Archive for May, 2015

Greenway at Stadium Park Set to Open on June 1

The 68-unit Greenway at Stadium Park in Greensboro is set to open on Monday (6/1/15) and the owners expect to be leased up within 60 days.

The demand for downtown living in Greensboro remains strong, with developers projecting near 100 percent occupancy in as little as 60 days after a 68-unit community opens Monday.

The Greenway at Stadium Park, a $6 million undertaking by brothers Jim and Steve Jones at the corner of North Eugene and West Smith streets, was developed after the success of its sister property, the $10 million, 196-unit Greenway at Fisher Park complex next door. That complex continues to see occupancy rates well over 90 percent.

Stadium Park apartments is a boutique community that is smaller than its sister but still offers unique amenities. Those include a lounge and kitchen open to the resort pool, cabana, grilling deck and a fourth-floor lounge that overlooks the NewBridge Ballpark. The community is 35 percent pre-leased, according to a news release from the developers.


May 29, 2015 at 9:05 pm Leave a comment

Where Are the Young Home Buyers?

It’s no secret that there’s a dearth of younger home buyers these days, but why are young adults still slow to move from renting to buying even though the economy is finally growing? Shane Squires of MPF Research wrote about some of the challenges faced by millennials:

For starters, income levels for those between 25 and 34 are down. Median household income for that demographic has declined between roughly 5% and 15% in real terms from 2000 to 2012 for every education level of the head of household, according to the National Center for Education Statistics. And in 2013, the real median net worth of households under 35 years old was just $10,400. That was approximately 32% below the level estimated in 2001, according to the Federal Reserve Survey of Consumer Finances…

He then cites some data showing that the combination of an increasing population and anemic job growth coming out of the past two recessions led to a highly competitive job market that prompted many students to continue on to grad school. That demand allowed universities to jack up tuition which led to more debt:

That brings us to the most commonly cited economic constraint for Gen Y – student debt. Over the decade from 2002-2003 to 2012-2013, the number of full-time undergraduate students rose from 9.1 million to 11.6 million people, according to College Board. That increased demand enabled higher education institutions to raise tuition prices 51% past the rate of inflation in the past 10 years,…

Add to that the increase in health care costs, which he cites as being 31% greater than the reported rate of inflation, and the increase in cost of staples and you can see that young adults face some serious obstacles to home ownership. Even the accelerated job growth of 2014 is recognized with a caveat:

Given that job growth has accelerated notably in 2014, with a much higher share being created in higher-paying sectors, these trends in income and net worth are bound to start improving to some degree. Though, considering that the appreciation of median home prices has vastly outpaced wage growth over the past decade, many in the Millennial generation will likely continue to find it more difficult to qualify for a mortgage than Generation X did 10 years ago.

It would be easy to point to the Great Recession as the primary cause for the struggle young adults will have in moving from renting to buying, but some of the contributing factors are the result of societal shifts that began a generation ago. For instance, the decoupling of income from worker productivity:

The “decoupling” is the divergence between labor productivity and employment/wages that happened in the US in the 1980s and has become quite pronounced over the past thirty years. During the great postwar boom, productivity and wages grew in lockstep in the US. Of course, we don’t see any data from the 19th century and the first half of the 20th century so it’s not clear that labor and wages have always grown in lockstep. But something certainly changed in the 1980s and the result has not been good for median family income which has been stagnant in the US for almost thirty years now.

This is the kind of shift that does not happen overnight, and if that trend is to reverse it will not happen in a matter of years but in decades. What that means for rental housing providers in particular is that the falling rate of home ownership could be the new normal for a generation to come, which is good news for their businesses. On the other hand, if real median household income continues to decline then the demand for market rate units could stall and the demand for affordable housing units could skyrocket.

Obviously some policy changes could change this outlook. For instance if lending standards are relaxed again and if more affordable single family homes are constructed, then rental demand would obviously be impacted. Considering the lessons we learned when the housing bubble popped that first if is pretty big, and given the persistent problem of slow income growth any growth in home construction we do see probably won’t come close to what we saw in the late 90s through mid 00s.

Long story short – rental housing should continue to grow for the foreseeable future.

May 29, 2015 at 2:38 pm Leave a comment

Solid Rent Growth for Triad Apartment Market in 1Q15

In this video from MPF Research, they look at the 1Q15 numbers for the Triad and find that year-over-year rent growth was – finally – on par with the rest of the country:

May 28, 2015 at 1:54 pm Leave a comment

New Requirement for Forsyth County Summary Ejectment Cases

If you own or manage apartments in Forsyth County you need to be aware that the courts in Forsyth have instituted a new policy that requires plaintiffs, in cases where the defendant does not appear, to swear as to whether or not they know if a defendant is in the military or swear that they cannot ascertain it one way or another. This stems from a federal law that prevents any court from entering a default judgment against a service member unless that court first requires the plaintiff to file the affidavit, and Forsyth County is the first, and so far only, county to interpret the law to apply to evictions.

When this first came to light at the end of April, representatives of PTAA (Executive Director Jon Lowder and attorney Chris Loebsack) met with the Clerk of Court to discuss the matter and get some clarity as to what will be required of our members in eviction cases. The good news is that the process will not need to be as time consuming as we originally thought (see below), but because this is based on a Federal law and cannot be changed other than through an act of Congress, the bad news is that this is something our members will have to live with. For the time being Forsyth County is the only jurisdiction in NC that is interpreting the law as applying to small claims court.

So what does this mean for you? Originally the Clerk was requiring the filing of a completed affidavit that they had developed for this purpose (found on their website at this link) but after meeting with her we were able to determine that members could visit the US Government’s SCRA website (found here) at which they can confirm the military status of any person, print the results and staple them to the complaint or bring it with them to court.

We asked for some clarification on timing and received the following via email from the Clerk after she checked with the District Court judge: How many days would the Status Report be acceptable? For the duration of the case was her answer. Presenting the Status Report or Affidavit at the time of hearing and not at filing is acceptable. She is meeting with magistrates and conveying these same issues with them to have consistency. 

So in a nutshell, what you can do is either use the affidavit provided by the Clerk or you can print off the results of the search from the SCRA website. You can attach the affidavit or printout to the complaint or you can bring it with you to court.

If you have cases in Forsyth County in which your experience is not consistent with what you have read here, or if you have different experiences or interpretations from magistrates on various cases, please do not hesitate to contact PTAA.

May 27, 2015 at 2:34 pm Leave a comment

Secondary Markets, Like the Triad’s, Are Hot

From the May 27, 2015 Wall Street Journal we learn that secondary and tertiary cities are the new belles of the ball in the multifamily sector:

As prices for multifamily properties in big cities escalate, some investors are setting their sights on smaller markets where prices are lower and yields are higher…

According to New York-based data firm Real Capital Analytics Inc., the average national cap rate for multifamily properties for the 12 months ended in March was 4.92% for the six primary markets such as New York or Chicago; 6.41% for secondary markets such as Houston and Philadelphia and 7.09% for tertiary markets such as Birmingham, Ala. or Buffalo, N.Y…

Large investors tend to favor primary markets in part because they have a firm employment base that expands during times of economic growth, boosting demand for rental housing. But as the economic recovery broadens, job growth is expanding to smaller markets.

That trend, in turn, is making investors more comfortable with the idea of entering less popular markets. According to brokerage Marcus & Millichap, three years ago over 60% of apartment acquisition capital was going to primary markets. Today, that share has fallen below 50%. Marcus & Millichap recently brokered the sale of 30 West Apartments, a 264-unit project in Bradenton, Fla., a tertiary market, for $25 million.

After watching our neighbors to the south (Charlotte) and east (Raleigh) getting most of the dances it looks like we here in the Piedmont Triad are finally going to get our share.

May 27, 2015 at 2:16 pm Leave a comment

The Story Behind the Sale of CityView

According to this piece on Triad Business Journal’s site, Signature Property Group’s sale of CityView to The Carroll Cos. was motivated by their need to free up capital for projects outside of the Triad:

The sale, a first for Signature in its 25 years of business, lifts constraints on cash resources, allowing the group to develop four more properties in the year ahead, said owner Frank Auman.

“The main reason we’re selling it is to fund expansion outside the Triad,” he said. “We currently have three properties under contract between Raleigh and Burlington, and we are in negotiations with a fourth in the Raleigh area. We plan to start two this fall and two next spring.”

He declined to provide further information about those plans.

The Carroll Cos motivation for the purchase seems to be deepening its presence downtown:

Carroll said the acquisition will help The Carroll Cos. take advantage of a “variety of synergies and operating efficiencies that come from owning three projects just blocks from each other in downtown.”

CityView joins Carroll’s other major downtown projects: Center Pointe, 98 luxury condominiums in a 17-story toweron North Elm Street; and Bellemeade Village, a large-scale mixed-use project planned near NewBridge Bank Park. Bellemeade Village, a $50 million project that will include a Hyatt Place hotel and 300 upscale apartments, could see site work begin “any moment,” Carroll said Wednesday.


May 14, 2015 at 1:04 pm Leave a comment

Home Prices on the Rise

A front page story in the Wall Street Journal highlights a rise in home prices in 1Q15 and how that might affect the apartment market:

The number of metropolitan areas that saw double-digit percentage increases in home prices more than doubled during the first quarter, reflecting a mix of thin supply and strong demand that points to heated competition for home buyers.

Fifty-one metro areas posted year-over-year double-digit price increases compared with 24 metro areas in the fourth quarter of 2014 and 37 in the first quarter a year ago, the National Association of Realtors said Monday…

The accelerating gains are a welcome sign for the spring selling season—a crucial period for sales because families typically want to lock in to a school district by the end of summer—and an early indication that the moderating gains of the past few years might be picking up. But affordability concerns could keep many would-be buyers out of the market…

In Winston-Salem, N.C., where prices are up more than 15%, broker Eric Munger said that clients are becoming discouraged by the lack of inventory. He said one client recently decided to renew his lease for six months because he couldn’t find a house to match his criteria.

The story goes on to describe how some economists think home builders will ramp up to meet the increasing demand, but others think that won’t happen until the employment picture in the country improves:

But builders disagree that a lack of new construction the sole factor for an unbalanced housing market. They blame relatively weak demand because of a relatively sluggish job market, young people putting off homeownership and people hesitating to put their homes on the market because they still can’t get prices to match what they paid during the boom.

And even when the demand does come back, it will take builders a while to ramp up production:

But Mr. Hamill said it will likely take several more years before builders have the capacity to fully meet demand. “We lost a lot of builders, lost a lot of trade contractors, we lost a lot of people to other industries,” he said of the lingering impact of the 2007-09 recession.

All in all the news still looks good for the apartment industry.

May 12, 2015 at 2:41 pm Leave a comment

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