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May 21, 2014

 It’s Not Always a Bad Thing for Rents to Rise

Rising rents may well be the apartment industry’s latest “frenemy,” simultaneously drawing applause from some stakeholders for positive growth and criticism from others over affordability concerns. Too often these analyses look at the industry’s top-line growth separate from related issues, such as supply limitations, underlying cost increases and income growth challenges. However, this article from The Atlantic’s Yonah Freemark looks at the trend in relation to yet a different metric: transportation costs.

According to Freemark, many cities want transit-oriented growth but fear the rising rents that typically come with it. But few fully consider how more reliance on public transit can free up additional dollars for housing. In fact, “a complete switch from private automobile to transit could leave a family up to $700 for additional monthly housing,” wrote Freemark. 

Land-use strategist Chris Leinberger nailed a similar point at last month’s 2014 NMHC Research Forum. Per Leinberger, households in drivable suburban locations spend 25 percent of disposable income on transportation versus 9 percent spent by households in walkable urban locations. (More takeaways from his presentation on walkable urbanism here.)

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MEETINGS

Spring Business Meetings Recap

NMHC members gathered last week in Boston for the back-to-back Apartment Strategies/Finance Conference and Spring Board of Directors Meeting. Both programs were stacked with some wicked smaht people sharing insights on what’s changed in the apartment market since January—including the economy, housing demand, construction activity, affordability constraints and emerging capital trends. Read the full story here. 

HOUSING POLICY

San Antonio Mayor to Be Administration's Pick for New HUD Secretary

President Obama initiated a cabinet reshuffling that set off a daisy chain of other moves with implications for housing policy. The Administration tapped HUD Secretary Shaun Donovan to become the director of the Office of Management and Budget and appeared eager to select San Antonio Mayor Julián Castro as his replacement, fueling rumors of Castro being groomed for a 2016 vice presidential candidacy.

DEMOGRAPHICS

Why Millenials Rent

CNBC’s Diana Olick looks at the reasons Millennials’ attitudes toward homeownership changed so dramatically over the course of a year. In 2012, 35 percent of renters surveyed said they were renting in order to make themselves financially ready to own; that dropped to just 26 percent in 2013. While affordability was the top reason, flexibility wasn’t far behind. However, this Bloomberg article offers a little reality check: Millenials need to leave the nest first.

CONNECTIVITY

Much Ado About Net Neutrality

Net neutrality has been all over the news as the Federal Communication Commission voted last week to allow the creation of so-called “fast lanes” to consumers’ homes, where Internet content providers (Netflix, for example) could pay a premium to have their content delivered faster. Given the demand for Internet in apartments, this change could have trickle-down effects on the industry. Get primed on the issue here.
In Case You Missed It
A hand-selected collection of noteworthy articles on a wide variety of issues of interest to apartment executives.
Developers Turn Former Office Buildings into High-End Apartments (paywall)

Preliminary Harvard Report Quantifies Apartment Rehab Spending

Small Investors Caught Up in Fight over Future of Fannie, Freddie

Winter Thaw Helps Multifamily Fuel Latest Starts Increases

The Micro Unit Defined

Next Revolution in Digital Technology Will Take Place in Homes, Among Other Places

Chinese Developers Take the Lead on New Residential Projects in New York

NREI Survey Shows Industry Insiders Bullish on Multifamily

MetLife Finances London Student Housing Acquisition for U.S. Buyer Greystar

Apartment Amenities Race Hits Puget Sound Area

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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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SEPTEMBER

2014 NMHC Fall Board of Directors and Advisory Meeting
September 16-18 , 2014
The Fairmont Hotel in Washington, DC

2014 NMHC Student Housing Conference & Exposition
September 30 - October 2, 2014
Palmer House Hilton in Chicago, IL

NOVEMBER

2014 NMHC Optech Conference & Exposition
November 17 - 19, 2014
Hilton Orlando Bonnet Creek in Orlando, FL

 

Multifamily Market Dashboard

Pace of Entrepreneurship Slows, Affecting Jobs

Anyone looking for a first read on apartment demand starts with jobs; job growth begets new household formations, a portion of which is pretty much guaranteed to show up as new apartment shoppers. But for as much as mega growth companies—think Apple, Google, Amazon—are critical to job growth, so are the nation’s small businesses and startups. However, according to a new Brookings Institute report, that’s exactly where the future doesn’t look so bright.

The report focused on business dynamism—the natural process by which new companies are created or fail, expand or shrink—and entrepreneurship’s essential role in driving productivity, sustained economic growth and net job creation. However, the analysis revealed that the pace of entrepreneurship has steadily slowed over the past few decades. Moreover, the decline has been fairly universal, reaching across nearly all sectors and geographies.

While the report stopped short of outlining the reasons for this “troubling secular decline” or prescribing a fix, a Bloomberg article offered a few thoughts on why the U.S. isn’t creating more small businesses. Capital constraints unsurprisingly topped the list. But not to worry, there are still some great places for small businesses.

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