Online Apartment Finder Reports Spike in Traffic

Norvolk, Va.–ForRent.com and its affiliate sites (including CorporateHousing.com and SeniorOutlook.com) report a 65 percent increase in traffic during August 2010 compared with the same month in 2009, according to the company, which specializes in providing information to apartment seekers. This finding matches other recent reports, in particular by the National Multi-Housing Council, that characterize demand for apartments as increasing nationwide.

The spike in visits to ForRent.com, a division of Norfolk, Va.-based Dominion Enterprises, comes at a time when the apartment rental market typically sees a seasonal decline. Other factors are at work in buoying the market, and thus overriding seasonal factors, according to Terry Slattery, president of For Rent Media Solutions (the parent company of ForRent.com and the others). “90 percent of the top apartment markets in the nation experienced demand growth as leasing activity improved during the first half of 2010,” he said in a statement.

The decline in home ownership is driving more consumers to an apartment living lifestyle, Slattery notes. In August, For Rent Media Solutions clients saw a year-over-year increase in total leads by 35 percent. The most recent quarterly survey conducted by the NMHC offers clues about what’s driving this kind of demand, and the fact that many people have lost their homes since the onset of the Great Recession is only part of the equation. A deeper shift seems to be under way, one that has longerterm implications for the apartment business. Namely, the NMHC report identified a shift in consumer mentality toward short-term rental agreements and away from long-term mortgage debt, as the prospect of homeownership now spooks more people than it used to.

Moreover, the NMHC report found that its Market Tightness Index, standing at 83 as of July 2010, was as tight as it has been in four years. Since a reading of 50 for the index means that, on balance, apartment markets nationwide are getting tighter, such a high number indicates an upswing in demand. And a sudden upswing at that, since as recently as January 2010, the organization’s Market Tightness Index was as low as 38, and in July 2009, it was 20.

Article written by Dees Stribling, Contributing Editor to Multi-Housing News Online
View the original article here:  Multi-Housing News Online

Analysts See Demand for Multifamily Strengthening Through 2011

The outlook for the multifamily sector is stabilizing, with vacancies that peaked in late 2009 continuing to decline as demand slowly grows and the new supply pipeline all but shut off. That's the conclusion of a recent Fitch Rating report, drawing extensively from CoStar Group data and presented during a recent webinar on the varying degrees of recovery in U.S. commercial and residential real estate sectors.

Private-sector job growth has led to positive net absorption for multifamily properties, with supply constrained markets such as Washington, D.C./Northern Virginia, San Jose and Boston ranking among the best in the country, while markets bombarded by the weak economy and single-family housing collapse such as Florida, Las Vegas, Detroit, Norfolk, and Memphis faring the worst, according to Adam Fox, senior director, U.S. CMBS.

Citing statistics from CoStar subsidiary PPR, Fitch Managing Director Steven Marks said vacancy declined to 8.1% in the second quarter from a historic high of 8.4% in fourth-quarter 2009. Vacancies will continue to decline over the next year, fueled by job growth, new household formation and limited supply driving renter demand in the near term. That will result in rising rent revenue and net operating income for apartment owners.

"The effects of a stabilizing economy combined with an advantageous supply-demand dynamic are expected to benefit multifamily fundamentals," Marks said. "Over a longer time frame, favorable demographics, relatively limited supply growth and tighter lending conditions in the single-family housing market should support fundamentals in the multifamily sector."

That said, "Ultimately, we believe a recovery will require job growth in order to be sustainable; but rents are rising in the meantime."

Solid liquidity driven by access to both public market debt and equity and a continuing flow of mortgage debt capital from government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac also bolsters Fitch's view of the sector, Marks said.

Fitch expects a below-average construction pipeline to churn out little supply for the rest of 2010, and even less in 2011, for two main reasons: most developers can't achieve economical pro forma returns on projects, and developers are having ongoing difficulty obtaining construction financing from traditional capital sources, namely banks, Marks said.

Given the weak amount of new apartment space, even a modest improvement in job growth will strengthen demand and absorption, though there will be a lag. The current improvement in demand has very little to do with job growth and more to do with new households, with many single people and young marrieds who were doubling or tripling up with friends and family decoupling to enter the ranks of renters.

Single-family housing affordability has improved somewhat over the last few quarters, theoretically reducing demand for rentals on the margins. However, given the amount of equity that home buyers need to get a mortgage -- combined with tighter underwriting and limited confidence that prices will stop falling anytime soon -- increased affordability may not significantly impair apartment demand going forward, Marks said.

In the 10 most expensive U.S. markets to buy a home, apartment owners generally have had above average pricing power over the past three years, as indicated by stronger rent growth relative to the national average, Marks said, pointing to CoStar data on historical and forecasted changes in rentals rates.

More volatile markets like New York and the San Francisco Bay Area experienced weaker performance in 2009 compared to the broader market due to severe job losses. Going forward, apartment landlords will not be able to increase rents aggressively in several of these large markets, and properties are expected to generate only slightly above-average rent growth compared to the nation over next five years.

In contrast, landlords have had less pricing power in the 10 least affordable housing markets, with demographics and higher home ownership rates working against apartment owners in such Midwest markets as Indianapolis, Detroit, Cleveland, Cincinnati and Pittsburgh.

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By Randyl Drummer

October 6, 2010

Read the original article on CoStar.com here:  http://www.costar.com/News/Article.aspx?id=74FAA7B8699C6FD04745E558D82D32D2&ref=1&src=rss

Business Briefing with Brian Bushlach - October 3, 2010

Joseph Chaplik is a routine guest speaker on the Business Briefing with Brian Bushlach on 750 KXL AM on Sunday afternoons.  Topics discussed on the October 3, 2010 show include a current apartment market update, how to choose the right broker, and much more.

Listen to the First Segment Here: http://www.josephbernard.net/uploads/files/1286226507.mp3
Listen to the Second Segment Here:  http://www.josephbernard.net/uploads/files/1286226604.mp3