Rental, For-Sale Markets Buck Odds, Rise Together

Bendix Anderson – Mar. 1, 2013

The apartment and for-sale housing markets usually compete with each other. Historically, the math has been simple and brutal: If the percentage of people who own homes goes up, then the percentage of people who rent goes down. Good news for housing sales often means bad news for the apartment sector, if the number of households that need homes stays stable.

But what’s happening today is different, according to the economists at the National Association of Realtors (NAR). “Rental demand and housing sales are rising… Full Article

Too Soon to Worry About Apartment Overbuilding?

It’s natural to worry about whether apartment markets will get overbuilt.

The development pipeline is robust. But market researchers at the at National Multi Housing Council’s annual meeting, held January 22-23 in Palm Springs, Calif., said that the sector remains in the clear—for now. While the pipeline in some markets is at worryingly high levels, the national supply is within normal levels.

Apartment developers now have plans to build roughly 1.4 million new apartments nationally, according to data from NMHC. More than half of the apartment companies report they are buying developable land, lining up financing … Full Article

Updated Commercial Real Estate Investment Outlook

The latest results from the NREI/Marcus & Millichap Investor Sentiment Survey are now available.

The survey shows that investor confidence is not only surging forward, but investors also are preparing to accelerate their commercial real estate buying in the coming months. After taking a slight step back in second quarter, the Investment Sentiment Index moved five points higher to 171 in third quarter. That is a significant milestone as it marks the highest level the index has achieved since the survey first began in 2004.

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The Case for Lower Multifamily Cap Rates

by By Mark Scott December 8th, 2012

Attend any number of multifamily conferences around the Tri-State region and cap rates are sure to be a topic of discussion. But while many suggest that cap rates for multifamily rental properties will flatten in the future or even rise, I would argue that they can (and likely will) go lower. There are number of factors driving this compression, including a healthy amount of cash that is ready to return to the market; record low interest rates; and a desire among both Generation Y consumers and the Baby Boomer generation (some 76 million strong) to forgo homeownership in favor of renting. But what’s arguably most important to the cap rate debate will be the fate of the home mortgage interest deduction.

First, let’s follow the cash flow. There is a strong stable of Real Estate Investment Trusts that have large amounts of cash they are looking to deploy, and multifamily is currently the most stable asset class available. In September, the Multifamily Production Index (MPI), released by the National Association of Home Builders (NAHB), improved for the… [Full Article]