Friday, January 16, 2015

What Slowdown? Rent Growth Accelerated in 2014

What Slowdown? Rent Growth Accelerated in 2014
Rents grew a healthy 4.7 percent last year, the highest level since 2011, according to MPF Research.
By: Les Shaver, Multifamily Executive

Apparently fears of the apartment market slowing were overblown, according to a recent report from RealPage's MPF Research.

Rent growth accelerated to 4.7 percent in 2014, the highest figure since 2011. Usually the pace of rent growth slows after the first couple of years of a cycle, but this upturn is behaving differently, driven by strong job growth in higher-paying jobs in 2014.

“The overall economic performance was stronger than typical at this stage of the recovery,” said MPF Research vice president Greg Willett. “Job production went up 20 to 25 percent over the previous three or four years. In past years, 60 percent of those jobs were in low-paying industries. In 2014, 60 percent of those jobs were in higher paying industries.”

One surprising driver of growth was the fourth quarter, when things usually slow. Rents actually rose 0.6 percent during the last quarter of 2014, which was only the second time in the last decade rents rose so much at the tail-end of the year (the other time was 2005).

“The overall economic performance was stronger,” Willett says. “And, certainly if you compare it to last year, the weather was really cooperative, as well.”

Absorbing the Supply
The industry’s strong performance in 2014 came despite a 14-year high of 246,579 new completions in the nation’s 100 largest metros. But with demand at 268,532 units, the supply/demand equation was still in favor of landlords, as occupancy climbed 30 basis points to 95.3 percent.

Supply should increase this year as well. During 2015, 290,145 new units are expected to be delivered, which will put more pressure on apartment owners. But MPF expects actual deliveries to be less than that because of construction delays due to labor shortages in many markets. As such, the research firm forecasts 2015 new supply to be around 250,000 to 260,000 units, which will be on par with 2014’s tally.

MPF expects the market to be able to absorb those 250,000 to 260,000 new units. Overall, MPF expects rent growth of 3.5 to 4 percent for the year ahead. But the growth won’t be even.

“I do think we are in late innings for the urban core/really expensive apartments,” Willett says. “There just aren’t that many households out there who can afford that. Those units tend to be built for Millennials, but honestly they’re too expensive for them.”

But in other spots, outside of the urban core, 2015 looks a lot better.

“We still have a lot of runway for suburban or even urban fringe, where you’re just coming down from that 'Main and Main' price point by 10 or 20 percent,” Willett says. “The middle market is still going strong. The concern about the middle market was affordability. But if wage growth is getting better, maybe that’s not as big a problem as we thought it should be.”

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!
Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! 
Click Here to Pre-Qualify for a Loan Online!

IERT logo
Regards, Michael Hon, REALTOR®
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

Thursday, January 01, 2015

Will 2015 Be Better Or Worse For Real Estate?

Will 2015 Be Better Or Worse For Real Estate?

Forbes.com

Whether you’re looking to sell your home or spent the last year waffling between renting or buying, you probably have one question as we head into the new year: Will 2015 be better — or are we headed into another year of the same?

There’s no such thing as a real estate crystal ball, and anyone who claims to have all the answers probably has a hidden agenda. With many factors to consider, let’s take a closer look.

The recovery process — where are we?

Trulia’s Chief Economist Jed Kolko recently came to the conclusion that while none of the five measurements in Trulia's TRLA -0.64% Housing Barometer are completely back to normal, most are making progress. It’s been three years since prices bottomed out in 2011, and we are still very much in recovery mode with rebound effects slowing; housing prices are no longer significantly undervalued and the investor market is drying up.

As a former broker, I have to agree — the investor well is indeed dry. In the past week alone I’ve received calls from three investor groups inquiring about off-market deals in the Seattle metro area. They complained that rising prices have impacted the number of available opportunities and so they’re looking for additional sources. (Sorry! No deals here.)

The good news is that most of us think things are about to get better. Regardless of the slowing rebound effects, there is optimism in the air. According to the Trulia study, consumers think 2015 will be an improvement over 2014 for all real estate activities, especially for sellers.

The millennial factor

Undoubtedly, the purchasing power of the millennial demographic packs a serious punch. And it seems that home ownership still plays a key role in the American dream, especially among young adults — an overwhelming 93 percent of young adult renters responded yes when asked if they will be purchasing a home someday.

However, while millennials are willing to purchase a home, they are encountering barriers to executing on their dream. Hurdles such as saving a down payment, qualifying for a mortgage, and cleaning up derogatory credit items are fairly straightforward, but what about market affordability?

Making tough choices

“The number of homes for sale in my market within my price range is discouragingly low,” says Elizabeth Archer of Ukiah, CA. “I am really tired of renting, but I love the area and I’m not willing to look elsewhere. I’m crossing my fingers that some affordable houses will be for sale this spring.”

Archer is experiencing a widespread affordability issue termed the “millennial mismatch.” Millennials can afford markets where they don’t live, but they can’t afford many of the markets where they do live. They find themselves faced with a tough choice: rent for the long term or live in a less-desirable city.

From over 100 major metro cities, there were only two notable exceptions where millennials currently live and also can buy: Oklahoma City, OK, and Baton Rouge, LA. These cities have a high population of millennials and better-than-average affordability.

The bottom line

Although consumers are feeling hopeful, young people are having trouble finding jobs and affordable housing in areas they want to live in. Further hampered by weak construction growth, the housing recovery needs to play nice with the overall economic recovery to make an impactful difference.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.
PS: We've Helped More Buyers and Sellers than 99.8% of any Local Realtor
Click Here to Search 24/7 for The Best Real Estate Deals in Boise!
Click Here to Download Our Free "Selling Your Home" Pre-Listing Plan! 
Click Here to Pre-Qualify for a Loan Online!

IERT logo
Regards, Michael Hon, REALTOR®
CEO, The Iron Eagle Realty Team
Associate Broker, Silvercreek Realty Group
Certified Short Sale Specialist®
Investment Property Consultant
Direct: 208.919.0458 Office: 208.939.9033 Fax: 208.514.1422
www.IronEagleRE.com Michael.Hon@IronEagleRE.com

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