Month: December 2019

Land Sales Maintain Steady Pace, But Remain Well Short of Pre-Recession Peak

Developers are remaining careful on land acquisitions this time around.

Land sales can be a fickle business. Prime development sites often disappear quickly, while other parcels can languish on the market for years waiting for the right buyer and use. Land sales can also be a good barometer to show what’s ahead for development pipelines and growth opportunities within markets.

Annual transaction volume on land deals is still falling well short of the pre-recession peak that reached $31.2 billion in 2007. However, sales have been fairly steady over the past five years, with annual totals ranging between $19.3 billion and $25.0 billion, according to research firm Real Capital Analytics (RCA). Buyers have taken the foot off the gas a bit in 2019, with year-to-date sales at the end of the third quarter totaling $14.3 billion, which is down 16 percent compared to the same period in 2018, according to RCA.

Overall, developers have been much more disciplined compared to past cycles when they were more aggressively grabbing land that was well ahead of growth. “We’re not seeing that now. They’re slowly marching with growth and not racing in front of it,” saysAshley Bloom, national land & development services product council chair for brokerage firm SVN in Sarasota, Fla.

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Multifamily Investors Are Spending More Capital in Secondary, Tertiary Markets

Slightly higher yields and still expanding economies are driving multifamily investors to smaller cities.

Multifamily investors are now more likely to spend their money on properties in secondary and tertiary markets rather than in primary markets.

“In secondary and tertiary markets… the number of offers that we are generating is much higher than what it was,” says John Sebree, Midwest-based first vice president and national director of the national multi housing group with brokerage firm Marcus & Millichap. “The level of sophistication of those buyers is much higher.”

After the more than a decade of expansion, investors are running out of attractive places to invest their capital. In secondary and tertiary markets, the yields are often only slightly higher than in primary markets; however, the local economies are strong enough to keep attracting more investors.

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Five 2020 Trends to Consider in Multifamily Investment

With the new decade quickly approaching, Fogelman’s Mike Aiken breaks down why multifamily is a reliable bet.

Cautious optimism is the proverbial tone many multifamily investors are taking as the start of a new decade is only a few weeks away. The whispers of a slowing economy have turned to a dull roar, but according to recent IMF reports, the U.S. economy is expected to steadily grow 2.1% over the next year. As economic pessimism lifts the outlook looks rosier for multifamily investment with continuing job growth. Without indication of a significant downturn, steady pace and predictability will be key performance indicators for multifamily investment as the balance of supply and demand level off and favorable financing conditions continue with the government-sponsored enterprises. Here are five trends to watch with the start of a new decade.

1. Most Compelling Commercial Asset

Considered an oasis of lower volatility investing and a safe haven for market unpredictability, multifamily remains the most reliable bet for commercial investors.

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Small multifamily loans: providing sustainable and affordable financing solution

How the GSEs are changing the multifamily market

The lack of affordable housing has reached crisis level in the nation’s cities and suburbs.

The squeeze has tightened across housing segments steadily for years. Between 2005 and 2017, the stock of single-family homes remained essentially flat, resulting in unattainable homeownership for many. Though expected wage increases and moderating home prices should offset some of this higher homeownership cost, the U.S. credit card debt being at an all-time high and the student debt load topping $1.5 trillion means that the down payment needed to purchase a home is simply not possible for many Americans.

With renter demand continuing unabated and many Americans being priced out of owning a home, the single-family market is feeling the pressure of higher interest rates, a lack of affordable single-family supply, and historically high debt loads. According to Harvard researchers, from 2001 to 2016 renters’ median housing costs rose by 11% while their income actually fell by 2%. Even though rental units grew 23% during that span, the rental market has also remained constrained and seen prices soar.

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Single-Tenant Net Lease Sales Volume Is on Pace for a Record Year, with Industrial Assets in the Lead

Industrial single-tenant net lease properties are highly coveted by institutional and private equity investors.

In a market rife with uncertainty, investors seeking risk-adjusted, recession-proof opportunities continue to be attracted to single-tenant, net-lease assets. As a result, total single-tenant net lease sales volume at the end of the third quarter had increased by 24 percent year-to-date, to $55.2 billion, according to a recent report from CBRE. It is now on pace to exceed last year’s sales record of $69.6 billion, according to the real estate services firm.

“This sector is growing and will probably total more than $70 billion this year in transaction volume,” says Will Pike, chairman and managing director of the CBRE net lease property group and corporate capital markets.

The industrial sector has been leading single-tenant net lease sales, with transactions totaling $22.3 billion year-to-date at the end of the third quarter, compared to $19.8 billion during the first three quarters of 2018. In the third quarter, single-tenant net lease industrial transactions jumped 48.5 jump to $10.2 billion, compared to $6.9 billion during the same period last year.

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Top 10 U.S. States Where Homebuyers Are Most Likely Thankful They Bought During the Winter

In this special #FiguresFriday post on the eve of Thanksgiving, ATTOM Data Solutions ranks the top 10 U.S. states where homebuyers are most likely thankful they bought during the winter months.

According to ATTOM Data Solutions’ annual analysis of the best time to buy a home issued this week, winter is the best time to buy given the discounts homebuyers are realizing below estimated market value during the winter months.

ATTOM’s new report notes the analysis of more than 23 million single family home and condo sales over the past six years is evidence of the continuation of a hot sellers’ market. The study highlights the three days of the year that offer the most significant discounts below estimated market value — all falling in the month of December.

The data shows that buyers willing to close on a home purchase the day after Christmas realize the biggest discounts below full market value of any day in the year.

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Five Tips for Securing Multifamily Financing and Articulating Your Case to Capital Providers

This about what is your borrower story when trying to secure financing.

With a possible recession looming, investors seeking to de-risk their portfolios are looking at an increasingly limited menu of stable investment options. Yet one of those options is clearly evident: multifamily remains a popular option for investors and capital providers alike. That’s largely because home affordability issues and changing lifestyle preferences are driving more renters to stay in apartments longer, strengthening demand and, in turn, pushing up rents. In fact, rents in the third quarter of 2019 were up 2.9 percent over the previous year, according to RealPage Inc., a real estate analytics firm.

Foreign investors alone acquired $16.1 billion of apartment properties in the U.S. between the second quarter of 2018 and the same period this year, according to research firm Real Capital Analytics. This occurred even as those investors pulled back on other asset classes.

Investors who are trying to increase their presence in the multifamily market don’t have to look far to find lenders to finance an acquisition. There’s plenty of capital to go around. The Mortgage Bankers Association (MBA) projects multifamily lending will grow to $359 billion in 2019, up from last year’s record total of $339 billion.

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Some Millennials say they plan on renting forever

Financial struggles are holding this generation back more than ever

Although Millennials seem to be taking over the housing market, nationally, 12.3% of Millennial renters say they plan to keep renting.

Last year, 10.7% said they plan to always rent, up over 2%, a study from Apartment List said.

For most, being able to make a down payment is the biggest struggle when it comes to purchasing a home.

In fact, nearly half of Millennial renters have no down payment savings, according to the study.

Another major barrier for this generation? Student debt. Even those who are debt-free are only saving about $100 more a month than those who have the burden of paying off loans.

Almost half of Millennials with no college degree have $3,221 saved for a down payment, while 50% with a college degree and debt have $8,200 saved for a down payment.

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Flush with Cash from Target, Startup Attacks Rental Headaches

Landing is a new membership-based firm that provides short-term furnished rentals in some of the country’s most expensive cities.

(Bloomberg)—When Bill Smith moved to San Francisco in 2016 to work on his grocery-delivery startup, the most annoying part was finding an apartment.

Poring through rental listings in an unfamiliar city, calling the gas company, waiting for an internet connection — the entrepreneur had little patience for any of it. So, after Smith sold his company, Shipt, to Target Inc. in 2017 for $550 million, he decided to use some of that cash to do something about it.

In June, using $15 million of his own money, he started Landing, a membership-based firm that provides short-term furnished rentals in some of the country’s most expensive cities. He’s leasing blocs of apartments from landlords including Related Cos. and AvalonBay Communities Inc., filling the units with furniture and dishware, hooking up cable and internet and renting them out at a markup for as little as 30 days.

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