barrack on CNBC last week
Stock markets rise and fall, but investors with a long-term view will make money, real estate investor Tom Barrack of Colony Capital is a “slow money guy”. Barrack has $27 billion invested in real estate and $45 billion in assets around the world.
Successful apartment building investing is about knowing where and when to buy and when to sell. The apartment building investment cycle sends very clear signals to those paying attention and one of the biggest and clearest is when existing properties begin to sell for more than the cost of building new apartments. As I mentioned here this line was crossed about a year ago in the Seattle market and now we can see how the peak is formed, when every developer and their brother starts building new apartments.
The biggest surge of Seattle-area apartment construction in a quarter century is threatening to undercut the growth in rents. Seattle went from “dead last” in rent increases three years ago to 13th out of 88 markets last year. “We went from almost a desert to a big pipeline” in two years, said David Young, the Seattle-based managing director who oversees western U.S. apartments for commercial broker Jones Lang LaSalle Inc.
Encouraged by hiring at local employers such as Amazon.com, Boeing and Nordstrom, developers are building almost 10,000 apartments in Washington state’s King and Snohomish counties, Three- quarters of the total are in Seattle, with 4,619 of those units in or near downtown.
Dupre + Scott Apartment Advisors Inc. said the building boom may last through 2016.