October 26, 2017

Hitting The Supply Crescendo

A report from the Denver Post in Colorado. “Apartment rents slid a little and vacancy rates rose as metro Denver absorbed a historically large number of new apartments during the third quarter, according to the Apartment Association of Metro Denver. The metro area has added 9,713 new apartments in the first nine months of this year, a 35 percent increase from the same period in 2016, which was a big year. Of this year’s new supply, 4,315 units came online in July, August and September. ‘It’s equivalent to completing a new 48-unit apartment community every day for three months straight,’ said Teo Nicolais, a real estate instructor at the Harvard Extension School.”

“The metro area will easily smash through the 10,000 new units mark this year, the first time that has happened in more than three decades, said Nicolais. Denver had the highest average vacancy rate among metro counties at 6.8 percent, with vacancies downtown, ground zero for apartment construction, at 12 percent. ‘We are going to hit the supply crescendo,’ said the report’s author Ron Throupe.”

From Silicon Beat in California. “A new analysis of Bay Area rents shows the cost of newly advertised apartments rising most rapidly in Mountain View, Petaluma and Walnut Creek and dropping most dramatically in Oakland, Berkeley and South San Francisco. In the East Bay, rents dipped 12.7 percent year-over-year in Oakland, where the median rent for a one-bedroom is now $1,930, according to Zumper. The report shows rents dropping 12.3 percent next door in Berkeley (where a one-bedroom goes for $2,500) and 8.8 percent on the other side of the bay in South San Francisco ($2,070 for a one-bedroom).”

From Capital Public Radio on California. “Fewer neighborhoods have vacant homes in limbo, or properties not yet repossessed by a bank. Sometimes referred to as ‘zombies,’ these foreclosures are notorious for dragging down property values and just generally being sore thumbs on the block. Meanwhile, more California homes are being converted into rentals, and a growing number of them are empty. ‘A 5 percent increase in Sacramento in those vacant investment properties, or rental properties, from a year ago. In California it was actually a 9 percent increase,’ says Daren Blomquist, senior vice president at ATTOM Data Solutions.”

From 10 News in California. “With San Diego rents at record highs, it’s understandable to feel powerless when it comes to increases. But one North Park man just proved a little research can go a long way. Matthew Brewer was paying $1,550 a month for a two-bedroom apartment when he got slapped with a $200 a month increase. He rents the apartment month to month, which is risky when it comes to increases. And it’s something those in his complex have already seen. ‘They had already been raising the rent on my neighbors as well, so they had four units that were empty,’ he said.”

“Brewer didn’t want to move out, so he prepared his case. He searched for similar listings nearby on hotpads.com. He discovered that his rent was a little low, but in the normal range. He told his property manager that finding a new tenant at the higher price was no sure thing. ‘I made the argument logically that it’s safer to have me in the unit paying for my rent, than having me move out for them to raise the rent,’ he said.”

“And it worked. Brewer ultimately got a letter postponing that $200 a month increase until March, which means by that time he’ll have an extra $800 in his pocket.”

From Crain’s Chicago Business in Illinois. “Some of the costliest housing areas in Cook County saw the price of a single-family home decline this spring, according to a report. House prices cooled in the Lincoln Park/Lakeview submarket in the city and in the Winnetka/Northbrook submarket in the suburbs during the second quarter, according to a report from the Institute for Housing Studies at DePaul University. ‘There’s a sign of flattening demand at the upper end,’ said Geoff Smith, the institute’s executive director.”

“In Winnetka/Northbrook, it was the first decline after five straight quarters when prices were up compared to the corresponding period a year earlier. In Lincoln Park/Lakeview, the second-quarter decline followed a smaller decline in the first quarter; before that there had been increases in the previous two quarters. The Chicago area ‘has some strong head winds,’ Smith said. ‘Population remains flat and income growth is slower’ than in other parts of the country.”

The Real Deal on New York. “In real estate, you want to buy low and sell high. But the mercurial Manhattan condo market got the better of U.S. Secretary of Commerce Wilbur Ross. The billionaire cabinet head sold his 5,573-square-foot penthouse at the Briarcliff for $15.95 million, a $2 million loss on what he paid a decade ago, records filed with the city show. Ross, who made his money investing in distressed assets, bought the duplex at 171 West 57th Street for $18 million in 2007, according to records.”

“He first tried selling the four-bedroom, five-bathroom home for $21 million in 2015, but slashed the price after failing to attract a buyer.”