Tag: supply

M&M Apartment Building Investment call: Opportunities exist in secondary mkts & value add, tertiary still lagging

Marcus & Millichap Q1 call on the apartment building investment climate this morning:

  • Year over year manufacturing jobs grew 238k. Manufacturing = 20% of GDP but gets no press, where as single family housing < 2% gets all the coverage.
  • There is a historic % of 18-34 Y/Os still living ‘with the parents’ but they are also getting a larger proportion of the new jobs. (See chart) Good for apartment building investors as these people typically become renters when they do move out.

pent up apartment building demand

Portland OR Q1 Apartment Building Investments Now Posted.

Here are some interesting transaction statistics for 1st Quarter apartment building investment transactions:

  • Average price per unit was up 11% from Q1 2011
  • 6.86% was the average cap rate, vs. 7.07% in 2011
  • 77% of properties sold had between 5-50 units

Click on the image to see the list of Q1 apartment building investment sales in Portland:

Portland Apartment Building Investment Sales Q1

For more on PDX apartment building investment see City Rents Rise As Buyers Wait Out Housing Bust from Joseph Bernard Investment Real Estate.

 

Now you can watch the Apartment Building Investing Cycle Unfold In Real Time- Much easier than deciphering technical stock charts!

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.

From Bloomberg:

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.

Apartment building investment in Seattle

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.

“If in fact we come to market when there’s excess supply, we’ll just have to be aggressive on rents,” said Continue reading Now you can watch the Apartment Building Investing Cycle Unfold In Real Time- Much easier than deciphering technical stock charts!

Apartment Building Investment In Seattle, here’s the good news- video

Seattle Apartment Building Investment update video Translation: We would never overbuild or get started too late in the apartment building investment cycle 😉

Is the Dallas/Fort Worth Apartment Building Investment Cycle Peaking or just taking a breather?

In their RECON report The  Real Estate Center @ Texas A&M quotes The Dallas Morning News on apartment building investment in the DFW market:

“Apartment leasing in Dallas-Fort Worth dipped for the first time in over two years.

Net leases fell by 270 during first quarter 2012, with most of the declines occurring in the northern suburbs.

Apartment Building Invesment Cycle peaking in Dallas?

Greg Willett of apartment analyst MPF Research believes the slight dip is nothing to worry about.

“I don’t think one quarter of slight resident loss should be viewed as a big deal, especially when demand in first quarter usually is pretty mild anyway,” he said. “The job numbers still look good, and a comeback for the for-sale housing sector actually could drive them higher.”

The North Texas area has added about Continue reading Is the Dallas/Fort Worth Apartment Building Investment Cycle Peaking or just taking a breather?

When long time contrarians flip is that confirmation of a market top? What about in multifamily?

Read this week that well known stock market perma-bears have gone bullish and that struck a nerve in my contrarian’s contrarian heart. This morning I read a post on the Joseph Bernard Investment Real Estate blog that really got my attention.  Here’s what stopped me in my tracks:

In three decades working in and ­studying multifamily, Johnsey, president of Dallas-based research firm Axiometrics, has developed a bias toward an outlier’s view of what’s happening and what’s coming next. This time, though, it’s different. Strangely, he’s finding no counterpoint position to argue.

“Everything is just ripe for a robust apartment market,” Johnsey says. “I’m always looking for problems. But these numbers are just some of the strongest I’ve seen.”

Johnsey has company aplenty. Market researchers, Wall Street analysts, REIT executives, big multifamily players, and small alike can scarcely quell optimism over practically a sure bet for a bountiful 2012. [Emphasis mine]

Regular readers and students of the financial collapse will instantly recognize the first highlight as echoing the title of probably the best book ever written on the subject, “This Time Is Different: Eight Centuries of Financial Folly”. Authors Rogoff and Reinhart have researched and written (exhaustively) about how many times that sentiment has proven exactly wrong. If you haven’t read it, check it out on Amazon by clicking on the book image in the ‘Learning From History’ section on the right of this page.

Granted the rest of the article goes on to lay out the great fundamentals the national apartment market is currently enjoying and further that short of institutional grade properties in core markets multifamily is a very local business (and properties are more reasonably priced). But still…

What are you seeing in your market?

Canadian Multifamily Bubble? Sadly the US can watch from hindsight.

Interesting peek at multifamily in Toronto and Vancouver, worth a read to see how many rationalizations you recognize (or have uttered yourself).  Nice quote: “If builders stopped building today, there’s five years worth of supply that is about to be delivered, relative to what normal population growth is.” Sound familiar? They’re even starting to do NINJA liar’s loans.

Toronto home and condo prices are amazingly high, the average price for a detached home C$543,993; for condos it’s ‘only’ C$343,835. In Vancouver the Continue reading Canadian Multifamily Bubble? Sadly the US can watch from hindsight.