apartment demand | Ashworth Partners

Who is buying all those properties and what does it mean for the apartment building investment cycle?

Mark Hickey of CoStar put out a piece looking at who was responsible for the near record $65.8B of apartment building investment in 2012. CoStar’s numbers show that private owners/developers did just about half of all acquisitions last year and institutions were in for 12%, both near their recent trends. REITs on the other hand increased their share by a third, responsible for 12% of sales volume last year.

Interestingly the sellers were pretty much the same groups, except REITs who were the largest net buyers last year.

Last year REITs raised 15x the equity they did in 2008 (and 20x the total capital). Up against pockets that deep Continue reading Who is buying all those properties and what does it mean for the apartment building investment cycle?

Housing recovering from the bottom up- good for apartment builidng investment? 2 charts via Calculated Risk Blog

Bill McBride over at Calculated Risk has a post out this morning with 2 charts of data from LPS on the housing recovery. The first shows that homes in ‘active’ status, either in foreclosure, delinquent or otherwise ‘non-current’ has fallen below 2008 levels for the first time.

Which is the primary axis and which is the secondary is kind of a mystery and we are left to assume that both are x1,000 so that would imply the left axis is secondary (Or is it?) The most interesting factoid on the chart is in the box on the upper left; The percent of DQ homeowners active (in the foreclosure pipeline instead of being ignored) has doubled. To me this looks like a market that’s starting to clear, which is good for housing and the economy in general.

The next chart looks at the percent of Continue reading Housing recovering from the bottom up- good for apartment builidng investment? 2 charts via Calculated Risk Blog

CBRE Research: Since 2010 population shifting towards urban but apartment building construction is outpacing growth in

… A number of major metros

CBRE Econometrics is out with a new report showing population growth trends in major US metros has shifted towards urban centers since 2010 but apartment building investors have been keeping pace (or exceeding it) with new construction. Author Gleb Nechayev, Senior Managing Economist lays it out nicely in a series of charts:

First Population Growth Average Change 2000- 2010

Population Growth in major Apartment Markets 2000 t0 2010 — source: CBRE Econometrics

Raleigh is the only metro with significant urban vs. suburban population growth. Note that one-county metros such as Continue reading CBRE Research: Since 2010 population shifting towards urban but apartment building construction is outpacing growth in

CoreLogic Map: Almost 23 Million Zombie Homeowners Still Underwater.

CoreLogic is out with their quarterly report and map of underwater homeowners. Their analysis is “showing approximately 200,000 more residential properties returned to a state of positive equity during the fourth quarter of 2012. This brings the total number of properties that moved from negative to positive equity in 2012 to 1.7 million and the number of mortgaged residential properties with equity to 38.1 million. The analysis also shows that 10.4 million, or 21.5 percent of all residential properties with a mortgage, were still in negative equity at the end of the fourth quarter of 2012. This figure is down from 10.6 million* properties, or 22 percent, at the end of the third quarter of 2012.

Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

Of the 38.1 million residential properties with positive equity, 11.3 million have less than 20 percent equity. Borrowers with less than 20 percent equity Continue reading CoreLogic Map: Almost 23 Million Zombie Homeowners Still Underwater.

Apartment Building Permits Rise to Long-term Average while Vacancy Index Remains Low

In their latest apartment building permitting report Axiometrics says: “permitting increased 44.3% or 84,308 units from the January 2012 figure of 274,640 units.” This is very near the long term average of 280,000 units, see the chart:

Note that single family permits are still Continue reading Apartment Building Permits Rise to Long-term Average while Vacancy Index Remains Low

Single-Family Rentals Only Marginally Impact Apartment Building Investments PNC EVP says. Video via Globe St.

Scott Bassin, EVP and head of multifamily for PNC Real Estate says single family rentals will only marginally impact apartment building investment because there is a certain group of people who want or need single family homes, and everyone else. See his comments in the Globe St. video from the NMHC Apartment Strategies Conference in Palm Springs.

Single Family Rentals only have small impact on Apartment Building Investment — Scott Bassin, EVP at PNC with Globe St. in Palm Springs

MBA: GSEs vital in Ensuring Liquidity and Stability in apartment building investment finance.

The Mortgage Bankers Association is out today with a white paper “Ensuring Liquidity And Stability: The Future Of Multifamily Housing Finance And The Government-Sponsored Enterprises“. (or see the MHN exec sum here) The paper highlights the role of the GSEs (Government Sponsored Enterprises, i.e. FNMA ‘Fannie Mae’ and FHLMC ‘Freddie Mac’) in today’s multifamily finance market and presents five recommendations for the future making their points with a set of charts that demonstrate the size of their role in multifamily as well as the very low amount of bad loans they’ve made in the sector.

Our nation’s housing policies should reflect the importance of multifamily rental housing, the range of capital sources that support this market, and the need for liquidity and stability in all market cycles.

Continue reading MBA: GSEs vital in Ensuring Liquidity and Stability in apartment building investment finance.

Risks to Apartment Overbuilding Averted, For Now says ReisReports

In a piece just out today ReisReports says that new apartment starts have been postponed to 2014 by many developers.

The “bubble” now shows up in 2014, but if economic growth ramps up, then additional supply will most likely be absorbed relatively painlessly.

But not all Metros escape. The report mentions Washington DC and suburban Maryland as two of those who will still see large increases in supply next year.

Interestingly they name Seattle as a market that should be able to absorb the new supply coming because Continue reading Risks to Apartment Overbuilding Averted, For Now says ReisReports

ULI: Seattle most attractive market for Apartment Building Investment but there are 36,000 units just completed, under way or in the pipeline.

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:

And then I see this: Continue reading ULI: Seattle most attractive market for Apartment Building Investment but there are 36,000 units just completed, under way or in the pipeline.

Class C Apartment Building Investments takes the lead in rent growth nationally says Axiometrics.

From their latest National Monthly Trends report: Class C properties took the lead for annual effective rent growth in August. Class A properties had been the leader in that category as the apartment market improved over the past few years, but the Class A annual growth rate slowed from 4.73% in May to 3.70% in August. Why has the growth rate slowed so much in just the past few months? Is it tied to job growth, which weakened in May? Is the first wave of new supply starting to impact performance as we show new apartment deliveries nationally jumping from about 13,000 in the first quarter to over 17,000 in the second quarter and 25,000 in the third quarter? Or is it simply because a $75 increase this year is not as big of a relative change as it was a year ago since the denominator in the rent growth equation keeps getting larger? The answer is likely due partially to all three situations, but the weighting of each factor can vary by market. However, new supply could play an even larger role next year than it will this year.

See the whole report with more charts and data here Continue reading Class C Apartment Building Investments takes the lead in rent growth nationally says Axiometrics.