Socal Multiunit Real Estate

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.

DIDJA KNOW…THE LIFESPAN OF CARPET

DIDJA KNOW…THE LIFESPAN OF CARPET

The “lifespan” of carpet is a function of the quality of the carpet and the intensity of use and many other factors such as sunlight. Columnist Robert Griswold notes, “So while each carpet must be evaluated individually, I think it is safe to say that the usual range of years for the average life of an apartment-grade carpet is 5-10 years.”

INVESTING IN THE DOWNTOWN – THE TO-DO LIST

INVESTING IN THE DOWNTOWN – THE TO-DO LIST

The conclusions drawn from the recently released 2009 Emerging Trends in Real Estate report by the Urban Land Institute and PriceWaterhouseCoopers LLP are not pretty.

“Total expected returns on private equity real estate investments will likely drop into negative territory for the first time in nearly two decades as the market hits bottom next year,” the report suggests.

We slowly being to recover in 2010. The trough and recovery is predicted to be more U-shaped than V-shaped.

The report’s advice to investors and property owners to make it through the slow period:

· Go green. Cutting energy and other operating cost is likely to be a growing priority for both landlords and tenants.

· Buy or hold multifamily; hold office. Hold hotels, buy residential building lots, but be prepared to hold.

· Purchase distressed condos in urban areas near transit.

· Focus on neighborhood retail centers with strong grocery anchors and chain drugstores.

Info courtesy of:

http://www.costar.com/News/Article.aspx?id=41A9DE2D4E098EDEFBB56A05FBBB79A3

2009 IS ABOUT HOW TO GO GREEN ON YOUR MULTIUNITS

2009 IS ABOUT HOW TO GO GREEN ON YOUR MULTIUNITS 

In 2009, the U.S. Green Building Council (http://www.usgbc.org) plans to focus on why homeowners and multiunit property owners should go green.

“The message is…why to go green and how to go green,” confirms Nate Kredich, USGBC’s vice president of residential market development.

In 2009, the Washington, D.C.-based nonprofit plans to collaborate with local green home building programs and select 20 to 25 local home builder associations across the country to spread the green message.

Already the USGBC has successfully organized initiatives in New Mexico and Texas. Also in the first quarter of ‘09, USGBC expects to offer training courses to certify LEED for Homes accredited professionals.

Some statistics…since January 2008, 1,028 homes have received LEED for Homes certification with an additional 3,261 homes registered and awaiting certification. Notably, 45 percent of the certified units, which includes both single-family and multifamily homes, are affordable. Santa Monica’s Colorado Court is a fine example of green affordable housing.

USGBC also launched its REGREEN initiative, which includes guidelines for greening renovation projects. These guidelines are available
for free download online @ www.regreenprogram.org.

Sustainable development is also catching on in the multifamily sector,
“Multifamily is a market that knows LEED already as they have participated in the new construction program,” Kredich says. “They are starting to look at LEED for Homes as another option.”

The USGBC recently launched a new mid-rise test pilot initiative. The program will certify four- to six-story buildings that previously received certification
under the LEED for Homes initiative.

LEED for Homes Certification Breakdown
Certified: 24%
Silver: 40%
Gold: 22%
Platinum: 15%

Info courtesy of

http://www.ecohomemagazine.com/news/us-green-building-council-unveils-2009-plans.aspx

http://www.nahb.org/builderremodelerdirectory

http://www.car.org/newsstand/crem/current-issue/october2008/235686/

THE EXPERTS SAY BAD MARKETS CREATE GOOD OPPORTUNITY

THE EXPERTS SAY BAD MARKETS CREATE GOOD OPPORTUNITY

Experts say…2009 will bring good values for investors. According to Moody’s/REAL Index, commercial values have declined 12% from their peak in January 2007, and the general consensus is that there is still a ways to go.

“Cap rates are going straight up, with the low end at eight and the high end at 10, depending on the asset class,” noted Thomas Wood Jr., president of Thomas D. Wood and Co., at the recent Urban Land Institute conference. “I think we lose 15% to 20% value in 2009,”

The Jones Lang LaSalle’s Fall 2008 Cross-Sector Survey, which was conducted at the ULI conference, surveyed 100 commercial real estate experts – and optimistically less

than half of those surveyed foresaw a decline of zero to 30% in 2008.

More than two-thirds of respondents predict multifamily investments will decline by zero to 30% in 2009.

“What this tells us is that 2009 will be a prime year for opportunistic investors hoping to procure distressed assets,” says Jack Minter, managing director of investment sales at JLL. When asked when they expect the debt markets to regain equilibrium, 62% of respondents to the survey said it would take at least a year to reach stability.

http://www.globest.com/news/1279_1279/florida/174898-1.html

MORTGAGE INDUSTRY PROFIT STATISTICS

MORTGAGE INDUSTRY PROFIT STATISTICS

This info obviously takes a long time to calculate, which is why they give it to us so late in the year. But…when you find out, we bet you’ll be surprised to learn that mortgage companies lost an average of $560 on every loan they originated in 2007, compared with the $50 per loan they lost in 2006, continuing a downward trend that began in 2004, according to the Mortgage Bankers Association’s annual cost study.

While loan origination and ancillary fees grew on a per-loan basis, they did not keep pace with increases in production operating expenses, which grew 7 percent to $3,663 per loan, the study found.

MBA’s 2008 Cost Study is based on 2007 income and expenses associated with the origination and servicing of one- to four-unit residential mortgage loans by mortgage banking companies. The study is based on a sample of 180 mortgage banking companies who originate and service loans.

For the whole story please go to:

http://www.inman.com/news/2008/10/7/mortgage-industry-profits-tank-in-07

ON DECK FOR THE NEW PRESIDENT: COLLAPSING FORECLOSURES AND RISING HOME VALUES

ON DECK FOR THE NEW PRESIDENT: COLLAPSING FORECLOSURES AND RISING HOME VALUES

Recently, the Today Show, NBC’s traditionally reliable source of information, reported that nearly 20% of homeowners are upside down in their mortgages. Forget how we got there. What the next president inherits is a state of panic where people don’t know how they are fiscally going to make it through the next phase.

It is critical that the next president – be it John McCain or Barak Obama, takes an optimistic view that the housing market can indeed be fixed. Issues must be tackled piece by piece - rampant foreclosures, collapsing residential property values, and bad banking judgement. And these elements were part of an even larger governmental issue – what Inman News calls, “too much liquidity chasing bad loans in an unaffordable housing market.”

The economic shift has solved issues of excess liquidity + bad loans. Now the elements specifically affecting the housing market must be tackled. The pendulum of bad banking judgement has now swung to the other extreme, and only the best qualified can get a loan.

On deck for the new administration, to rising foreclosures and collapsing home values into collapsing foreclosures and rising home values. He needs to turn the current wave of fear into optimism.

Inman News has come up with a to-do list for the next occupant of the Oval Office, which includes:

· Institutionalize loan modification activity

· Rebuild faith in the secondary mortgage market

· Expand the Scope of the FHA

· Bring dignity to renting

· Re-tool federal housing programs

· Re-think regulation

· Beef up RESPA

· Housing leadership

· Resist quick housing stimulus packages

Please go to http://www.inman.com/news/2008/10/29/what-next-president-must-do for all the details.