Apartment Building Investment: People aren’t buying homes anymore but still need shelter.
Filed under: Multifamily Investments, The Economy and Current Affairs
In the aftermath of the worst housing crisis in a generation, more people are eschewing the American dream of homeownership and embracing apartment rentals in the still-fragile economy.
Surging demand for apartments, particularly by younger consumers, has given a boost to the nation’s apartment landlords. Multifamily properties represent one of the few corners in the commercial real-estate industry where rents are rising rapidly. As such, lenders are giving the green light to multifamily construction projects even as development grinds to a halt in other property sectors.
“People weren’t buying homes anymore, but they still needed shelter, Read more
Commercial Real Estate added $260 Billion to GDP last year- Hessam Nadji video via Marcus & Millichap
Filed under: Apartment Finance, Commercial Real Estate, Multifamily Investments, The Economy and Current Affairs
See the video here: http://bit.ly/JpqMck Sorry, couldn’t figure out how to load their video directly into this post. Any suggestions? Thanks.
Q2 Local Metro Apartment Building Investment Reports Now Posted.
Filed under: Apartment Building Investment Cycle, Apartment Finance, Multifamily Design & Development, The Economy and Current Affairs
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.
Apartment Construction Trends for Phoenix Q2 2012
If you have questions about a specific market Read more
Happy Flash Crash 2nd Anniversary. Lack of trust in stock markets is scaring away investors…
Filed under: Multifamily Investments, The Economy and Current Affairs
… small and Large. Sunday was the 2nd anniversary of the May 6th Flash Crash of 2010. High Frequency Trading (HFT) insiders have hacked the stock markets so they get a sneak peak at your, and everyone’s trades before they’re executed. Think of it like one player at the poker table can secretly see your cards, and everyone else’s before they bet- Want to play in that casino?
When the HFT trading robots all lock onto the same pattern they can take a major market like the Dow Jones Industrial Average down 700 points in 10 minutes and thus we all remember the Flash Crash. Now it so happened that that time the market recovered about 70% of the loss shortly after but the damage to confidence was done.
Once bitten, twice shy. Or as Joe Saluzzi and Sal Arnuk at Themis Trading (a specialty company that trades equities for large institutions and hedge funds- stock traders not OWS supporters) put it: ” traditional retail and institutional buyers and sellers of stock have been steadily waking up to the dangers of drinking at the increasingly dangerous ”stock market watering hole”. Like the animals on the Serengeti, who for years were accustomed to sipping long and heartily at their favorite spot, retail and institutional investors now see what’s beneath the surface. And they are deciding that the drink they crave is just not worth the risk.
It isn’t hard to blame them. They have witnessed a radical transformation of the best capital allocation market system in the world, into one where:
- 13 stock exchanges cater to hyper traders who game the system, chasing exchange rebates, and leveraging speed for the purpose of a nanosecond scalping dance.
- More than 40 dark pools together trade more than 1/3rd of all shares.
- Conflicts of interest abound as exchanges own stakes in Read more
Portland Apartment Market to add 31,000 jobs this year, vacancy to fall below 3%.
Filed under: Multifamily Investments, The Economy and Current Affairs
As the next building cycle for the Portland area is still another year out, vacancy rates are expected to fall to historic lows across the metro. The overall vacancy rate will match the lowest on record at 2.7 percent, while the area’s lower-tier vacancy will fall to as low as 2 percent.
Marcus & Millichap notes that a lack of multifamily construction and the expansion of jobs in the region will be the prime factors behind the extraordinarily high rates of occupancy. Job growth is expected to rise 3.1 percent—from 20,500 positions created in 2011 to 31,000 positions created in 2012. Of particular significance will be the development of a new Intel facility, which is expected to create thousands of construction jobs and spur large demand for Class B and C apartments.
Cap rates for trophy buildings are likely to average in the high 4-percent range, with Class A and B assets in Read more
Are we overbuilding multifamily already? Or just the wrong kind? Research from CBRE Econometrics
Filed under: Multifamily Design & Development, Multifamily Investments, The Economy and Current Affairs
At a Seattle apartment building investment conference recently one of the main speakers was saying that everyone who’d ever held a hammer, and their brother was trying to build apartments. That really struck a nerve in my market cycle conscious brain and was looking to get some perspective on that when a CBRE piece crossed my desk with this chart on it:
So while new unit construction starts are up significantly from the 2009 lows they are still well below the 89-08 average of about 250k. More importantly in relation to demographics we will be seeing increasing demand from growth in two of the prime renter groups, my exec sum from the piece below: Read more
Denver Job Growth catching up with Apartment Building occupancy and rent gains.
Filed under: Commercial Real Estate, Multifamily Investments, The Economy and Current Affairs
Apartment building investment buoyed by job growth in Denver
Video via Property Management Insider: http://youtu.be/uFjpYSbVdRg
Apartment fundamentals are strong essentially across the board in Denver, which ranked among the nation’s best with year-over-year rent growth of 6.5%
Six lessons on the financial crisis that help explain why we’re still in one.
Filed under: Neuroscience and Behavioral Economics, The Economy and Current Affairs
Six lessons on crisis that help explain why we’re still in one:
- When you don’t reinvent institutions at a time of systemic failure, the problems they’re creating don’t just magically disappear.
- When you prop up (read: bail out) the institutions causing the crisis, instead of reinventing them, the crisis will deepen.
- When dysfunctional institutions prop one another up, prosperity’s a house of cards. Crisis becomes stagnation.
- When propping up failed institutions has drained your resources, you’ve turned a crisis into a catastrophe.
- The longer it takes you to see a crisis for what it truly is, the disproportionately worse it’s likely to get.
- When people who are prisoners of the
Will REO-rentals Really Compete With Apartment Building Investments?
Filed under: Multifamily Investments, REOs to Rentals- Single Family, The Economy and Current Affairs
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.
Our take is that Read more
Clash of housing bottom fairy tales: Big Bad Wolves v. Robin Hood Investors.
Filed under: Multifamily Investments, The Economy and Current Affairs
My friend and fellow real estate investor Mei was asking about competition for single family REOs from big institutional players buying them at the courthouse as in the Bloomberg article here. The article profiles Waypoint, a Southern California real estate investing outfit that has developed some great technology to facilitate buying and leasing REOs. Check out Waypoint’s website, it’s the best example I’ve seen of the lease/option, credit repair, rent-to-own strategy for real estate investors.
It is a great question and one that I’d been wondering about too. Just so happens I was meeting with one of my private equity clients last week and we had a long conversation about that very subject. My client is the real estate/mortgage specialist at a 50B firm and they’ve been trying to crack this market profitably for about a year. Here’s the bottom line: Private equity needs to earn Read more
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