The Specials Are Getting Bigger And Bigger And Better
A report from KSHB in Missouri. “Luxury apartments in the heart of any downtown are becoming quite the craze. In Kansas City, there’s River Market, Columbus Park, One Light, Two Light, to name a few. According to one research firm, the number of apartments nationwide may jump more than 25 percent in 2017. But the Wall Street Journal predicts the building surge will outpace suitors, leaving many units vacant and forcing rent prices to drop. Those numbers may reflect the national trend, but local housing experts predict the opposite in the Kansas City metro. Harold Phelps, president of the Home Builders Association of Greater Kansas City agrees with Wilson. He doesn’t see any slowdown, any time soon. ‘We’ve seen growth in the 20 to 30 percent range since 2014. Will we continue to see that growth? I think we will.’”
“Local experts say we’ve learned a lot from the housing crisis of 2008, and in Kansas City, they won’t build unless there’s a strong demand. So if you’re waiting for the prices to drop on luxury rentals in the metro, keep waiting.”
From KOAA 5 in Colorado. “2016 was a good year for the local housing market. In El Paso County, there were more than 3,200 new builds. That’s up 18 percent over last year, and the most since 2006. There was a 30 percent increase in home builds in December alone. But homes weren’t the only thing going in — apartment builds were up 55 percent over last year. ‘Every time I turn around we’re adding a new apartment complex,’said Roger Lovell with the Pikes Peak Regional Building Department.”
“The other big question that comes with an increase of this size is whether or not the housing bubble is about to burst. ‘No way,’ Long said. In fact, he thinks 2017 is going to be another busy year. ‘If I had to just throw a dart, I’d say 10 percent,’ said Mark Long with Vanguard Homes.”
From Multi-Housing News. “On the last day of 2016, Hamilton Point Investments closed its HPI Real Estate Fund IV LLC (HPI Fund IV). Altogether, the Reg D private equity fund raised $85 million through 27 independent broker-dealers and registered investment advisors. Thus far, the fund has acquired seven multifamily properties. A further four apartment acquisitions are scheduled to close in January and February of the New Year. HPI expects to fully deploy the remainder of the fund’s equity in one additional acquisition during the first quarter of 2017.”
“HPI’s strategy, explained co-founder Matt Sharp, is to buy post-2000 construction apartment properties in secondary growth markets for below replacement cost. Then the company does modest common area and unit interior upgrades to increase revenue. ‘We’ve avoided the super-expensive, tier-one markets that have become overbuilt and overpriced,’ he noted.”
The Boston Herald in Massachusetts. “Rents in Boston have fallen for the first time in six years, according to a new report, as housing supply is finally starting to catch up to demand, analysts say. ‘My guess is that is from the upper end of the market, just because that’s what we’ve produced,’ said Greg Vasil, chief executive of the Greater Boston Real Estate Board. ‘There’s a lot of people on the development side, a lot of the bigger developers are taking a pause right now.’”
“Even as prices decline, Boston is the fourth most expensive city in the country, after New York, San Francisco and San Jose. All four cities were among more than a dozen where rents fell last quarter. These markets, Vasil said, may have just hit their peak. ‘It’s slowed up, it’s changing, but it’s not something that’s unhealthy,’ Vasil said. ‘It’s part of the cycle.’”
The New York Times. “Cracks in the rental market became evident to many brokers last spring, when the typically brisk rental season felt lackluster. By fall, some brokers said the market felt as slow as the holiday season. ‘Last summer, things were definitely a lot different,’ said Christophe Tedjasukmana, a salesman for Citi Habitats. ‘Some of the concessions are like out of the ordinary, extraordinaire.’”
“David J. Maundrell III, the executive vice president of new developments in Brooklyn and Queens for Citi Habitats, thinks the market started flattening out almost three years ago, and since then ‘we’ve been Band-Aiding everything with concessions.’ In September 2015, ‘the rental market went off a cliff. It just went crazy quiet. That’s where we turned on two months’ free rent,’ he said. ‘That was, in my opinion, the beginning of the downturn.’”
“Landlords would rather offer a few months of free rent than lower the base rent, because when base rents fall, the building’s value falls too. But come March or April, when the rental season moves into high gear, landlords will be pressured to move apartments. ‘Rents have got to come down,’ Mr. Maundrell said. ‘That’s the only way to get the absorption rates back.’”
From KHOU in Texas. “All over Houston, you’ll find apartments complexes trying to lure new tenants through their doors. Places, like Willowick Park near River Oaks, are offering 2 ½ months free rent, plus a $1,000 gift card for those who sign a lease within 24 hours of looking. Experts say you’ll find deals like that at roughly 500 complexes in town right now.”
“Realtor Spencer Moore specializes in helping people relocate to Houston. ‘The specials are getting bigger and bigger and better, so it’s a great time to be a renter in Houston,’ said Moore. ‘A lot of properties are giving away iPads, cruise ship tickets, TV’s. This luxury apartment in Downtown Houston was offering six months of rent half off.’”
“‘Last year was one of the worst years on record for job growth. We only added about 15,000 jobs, but we added 21,000 apartment units. That math just doesn’t work,’ said Patrick Jankowski, Senior Vice President, Research for the Greater Houston Partnership.”
“In addition, another 16,000 apartment units are currently under construction, with 12,000 of those units expected to open in 2017. ‘If you walk into your manager’s office and you need to resign a lease, you should ask for something. You should ask for some sort of deal, because if not, you could go down the street and get a better deal,’ said Jankowski.”
