Archive for November, 2012

New Housing Types Reflect Changing Family Dynamics

According to this article in the New York Times home builders are adjusting to new family dynamics by offering more options:

Lennar started marketing its new designs last fall with particular gusto: “Next Gen — The Home Within a Home” is a title and tag line intended to wrap the notion of multigenerational living in a futuristic gloss. But it is more than just marketing; the blueprints themselves are changing.

In fact, architectural historians, statisticians and builders themselves are pointing out that the new household — and the house that can hold it — is much like the old household, the one that was cast aside after World War II by the building boom that focused on small, tidy dwellings for mom, dad and their two children.

Population statistics help tell the tale. A Pew study reports that 41 percent of adults between 25 and 29 are now living, or have lived recently, with their parents. Over all, more than 50 million Americans are in multigenerational households, a 10 percent increase from 2007. It is a back-to-the-future moment.

Of course zoning laws that were put into place in the era of uniform single family home development can make building this type of housing difficult:

Mr. Litchfield warns of the “dead hand of single-family zoning” that inhibits the formation of households like those headed by a single mother, who needs to rent out space to make ends meet, or by boomers who want to build an accessory dwelling unit for an aging parent. Only California, he added, has a state law that allows homeowners to build such a unit “by right,” though some cities have altered their zoning codes to encourage their creation.

To circumvent zoning that is leery of duplexes, Lennar’s Next Gen houses run on a single electric meter, have only microwave convection ovens in the apartment, and from the outside look like other houses.

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November 30, 2012 at 7:17 pm Leave a comment

Impact of the 2012 Elections on the Apartment Industry

On Tuesday, November 27,  PTAA welcomed Ken Szymanski, Executive Director of the Apartment Association of North Carolina (AANC), and Colleen Kochanek, AANC’s lobbyist, to update our members about the likely effect this year’s election results will have on the North Carolina legislature, and in particular what it means for the apartment industry in 2013.  Ken was kind enough to share a few slides (see below) showing the makeup of the legislature in 2013 and you’ll notice how many “freshman” legislators the state will have next year. Both Ken and Colleen stressed the importance of reaching out to these new legislators before they head to Raleigh next year, and of the need to start educating them about the apartment industry and the important role it plays in providing housing and jobs to its residents, and tax revenue to its local municipalities. There will also be a steep learning curve for issues of particular concern to the industry like continued work on legislation related to local governments’  rental housing registration/inspection programs to name just one.

If you missed the dinner meeting you’ll have the opportunity to see them again at AANC’s Legislative Days in Raleigh next spring. Stay tuned, and if at all possible, plan on making the trip to Raleigh.

121125 congressional districts powerpoint from piedmonttaa

November 29, 2012 at 7:08 pm Leave a comment

Housing Driving Economy for a Change

As reported in the Wall Street Journal the housing market, once a primary factor in sending the economy into a severe recession and an economic laggard ever since, has rebounded and is now one of the country’s economic bright spots:

Economists project U.S. gross domestic product growth will slow in the final three months of the year from the sluggish 2% annual rate in the third quarter. Businesses, unnerved by the prospect of federal tax increases and spending cuts known as the “fiscal cliff” taking effect in January, have slowed their pace of investment spending. Defense spending also is expected to slow, further weighing on growth.

But while those economic pillars weaken, an improving housing market is buoying consumers’ spirits and giving the economy its biggest lift since the real-estate boom. Macroeconomic Advisers projects the economy will grow at a 1.4% annual rate in the fourth quarter, with housing contributing 0.4 percentage point. IHS Global Insight is projecting a 1% growth rate, with housing contributing 0.53 of a percentage point—the largest contribution since 2005.

One of the many reasons that housing is making a comeback is the rise in rents:

While rising prices now are driving the housing market forward, that couldn’t have happened without a painful cycle of losses. Lower prices and rock-bottom interest rates have boosted affordability. The average monthly mortgage payment on a median-price home in October, assuming a 10% down payment, fell to $720 at prevailing rates, down from nearly $1,270 at the end of 2005.

Rising rents and an uptick in household formation have ignited demand, which, in turn, has pushed inventories of homes for sale to their lowest level in at least a decade. The upshot: More buyers are chasing fewer homes, pushing up prices.

November 29, 2012 at 10:38 am Leave a comment

Rating Agency Slightly Bearish on Archstone Deal

From the Wall Street Journal:

Equity Residential EQR -0.72% may be pleased with the purchase of apartment giant Archstone that it is making with AvalonBay Communities Inc. AVB -0.09% But Fitch Ratings needs some convincing.

The ratings agency Tuesday placed Equity Residential on watch for a possible downgrade that could lower the company from its current investment-grade BBB+, which is three notches above junk, says Steven Marks, head of Fitch’s U.S. REITs group…

Mr. Marks says Fitch is concerned that Equity Residential’s balance sheet may get strained if it runs into problems selling assets.

November 28, 2012 at 5:28 pm Leave a comment

Rules for the Holiday Party Road

The NAA Blog has some advice you should consider during the holiday party season:

The seasonal soirees don’t end there, though. Let’s not forget the office functions!

Whether they’re holiday-related, grand opening celebrations or networking events, such gatherings provide the opportunity to build relationships with customers, prospects and industry partners—or to be the person that everyone gossips about the next day, saysEllen Thompson, Founder and CEO of 4 Walls, Inc.

Following are three people sure to be at your next gathering. Don’t be one of them.

You should definitely check out the descriptions of the three people – That Guy, The Drunk and Casanova – and strive to not be him or her.

FYI, the PTAA Holiday Open House is Friday, December 14. Come on out and join us, but please try not to be That Guy.

November 28, 2012 at 12:02 pm Leave a comment

Single Family Rental Demand Greater Than Supply

A post on the Wall Street Journal real estate blog looks at the not-so-surprising news that demand for single family rental homes is outpacing supply:

Demand for single-family rental housing is outstripping the available supply of homes, and some housing markets that have been hit hardest by the foreclosure crisis have seen rental demand jump by more than 25% in the past year, according to a report to be released Tuesday by real-estate firm CoreLogic CLGX +1.54%.

It shouldn’t be surprising that single family rental demand has picked up in recent years: There are many families who have lost their homes to foreclosure or that can’t qualify for mortgages given tighter underwriting standards.

But the magnitude of rental-demand gains is still eye-opening. Markets that include Port St. Lucie, Fla.; Riverside, Calif.; and Tucson, Ariz., have all seen rental demand jump by 25% over the past year, and 22 of 30 markets tracked by CoreLogic have seen year-over-year leasing gains…

Slightly more than half of all rental units in the U.S., or around 21 million units, are single-family homes. Around four in five of those unit owners are individual investors…

Single-family rents, which tend to show less volatility in either direction than home prices, rose by 2% last year and have increased by 1% so far this year, after declining in 2009 and 2010. “While those increases are low, rent growth typically lags home price growth by about 12 months,” writes Sam Khater, senior economist at CoreLogic, in the report. He expects rent growth to increase “at a strong clip” late this year and throughout 2013, though not at the same rate as home prices.

November 28, 2012 at 10:27 am Leave a comment

Echo Boomers Impact Multifamily Market

From an article on GlobeSt.com:

In addition, more Millennials, a.k.a. Echo Boomers, entering the market should also help boost fundamentals. “In the past year, new developments have been met with strong renter demand, particularly for contemporary product in A+ locations that are heavily favored by today’s Echo Boomers,” Jeff Meyers, president of Meyers Research, tells GlobeSt.com. “This demographic of 95 million is obviously important because they are transitioning into the workforce, and detached shadow inventory is not competitive for this young cohort.”

It will be interesting to see if these folks, who have come of age at a time when the American Dream of home ownership turned into a nightmare for so many, will decide to stick with renting longer than their parent’s generation did. If so, then they could impact the housing sector as strongly as the original Boomers did back in ‘the day’.

November 27, 2012 at 10:20 am Leave a comment

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