Multifamily still rockin' and rollin' at RealShare Apartments 2012

By Erika Petty
October 30, 2012

Last week’s RealShare Apartments conference in Los Angeles was the place to be for multifamily investors, lenders and brokers.  With almost 2,000 attendees, this was one of the best turnouts ever.  Enthusiasm continues to be high for multifamily properties, despite signs of a returning single-family housing market.  For example, while rent hikes could drive some of the best renters into home ownership, financing for homes is still a challenge as credit requirements are high so this will help sustain apartment demand.

The environmental and engineering due diligence industry has a unique “boots on the ground” perspective on the trends in the multifamily and commercial real estate markets.  Our services, such as a Property Condition Report and Phase I Environmental Site Assessment, are typically called into play prior to acquisition or financing, so we can serve as a metric for what is going on in the market.  A few trends we’ve seen lately include:  large portfolios in the 2^nd half of 2012; foreign and institutional investor activity in major markets like NYC and LA; REITs leading the way into secondary markets with others following; very active HUD lenders across the country; and of course busy Fannie Mae and Freddie Mac lenders as well.

Partner’s president Joe Derhake, PE noted some of these and other trends in an interview with GlobeStreet TV during RealShare, and they were also echoed by other panelists throughout the day.

The sentiment at RealShare Apartments seemed to be that 2013 will be another great year for multifamily, though one panelist noted that the best buying opportunities will be done by this spring.  We look forward to a busy 1^st quarter for multifamily due diligence, and hopefully a sustained demand throughout the year.

Source:  GlobeSt

Housing Prices and Income Inequality

By BINYAMIN APPELBAUM
October 17, 2012 

Why is the gap between rich and poor in America yawning ever wider?

The issue is urgent. As my colleague Annie Lowrey writes, there is growing evidence that income inequality impedes economic growth.

And one interesting explanation boils down to the high price of housing.

A recent paper by researchers at Harvard University argues that the prohibitive cost of living in the areas with the greatest economic opportunities has forced low-wage workers to migrate instead to areas with inferior opportunities.

“The best places for low- and high-skilled workers used to be the same places: California, Maryland, New York,” said Peter Ganong, a doctoral student in economics, who wrote the paper with Daniel Shoag, a professor of public policy. “Now low-skilled workers can no longer afford to move to the high-wage places.” 

In this account, people aren’t moving to the Sun Belt because they want to live there. They are moving because they can’t afford to live in Boston. And the result isn’t just second-best for them; it also slows the pace of economic growth.

Basically, the economy works best when people can move where their skills are most valued. But for low-skill workers, the high price of housing means the cost of living in those places often exceeds the benefits of working there.
The trends are beautifully illustrated by three time-lapse graphics.

The first shows that average incomes by state converged between 1880 and 1980 as low-skilled workers moved to wealthier states. The second shows the pattern of migration, which has changed significantly over the last 30 years.
The third shows the increase in land-use regulations in rich states.

And here’s the crucial point: It doesn’t have to be this way. High housing prices are the result of public policies that discourage new development. Those policies are generally embraced by the residents of wealthy areas, who benefit, at least in the short term, from restrictions on the supply of new housing. But this paper is one more reason to worry about the long-term economic consequences.

Source: Economix Blog The New York Times