Posted October 27, 2015 by RentJungle
Worrying about the apartment rental market is a natural thing to do when the market is on the up-and-up. After all, rising apartment demand and rents won't last forever. However, according to recent reports, the multifamily industry will continue to rise in demand. As fewer people are qualified to buy houses (and as Millennials form households later in life), those in the apartment industry continue to be optimistic about the rental market. An article from Commercial Property Executive explores these survey results:

"The National Multifamily Housing Council released its latest Quarterly Survey of Apartment Conditions on Thursday. One question on the survey was, "How are apartment market conditions in the local markets that you watch? 'Tight' markets are defined as those with low vacancies and high rent increases. Conditions obviously vary greatly from place to place, but on balance, apartment market conditions in your markets today are…" A slim majority, 52 percent, answered that their market is about the same as it was three months before. A quarter of the respondents (26 percent) characterized the market as tighter than three months earlier, while fewer (22 percent) said that their market is looser than three months earlier.

Another survey question was, "What about sales of apartment properties in the local markets you watch? The sales volume (number of deals) currently is…" That question ellicited a similar breakdown in responses. The majority — 56 percent — said that the sales volume in October was about the same as it was three months before. But a sizable chunk of respondents think that sales volumes had increased in the last three months: 27 percent. Only 11 percent said that the volume was down.

The survey also asked about equity and debt financing for apartment deals. Regarding equity financing, a majority think that conditions are about the same as three months earlier. But regarding debt financing, most either said that now's a better time to borrow than three months ago (45 percent) or that now's about the same as three months ago (41 percent). A paultry 2 percent said that now's a worse time to borrow — maybe partly as a result of interest rates not rising in September after all. The survey was conducted in mid-October, with 120 CEOs and other senior executives of apartment-related firms nationwide as respondents. The previous survey was in July and the one before that in April."


Learn more about the commercial property and apartment industries on Commercial Property Executive: http://www.cpexecutive.com/economy-watch/economy-watch-apartment-market-fundaments-still-robust/1004130135.html


Posted October 21, 2015 by RentJungle
Multifamily Housing_ InvestmentsIn the mid-2000's, investment in the United States multifamily housing sector reached a peak of $100 billion dollars during the year ending June of 2006. Though the numbers from almost a decade ago are impressive, the total in investments for the year ending in June of 2015 have set yet another record. Coming in at over $127 billion in investments, the multifamily housing segment has seen its largest four-quarter total in history - representing a 36 percent growth rate over the last twelve months. This article from urbanland.uli.org sheds some light on this recent trend, and delves a little more deeply into what this could mean for the market in years to come.

Investment in multifamily communities has been robust for several years and this trend continued during the second quarter of 2015, with $30 billion flowing into the sector. The quarter's total reflects a 35 percent gain over the second quarter of 2014, though a slight decline from the first quarter of 2015 (–3 percent). Multifamily acquisitions represented 27 percent of the total $110 billion invested in U.S. commercial real estate in the second quarter of 2015.

The Los Angeles/southern California area attracted the most multifamily investment in the first half of 2015—$5.3 billion—ahead of Dallas/Fort Worth ($3.0 billion); Washington, D.C. ($3.0 billion); Atlanta ($2.8 billion); and Houston ($2.5 billion).

Cross-border investment in U.S. multifamily totaled $2.1 billion in the second quarter of 2015 (not counting properties acquired through entity-level acquisitions). The first-half 2015 total of $4.4 billion is already higher than the full-year 2014 figure of $3.7 billion. Mexico represented the largest country source of cross-border acquisition capital for multifamily investment (31 percent), due to a significant portfolio transaction, ahead of Canada (29 percent).

"Investment in U.S. multifamily product continues its extraordinary run, reflecting solid confidence in future market and asset performance. Drawn in by solid fundamentals, investor interest in the sector remains high, per sales activity and underwriting trends. Equity and debt investment volumes continued to rise, along with transaction sales prices. Cap-rate declines have been minimal, which signal [that] total projected investor returns are close to bottom," said Brian McAuliffe, executive managing director, institutional properties, CBRE Capital Markets.

Demand for apartments is unrelenting as new supply has been swiftly absorbed. As a result, the average apartment rent across major U.S. markets is increasing at a pace far above the inflation rate, and the vacancy rate is at its lowest point in nearly 15 years.

Rent growth was widespread in the second quarter of 2015, with 30 of the 62 markets tracked by CBRE posting year-over-year rent increases of 5 percent or more. The apartment vacancy rate across these markets was 4.3 percent in the second quarter of 2015—down 30 basis points from a year earlier and down 300 basis points from the first-quarter 2009 recessionary peak of 7.3 percent. Vacancy is expected to continue to decline through the end of the third quarter of 2015.

Almost 70,000 apartment units were completed within the 62 major markets during the first half of 2015. If deliveries continue as forecasted, the 2015 total will reach nearly 173,000 units—while less than last year's 181,000 units, the total is more than any other year since 2000.

"Accommodative economic conditions and employment growth will support further strengthening in multifamily fundamentals in the near term. Demographic trends—including the 30-year low homeownership rate of 63.5 percent—suggest that the apartment sector will continue to absorb new deliveries over the next two years," said Peter Donovan, senior managing director, multifamily, CBRE Capital Markets.


Posted October 01, 2015 by RentJungle
Millennials, or young adults born between 1980 and the early 2000's, are a generation apart from their predecessors. Takers of selfies, oversharers on social media, and perpetually "lazy", this generation is coming into adulthood. When it comes time to move out of mom and dad's house, where will they go? Do they strive for the typical American dream and put a down payment on a house a few streets away from their parents? Or do they opt to stay in the realm of renting? With the cost of renting now exceeding the cost of purchasing your home, you'd think they'd lean towards buying.

 One reason towards millennials being more interested in temporary living than in planting their roots is the predilection towards travelling. The Millennial generation is more interested in travelling than their older counterparts by a 23 percent point margin. The UN has estimated that over 20 percent of international travellers in the world are young people.

 It is also not unusual for this younger generation to take trips spanning longer than the typical vacation. Trips that last 2 weeks, 3 weeks even a month or two are not unusual for this generation of travellers. That's a lot of time to be spent away from a permanent home. It might even be easier for these adventurers to put their living situation on hold by breaking an apartment lease, especially if their travels are going to be happening frequently.

 For some, moving frequently, not just travelling but actually moving house, is more drawing than staying in the same town for years and years, possibly even forever. Some choose to move for jobs, others for relationships and others just because they enjoy the thrill of a new city and can't stand to stay in one place for too long. If you're from a small town, the draw of a big, bustling city can be enchanting and enough to make you pack your bags and jet off.


 Another contributing factor to the renting trend among the younger generation, is that they are holding off on starting families until later in their lives. This could be due to many of the factors we mentioned above: jobs, travel, relationships (or lack thereof). But the biggest contributing factor is most likely money. Millennials are loath to drop their bags, their money and start a family. There are so many other things that that money could be spent on that they are unlikely to drop it all to start a family and buy a home. Packaging all of these preferences and wants and needs into one leads to putting off purchasing a home until later in life. For most millennials, there's no need for putting a hold on your travels, dropping tons of cash and purchasing a home, especially when we probably just dropped a ton of cash on college! The trend of renting has been growing for years and will probably continue into further generations due to a change in perspectives and values.


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