Socal Multiunit Real Estate

SOCAL MULTIUNIT REAL ESTATE SNAPSHOT – MAY 2010

By Jodi Summers

It’s been all over the news. Now is the time to buy multiunit properties. Today’s research, offered by Bank of America-Merrill Lynch, concludes that if the apartment market didn’t bottom out in the fourth quarter of 2009, then it did during the first three months of 2010. The L.A. County multiunit market is the most desirable it’s been all millinneum.

In Los Angeles County comparing April 2008 to April 2010, the median price of for sale properties is down 18% and the median price of sold properties is down 47%

The lack of commercial financing and higher vacancy rates have contributed to the huge drop in sales prices, Marcus & Millichap data shows that apartment-house prices have slipped to an estimated median of $128,500 a unit last year, down 4% from 2008.

And that’s why in L.A. County, the number of for sale properties is down 40% and the number of sold properties is up 82%. Those that don’t have to sell are not, and those that can buy are.

More encouraging reasons to buy a multiunit property? Axiometrics’ survey of some apartment managers in the top 20 national markets reported better rental revenues in the first quarter, as compared with the four preceding quarters. Overall occupancy ended the first quarter at 92.6% and effective rents were $1,106.33.

And that is why locally, the number of under contract properties is up 156%.

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http://netleaseinsider.blogspot.com/2010/04/us-apartment-uptick-net-lease-impact.html

http://www.globest.com/news/1644_1644/insider/184557-1.html

https://www.terradatum.com/agentmetricsonline/agentmetrics_online.td?__m_sid=121

LOS ANGELES MULTIUNIT REAL ESTATE SNAPSHOT – APRIL 2010

By Jodi Summers

Experts say the multiunit market is leading the commercial real estate recovery. After a dismal year of increased vacancies in the high end areas (There were 141 properties available for lease in Santa Monica on April 1^st, and 133 in Beverly Hills, according to the MLS.), which forced landlords to cut rents and make leasing concessions, investors have a renewed sense of optimism. Essentially, there’s no place to go but up. Nationally, average vacancy rate sits at a historic high, hitting 8% at year-end 2009. This positive outlook is confirmed by a PricewaterhouseCoopers Korpacz Real Estate Investor Survey for the first quarter of 2010, titled, “Investor Sentiment Improves, But Challenges Persist in 2010″ notes the multifamily market, will “bump along the bottom” this year, but continued price drops are not in the forecast.

Similar to other property sectors, sales activity has diminished for apartments; conversely demand is high for well-located, high-quality assets. Los Angeles is reaping those benefits. In Los Angeles County, comparing March 2008 to March 2010 the number of properties under contract is up 188%…

While the average number of sold properties is up 88%.

Another positive sign, the average days on market is down 16%. Nationally, the average asset sold within 8.06 months this quarter, a 9.03% drop from the prior quarter.

The market surge may be attributed to the fact that nationally, cap rates for apartments fell over the final three months of last year, ranging from 5% to 11%, with an average of 7.85%, down from 8.03% in the third quarter of 2009. For the first quarter of 2010, cap rates have risen back up to 8.01%. Cap rates for properties that are selling tend to be in the 5%-7.5% range in L.A. County, again depending upon the neighborhood.

Investors are always happy to pick up what they perceive as a value in California. But, on a regional level, in less sexy areas, the performance of the apartment market has hinged on the performance of the individual markets’ employment scene. Take the very solid Washington, DC, market, for example. Jobs are on the rise, and vacancy rates have remained stable over the past six months. This success can be applied throughout the Mid-Atlantic region as well. Face it, real estate tends to be stronger on the coasts.

Another happy point, investors feel that multifamily market rents should grow by a national average of 2.41% over the next eight years…or the standard 4% a year in Los Angeles.

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http://www.globest.com/news/1624_1624/insider/184102-1.html

https://www.terradatum.com/agentmetricsonline/agentmetrics_online.td?__m_sid=121

http://pro.themls.com

http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=16322406&SRID=826306030&StepID=101

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LOS ANGELES MULTIUNIT PROPERTY SNAPSHOT – MARCH 2010

By Jodi Summers

And the good news is – research is indicating that the Los Angeles employment market is expected to stabilize in the second half of 2010. Following a loss of 115,000 jobs in 2009, payrolls are forecast to expand by 0.3 percent this year, with the addition of 13,000 positions, observes the 2010 National Apartment Index Report by Marcus & Millichap. The lack of job growth is hurting demand in the multifamily market, confirms Reis Research. “It is only when labor markets stabilize and recover that we will see a ramp-up in household formation that represents the greatest driver for rental apartments,” observes Victor Calanog, Reis research director.

Investors obviously feel that the Los Angeles market is stabilizing. Comparing February 2008 to February 2010, the number of under contract multiunit properties in Los Angeles is up 148%, according to Clarus Market metrics.

In 2009, the national vacancy rate for apartment properties rose 1.3 percentage points to 8%, the highest level since t in 1980. Average asking rents in the sector dropped 2.9% to $1,026/unit last year. Rents fell or held flat in 69 of the 79 markets tracked by Reis.

For years, Los Angeles has had low, low, low vacancy rates, hovering between 2-3 percent – making it a very attractive market. Even with the recession making higher priced units on the West Side less desirable, vacancy rates are still hovering between 5-6%. The National Apartment Index Report notes that the lingering high unemployment will continue to pressure owners to lower rents. Asking rents are expected to fall to $1,335 per month in 2010, while effective rents will slip to $1,263 per month, respective declines of 2.8 percent and 3.6 percent annually.

Now that the economy is coming back, Los Angeles multiunts are still attractive. Between Feb-08 vs. Feb-10, the number of for sale properties is down 44% and the number of sold properties is up 53%.

According to Realpoint, 6.53% of securitized loans backed by multifamily properties are delinquent, which is the CMBS market’s second-highest delinquency rate behind the hotel sector’s 8.09% rate.

Investors realize the current value of the Los Angeles, and there is a trend of cash-rich buyers shifting money out of the stock market and buying multiunit property with the intent of holding it for future generations. This is why the average months supply of inventory is down -79.8%

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We would like your real estate business. If we can provide you with more detailed information, please contact the SoCal Investment Group through Jodi Summers, Jodi@jodisummers.com. We look forward to working with you in your next real estate transaction.

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http://www.loopnet.com/xnet/mainsite/news/news.aspx?DocID=12898

http://www.reuters.com/article/idUSTRE5950PA20091006

http://www.socalmultiunitrealestateblog.com/?p=689

http://www.tierraproperties.com/current_market_data/metro_la_apt_vacancy_table.htm

http://realpropertyalpha.com/2009/08/17/metric-to-watch-apartment-vacancy-rate/

http://www.marcusmillichap.com/aboutus/News/Current/020510_los_mm.asp

https://www.terradatum.com/

LOS ANGELES 2010 - MULTIUNIT REAL ESTATE PREDICTIONS

Edited by Jodi Summers

The sun is shining again in Los Angeles. After two years of job cuts, payrolls are predicted to expand payrolls minimally in Los Angeles County in 2010, according to the 2010 National Apartment Index Report by Marcus & Millichap.

Los Angeles moves up two places this year to No. 13, thanks to perceived strengths in our marketplace. The hot spot is our sister city, San Diego, which rose four spots to No. 2 on the index due to expectations for resumed employment and household growth. (Washington, D.C., retained the top spot in the NAI for the second consecutive year, as ongoing government spending will fuel metrowide hiring and apartment demand.) New York City, which is the tightest apartment market in the country, finished in the No 3 spot.

Following are some of the most significant aspects of the Los Angeles Apartment Research Report:

* The local employment market is expected to stabilize in the second half. Following a loss of 115,000 jobs in 2009, payrolls are forecast to expand by 0.3 percent this year, with the addition of 13,000 positions.

* Rental completions will slow to 1,550 units in 2010, a 0.2 percent addition to inventory. Approximately 800 apartments are expected to come online in the San Fernando Valley due to continued job losses in the retail and construction sectors.

* Vacancy is forecast to tick up 20 basis points this year to 6 percent in response to ongoing stock additions.

* Lingering high unemployment will continue to pressure owners to lower rents. Asking rents are expected to fall to $1,335 per month in 2010, while effective rents will slip to $1,263 per month, respective declines of 2.8 percent and 3.6 percent annually.

Investors realize the current value of the Los Angeles, and there is a trend of cash-rich buyers shifting money out of the stock market and buying multiunit property with the intent of holding it for future generations.

“After watching the Los Angeles apartment market for years I have decided to move monies out of my stock portfolio and buy apartment buildings for my children,” noted one savvy investor.

A bolster for the multiunit market place is that Government-Sponsored Enterprise financing will remain available due to the GSE’s ongoing commitment to the asset class. (GSEs hold or pool approximately $5 trillion worth of mortgages.)

In conclusion, Marcus & Millichap expects, “Long-term rates to remain low this year, mortgage rates to stay relatively stable and lenders increasingly opting to work out extensions or modifications for loans rather than taking near-term losses. Seller financing, or assumable debt, will also become a big factor in transactions this year.”

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http://www.marcusmillichap.com/aboutus/News/Current/020510_los_mm.asp

http://www.globest.com/news/1580_1580/insider/183133-1.html

http://www.uli-la.org/node/382

http://en.wikipedia.org/wiki/Government-sponsored_enterprise#See_also

WHAT HAPPENS WHEN A TENANT ABANDONS A UNIT?

WHAT HAPPENS WHEN A TENANT ABANDONS A UNIT?

Edited by Jodi Summers

Hey landlords, have you ever had this happen to you –

You decide to visit a tenant whose rent is past due, and while passing by the front window of the unit, you notice that the apartment appears to be vacant.

Do you know what to do? Can you, as the owner, just assume that the tenant abandoned the property, change the locks, and lease out the apartment to the next person?

Yeah right, if only it should be so simple. Being a landlord is just not that easy.

According to the California Association of Realtors legal department:

California law provides a procedure that the owner or the property manager of the rental real property must follow before assuming that the rented property has been vacated. The focus of this legal article is on this procedure for regaining possession of abandoned real property. A copy of the notice that the owner must send to the tenant is included. However, this article does not address the issue of recovery of damages by the owner.

FAQ

Q 1: If a landlord believes the rental property has been abandoned, what is the notice that the landlord must provide to the tenant?

A: The Notice of Belief of Abandonment (“Notice”) goes as follows:

Notice of Belief of Abandonment

To:

______________________________________________________________________

(Name of lessee/tenant)

______________________________________________________________________

(Address of lessee/tenant)

This notice is given pursuant to Section 1951.3 of the Civil Code concerning the real property leased by you at ____________________ (state location of the property by address or other sufficient description). The rent on this property has been due and unpaid for 14 consecutive days and the lessor/landlord believes that you have abandoned the property.

The real property will be deemed abandoned within the meaning of Section 1951.2 of the Civil Code and your lease will terminate on ____________________ (here insert a date not less than 15 days after this notice is served personally or, if mailed, not less than 18 days after this notice is deposited in the mail) unless before such date the undersigned receives at the address indicated below a written notice from you stating

Both of the following:

(1) Your intent not to abandon the real property.

(2) An address at which you may be served by certified mail in any action for unlawful detainer of the real property.

You are required to pay the rent due and unpaid on this real property as required by the lease, and your failure to do so can lead to a court proceeding against you.

Dated: __________________________________________________________

(Signature of lessor/landlord)

___________________________________________________

(Type or print name of lessor/landlord)

___________________________________________________

(Address to which lessee/tenant is to send notice)

(Cal. Civ. Code § 1951.3(d).)

Q 2: Under what circumstances may a landlord give the tenant the Notice in Question 1?

A: The landlord may give the Notice only if two conditions have been met: (1) the rent on the property has been due and unpaid for at least 14 consecutive days and (2) the landlord reasonably believes that the tenant has abandoned the property (Cal. Civ. Code § 1951.3(b)).

Q 3: What if the landlord doesn’t want to wait the 14-day requirement mentioned in Question 2?

A: If a landlord wishes faster action, the landlord may use the unlawful detainer remedy. See California Code of Civil Procedure Sections 1161-1179a. See also, the C.A.R. legal article, Unlawful Detainer: The Eviction Process in California < http://www.car.org/index.php?id=MTg4Ng >

Q 4: What if the landlord believes the property to have been abandoned and there’s been a breach of another covenant under the lease but the rent has been paid?

A: The landlord must use the unlawful detainer remedy if the landlord wants to get the tenant out of the property. See California Code of Civil Procedure Sections 1161- 1179a.  See also, the C.A.R. legal article, Unlawful Detainer: The Eviction Process in California.

Q 5: What is a “reasonable” belief of abandonment?

A: Many residential as well as commercial tenants vacate the premises when behind in the rent without ever notifying the landlord. What some courts look for is whether or not the keys have been turned over to the owner.  If turning over the keys establishes for the landlord a clear showing of abandonment, then the landlord may be able to take possession of the premises without providing the Notice as required by section 1951.3.  Following the procedure of section 1951.3 provides greater certainty to the owner and provides protection against a tenant who later sues the landlord for legal possession of the rental property.

However, if the tenant has not made it clear—has not given over the keys—then the landlord is left guessing about the tenant’s abandonment. One way to get some idea of the tenant’s intention is to view the premises by looking through a window to see if there is anything left behind. For example, if the utilities have been discontinued, there is no refrigerator and no furnishings, abandonment seem clear.

What if some personal possessions have been left behind?

“Since many lessees who abandon real property leave personal property on the premises, the mere fact that the lessor knows that the lessee has done so should not, by itself, be held to establish that the lessor’s belief as to abandonment was unreasonable. Where the personal property left by the lessee appears to be of little value, it would be reasonable for the lessor to conclude in the absence of other evidence that the personal property, as well as the real property, had been abandoned. On the other hand, where the personal property is of substantial value and it appears that the lessee is the owner, these facts would be significant evidence that the lessee had not abandoned the real property.” (11 Cal.L.Rev.Comm. Reports 951 (1973); 12 Cal.L.Rev.Comm. Reports 571 (1974); (Cal. Civ. Code § 1951.3(e)(2).)

Note:  if personal property has been abandoned too, there is another procedure to be followed.  See the C.A.R. legal article, Abandoned Personal Property: Disposition of Items Left Behind After Termination of a Tenancy.

Q 6: What If the property is under a lease that doesn’t terminate for several months, what should be written on the Notice regarding the date of lease termination?

A: Assuming the landlord wishes to terminate the lease and rent it to another tenant, the date of termination of the lease specified in the Notice should be at least 15 days after the Notice is served personally or, if mailed, at least 18 days after the Notice is deposited in the mail (Cal. Civ. Code § 1951.3(b)).

Q 7: How should a landlord or property manager give this Notice to a tenant if the tenant has disappeared?

A: The landlord’s Notice can be personally delivered to the tenant (if possible) or, in the alternative, it can be sent by first-class mail, postage prepaid, to the tenant at his or her last known address (which may be the rental property address).   If there is a reason to believe that the Notice sent to that address will not be received by the tenant (or will not be forwarded to a subsequent address), the landlord may also send he Notice to another address, if any, known to the landlord where the tenant may reasonably be expected to receive the Notice (e.g., a place of employment). (Cal. Civ. Code § 1951.3(c).)

Q 8: Can a landlord still assume that the tenant has abandoned the property if the landlord accepts all or partial payment of the rent due before or after giving the Notice?

A: No. If during the period of time beginning 14 days before the time the Notice was given and ending on the date the lease would have terminated in the Notice, the tenant pays all or a portion of the rent due on the real property, then the landlord cannot assume the property has been abandoned.  (Cal. Civ. Code § 1951.3(e)(4).)

Q 9: What must a tenant do to prove that he or she has not abandoned the property?

A: Assuming the tenant doesn’t receive the Notice and wants to regain possession of the property, the tenant must establish that he or she hasn’t abandoned the property by proving (1) that rent was not due and unpaid for 14 consecutive days when Notice was given, (2) that it was not reasonable for the landlord to believe that he or she had abandoned the property, (3) that, within the permitted time, he or she gave written notice of his or her intent not to abandon the property, or (4) that, during the period specified in section 1951.3 (e) (4), the tenant paid all or any portion of the rent that was due.  (Cal. Civ. Code § 1951.3.)

The burden of proof on these matters is placed on the tenant so that the landlord will be able to proceed to relet the property with reasonable assurance that the abandonment and termination will not later be set aside by a court. (11 Cal.L.Rev.Comm. Reports 951 (1973); 12 Cal.L.Rev.Comm. Reports 571 (1974).)

If the tenant receives the Notice, the tenant must respond in writing prior to the termination date in the Notice that the tenant has not abandoned the property and must provide a current address for the landlord.  In addition, the tenant must pay current all rent that is owed.  (Cal. Civ. Code § 1951.3(d).)

Q 10: Does the law discussed in this legal article pertain to all real property, commercial and residential?

A: Yes.  The law applies to all real property (Cal. Civ. Code § 1951.3(a)).

Q 11: Does the law discussed in this legal article apply to mobilehomes?

A: No.  For abandonment of mobilehomes, see the Mobilehome Residency Law; in particular, see California Civil Code Section 798.61.

Q  12: Where can I obtain additional information?

A: This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit C.A.R. at www.car.org Online.

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Reprinted with permission of the California Association of Realtors. Credit for this piece is to be given to the C.A.R. Legal Department.

http://www.car.org/legal/2007articles/abandoned-rental-real-property

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EXPENSIVE RENT V.S. CHEAP RENT IN THE U.S.

EXPENSIVE RENT V.S. CHEAP RENT IN THE U.S.

California cities have among the highest rents in the country, claiming four of the top rental prices for the nation’s 40 largest metropolitan statistical areas according to the U.S. Census Bureau’s 2008 American Community survey.

San Jose has the most expensive lease rates in the country with renters paying an average of $1,314 a month; the area just north of San Francisco is second at $1,210; and our beloved Los Angeles, it’s a relative bargain at $1,101. So says

California rents even beat out those in New York, which has the seventh-highest rent of any major metropolitan area. But Thomas Davidoff, assistant professor at the Haas Real Estate Group at the University of California, Berkeley, says the differential between high and low rents in California is much less dramatic than in New York.

“Nothing in California matches rents in Manhattan, but in New York if you factor in Brooklyn, rents get lower,” says Davidoff.

Signing a lease in Miami and Orlando fetched monthly rents of $1,031 and $981 respectively.

“Miami and Orlando were two pretty hot areas when the housing market was raging for conversion of apartment stock into condominiums,” he says of the mid-decade housing boom. “So that reduced supply.”

The survey looked at renter-occupied units paying cash rent, and defined gross rent as the contract rent plus utilities, if utilities were paid by the renter.

On the affordable end, cities such as in Cleveland and Pittsburgh, where the slumping job market has lead to rent rates of $678 and $608. Pittsburgh has struggled to rebuild its economic base after the loss of its steel industry, and residents are leaving the city.

“The bottom line is that Pittsburgh is undergoing a sea shift in its economic base,” says observes Davidoff.

Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School. “Rents are relatively low because it’s in a state which is losing population, and it is simply not doing well.”

Rust belt cities like Cleveland, Cincinnati and Columbus, Ohio, still have low rents compared with the rest of the country. Even though, according to the U.S. Office of Policy Development and Research, apartment vacancies are limited because of a lack of new construction, a rental home in Cincinnati will still cost only around $652 per month.

LOS ANGELES IS THE 6TH MOST DESIRABLE PLACE TO BUY MULTIUNITS

LOS ANGELES IS THE 6^TH MOST DESIRABLE PLACE TO BUY MULTIUNITS

Apartment properties in Los Angeles are expected to record strong performance in 2008 with cap rates expected to climb between 6.25 percent and 6.5 percent, according to the latest National Apartment Index report from Marcus + Millichap.

The NAI is a snapshot analysis that ranks 43 apartment markets based on a series of 12-month forward-looking supply and demand indicators. Markets are ranked based on their cumulative weighted-average scores for various

indicators, including forecast employment growth, vacancy, construction, housing affordability and rent growth.

The report notes that tight operating conditions and low housing affordability, makes Los Angeles 6^th on the list of cities to invest in multiunits.

As we’re all around, locally, layoffs in housing-related industries have slowed employment expansion in recent quarters, but job growth is forecast to accelerate slightly this year, supporting renter demand for apartments. In

addition, the income required to purchase the median-priced home is nearly $100,000 higher than the metro’s median household income, and with credit for marginal buyers essentially nonexistent, the transition from renting to

owning has become more difficult. With homeownership out of reach for the foreseeable future, some renters will look to upgrade into high-end apartments, particularly in the Westside Cities, which is expected to record the metro’s strongest absorption and lowest vacancy rate by the end of 2008.

Strong revenue growth should support apartment prices in the Los Angeles market this year, although sales velocity will be influenced by the availability of capital. Buyers are now finding higher yields in areas such as South Bay/Long Beach, where cap rates often exceed 6 percent. In locations poised for more rapid rent growth, such as the Westside Cities, properties often trade with initial yields below 5 percent.

Going forward, investors seeking upside potential may want to monitor the impact of downtown redevelopment and gentrification efforts, including L.A. Live and the Park Fifth Towers.

2008 Market Outlook

◆ 2008 NAI Rank: 6, Up 3 Places. Slight acceleration in job growth and below-average vacancy pushed Los Angeles up three spots in the NAI.

◆ Employment Forecast: Employment growth is forecast to rise slightly in 2008. The projected addition of 23,000 new jobs will result in a 0.6 percent increase to metrowide payrolls, up from 0.5 percent in 2007.

◆ Construction Forecast: Apartment construction is expected to total 4,700 units this year, compared with 4,500 units in 2007. New development will increase the metro’s apartment inventory by a modest 0.6 percent.

◆ Vacancy Forecast: Vacancy is expected to edge up 20 basis points in 2008 ◆ Rent Forecast: Owners will be able to implement steady rent gains, despite competition from new stock. Asking rents are forecast to advance 5 percent to $1,504 per month by year end, while effective rents pick up 4.8 percent to reach $1,452 per month. In 2007, asking and effective rents climbed 5.7 percent and 5.5 percent, respectively.

◆ Investment Forecast: Revenue growth will offset rising cap rates, keeping prices near current ranges.

Market Forecast Employment: 0.6% ▲ Construction: 4% ▲ Vacancy: 20 bps ▲ Asking Rents: 5% ▲

APARTMENT BUILDING PRICES PREDICTED TO STAY STRONG

APARTMENT BUILDINGS APPEAL TO INVESTORS�A recent survey of 1,000 seasoned real estate Apartments and mixed-use assets are the most attractive investments at the moment. According to the 2008 Real Estate Investor Outlook, 33 percent of investors say they�ll enter the apartment sector in the next 12 months, and 19 percent indicate they�ll enter or expand into the mixed-use sector. �Office properties and retail assets rank far lower with investors, according than the volume of transactions during the first three quarters of 2007, according to Real CapitalAnalytics.�Much of the investor interest in apartments is driven by the weakness in the housing sector and continued upheaval in the mortgage markets. �With both the condo market and the single-family home market falling apart, people have to live somewhere, so they�re going to rent apartments,� observes Dennis Yeskey, national director of Deloitte& Touche LLP�s Real Estate Capital Markets Group.�Investors have grown increasingly more interested in the apartment sector. In 2004, for example, roughly $51 billion worth of apartment assets changed hands in the U.S. � about $1 billion less than the volume of transactions during the first three quarters of2007.��We like the demographic and demand trends in the sector because affordability of single-family housing is out of reach of many people,� explains Bob Dougherty, chief acquisitions officer with Buchanan Street Partners. This year, the company is on track to close $325 million to $350 million in new equity investments. Next year, it is shooting for $400 million to $450 million.�Dougherty, like many other investors, expects apartments to benefit from increased pricing and rental rates. As much as 75% of investors who are currently invested inapartment properties predict an increase in effective rents, and nearly one-third expect to see an increase in the market pricing of apartment properties. More than half of those who invest in apartments expect at lease a slight increase in cap rates.�In October 2007, the average cap rate for apartment properties was six percent and the average price per unit was $104,857, according to Real Capital Analytics.�To compare, the average cap rate in 2004 was 8.66 percent and the average price perunit was $67,776. �Alan George, chief investment officer for Equity Residential, says cap rates for Class Band C apartment properties have increased 25 basis points and 75 basis points, respectively, in the past year. �I think cap rates for those types of assets has plateaued,and I wouldn�t expect more of an increase in 2008,� he notes, adding that Class A caprates have moved very little.

Apartment Rents Rise in 2nd Quarter

Apartment Rents Rise in 2nd Quarter

The average apartment rent, including concessions, rose 1.1 percent in the second quarter to $994 a month, up from the 0.8 rise in the first quarter, according to Reis, a real estate research firm. This was slightly less than the 1.3 percent increase in the second quarter of 2008.

The average asking rent rose only 1 percent, indicating that landlords did not have to offer as many months free rent or other concessions to attract tenants.

The U.S. apartment vacancy rate stood firm at 5.9 percent, slightly more than last year’s 5.8 percent.

Of the top 79 markets that Reis tracks, the New York market remained the tightest with vacancy unchanged at 2.2 percent. Jacksonville, Fla., was the weakest with vacancies at 10.8 percent.

Source: Reuters News, Ilaina Jonas

http://www.realtor.org/rmodaily.nsf/pages/News2008070705

SANTA MONICA RENT CONTROL GRIPE

By Jodi Summers

It is astounding how local, state and federal governments hold landlords responsible for so many things.

After a brief meeting and credit check a landlord is expected to take on the liabilities of a virtual stranger, and then be held responsible because that tenant is an Illegal aliens, smokes, has pets, trims a neighbor’s tree, has a bad temper.

Our city’s Rent Control board do their best to make multiunit ownership undesirable Santa Monica, CA.

As an incorporated city, Santa Monica has created their own special set of rules, which can be a deterrent to unseasoned property investment owners and developers.

This week’s grumble, instead following the City of L.A. example and allowing landlords to raise rent 4% every year, the City of Santa Monica devises an annual General Rent Adjustment which seldom if ever equals the annual cost of living increase. For example, this year’s proposed General Rent Adjustment is 2.7% .