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April 24, 2014

Behind the Rising Rent Story

As the economic recovery has rolled forward, average rents in many areas of the country have migrated north. In some instances, the increases have been rapid and noteworthy, raising the question of apartments’ affordability. Point in case is this recent NYT article, which focuses on the fact that half of all renters spend more than 30 percent of their income on rent.

The underpinnings of this trend lie in the chronic under building of apartments during the downturn, which created a dearth of new units at the same time that demand for apartment living has been climbing. True to the laws of supply and demand, this shortage has resulted in temporary rent increases.

However, there are additional contributing factors rarely recognized in the media. Rising unit costs is one that Dean Baker, with the Center for Economic and Policy Research, recently highlighted in this blog post. Using Consumer Price Index data, he argued that today’s rising rents actually reflect better quality housing, as the mix of rental units has changed so that the typical unit costs more.

NMHC recognizes that the proliferation of media stories on rising rents can pose challenges for our members and continue to address the issue through our advocacy, education and communication efforts. A good example is this fact sheet on the apartment supply shortage, which our staffers regularly distribute to lawmakers and regulators.

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MEETINGS

Former CIA/NSA Director General Michael Hayden Headlines NMHC Spring Board Meeting in Boston (May 13-14)

General Michael Hayden, a retired four-star general who also served as director of two of the nation’s premier intelligence agencies, will deliver the keynote address at the 2014 Spring Board of Directors Meeting dinner event on May 13. A familiar face in Washington, D.C.’s inner circle, Hayden will offer his perspective on some of the nation’s emerging security issues, such as data privacy and security and cyber terrorism.

The Spring Board Meeting, held May 13 and 14 at the Fairmont Copley Plaza in Boston, is open to NMHC Executive Committee and Board of Directors members only.

PUBLIC RELATIONS

NMHC/NAA's Pro-Apartment Campaign Wins More Awards for Communications Excellence

NMHC and industry partner NAA’s multimedia Apartments. We Live Here campaign recently collected more accolades for excellence in communications and public relations. As part of ASAE’s annual Gold Circle Awards, the association leadership organization gave the campaign top honors in the categories of Innovative Communications, Integrated Communications Campaign and Media/Public Relations and selected it for a merit award in the Website category.

The on-going campaign has earned multiple design and video awards, as well as national recognition from PR Week, PR Daily and PR News. The campaign’s centerpiece is the www.WeAreApartments.org website, an info-driven digital experience with unique features—including an animated infographic, interactive state, metro and district area map and an online calculator that tallies the economic contribution of any number of apartments based on location.

RESIDENT SERVICES

Apartment Firms Raise the Bar on Customer Service with Hotel-Grade Concierge Services

Beyond brick-and-mortar amenities, many apartment firms find that customer service can be a way to differentiate their communities from the competition. Increasingly many communities are opting for concierge services akin to those found in high-end hotels. Here’s an inside look at how The Bozzuto Group is taking a page from playbooks of hotel giants Marriott and Ritz Carlton and implementing a rigorous concierge training program for its on-site staffers.

STUDENT HOUSING

NMHC Delivers an Intro to Media Training at Student Housing Meeting

NMHC’s Student Housing Council recently met at American Campus Communities’ headquarters in Austin during the Interface Student Housing Conference to discuss a variety of business topics, including market trends, federal lobbying, political fundraising and the 2014 Student Housing Income and Expense Survey. (Currently underway, the deadline to complete the survey is April 30.)

In addition, NMHC facilitated a media training session for the committee’s new Forty Under Forty young leaders group. The session offered attendees some strategies for preparing for and conducting media interviews and was followed by a networking barbecue. NMHC thanks ACC for volunteering to host the successful event. 

TRENDS

Strategies to Increase Community Buy-In for Microhousing Could Make It More Expensive

Many major U.S. metropolitan areas are turning to microunits to help address a complicated set of rental housing issues. This trend is playing out big time in places like Vancouver and Seattle, which have long been touted for their forward-thinking municipal planning.

Despite this legacy, community push back still exists. However, as municipalities look to find compromise, some stakeholders warn that the more complicated the process to bring microunits into the mix becomes, the more expensive—and ultimately ineffective—the housing solution. Check out Smart Growth Seattle’s math on how a design review could raise asking rents more than $90 a month.

(Bonus: Needing a design fix? See how art students in Georgia turned an underused parking garage into a microunit community.)

In Case You Missed It
A hand-selected collection of noteworthy articles on a wide variety of issues of interest to apartment executives.
Opinion: Americans Think Owning a Home Is Better for Them Than It Is

New Companies Look to Usurp Amazon Locker in Solving Urban Package Delivery Problems

NMHC Annual Compensation Survey Underway, Participate by May 9 to Save 78% on Final Report

Opinion: Why the Middle Class Can’t Afford Rents

Apartment Developers Catch On to Computerized Living

Proposed FCC Rules to Allow Content Companies Access to Priority Internet Service, Consumers Could See Price Increases

How Burrowing Owls Lead to Vomiting Anarchists (or San Francisco’s Housing Crisis Explained)

One Seattle Builder Hopes to Fill a Market Void by Targeting Affordable Housing(paywall)

Apartments, Mixed-Use Projects Revive Old Suburban Chicago Locations (feat. NMHC’s Doug Bibby)

Beyond Building in Walkable Locations, Multifamily Developers Must Engage in Placemaking

MFE’s Spring Technology Issue Features NMHC Experts on Business Intelligence and Data Breach

New Apartment Buildings Are Geared for Millenials

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About Apartment Wire
A must-read for top apartment industry professionals, Apartment Wire is a timely review of emerging trends in apartment finance, development, management and technology and more, featuring both exclusive content from NMHC's staff of experts and provocative articles from across the web.
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THIS MONTH
2014 NMHC Research Forum
April 29 & 30, 2014
Georgetown University Hotel & Conference Center in Washington, DC
NEXT MONTH

2014 NMHC Emerging Leaders Speaker Series - Boston
May 12 , 2014
Mandarin Oriental in Boston, MA

2014 NMHC Apartment Strategies/Finance Conference
May 12 & 13, 2014
The Fairmont Copley Plaza in Boston, MA

2014 NMHC Spring Board of Directors Meeting
May 13 & 14, 2014
The Fairmont Copley Plaza in Boston, MA

 

Multifamily Market Dashboard

Apartment Supply Update

According to preliminary data recently released by Census and HUD, multifamily (5+ units) completions ticked up in March while permits and starts tempered.

Good news or not so good news? Hard to tell. Monthly figures for multifamily tend to be volatile, particularly during the winter months, so it’s always better to look at the latest data in some context to get a better grasp of what’s really happening to supply.

Calculated Risk’s Bill McBride examined the data on a 12-month rolling basis in this post, comparing starts to completions.  His takeaway:

“The rolling 12-month total for starts (blue line) has been increasing steadily, and completions (red line) are lagging behind—but completions will continue to follow starts up (completions lag starts by about 12 months). This means there will be an increase in multifamily completions in 2014, but probably still below the 1997 through 2007 level of multifamily completions.  Multifamily starts will probably move more sideways in 2014.”

 

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