by Gregg Davis
Q1 2019 is in the books and it was much as we expected. No significant increase in vacancy. Rents have continued to rise, albeit slower than we have seen in the past few quarters. The newest numbers from the ARES survey performed by Moe Therrien show the 5th straight year with reported vacancy under 3.5%. Average rents are up about 8% over last year.
Areas of the Treasure Valley have seen more rapid rental increases than others. Downtown Boise, Southeast Boise, The Village, Ten Mile Interchange, North Meridian and Eagle have been the target of
the majority of the new construction and development of Apartments in the past three years resulting in rapid rise in rental rates in those areas as new product demands higher prices. As these new units are delivered, we see an uptick in vacancy during lease ups in those areas. Those units are competing for the same target of higher income earners who either can’t or choose not to buy a home. That portion of the population is growing, but we may see stress on those newer, high-rent, full-amenity properties soon if construction continues at the current pace.
For every one of those areas, there is another area where rents have been held below market averages by the lack of land for infill development which has not allowed the new construction pricing to drive up rents. Some of those areas provide savvy investors with opportunity to add value to properties and increase rents and therefore create/force appreciation. Local investors have known about these areas for years, and out-of-state money is starting to trickle into those neighborhoods. It is no secret that the Boise Bench has amazing potential for redevelopment. That is the obvious next “Northend” area and money is pouring into the Bench. One of our clients has remodeled a small apartment community and taken rents from under $700 to over $1,200 per month. Others have seen less dramatic, but still significant increases from $675 up to $950 per month. The age and charm of the properties in the Bench captivate renters who have been priced out of the Northend.
Other areas that hold those “deals” that everyone is chasing are Southwest Boise, the mall area (around the Boise Towne Square Mall), pockets of the Westend that haven’t already been snatched up, the airport/Vista Ave south of Overland, older parts of Meridian, Garden City, Kuna, and even Nampa and Caldwell.
As high rents drive renters to look for more affordable housing, many are driving farther than ever to be able to afford rent. Wages, while up, have not kept up pace with rents. Those areas in the outlying Ada, Canyon, Gem and even Elmore county are seeing more and more commuters who work in Boise seeking refuge from the rental rates they are fleeing in Boise. These rental rate “refugees” are driving up rents in those areas as well as more and more renters compete for very few available units.
Some examples of investment scenario’s our clients have experienced in the past 18-24 months that demonstrate the value that exists in these areas are outlined below:
What’s the point? With the right team—one that knows the market rents, can manage the renovations and estimate the costs associated with those repairs, you can buy a property and add value, force appreciation, and grow your net worth. Our team at Commercial Northwest Property Management and KW Commercial, our brokerage arm, can help you find those neighborhoods that harbor potential gems, help you negotiate and purchase the property, manage the renovation and lease the units at the increased rates to create and grow your property value and in turn your net worth.
Contact us today to see how we can help you!
Without a doubt, owning and managing any type of rental housing can be challenging. However, owning and managing a luxury apartment community can be even more demanding.
Prospects seeking to live in a luxury community expect the latest amenities, beautiful interiors, and superior management and service. These residents are willing to pay a premium for the lifestyle and convenience an upscale property offers, and so they expect the property to provide value for their money. That’s why hiring an experienced and quality property management firm is essential to the ongoing success of an apartment community, especially in the luxury category.
A high-quality property manager enhances the value of a building, which in turn benefits an investor's bottom line. From common-area amenities to individual apartments, a top-performing property manager keeps a community in prime condition, maximizing value to yield higher rents and increase profit during ownership. They’ll also command a larger return when the investor is ready to sell. Here’s how.
Leasing and Retention
In today’s digitally driven world, prospective residents first look to the internet when deciding where to live. It’s imperative for property managers and their teams to have an online presence along with a definitive plan for how to manage it. It takes skill and dedication to manage and oversee the online aspects of a community, from the website and resident portal to social media and reputation management.
Many property management firms target their marketing to the demographics best suited for the community by highlighting amenities, apartment features, and neighborhood attributes to attract potential residents. This makes for a satisfied and, likely, long- term resident. Reduced resident turnover and shorter vacancy cycles are good conditions to have—and good property managers will have a tried-and-true resident-retention formula.
Property management firms also handle the leasing process, which includes performing renter background, credit, and criminal checks. Hiring a property management firm can also help shield you from unqualified prospects, rental scams, and potential lawsuits by keeping your company compliant with the latest landlord–tenant laws and federal protections related to housing.
Professional property management companies tend to have established and trusted vendor relationships. Those vendors can provide discount or bulk pricing and possibly discounts from insurance companies to get you the most for your money. They utilize the latest software, too, which can provide key metrics to monitor maximum performance in both revenue and expenses.
With the demand for luxury apartments on the rise, renters expect a higher level of competency and sophistication from on-site staff. Luxury communities require expert knowledge of property management due to the additional detail and responsibility involved in the venture. Trends show that residents expect cutting-edge amenities, including smart features, in their unit, which requires extra oversight, maintenance, and an evolving knowledge of the wants and needs of today’s renter.
There are both long-term and immediate benefits that come from hiring a quality property management firm to oversee your investment. It will generate a return on investment that's well worth the initial expense. It reduces stress, increases your freedom, and gives you confidence that your investment is being well taken care of while you’re making money from it.
Every experienced investor understands that time really is money. Selecting a credible property management firm to manage your luxury property assets can afford you more time to focus on new business that can help build your portfolio and your long-term success.
View original article by Multi Family Executive here
How will property owners and property managers improve business operations and revenue in 2019? By keeping a close and persistent eye on the major trends affecting future business performance.
Property management is a booming multidimensional business worth Billions. Improvements and threats will come from many directions.
The top 15 trends to watch are dominated by the new software and tech electronics and all the amenities tenants want. It’s the demands of tenants who want technology that’s driving big changes for landlords and property managers.
Keeping on top of industry trends and improving your business should be a priority in 2019. Just being aware of stats, views, opinions and news in the property management and housing markets can help keep you ahead of the crowd.
Trends Impact the Bottom Line Quicker Now
Trends aren’t gimmicks. These improvements are responding to landlord’s and tenant’s pain points. It’s not the apps, services, etc. that matter. It’s the need for them that makes property trends so interesting.
Owners and Investors Need Your Insight
Property owners and investors in general may not be housing demographic, technology nor customer service experts. Cultural trends and new software technology for instance, are invisible to them. However these will affect demand for their properties or how long they hang onto good tenants.
Your choice of software and apps might have big effect on future rental property portfolio earnings, yet they won’t see these trend “trains” coming unless they’re an avid property management blog reader.
Only you’ll understand the evolution.
They’ll be relying on your forecasting and leadership here. Your expertise ensures their investment is protected and you know how to add value.
Upstart property management companies will be looking for an advantage to beat you, and an authoritativeness about the “new property management market” might be their opportunity. Make sure they don’t get ahead of you on this.
Property Management Trends 2019/2020
1. Technology Trends: In 2019, the most influential trends might arrive from many different sources due mostly to technology. New cloud services, Internet connnected devices, automation software are creating business advantages.
Fintech and Proptech are the buzzwords. These technologies integrate well with modern property management software such as ManageCasa and they’re optimizing management in a way tenants appreciate.
2. Demographic Trends: Millennial tenants are becoming more of the tenant market and what they want often requires high tech solutions. Without that technology, they consider you backward or irrelevant, even though you’ve got everything else nailed.
Without technology and growing property portfolio’s you may not be able to keep up, nor satisfy landlords and owners that you’re capable of growth and efficiency. They’ll likely know from their first visit to your website or conversation on the phone that you’re old school.
Is it over-hyped or under-hyped? Well, renters love the ease of doing things when they can via their smartphone, on the bus or subway, at work, on the road in their car or at home.
3. Rental Market Demand: Housing construction starts will grow in 2019 and for the next 5 years. Renters are weighing the buy vs rent decision, and some will make the choice to buy a home. That will in turn lower rents and raise vacancies. Your costs will go up and your revenues down.
4. Booming Economy and Trade Tariffs: President Trump’s new tariff walls will likely mean the return of jobs across the U.S. including the long lost cities of the midwest and rust belt. High employment and rising wages among Millennials who are mobile will mean no city has to be left out of the new economy. New single houses, townhouses and multifamily developments will spring up creating opportunities for property management companies.
5. Government Restrictions: given how high housing prices are and how high rental prices have become in cities such as San Diego, New York, San Francisco and Los Angeles, the cries for rent controls will get louder in 2019. That’s a death sentence for many investors. From California to Texas, keeping an eye on state and local attitudes is smart.
6. New Construction Trends: besides big growth in new construction, and government programs (such as the new $1 billion program in Vancouver, Canada) can impact your future rents and income potential.
Large multifamily buildings are the trend, due to so much pent up demand for units. Big developments near key transit locations will receive priority from government.
7. Interest Rates and Inflation: financing, wages, utilities, and operating costs will rise in 2019 thus cutting into your net income.
8. Software Technology: New software technology is offering improvements in simple accounting, time management, tenant screening, online payment, property maintenance and repair services, and property management analytics. Some offer complete solutions while others are woefully inadequate. Some might impose on your business creating addtional costs and adoption issues. Which solutions and appsshould you adopt in 2019?
9. Demographic Shifts: Babyboomers are finally retiring and the Millennial generation is out of their parents homes and into renting their own apartments. Your rental products and managment style will gradually be reshaped to suit them in 2019.
10. Startup Property Management Companies: We’ve all heard about the growth in accidental landlords. Buying rental income properties is popular and many are realizing there is big money in property management. They will want to get serious about growing their portfolio and formally launching a property management company.These newcomers to property management won’t want anything to do with old PM practices involving spreadsheets, receipts, and check payments at month’s end. No, they’re not trained pros and they’ll want to simplify right away using property management software.
11. Industry Consolidation: Big property management conglomerates are entering the independent property rental market. What are they looking for in properties or in property management companies they’d like to acquire? What services will they offer, e.g., maintenance).
12. Specialization: Given growing complexity in PM licensing requirements, government legislation, lender regulations, insurance requirements, environmental constaints, and accounting and taxation property management professionals have begun to specialize. Will expertise in any area give you a business advantage? What training and licensing must you obtain?
13. Insurance: Changes in legal liability mean more renters should have their own renters insurance, and they will. Similarly, landlords will also need to be sure of their own landlord insurance. Is insurance coverage for them a value add for your company?
14. Digital Amenities including Free Wifi: Here’s benefits tenants love. It’s for large multifamily buildings or large portfolio managers to either provide free wifi or create it as an affordable option for tenants. Wifi may be the coin operated washing machine of 2019.
15. Smartlocker Storage: We’re in the era of Amazon. Amazon’s growing share of retail shopping is shocking. Tenants will need some way of accepting packages at their apartments, many of which don’t have suitable storage. Smartlockers allow them to pick up parcels when they can. The tenant receives a digital message and unlock code on their smartphone. Yes, another app.
Technology is just trying to keep up with modern renters lifestyles. So you’ll need to keep up with property management technology.
View full article by Manage Casa here
Are you a hands-on landlord, or would you prefer to avoid weekend maintenance calls or monthly rental income and expense management? If you’d rather have someone else handle the details, hiring a property management company to manage your real estate investment might be the right choice for you. Yes, they’ll take a cut of your rental revenue, but they can also help streamline your business and free up your time.
Take the time to research and interview several companies. Choosing a property management company is a big decision, and not every property manager will offer the same level of service or be the best fit for your needs. But, when you find a good one, you may never want to go back to managing rentals on your own.
Here are 5 benefits a property management company can provide.
Screening out problem tenants
Experienced property managers see hundreds to thousands of applications, so their trained eyes are more likely to notice potential red flags when reviewing an applicant’s paperwork. Letting them manage the tenant screening process can improve your chances of landing a reliable tenant.
Acting as the point of contact for tenant concerns
If something breaks at your property, it’s not always convenient or possible to drive over to the unit to inspect it yourself (especially if it’s in another town or state). A property manager can address problems at all hours of the day and arrange for a service provider to repair or replace the item. Or, if you have a tenant who always seems to have a complaint, be it the noisy neighbors or the dog who relieves itself on the front lawn, you can breathe easy knowing that the property manager is the point of contact for those types of calls.
Decreasing tenant turnover
Good property management companies know how to keep their renters happy. They are responsive, available and take care of problems as they arise. Happy renters are less likely to look for another place to live and more willing to accept reasonable rent increases.
Ensuring rent is paid on time
Since many property management companies deduct their fees from the monthly rent, they are motivated to keep those payments flowing in. Consistent rent collection is the key to receiving rent payments on time, and a property management company will enforce lease policies if payments aren’t received. If tenants are consistently failing to pay their rent on time (or at all), the property manager will know the proper steps to deal with the situation, including issuing an eviction notice if necessary.
Reducing your rental headaches
If someone else is handling the daily management of your rental property and tenants, you’ll have fewer complications and commitments to worry about. If more time and less stress are key to your quality of life, a property management company can be a great asset.
Investing in rental real estate can contribute to your monthly cash flow and build long-term wealth — but day-to-management isn’t for everyone. If you just want a rent check and don’t want to be responsible for all of the details of your real estate investment, leaving it up to the pros can be well worth the cost.
View the original article by Amie Fisher with Zillow here
Whether you live in New York, Seattle or some other crowded city, one thing is for sure: there’s a pretty high chance you’re living in a tiny apartment. I know I am. You’re building your empire and you can’t afford a spacious penthouse (yet) and that’s just fine. According to The House Designers, tiny spaces are becoming mainstream and anything less than 1,000 square feet counts as a tiny space, so many of us fall into the category. In fact, just the other day I drove by a furniture store that was called ‘OMG it’s small’ and it caters to those shopping for furniture for their small apartment. Go figure. I’ve come to recognize that living in a small space can benefit you in unexpected ways, though. Spring cleaning is so much faster and easier. You’ll be more of a minimalist, you’ll simplify every aspect of your home life, and you’ll have a way easier time cleaning up and keeping track of your things. You’ll spend less of your hard-earned cash on home décor because, well, you have nowhere to put it anyways. What are some other unexpected benefits of living in a tiny apartment? Read on for 8 reasons why living in a small apartment is actually a great thing:
1. You’ll save a bunch of money
You don’t need me to tell you that it’s cheaper to rent a smaller space. Additionally, the smaller your space the less your monthly bills will rack up since it takes less energy to light up, heat up and cool down your space. If your place is half the size of your friend’s place, who do you think is spending half as much on utilities?
Do you dream of traveling or having a large savings account but find this to be impossible with your current monthly bills? Well, tiny living offers freedom from these financial issues by letting you dramatically reduce your expenses, so you may want to think about moving into a smaller apartment. Additionally, you’ll have less decor to buy, a small collection of artwork will go a long way, and smaller furniture costs less than large-scale furniture.
2. Your mental health may improve
There is some conflicting evidence being debated by psychologists regarding the mental health benefits or complications of tiny home living. However, many in the field have pointed out that small spaces tend to be less visually complex, which can be comforting for some people. Plus, your home should be cozy, and small is cozy – and comforting. In the best-selling book The Life-Changing Magic of Tidying Up it’s pointed out that a clean living space is good for your mental health, and it’s easier to keep smaller spaces clean and tidy.
It’s also beneficial that a smaller space can provide you with a greater sense of control over your environment. You’re also much less likely to have to play the host all the time compared to friends living in spacious apartments. Finally, people who live in small apartments are much more likely to spend time outside, and spending time outdoors is directly linked to happiness. There are many documented mental health benefits to physical activity and being outside in nature.
3. You will finally have to de-clutter
If you’re about to move into a small apartment, you’re about to do some major de-cluttering and that’s a fantastic benefit. If you’re like the vast majority of Americans, you have approximately 300,000 items in your home. This tends to create a lot of clutter, even if you attempt to straighten up on a daily basis. Moving into a tiny apartment will force you to let some of those items go, which will result in less clutter accumulating. Chances are, though, that even if you donate half of your kitchenware, you’ll still have too much of it for your small kitchen. This article explains how you can save space in a small kitchen by installing extra shelving and hooks.
De-cluttering and adopting the minimalist approach has been linked to improved mental and physical health, and this is one of the prime reasons that so many people have embraced the concept of minimalism. Quite simply, if you have fewer possessions, there will be less to do to keep your living environment looking and feeling great!
4. You’ll reduce your negative impact on the environment
Carbon emissions are caused by many things, but one of the biggest home offenders is heating. Regardless of the type of heating system you have, you’re putting carbon emissions into the surrounding community each time the heater comes on. Therefore, if you’re concerned about the environment, you can take steps to reduce your carbon emissions by moving into a smaller home. Of course, you’ll still need to be careful with your heat usage to have the biggest possible impact, but a smaller home will automatically help based on its size alone. The truth is that small living spaces are much more eco-friendly and more economical than larger living quarters.
5. You get to be more creative
Living in a tiny space requires creativity, especially if there’s more than one person in the home. You’ll be able to fully stretch your creative juices by working out solutions to issues such as storage space and maintaining privacy. You’ll get inspired to make your small space chic, and you’ll get creative in decorating it to make it look bigger, brighter and less confined. This also encourages a less cluttered environment and will help you determine which items are truly important versus the ones that can be donated or thrown away. Tons of creativity is involved when it comes to adopting the minimalist approach (which you must if you’re living in a small space.)
6. You’ll have more free time because you’ll spend less time cleaning and organizing
The larger the home, the more time it takes to keep it clean and well-organized. And, the bigger your space the more often you lose things, let’s be honest. It’s just not as easy to keep track of your things in a bigger space. By downsizing to a tiny apartment, you can keep everything clean without committing as much of your free time to household chores. This will make it easier to spend time with loved ones, pursue your personal interests and fit some daily exercise in. Keep in mind that all of these things can also improve your overall quality of life. If you feel like your current lifestyle doesn’t provide you with enough time to devote to personal relationships, hobbies or goals, moving into a tiny apartment may help you find a solution.
7. When it comes to decorating, you’ll get so much more bang for your buck
Living in a small space means that you’ll be able to get a lot more bang for your buck by finally getting the nicer interior you’ve always wanted without blowing your budget. Less space means that decorating your apartment will be much cheaper. You can have fun with it and make your space beautiful so much more easily – and more cost-effectively. Check out some of my tips for decorating a small apartment. Pretty chic, right? You have more room than you think to display your trinkets from around the world – simply invest in some cool floating shelves for your walls. You can save space with chic furniture that doubles as storage, and you can make your tiny space look bigger and brighter with eclectic mirrors. All of these decorating tips for smaller spaces definitely makes living in a small home look not so bad.
8. Relocating will be easier when it comes time
At some point in the future, you may need or want to relocate, or upgrade to a bigger space. So, it’s great news that small spaces are easy to transport. Less stuff, less fuss. You also won’t have to spend a bunch of time selling furniture or décor that won’t fit in your new place. Chances are, all of it will fit if you’re moving from a tiny apartment. Moving sucks, but you don’t dread it as much when you’re moving from a small space with less stuff.
View original article here
Spring is here, and summer is fast approaching. That means the opening quarter of 2019 is in the books. We don’t have 5 petabytes of data stored on 1,000 pounds of hard drives as was generated by the recent, historic first picture of a super-massive black hole. But, we have more than enough data to assess what kind of start various multifamily markets have gotten off to this year. On a national level, stability is the word. Average occupancy was essentially flat, as was average effective rent growth.
All numbers will refer to conventional properties with more than 50 units. For this review, we’ll go by National Apartment Association (NAA) regions and identify some high and low points from each.
Region 1—Washington DC, MD, PA, VA, WV
A little more than 20 new properties were added in these states in the first three months of the year. Of those, 12 are in the DC market. The approximately 3,300 new units there represent the only market in this group to have surpassed 1,000 new units. Philadelphia was closest, adding just under 1,000 units. Unfortunately, net absorption* was negative by more than 200 units in the quarter, while in DC, more than 2,700 units were newly rented.
The story with average occupancy across these markets is one of stability. A relatively small amount of new construction in areas outside metro DC resulted in average occupancy change being within 1% either direction for every market. No area ended March below 93%, and no area managed to hit 96%.
As with occupancy, there wasn’t much movement in average effective rent during the quarter. There were three markets to top 1% growth: Harrisburg – Lancaster, Richmond and Roanoke. The 2% increase in Roanoke put it in the top 10% of all markets across the county. Harrisburg – Lancaster saw rents gain about 1.5%, and Richmond added 1%. DC continues to lead the pack in rent per unit, and by a wide margin, ending the period at $1,800 per month per unit. Baltimore and Philadelphia come next, with both right around $1,300 per month.
Region 2—CT, MA, ME, NH, NY, RI
Fewer properties were added in this region, with a majority coming online in the Greater New York metro area. New York added about 1,300 new units but absorbed nearly 4,000. Hartford, Boston and the upstate New York region each added two or three properties, but all failed to absorb those units within the quarter.
Once again, because of the relatively sparse construction pipeline deliveries, average occupancy was stable. No market gained or lost even 1%. At the highest occupancies were in Albany, Augusta – Portland, Providence and Springfield, where the lowest ended March at 96%. All are in the top 10% nationally.
There wasn’t much activity in rent growth in this region either. Concord and the New York metro area each managed about a 1% gain to lead the way. New York and Boston have the highest average monthly rents, at $2,600 and $2,200 respectively.
Region 3 – IL, IN, MI, MN, OH, WI
Much of the new construction activity in these markets was in Chicago, where almost 3,400 units were added. Both Columbus and Minneapolis – St. Paul added more than 800 units, and Detroit added almost 750 units.
This is the first region where we see some real variance in average occupancy. Although, like the previous regions, there isn’t much variance in terms of occupancy percent change. Fort Wayne and Madison were the only areas to hit 1% occupancy growth for the quarter. On the other end, Springfield suffered the largest occupancy loss—a 1% decline.
Chicago ended March at 90% average occupancy. Every other market ended higher, with Green Bay – Appleton – Oshkosh highest at nearly 97% — placing it in the top 10% of markets nationally.
Rents performed comparatively well in these markets during the first three months of the year. Both Minneapolis – St. Paul and Chicago realized 1.5% rent gains, while Columbus and Evansville came in just behind with about 1.3% growth each. Green Bay – Appleton – Oshkosh was the only one in this region to see rent growth fall short of 50 basis points, with a gain of about 25 basis points.
Region 4 – GA, KY, NC, SC, TN
New supply is more pronounced in these areas compared to the first three regions. It’s also more dispersed amongst the markets. The Atlanta metro added about 3,500 new units, and Charlotte and Raleigh – Durham each added around 1,800 units. Nashville was the other site of notable construction activity, with nearly 1,200 new units coming online in the quarter.
Whereas the areas covered so far have tended to have average occupancies in the low-to-high 90% range, this region is grouped more around the high 80% to low 90% range. On the low end, markets like Augusta, Charleston and Myrtle Beach all ended March around 88% for average occupancy. On the high end, Columbus and Wilmington ended the quarter at 94% and 95% respectively. The larger markets such as Atlanta, Charlotte, Raleigh – Durham and Nashville were all right in the middle in the low 90% range.
This region also experienced strong rent growth in the period compared to the previous few regions. In fact, two markets landed in the top 10% for effective rent growth across the county. Wilmington and Lexington added about 3% and 2% respectively to average effective rent. Albany, Atlanta, Memphis and Louisville each gained just under 2%. Furthermore, Augusta, Chattanooga, Charleston, Columbus and Savannah all surpassed 1.5% rent appreciation. For those keeping track, 11 of the 22 markets in this region saw larger rent gains than any of the markets in NAA Regions 1, 2 or 3.
Region 5 – IA, KS, MO, NE, OK
Slightly more than 1,100 units were introduced in the Oklahoma City market in the period. No other market in this region added even 500 units. The closest was Omaha, with about 450 new units.
The average occupancies in this group resemble those in NAA Region 4. Wichita managed a 1% occupancy gain despite also adding about 200 units. No other area added even 50 basis points to average occupancy. Springfield and Oklahoma City each lost ground to the tune of 1%. Lincoln, after adding about 160 units saw average occupancy decline by 2.5%. St. Louis ended the quarter at 95% average occupancy, with Columbia and Kansas City not far behind at 93%. No market finished March any lower than 89%.
Effective rent growth was strong in this region compared to the national average as well. Wichita was the biggest gainer, at about 2%. Rents rose in Oklahoma City by a little more than 1.5%. The St. Louis, Lincoln and Topeka – Manhattan -Lawrence areas all managed to top 1% growth as well. Springfield was the only market that slid backward, suffering a 2% loss on average. This is the first region where no market average is above $1,000 per unit per month, though Kansas City and St. Louis are likely to change that before 2019 is over.
Read ALN Data's Recap of the 2019 TAA Education Conference & Lone Star Expo
Region 6 – AR, NM, TX
Q1 2019 continued the building trend in the major Texas markets. More than 6,200 units were added in DFW. Houston added more than 3,000 new units and Austin delivered about 2,200. San Antonio introduced just under 1,500 new units. The smaller markets got into the action as well, with Albuquerque, Waco – Temple – Killeen, Northwest Arkansas and Midland – Odessa each adding at least 1 new property in the quarter.
The lowest average occupancies as of the end of March for this region were all in markets with no new supply in the period. College Station ended up at about 85%, while Amarillo, Beaumont and Lubbock all ended between 88-89% average occupancy. The best improvements were found in areas like Abilene, Albuquerque and Waco – Temple – Killeen where average occupancy rose by more than 1%. Three of the four major Texas markets finished the quarter at about 90% occupancy, Austin ended higher at about 91%. Lastly, DFW had the highest net absorption of any market in the US in the first quarter, adding more than 4,400 net newly rented units.
Rent growth in this region was relatively robust across the board, with only a couple of exceptions. Waco -Temple – Killeen and Midland – Odessa both surpassed 2.5% growth. Lufkin and Victoria added better than 2% to rents. All four markets were in the top 10% for effective rent growth nationally.
Thanks to the oil industry rebound and limited multifamily supply, Midland – Odessa continues to be the most expensive market in Texas. Average effective rent in that market ended March at over $1,500 per month. Austin and San Antonio each realized gains of 1.5% or better, while both DFW and Houston managed only a little more than 50 basis points. San Antonio has now joined the other major Texas markets with average rent of $1,000 or more.
Region 7 – AK, AZ, ID, NV, OR, WA
The Q1 performance of this region is as diverse as the geography it covers. Phoenix and Seattle each added about 2,000 units in the first three months of the year. The other market with notable new supply was Portland, where around 1,200 new units came online.
The Southeast Washington area saw average occupancy jump nearly 5% in the quarter, ending March at nearly 96%. Boise was another strong performer, adding a little more than 1.5% to finish at 95% average occupancy. On the other end of the spectrum, both Reno and Flagstaff moved downward by about 2%. Spokane didn’t see much movement in the quarter but remains one of the highest occupancy markets in the country at nearly 96%. The only market under 90% is Anchorage, but only slightly, at 89%.
Every market in this region managed to raise rents, most of them by at least 1%. Phoenix and Boise paced the field at just over 2%, while the 20 basis point gains in Flagstaff and Southeast Washington brought up the rear. Each of the other seven markets added no less than 70 basis points at the average. Spokane was the other standout, managing to just touch 2% growth.
Region 8 – CO, ND, SD, UT
The bulk of new construction in this region occurred in the Denver – Colorado Springs and Salt Lake City markets. Denver – Colorado Springs added about 1,400 new units and Salt Lake City delivered around 800.
Sioux Falls, which began the year at 89% average occupancy, added almost 400 units and the result was an occupancy decline of almost 3% to just under 87%. No other market ended the quarter with an average occupancy below 91%. Fargo also suffered an average occupancy decline, losing just under 2% to finish March at 91%. Rapid City, at 96%, and Bismarck at 95% continue to have the highest average occupancy of the region.
Average effective rent in both Bismarck and Sioux Falls rose by 2% in the period, the highest gains in this region. Salt Lake City and Denver – Colorado Springs each gained about 60 basis points and continue to be the only markets with average rent above $1,000 in this group. Denver – Colorado Springs now has an average rent per unit of nearly $1,450 per month, while Salt Lake City ended March just below $1,200.
Region 9 – AL, FL, LA, MS
Unsurprisingly, the larger Florida markets dominated the new construction scene in the first quarter for this region. Orlando and Miami each added around 2,000 new units. Tampa and Fort Myers – Naples saw deliveries of about 1,800 and 1,600 units respectively. Melbourne, Jacksonville and Fort Lauderdale each added more than 500 new units as well.
Average occupancies in this group largely ended March on the low end of the national scale. Baton Rouge, Lake Charles and Fort Myers – Naples all ended Q1 2019 at or below 88%. Additionally, Monroe and Mobile each finished up the period around 89% average occupancy. All five of these markets were in the bottom 10% of nationwide markets. Of the markets with at least 250 conventional properties, Birmingham owns the highest ending average occupancy – just under 93%. Jacksonville had the lowest ending occupancy of those larger markets, managing to stay just above 90%.
Lake Charles was the only market in this region to suffer a significant loss in average effective rent—a loss of nearly 6%. It’s important to note the sample size here as Lake Charles has only 29 conventional properties with more than 50 units. Gulfport – Biloxi also lost some ground on rents, but only by about 20 basis points at the average.
There’s good news for this region – it’s home to the market with the strongest effective rent growth in the nation for the first quarter. Pensacola rents climbed 3.5%, and just behind Pensacola was Fort Myers – Naples with a gain just over 3%. Lastly, Baton Rouge, Gainesville and New Orleans are likely to surpass $1000 average effective rent per unit sometime this year.
Region 10 – CA, HI
Most of the new supply in this group came in the Los Angeles – Orange County and San Francisco – Oakland markets. The LA metro area added about 1,300 units, and the Bay Area added about the same.
It shouldn’t come as any surprise that some of the highest average occupancies in the nation are found in this region. San Joaquin Valley finished March with an average occupancy of 97%. Central Coast in California crossed 96% in the quarter. Honolulu and Los Angeles – Orange County are the low water marks in this group, and each stands a bit over 93%. The nearly 1,800 absorbed units in the Los Angeles – Orange County area was enough to put it in the top 10% of markets nationally.
The highest average effective rent for a market continues to be the Bay Area, which ended March with an average rent of just above $2,700 per month. LA is neck-and-neck with Boston for the next third most expensive market nationally, with an average rent of about $2,200 per month.
In fact, eight of the ten ALN markets in this region are in the top-10 for most expensive markets, with only New York City and Boston being in the top-10 from outside this region. Honolulu is the only market to have seen rents recede at all in the period, with a loss of just under 2%. San Joaquin Valley, Providence, San Bernardino – Riverside and Sacramento were the only areas to gain at least 1%.
The nearly 70,000 new units introduced nationally in the first quarter is a reduction from over 85,000 new units in the same period in 2018. However, that’s still a significant increase compared to Q1 2017 which saw the introduction of fewer than 55,000 units. The draw down in new supply was timely because demand, as reflected in net absorption of about 45,000 units, was lower than it has been in the last few years for an opening quarter.
Average occupancy in Q1 2019 stayed essentially flat for the third year in a row, and average effective rent growth was just under 1%. What we’ve seen so far this year is that some areas continue to perform well, but the strong results are beginning to be concentrated in fewer markets. And, even these relatively strong performers failed to replicate recent past performance. Many areas mostly held their ground but didn’t make much progress in the quarter.
As we move into the traditionally stronger second and third quarters, demand will have to increase if it’s going to stay in-range of the pace of new supply. In a few markets, we could see more pronounced signs of overbuild before the end of the year.
View the original article by ALN Apartment Data, Inc here
In the not-so-distant future, apartment buildings will incorporate digital detox spaces and internet-connected yoga mirrors.
The future of the multifamily market will include disruption, advances in technology, and engineering challenges related to the ongoing labor shortage, industry observers said at the International Builders' Show (IBS) in Las Vegas last week.
“We used to be really great with hammers and nails. Now, we have buildings with brains,” said Jennifer Nevitt of Forty-Two LLC, a multifamily property management, development, and consulting firm based in Plymouth Meeting, Pa. “Our buildings have become so high-tech, we don’t have a labor force that can deal with that.”
Nevitt’s presentation at IBS focused on a wide variety of trends that are already influencing the industry, with more change predicted in the future. She acknowledged that the labor shortage is affecting not only the construction of multifamily buildings but also their operation, and she recommends tapping graduates from local colleges or trade schools that offer construction management on the curriculum. She also predicted that increasingly severe weather will continue to create havoc in the construction business and that the threat of tariffs has resulted in raising the level of contingency funds in a budget.
Nevitt likes using monitoring technology to help manage buildings, such as Leak Gopher, by Franklin, Tenn.–based Leak Intelligence, which can detect a leak in a building and turn the water off automatically, or devices from Lebanon, N.H.–based FreshAir Sensor, which can detect unauthorized smoking in a building, including of tobacco and marijuana. “It’s the only way to police,” she said. "Otherwise, we'd have to hire a full-time employee just to handle lease violations.”
To cut down on labor costs, Nevitt recommends paying attention to innovations like accessible pick-up zones for car-sharing services, backup electricity systems in case of an outage, and augmented-reality devices to show prospects apartments. “We figure it’s a 40-minute labor cycle to physically show somebody an apartment, and 70% don’t buy on the first visit, which leads to another 40-minute labor cycle,” she said.
Nevitt also points to digital detox spaces—tech-free zones inside a building that are dedicated to a phone-free experience, and coffee shops that can transform into a sushi bar in the evening via movable walls. Mirrors in the near future will be internet-enabled so that residents can practice their yoga poses, and closets will be so smart they'll help a tenant match outfits. She envisions vertical farming coming to high-rise buildings, especially product that features oversized patios.
Mail and package rooms are getting hipper and putting more onus on renters to retrieve their own goodies, and Nevitt likes Amazon’s locker service as another way to dial back labor costs. “Amazon will install lockers for free,” she said. “Our leasing agents were spending all their time delivering packages; we’re getting 100 packages a week for 350-unit buildings.”
Statement flooring appears to be another trend, along with circadian lighting systems. In upscale buildings, private panic rooms are popular, along with refrigerators that tell you when the food has expired. In the bath, showers with seats are desirable and sinks should be single basin and 14 to 16 inches deep. High-quality faucets are a must. Gas fireplaces are now a good idea, along with appliances that reveal when they're about to fail.
Of course, the lifeline connecting all these bells and whistles in terms of bandwidth can't be ignored. “We’re now connecting units with 1 gig of fiber per home, when it used to be 1 gig for the whole property,” said Nevitt. “We offer 30% of that speed for $69 and they pay extra by volume for the gigs used, so we don’t turn it on for everybody.”
Nevitt also likes to imagine that, one day, owners and operators will be able to use an app to rate their renters, but, so far, that is still a ways off.
This article first appeared on the website of MFE sister brand BUILDER.
Living in a rental is a great way to save cash and have some flexibility in your life, but it does come with limitations. Most landlords will impose strict rules as to what you can and can’t do to their property. Often, you won’t be able to paint walls, add new fixtures or even put up a shelf or two. This can make it difficult to turn a rental place into a home, but with a few tips, you can make it feel a little cozier.
Split Your Space
Room dividers are a great way to split your space up and create temporary partitions. This can be especially useful in a studio apartment, or in a room that feels too large and empty. Don’t let your living space have that vacant feeling by creating the layout that suits you.
Add Some Greenery
House plants, herb gardens and vegetable patches are all excellent additions to any living space and can create a really homely atmosphere. They look fantastic, freshen your air, and you can use some of the plants in your cooking.
Don’t like that musty old lampshade? Swap it out for something more to your taste, and consider making a feature of a really special piece. When your lease is up, simply swap it back and take your personal light fitting to your new place.
Go Large on Art
Can’t hang pictures or photos on your walls? Go large and order huge, framed prints. These can be simply leaned against a wall, making a beautiful statement and providing an eye-catching focal point. [You can also use Poster Putty to hang photos and prints!
Removable wallpaper is affordable, easy to install and easy to remove when it’s time to move on. Plus, it comes in a huge variety of colours and patterns, allowing you to liven up your rental space and put your mark on the place.
Make the Most of Surfaces
Since most landlords prevent you from drilling holes in the walls, you might find yourself short of shelf space. Make the most of the surfaces available and use them to showcase things like art, decorations, and books. Window sills, tables and even fridge tops can all house a variety of objects.
Simple Storage Solutions
If your rental is short on storage space, you might need to think outside of the box, especially in the kitchen. There are several simple storage solutions you can use around the home, many of which pack up and can go with you wherever. A step ladder is a great place to store anything from pots and pans to bathroom accessories and books. A pegboard with hooks is another great solution for storing kitchen utensils, pots and pans.
Curtains and Drapes
If you can’t paint your walls, you can add color to your rooms with drapes and curtains. Choose colors that add a little of your personality to the place. Patterned curtains can also be a great way to liven up an otherwise bare space.
Fit a Removable Headboard
There’s nothing better than slipping into bed after a long day, but some landlords consider headboards to be optional extras and don’t think the bed they offer you needs to have one. However, you can always make your own to brighten up your rental, and they’re easy to move from place to place.
Splash Some Color in the Bathroom
Most rental apartments have been decorated in fairly neutral tones, with white bathrooms being the norm. Make yours less monochrome with colorful shower curtains, roman blinds, towels, toilet seats, shower mats, etc.
Take Advantage of Windows
Windows are of course a great source of natural light, and can easily become the focal point of a rental apartment. Treat them well, and add decor on the window sill that will take advantage of the light flooding in. Coloured glass jars and vases are a nice touch and add vibrancy to otherwise dull areas.
View original article by Andra Hopulele with Point 2 Homes here
There’s no doubt about it: the 2018 housing market has seen its ups and downs.
The year started with sky-high home prices, historically low mortgage rates and a definitive upper hand for sellers. In recent months though, home price growth has faltered, rates have risen to their highest point in nearly eight years, and favor has started to shift from seller to buyer.
Will these trends continue? Will housing experience the same wild ride in the new year? Here’s what experts predict will happen in 2019 real estate market:
Mortgage rates will continue rising.
“Despite steady climbing for the past two years, mortgage rates remain lower than they were during most of the recession and below average for the type of strong economic growth we’ve been experiencing. That will change in 2019, as the 30-year, fixed rate mortgage reaches 5.8% — territory not seen since the dark days of 2008 when rates were racing downward in response to the housing crisis.” — Aaron Terrazas, director of economic research for Zillow
Millennials will keep buying homes — despite those rising rates.
"The housing market in 2019 will be characterized by continued rising mortgage rates and surging millennial demand. Rising rates, by making housing less affordable, will likely deter certain potential homebuyers from the market. On the other hand, the largest cohort of millennials will be turning 29 next year, entering peak household formation and home-buying age, and contributing to the increase in first-time buyer demand.” — Odeta Kushi, senior economist for First American
“Millennials will continue to make up the largest segment of buyers next year, accounting for 45% of mortgages, compared to 17% of Boomers, and 37% of Gen Xers. While first-time buyers will struggle next year, older Millennial move-up buyers will have more options in the mid-to upper-tier price point and will make up the majority of Millennials who close in 2019. Looking forward, 2020 is expected to be the peak Millennial home buying year with the largest cohort of millennials turning 30 years old. Millennials are also likely to make up the largest share of home buyers for the next decade as their housing needs adjust over time.” — Danielle Hale, chief economist for Realtor.com
This graphic shows the role Millennials will play in the 2019 and 2020 housing markets. COURTESY OF REALTOR.COM
Home buying power will decrease, but that could be a good thing.
“Most homebuyers budget a monthly payment. As rates rise, a fixed monthly payment translates into less borrowing capacity and buying power is down about 10% since the same time last year. As there are less buyers at each price point, the appropriate market response is a slowdown in sales and an easing in price momentum.” — Tendayi Kapfidze, chief economist for LendingTree
Overall home sales will drop.
“As we look toward 2019, we are anticipating home sales to decline around 2%. We’re expecting it to be another slightly slower year as buyers continue to wrangle with higher mortgage rates after contending with several years of rapid price growth.” — Ruben Gonzalez, chief economist at Keller Williams
Inventory troubles will ease — not too much, though.
“The wave of first-time home buyer demand will be met by somewhat higher inventory levels than in 2018. However, while the days of multiple offers and bidding wars may be history in some markets where inventory is increasing, inventory will likely still remain tight nationally through 2019." — Kushi
“In the majority of markets, the number of homes being put on the market or newly constructed has increased slightly, while the pace of sales has slowed slightly, which has helped stop the inventory decline. But the inventory increases or slowing price increases necessary for a more widespread sales gain are not forecasted to happen in 2019. While the situation is not getting worse for buyers, it’s also not improving notably in the majority of markets.” — Hale
This graphic shows housing inventory predictions for 2019. COURTESY OF REALTOR.COM
Home price growth will continue to slow.
“Right now, for 2019, we believe home price appreciation will likely slow to near 3%. This is based on the assumption that the recent pattern of increasing inventory levels will be sustained in the upcoming year.” — Gonzalez
Buyers will see less competition, but that might not help first-timers.
“Buyers who are able to stay in the market will find less competition as more buyers are priced out but feel an increased sense of urgency to close before it gets even more expensive. Their largest struggle next year will be reconciling wants, needs and budget versus the heavy competition of 2018. Although the number of homes for sale is increasing, which is an improvement for buyers, the majority of new inventory is focused in the mid- to higher-end price tier, not entry-level.” — Danielle Hale, Realtor.com
National rents will rise, but apartment construction could ease renters’ pains.
“As higher rates limit the number of homes that potential buyers can afford, some would-be buyers will be too financially stretched to buy and will continue renting. As a result, recent (and very slight) drops in rent will reverse and turn positive again. The shift will be muted, however, by continued steady investment in apartment construction, which will prevent rent growth from shooting too far above income growth.” — Terrazas
NYC rent hikes will continue — thanks to Amazon.
“Overall, I think the beginning of 2019 will be relatively flat, with price increases in Q3, Q4 and into 2020. The period between the old 421A and the beginning of affordable New York was a window of time where there wasn’t a tremendous amount of rental development. During that time it was difficult to build rental developments due to the escalating land and construction costs, no tax incentives, etc., creating a shortage of new product. Today, not only have some regulations changed, but the economy is doing well, unemployment rates are down, a lot of jobs are being created here in New York – not only by Amazon but everything that comes along with Amazon and all of the corporations looking to be close proximity to their headquarters. When we see the economy doing well, we can expect rental prices to increase.” — Andrew Barrocas, CEO of MNS
Individual and institutional investors will battle it out.
“Well-funded institutional buyers have tremendous advertising budgets and their spend makes it impossible for the average real estate investor to compete. It takes a serious financial investment to fund a marketing campaign that accurately targets and identifies acquisition opportunities. That alone gives institutional investors an instant advantage. Additionally, interest rates are increasing, which not only impacts buyers who cannot afford to move, but also individual investors looking to borrow money to buy and hold rental properties. Their cost to borrow increases while inventory decreases and competition grows. This type of combination middle-market is one individual investors do not want to see.” — Brian Spitz, founder of Big State Home Buyers
Commercial property managers will hop on the shared space bandwagon — or bring in top amenities to make up for it.
“As co-working continues to be a disruptor in commercial real estate, the largest traditional landlords have opened their own flexible and co-working options to compete, such as Sage Realty's Swivel and Boston Properties' Flex. Landlords who are remaining or returning to the traditional commercial office space are facing increased demand for amenities like sleek lobbies, tech services, etc. To meet these demands and gain a competitive edge, landlords are opening up to fintech/insurtech solutions like replacing security deposits with surety bonds to make tenants lives easier.” — Julien Bonneville, CEO of The Guarantors
Technology will continue to disrupt the industry.
“Technology disruption of the real estate industry driven by Silicon Valley and institutional investors will reach a point where it’ll threaten the traditional real estate industry. Technological innovation is here and rapidly advancing in the real estate industry and preparing for disruption. iBuying, blockchain, artificial intelligence and machine learning are changing the ways buyers, sellers and investors interact with each other and the properties they are interested in.” — Spitz
This graphic shows the top technologies experts predict will be adopted in 2019. COURTESY OF FIRST AMERICAN
The Moral of the Story
All in all, housing is set for a slow-down next year, but as Kapfidze explained, that’s not necessarily a bad thing.
“The medium and long-term prospects for housing are good because demographics are going to continue to support demand,” he said. “With a slower price appreciation, incomes have an opportunity to catch up. With slower sales, inventory has an opportunity to normalize. A slowdown in 2019 creates a healthier housing market going forward.”
Article by Aly J. Yale--Contributor for Forbes. View original article here
When you scan the internet for 2019 real estate trends, you'll find a lot of different opinions about what the year will bring. However, one consistent theme is that we will start to see more and more millennials purchase homes. Whether it is because they are aging or feeling more financially stable, there’s no doubt that this generational powerhouse will be a large influence in this year’s real estate space. In fact, some experts are anticipating that 34% of this generation — currently encompassing some 70 million individuals born between the early 80s and mid 90s — will buy a home in the next five years.
At face value, this means that real estate agents and real estate marketers will need to shift their focus to sell homes effectively to a generation that has previously baffled them. Finding their pain points, addressing them and finding exactly what will create that tipping point toward a purchase will keep this group on their toes. Understanding the millennial propensity to seek information from peers and online first, their “recession mindset” and other unique traits will be important for selling real estate.
But one question that hasn’t been explored in the face of this trend is how millennials “growing up” and purchasing homes will affect the rental market. It makes sense that property managers and landlords will start to shift their focus to the next up-and-comers: Gen Z.
Rental Properties And Gen Z Tenants
With the oldest individuals in Gen Z entering their 23rd year in 2019, this generation represents the next wave of renters. If you’re wondering why this is a big deal, trust me — this generation is unlike any we’ve seen before and their demands surrounding rental properties and amenities will be just as different.
If you are a landlord or investment property owner/manager, it’s important to have a baseline understanding of what’s driving these teens and young adults in order to prep for your next group of renters.
They are consuming digital media differently.
We can’t simply apply the rules we’ve finally established for millennials to the following generation. Gen Z is consuming media in a way that’s all their own, using different social media platforms and watching drastically fewer hours of traditional TV. If you are marketing a rental property, you will need to find ways to meet them on their own turf via online video content and not through television advertising. Messages need to be fast, easily digestible, and ready to share with others. This generation likes to interact with their peers and share information and values the human connection in addition to online sources when making housing decisions
They are tech dependent.
These digital natives have never known a world that isn’t completely, immediately connected. They want every aspect of life to be easily accessible through their smartphones. This means as a landlord or investment property owner, you need to take a close look at how you’re interacting with your tenants. They will demand electronic interactions for regular tenant activities like paying rent, filing maintenance requests, basic communication with the landlord and accessing services like purchasing renters insurance.
They are frugal.
A recent Business Insider survey showed that, even though this generation is still very young, some already believe that one of the most important issues that they will have to deal with is the economy and debt. Because they have grown up during a global economic crisis, and in the shadow of the relatively “poor” millennials, they will tend to worry about money. This mindset might make them value affordability over extra square footage or unnecessary amenities.
They want to participate and co-create.
From creating vlogs to launching their own video channels, this generation has had tools at their fingertips from the get-go to be creative in major ways. This experience of participation and creation is part of who they are, and it stands to reason that this will spill out into other portions of their lives as they begin to enter adulthood. If you own a rental complex, consider amenities that bring people together to help create culture, like group art projects, community events and contests.
As real estate trends start to take shape for the coming year, property investors and landlords would do well to take a look at how those trends may affect the rental market. The biggest change on the horizon is the coming-of-age of Gen Z, and understanding their needs can mean the difference between a vacant property and a profitable one in the years to come.