Home sales in California have fallen for 4 months straight

Inmannews - Mon, 09/17/2018 - 10:13am
Near record-high home prices are crushing demand in California, according to the latest home sales data from the California Association of Realtors (C.A.R.). The state dropped below the 400,000 sales benchmark in August, the first time in two years sales have reached that low.
Categories: RSS

Douglas Elliman agent and husband killed in plane crash

Inmannews - Mon, 09/17/2018 - 10:11am
Jodi Cohen, an agent with Douglas Elliman, and husband Michael Graver, were flying between airports in New York and Massachusetts when the plane went down.
Categories: RSS

Tenants got a rare chance to come back after being evicted — but most didn’t

American Apartment Owners Association - Mon, 09/17/2018 - 9:58am

Two years ago, when she was booted from her airy apartment on Franklin Avenue, Sylvie Shain was packing up until nearly midnight.

Now she and her friends were lugging it all back up to her door at the Villa Carlotta: a vintage stove in a sherbet shade of mint, a velvety couch said to have once graced the Chateau Marmont, boxes heavy with knickknacks she never had the heart to cull when she was evicted.

Back then, “I was the little guy and there was no way I was going to win,” Shain recalled one afternoon. “Me going back is like the little guy winning.”

Shain and other renters lost their apartments after a new owner announced plans to turn the Villa Carlotta into a boutique hotel. When those plans fell apart, tenants got a rare chance to come back.

That right to return is a safeguard for renters displaced under the Ellis Act, a state law that allows landlords to evict tenants from rent-controlled units if they are tearing down a building or getting out of the rental business. Under L.A. city rules, if the landlord promptly backs out of those plans and leases the apartments again, former tenants are allowed to return at roughly the same rents.

But tenant activists say it rarely works out that way.

‘Slim to none’

Shain maybe the little guy, but she is an unusually savvy one — a founding member of the Los Angeles Tenants Union who fought the evictions and now advocates for other renters at City Hall. And she is the only tenant to come back to the storied building below the Hollywood Hills.

Some of her neighbors had accepted buyouts from the owner to leave the Villa Carlotta and said they were told they had relinquished their right to return. Others found it impractical or unappealing to come back.

“It’s a tremendous burden for a tenant to move out and find a place and lay down roots somewhere else,” said Larry Gross, executive director of the Coalition for Economic Survival, a tenant advocacy group. “Once they’re out, the likelihood that they’ll go back is almost slim to none.”

CGI Strategies, which owns the Villa Carlotta, withdrew plans to turn the building into a hotel two years ago, in the face of opposition from City Councilman David Ryu. At the time, the company said it still planned to restore the historic building for another use.

The Villa Carlotta is now marketed as a sophisticated hideaway for extended stays of roughly a month or more. Furnished apartments with Nespresso machines and Apple TV have been advertised online for around $4,500 a month, with bigger units going for roughly $8,000.

That far exceeded what tenants were paying when it was a bohemian hangout with peeling paint and leaky plumbing, where neighbors shared a giveaway pile in the lobby and gathered for Thanksgiving dinners. But because the apartments were being rented out again, Shain and other tenants had the right to come back at close to their old rents.

When Rick Guidotti got that news, however, he also got a phone call from a Villa Carlotta attorney who nixed the idea.

The reason? At the time of the evictions, Guidotti and his partner made a deal with the building owner to clear out, he said. CGI was offering them much more money to relocate than they would otherwise be entitled to under city rules, according to Guidotti.

Such buyouts can involve giving up some rights, tenant advocates say, although the exact details hinge on the wording. Guidotti said the deal mentioned waiving “future rights.”

He and his partner now live in an apartment across the street, he said, paying more than twice as much for a much smaller unit in the same neighborhood that Guidotti had lived in for decades.

“I’m just burning through that money,” said Guidotti, a guitarist who used to play with the Turtles. “I could go out and look for a job, but I’m almost 70 years old.”

Many of the displaced tenants accepted some kind of buyout before leaving. A few could not be reached, according to the housing department, which attempted to contact former residents from all the units that had been vacated. Shain said she heard from others who found it impractical to move, including one who had just signed a new lease.

CGI Strategies declined to comment, except to say that it was complying with the Ellis Act. Under city rules, it is also obligated to initially rent out the units that were vacated at the same rates as before, plus any annual increases allowed under rent control, according to the housing department.

Shain, who was paying roughly $1,700 for a one-bedroom unit in Westlake, will save hundreds of dollars a month at her old apartment with its Juliet balcony and 1920s charm.

Despite the changes — the renovated lobby with its breezy music, the disappearance of the old cast of characters in the courtyard — it felt reassuring to be back at her second-floor apartment.

And she relished returning to her familiar neighborhood, where residents at other buildings had helped her when she had knee surgery, bringing her meals and walking her tiny dog, Brad Pitt.

Thousands of units taken off market

It is unclear how many Los Angeles tenants have gotten the same chance, but it appears to be rare.

Housing officials had records of only eight L.A. addresses, including the Villa Carlotta, where landlords withdrew apartments under the Ellis Act in the past five years and later informed the housing department they were going back on the rental market. The department does not track whether people came back.

Both Steven Luftman and Jen Getz, the friends who helped Shain lug her couch back to her apartment, said they too had been displaced by Ellis Act evictions. Across Los Angeles, more than 24,000 units have been withdrawn under the law since 2001, according to the Coalition for Economic Survival.

”I’ve never seen a client return,” said Inner City Law Center supervising attorney Ingrid Arriaga, who isn’t representing Villa Carlotta tenants. In some cases, “they probably don’t feel comfortable moving back.”

An unusual exception was the battle over Lincoln Place, a Venice garden apartment complex that was up for demolition a decade and a half ago. The lengthy saga ended with a settlement that allowed dozens of former tenants to come back.

Beyond the Ellis Act, promises of a “right to return” have been floated in L.A. amid concerns about tenants being displaced by new construction.

City Councilman Mitch O’Farrell recently announced that tenants displaced by the Crossroads Hollywood project would be guaranteed a place in the new buildings at their existing rents, plus any allowable increases under rent control, under an agreement with Harridge Development Group.

Another developer, Bob Champion, made a similar pledge for another Hollywood development last year.

Last month, nonprofit developer Abode Communities vowed that tenants would have the right to come back once a new affordable housing project arose at the Westlake site now occupied by their bungalows, although community activists complained some might not be eligible.

And during the debate over Senate Bill 827, which would have allowed cities to ramp up housing development near rail stops, state Sen. Scott Wiener (D-San Francisco) said that any tenants displaced by construction would have a right to come back to a new building. But tenant activists said that wouldn’t reverse the damage.

Earlier this year, Assemblyman Richard Bloom (D-Santa Monica) unsuccessfully pushed a bill to make it easier to return after Ellis Act evictions and extend possible penalties for “abuses.”

Earle Vaughan, president of the Apartment Assn. of Greater Los Angeles, argued the law is strict enough and that tenants have other protections, including as much as $20,000 in relocation aid under city rules.

“If somebody is going to pay that kind of money, there must be a real reason,” Vaughan said, describing the Ellis Act as a “safety valve” for building owners unable to cover their costs in the rental business.

Shain argued that change was needed to help tenants exercise their rights.

“It’s difficult to navigate,” said attorney Aimee Williams, who assisted Shain through the process. “Even with an attorney. Even as an English speaker. It’s something that a lot of tenants are not equipped to deal with.”


The post Tenants got a rare chance to come back after being evicted — but most didn’t appeared first on AAOA.

Categories: RSS

Here are the hottest NYC neighborhoods for new development

Inmannews - Mon, 09/17/2018 - 9:49am
A new rundown of the top 20 NYC neighborhoods by number of approved building permits from local startup Localize, a company that seeks to provide a wealth of information about every address in the Five Boroughs, is revealing.
Categories: RSS

Renters ‘Paying More For Less’ As Older Apartments Take Over The Market

American Apartment Owners Association - Mon, 09/17/2018 - 9:46am

It stands to reason that older apartment units—with their outdated features and lower desirability—should come with lower rents. But while that may have been true in years past, according to recent data, a startling new trend is afoot.

Aging rentals aren’t just getting more expensive; they’re actually outpacing rent growth on newer units—and even rising construction rates aren’t doing enough to stop it.

In fact, since 2000, median rents have grown the most on the nation’s oldest properties. According to a new study from Apartment List, rents on units built from 1990 to 1999 increased by 6.5% between 2000 and 2016. Units built before 1960 saw rents jump more than three times that—a total increase of 21.4%—over the same period.

And what’s worse? For renters, there aren’t many other choices. Older units now make up a startling share of apartment inventory. Only a mere 9% of rentals are 10 years or younger (the lowest point since 1960), while 66% are 31 years old or more.

“The quickened pace of rent growth for older building cohorts has resulted in more narrow price gaps across buildings of different ages,” said Chris Salvati, housing economist for Apartment List. “In short, as renter cost burdens continue to pose a major concern, the least expensive cohorts of rental housing are seeing the fastest rent growth.”

A Drop In Affordability

The trend is putting a crunch on local rental affordability across all of the nation’s largest metro areas. But according to the study, the problem is worse in the Sun Belt. San Diego, Miami, Tampa, Houston, and Sacramento have seen the biggest uptick in aging rental units since 2000.

The Sunbelt has experienced the biggest jump in aging apartment units since 2000.COURTESY OF APARTMENT LIST

According to Mark Fleming, chief economist at First American Financial Corporation, in these high-demand markets, it means “renters are increasingly paying more for less.”

“It’s an unfortunate trend for many renters,” Fleming said. “Settling for an older unit may mean sacrificing on some of the modern amenities that might be desired.”

But it’s worse than just renting an undesirable property. Some renters might even be forced into undesirable locations, too.

“Many low- and middle-income renters are already struggling with affordability, and fast-growing rents in older units will exacerbate this issue,” Salvati said. “As affordable options become increasingly scarce, many households may be forced to move to the outer reaches of the metros they live in, or in the most extreme cases, households may move to an entirely different part of the country with a lower cost of living.”

The Construction Problem

The heart of the issue lies in lagging construction, according to Fleming.

“In the U.S., we have not built a sufficient amount of new housing units—rental or owned—to keep up with household formation and the demand for shelter,” Fleming said. “Furthermore, a lot of what has been built is at the higher priced end of the housing market. Insufficient supply, combined with most available houses being on a higher price point, has lead to less filtering down and an aging of what it is in the rental market.”

Multi-family construction is actually up in recent years, too. In 2017, a whopping $61 billion went toward construction in the sector—four times the amount spent just seven years earlier. Still, it’s not enough.

“The recent upticks in construction in many markets are certainly a step in the right direction,” Salvati said. “That said, these heightened levels of construction would need to be sustained for a longer period in order to have a significant long-term impact on affordability.”

Unfortunately, a dip in mortgage rates or home prices—which would likely push some renters out of the market and into ownership—isn’t likely to help either.

“There is already a significant shortage of homes for sale,” Fleming said. “While slower price appreciation and rising rates may improve ownership affordability, it doesn’t address the overall supply-of-shelter shortage. We just need to build more—easier said than done.”

Getting Creative

In the end, it seems America’s major metros might need to get more creative in order to solve today’s affordability and inventory problems.

“What happens in the short-run is not enough to overcome the multi-million unit shortfall in the supply of housing that has accumulated since the end of the recession,” Fleming said. “Long-run changes in how we think about housing Americans and providing shelter is required.”

The growing Yes In My Backyard movement in San Francisco—which aims to increase local development and affordable housing—is a step toward just that. So is the burgeoning popularity of Accessory Dwelling Units (ADUs) or “granny flats.”

Last year, California alone saw 2,000 ADU permit applications, with thousands of residents building new living structures to rent out—either for friends and family members or for full-time tenants—in their backyards or other plots of land.

And across the entire country? ADU expert Kol Peterson estimates there are several million more unpermitted ones. But will the YIMBY and ADU movements be enough? Only time will tell.



The post Renters ‘Paying More For Less’ As Older Apartments Take Over The Market appeared first on AAOA.

Categories: RSS

Agents reap the spoils of new technology, not consumers

Inmannews - Mon, 09/17/2018 - 9:42am
In real estate, innovations in technology have ignored the consumer. Instead, agents get clever digital marketing tools and backend applications.
Categories: RSS

Investors finally embrace big single-family rental companies a decade after the financial crisis

American Apartment Owners Association - Mon, 09/17/2018 - 9:37am
  • “The single-family rental market is very healthy right now,” according to one analyst.
  • “One of the barriers to entry is just having the people, processes and systems in place that allow you to create an efficient business model,” said Dallas Tanner, Chief Investment Officer at Blackstone’s Invitation Homes
  • As the vintage of the homes increases, the capital burden will increase as well.

A decade ago, when the U.S. housing market collapsed and millions of homes went into foreclosure, a new class of real estate investors was born. Large-scale, institutional firms began buying up tens of thousands of properties. They rehabbed them and put them up for rent.

Some said it was a short-term play; they’d sell the homes once property values recovered. And some did, but a decade later the firms that made the biggest bets are not only still in play, but expanding, and continuing to reap the rewards of a new rental boom.

At the start, there were several players. Names like American Residential Properties, Colony American Homes, Starwood, Waypoint and Silver Bay. Now, after mass consolidation in the last few years, only the last two remain: American Homes 4 Rent and Invitation Homes. They are single-family rental REITs, and, along with Canada’s Tricon Capital, which bought Silver Bay, they own and operate about 200,000 single-family rental homes across the nation.

“The single-family rental market is very healthy right now. The demand versus supply balance and the operating outlook for revenue growth over these coming years is more favorable versus most property types,” said John Pawlowski, an analyst at Green Street Advisors. “The operating backdrop for them is quite sound, and they’re better at what they do today versus the early days of this sector, they’re better operators, they have more refined systems.”

A rough start

At the start, bringing this new asset class to a functioning operational scale was not easy. Unlike multi-unit apartment buildings, these companies owned homes in multiple neighborhoods across multiple housing markets. The vast majority were and continue to be in the South and West, where the foreclosure crisis hit hardest, but inventing a management scale was entirely new territory.

“It is very scattered. One of the barriers to entry is just having the people, processes, and systems in place that allow you to create an efficient business model,” said Dallas Tanner, chief investment officer of Blackstone’s Invitation Homes, the largest single-family rental REIT. “That took some time to develop and get right, but with time, we’ve certainly seasoned those processes, and provided an opportunity not only for long-term employment, but we’ve been able to capture an asset class that people want and they’re looking for this quality of choice.”

Single-family rentals have been around forever, but most historically were and still are owned by small investors or so-called mom and pop landlords. These are people who might own a rental home in their neighborhood. They do all the maintenance, but they’re only responsible for one or a few properties.

Invitation Homes, a Blackstone company, began buying homes in 2012 and initially spent about $10 billion on a portfolio of 48,000 homes. It went public at the start of 2017, and now, after the acquisition of Starwood Waypoint last year, which had been the third largest single-family rental REIT, owns approximately 80,000 homes in 17 major markets, largely in Florida and the West. It has a 96 percent occupancy rate and continues to grow revenue, according to the company’s latest earnings release for the second quarter.

American Homes 4 Rent, now 5 years old, owns and operates just more than 52,000 homes with a 96.6 percent occupancy rate, according to its second-quarter financial report. Total revenue increased 11 percent to $522.5 million for the six-month period ended June 30, 2018, from $470.8 million for the six-month period ended June 30, 2017.

While some in the housing market claim that these institutional investors are taking away much-needed housing stock from the for-sale market, they actually comprise less than 2 percent of the single-family rental homes available today. There are currently about 7 million single-family homes for rent, owned by smaller-scale, private investors.

Investors initially unimpressed

In the early days, the going was rough for some, as investors were not impressed with initial returns nor the longevity of these rental REITs. Early innovators, like Laurie Hawkes, who co-founded Arizona-based American Residential Properties and grew its portfolio to nearly 9,000 homes, saw tremendous potential in the long-term play.

“This market went through in three years what it took multifamily 25 years to do. The ability to raise growth capital was the hardest thing to do,” said Hawkes in an interview after her company’s merger with American Homes 4 Rent in 2015.

Blackstone’s President and Chief Operating Officer, Jonathan Gray, who was global head of real estate at the time, never seemed to see the single-family rental market as a short-term play.

“Our focus is let’s perfect the model. Let’s get a world-class management team. Let’s have really clean simple metrics that the market can understand,” Gray said in an interview with CNBC in July 2015.

While this new public asset class is far from mature, it is continuing to expand and to profit, even as the fundamentals of the housing market change again. These companies were an outgrowth of a crisis, when home prices and the homeownership rate both saw record drops in a short period of time.

Homeownership is now growing, and home prices, just six years after hitting bottom, are now higher than they were at their peak in 2006. Still, rental demand continues to be strong for both single- and multifamily units.

“The way people are making choices today, there’s somewhere between 60 and 65 million people between the ages of 20 and 35 that are delaying the decisions like homeownership, and choosing the opportunity to lease a home, or an apartment in a local neighborhood, delaying those decisions are impactful to our business model,” said Tanner.

But unlike in the multifamily space, single-family rental companies have the advantage of being able to move with the housing cycles, profiting both from their income and their assets.

“Sometimes you have an asset that might be worth more in an end-user market than it would be in the rental space, and that’s just a very easy thing for us. U.S. housing is one of the most liquid asset classes in the world, and it’s a very easy thing for us to on the margin be selling and buying with our portfolio today,” he said.

Year to date, Invitation homes acquired 453 homes for $132.2 million, including estimated renovation costs, and sold 599 homes for gross proceeds of $132.0 million,” according to company filings.

Affordable home shortage continues

The nation also continues to suffer from a shortage of affordable homes for sale, and while builders are increasing production, they are not focused on the low end of the market. High costs for land, labor and materials make the move-up and luxury markets far more profitable. That shortage will continue to fuel rental demand for the foreseeable future.

But the rental market is not without risks ahead either. Investors purchased most of their properties out of foreclosure and did immediate renovations and repairs, but as the housing stock ages, those repairs will need to be made again. Invitation Homes reported costs for repairs and maintenance up nearly 20 percent compared to a year ago.

“In a business that’s only been around five years, nobody knows how these homes are going to age,” said Pawlowski. “People understand how much wear and tear they put on their own homes, and how much money they put into it on a recurring basis, but we don’t have the track record of the institutional single-family rental sector to opine with confidence on a long-term capital expenditure burden of this asset category versus others.”

Confidence in the sector grows

As the vintage of the homes increases, the capital burden will increase as well. But one thing improving with age is the confidence in the sector. The stocks underperformed initially but hit their stride in 2016. It was a shock to a lot of those following the sector, who thought that as home prices increased these REITs would sell off their homes and close up shop.

“Operating performance, both occupancy, rental rate, and operating margins, all began clicking and proved to investors that these companies could operate this asset class more like an apartment company, and now it does look like a viable business, so yes we were surprised as well, and it seems to still have legs these next couple years,” said Pawlowski.

As for the future, the companies continue to buy, sell and test the asset class. American Homes 4 Rent had its first real test in Houston last year, when massive flooding from Hurricane Harvey damaged a large swath of its homes. The company moved in both personnel and mechanical resources from neighboring states, set up emergency call centers, and found temporary housing for tenants.

“One of the benefits of the institutional single-family rental program is that we have an in-house maintenance team and a construction team, we’re in many cities across the country and have the ability to mobilize all those forces,” said David Singelyn, CEO of California-based American Homes 4 Rent, in an interview just after the disaster. “We planned prior to the hurricane hitting the city here in Houston. We were able to be in the city the second day with our crews and equipment that we sourced from other cities.”

Technology is the focus for both American Homes 4 Rent and Invitation Homes. Tanner said his company has spent more than $23 billion to date, outside of the original purchase price, improving homes. Going forward, upgrades will include smart home features and technology systems that younger buyers want.

“Sixteen million customers in the U.S. today rent a single-family home, so it’s our opportunity to enhance that experience, providing a suite of services that can be predictable, and that they can opt into over time,” said Tanner. “One of the beautiful things about our business model is that our customers are choosing a leasing lifestyle.”


The post Investors finally embrace big single-family rental companies a decade after the financial crisis appeared first on AAOA.

Categories: RSS

Does rising housing inventory signal the beginning of a buyer’s market?

Inmannews - Mon, 09/17/2018 - 9:34am
The recent inventory increase and the slowdown in price appreciation is not a coincidence and may be signaling good news for those considering buying a home.
Categories: RSS

CoreLogic launches a new digital underwriting tool for mortgage lenders

Inmannews - Mon, 09/17/2018 - 8:44am
AutomatIQ Borrower evaluates how much debt a borrower can take on by looking at consumer data and income verification services. It is designed to be the first of a series of new initiatives to build a more efficient lender underwriting system. 
Categories: RSS

8 graphs that show how much real estate has changed since the crash

Inmannews - Mon, 09/17/2018 - 8:28am
Reflections from Redfin CEO Glenn Kelman on how the country, and the real estate industry, has changed in the decade following the 2008 financial crisis.
Categories: RSS

Agent and builder tech startups chosen for new MetaProp $1.5M funding round

Inmannews - Mon, 09/17/2018 - 8:02am
MetaProp, the New York City-based property technology (proptech) early stage venture capital firm and tech growth accelerator announced it’s investing $1.5 million in a number of real estate-related startups.
Categories: RSS

See all the homes Manafort is giving up in plea deal

Inmannews - Mon, 09/17/2018 - 5:32am
The former Trump campaign manager plead guilty to two criminal charges on Friday, and as part of his deal, forfeits pricey homes across New York
Categories: RSS

Lesson learned: To make it, you have to be hungry to learn

Inmannews - Mon, 09/17/2018 - 3:00am
In this weekly column, real estate agents across the nation share stories of the lessons they’ve learned during their time in the industry. This week, Nest Seekers CEO Eddie Shapiro shares his thoughts on making it in the industry.
Categories: RSS

The five superpowers of uber-successful real estate agents

Inmannews - Mon, 09/17/2018 - 12:01am
One skill you “own” and completely embody. It’s your superpower! But do you even know what yours is?
Categories: RSS

What to do when a natural disaster strikes your listing

Inmannews - Mon, 09/17/2018 - 12:01am
Agents and homeowners who have property on the market (or under contract) that has been caught in Florence’s destructive path will be facing major challenges while trying to close their deals. Here's what to expect.
Categories: RSS

Ready player one: how the new hybrid virtual brokerage can help you compete

Inmannews - Mon, 09/17/2018 - 12:01am
It’s only been in the last few years that virtual brokerages have popped up, and they’re a hot topic within the industry. Without a physical location, virtual brokerages have significantly lower overhead costs and can scale their business with relative ease--two big reasons why they’re growing in popularity.
Categories: RSS

Empowering agents with technology – Why the CBx Technology Suite works

Inmannews - Mon, 09/17/2018 - 12:01am
CBx software breaks out of the noise because we ask two very critical questions every time.
Categories: RSS

Big real estate software vendor Lone Wolf admits to vulnerability, says it’s fixed

Inmannews - Fri, 09/14/2018 - 3:00pm
Lone Wolf Technologies' legacy platform loadingDOCS had a security vulnerability that could have potentially exposed stored information to hackers. The company confirmed the vulnerability did exist, but said according to an internal study, no data was breached.
Categories: RSS

Design-focused indie brokerage Deasy/Penner acquires Podley Properties

Inmannews - Fri, 09/14/2018 - 2:25pm
SoCal-based luxury real estate brokerage Deasy/Penner has acquired Podley Properties, an independently-owned brokerage with a team of 175 agents and 20 support staff spread across six offices in Altadena, Glendora, La Canada, Monrovia, Pasadena, and Sierra Madre. 
Categories: RSS

Luxury Connect: ‘Grab space, peace and quiet’ at Unplug Meditation Studio

Inmannews - Fri, 09/14/2018 - 12:28pm
The life of a real estate agent is a stressful one, especially when you’re working in the luxury sector. Learn how to manage that stress at Luxury Connect.
Categories: RSS


Subscribe to Rental Housing Journal aggregator - RSS