Apartment Living Information
More People Choosing to Rent Than Own
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Wednesday, 16 July 2014 13:45

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The apartments at the intersection of McBee Avenue and Spring Street are among the new units coming onto the downtown Greenville rental market. Many more are either under construction or being planned.(Photo: PATRICK COLLARD , Staff )

Angelia Davis, The Greenville News2:23 p.m. EDT July 9, 2014

Just after the national homeownership rate fell to a historic low, the apartment market soared to new highs.

The homeownership rate in first quarter of 2014 was 64.8 percent, its lowest in 19 years, according to U.S. Census statistics.

Meanwhile, the period from March through May "was the one of the strongest three-month stretches we've seen in the 19 years we've been tracking apartments," said Jay Denton, vice president of Axiometics, a Texas-based apartment data and research firm.

Young buyers key to housing future

Axiometrics said effective rent growth nationwide was 2.4 percent on a quarterly basis the second quarter, the highest it has been since 2000.

Occupancy in the April-through-June quarter was 95 percent, its strongest since the first quarter of 2001, Axiometrics said.

Denton said the fall in the homeownership rate may have contributed to the apartment market's strong performance.

"Demographics, along with the increasing choice to rent rather than own, continue to play in the favor of apartments," Denton said.

Effective rent growth and occupancy was 2.4 percent and 95.1 percent, respectively, in the Greenville area in the second quarter.

Both dropped slightly year-over-year, but picked up from quarter to quarter, according to Ross Coulter, a spokesman for Axiometrics.

New supply is the likely reason for "the annual slide between second quarter 2013 and second quarter 2014 of both effective rent growth and occupancy in the Upstate," he said.

And more new supply may be on the way. As of May 2014, 1,086 new multifamily units were permitted. In May 2013, 749 were permitted for this area, Axiometrics said.

The winter storms and bitter cold that gripped much of the nation earlier this year probably softened rent growth in January and February, Axiometrics said.

The Greenville-Spartanburg-Anderson area's vacancy rate improved by one percentage point over the past six months to 6.8 percent, according to Real Data, a North Carolina-based apartment market research firm.

Absorption was "positive," Real Data said, with a majority of the demand occurring in the downtown Greenville area.

Downtown Greenville and the health of what's going on there is viewed favorably from outsiders, said Brian Reed, research manager at CBRE Greenville.

"Then you've got that shift in demographics in that younger people want to rent rather than own and they generally want to be living downtown," Reed said.

Tony Bonitati, a broker in NAI Earle Furman's multifamily division, said the local apartment market is seeing gains from household formation and baby boomers.

"In a way, it's the perfect storm of people downsizing to apartments and people forming households, but not being able to buy houses so they're renting apartments," Bonitiati said.

Developers are most active in the Greenville-Central (the downtown area) and the Greenville-South submarket, which includes Laurens Road and its surrounding area.

Nationwide, most of the high-rent submarkets are in the urban core, where many millennials and others like to live to be closer to their work and play, Axiometrics said.

Many in this age cohort group like the flexibility of renting versus owning, while others may be victims of stringent mortgage-lending requirements, Denton said.

He said renters outside the core are staying put because they, too, might not quite make the mortgage-qualification standards due to credit and/or income issues.

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RealtyTrac: Average House Payment Has Risen 21% In Past Year
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Friday, 07 March 2014 15:03

by MortgageOrb.com Monday February 24 2014

Rising home prices and increasing interest rates have combined to make homeownership less affordable than ever, a new report from RealtyTrac shows.

According to the firm's analysis, the estimated monthly house payment for a median-priced, three-bedroom home purchased in the fourth quarter of 2013 - including mortgage, insurance, taxes, maintenance and subtracting the estimated income tax benefit - increased an average of 21% compared to the fourth quarter of 2012.

The report is based on median sales price data derived from public sales deeds for arms-length transactions in 325 markets in the fourth quarter of 2013 and fourth quarter of 2012. Also factored into the report is fair market rent data from the U.S. Department of Housing and Urban Development for 2013 and 2014.

The report also assumes a 20% down payment, a 30-year fixed interest rate of 4.46% for homes purchased in the fourth quarter of 2013 and a 3.35% 30-year fixed interest rate for homes purchased in the fourth quarter of 2012.

Based on a 30-year fixed-rate mortgage with an interest rate of 4.46% and a 20% down payment, the average monthly house payment across all counties for a three-bedroom home purchased in the fourth quarter of 2013 was $865 - up from $714 in the fourth quarter of 2012 - based on a 3.35% interest rate a year ago.

The disparity between income and median monthly mortgage payment grew even wider during the fourth quarter – however, it was more pronounced in certain markets. For example, in the greater Los Angeles area, one now needs to earn $95,000 per year in order to qualify for a mortgage for a median-priced three-bedroom home with a 20% down payment.

Driving the increased cost of owning a home is an average 10% rise in median prices and a 33% increase in the average interest rate for a 30-year fixed-rate mortgage, according to the report.

"A potent combination of rapidly rising home prices and the often-overlooked but significant uptick in interest rates in the second half of 2013 caused the monthly cost of owning a home using traditional financing to jump substantially in many markets over the last year," says Daren Blomquist, vice president at RealtyTrac, in a release. "The monthly cost of owning a home is still less than renting in the majority of markets, but the cost of financed homeownership is becoming dangerously disconnected with still-stagnant median incomes, driven not by shoddy underwriting practices this time around but by investors and other cash buyers who are not tethered to the typical affordability constraints.

"One simply needs to look at the minimum income needed to qualify for a median-priced home in some markets to realize the extent of the disconnect between prices and incomes," Blomquist says. "For example, in Los Angeles County, the minimum qualifying income needed to purchase a median-priced home is at more than $95,000, up from about $68,000 just a year ago."

The Consumer Financial Protection Bureau’s new ability-to-repay/qualified mortgage rules - which make it harder for some borrowers to qualify for mortgages - are compounding the problem of affordability, according to the report. The new rules “restrict people from purchasing their dream home,” says Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty covering the Oklahoma City and Tulsa, Okla., markets.

Despite the increased cost of owning a home, owning is still more favorable, economically speaking, than renting (and probably always will be), according to the report. The analysis shows that the estimated monthly house payment for a median-priced three-bedroom home in the fourth quarter of 2013 was lower than average fair market rent for a three-bedroom home - set by the U.S. Department of Housing and Urban Development for 2014 - in 296 of the 325 markets tracked. Still, in 29 of the counties tracked, the average monthly mortgage payment exceeded the average fair market rent for a comparable property.

Counties with some of the biggest increases in estimated monthly house payments included Contra Costa and Sacramento counties in California (both up more than 50%); Wayne and Oakland counties in Michigan (both up more than 45%); and Clark County, Nev. (up 43%).

Across all 325 counties, the average minimum household income needed to qualify for a median-priced home in the fourth quarter of 2013 was $41,544, up from an average minimum income of $34,262 in the fourth quarter of 2012. The minimum qualifying income was based on no more than 25% of household income going to the monthly house payment.

Counties with the highest minimum qualifying incomes were San Francisco County, Calif. ($228,569); Marin County, Calif., ($177,922); San Mateo County, Calif. ($170,284); Arlington County, Va. ($158,474); Santa Clara County, Calif. ($149,389); and Hudson County, N.J. ($142,684).

The average minimum qualifying income to rent a three-bedroom home at fair market rents for 2014 was $43,892 across all 325 counties, up from $43,527 at fair market rents for 2013. The minimum qualifying income for rents was calculated by multiplying the annual cost of rent by three.

Counties with the biggest jumps in fair market rents on three-bedroom homes included Sumter County, S.C. (up 23%); Kenosha County, Wis. (up 21%); Alameda County, Calif. (up 16%); Contra Costa County, Calif. (up 16%); and Missoula County, Mont. (up 15%).

The NAR's report is in contrast with a report released last week from the National Association of Home Builders (NAHB) showing that housing affordability "held steady" during the fourth quarter, compared to the third quarter.

According to the NAHB/Wells Fargo Housing Opportunity Index, median home prices dipped slightly in the fourth quarter while interest rates rose only slightly. (However it should be noted that the NAHB report compares fourth quarter data to the third quarter and does not provide a year-over-year analysis.)

The NAHB’s data shows that 64.7% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $64,400. This is virtually the same as the 64.5% of homes sold that were affordable to median-income earners in the third quarter.

Meanwhile, the national median home price dipped from $211,000 in the third quarter to $205,000 in the fourth quarter, while average mortgage interest rates rose from 4.45 percent to 4.54 percent in the same period.

"Housing affordability is stabilizing at a time when pent-up demand and ongoing job growth are helping housing markets across the nation to gradually strengthen," says Kevin Kelly, chairman of the NAHB, in a statement. "While this bodes well for housing in 2014, builders continue to face challenges, including tight credit for home buyers, inaccurate appraisals, and a shortage of workers and buildable lots."

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25% of Renters Plan to Stay That Way
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Monday, 12 November 2012 01:22

The San Francisco-based search
engine finds that more Americans
are embracing renting for the
long term.

SAN FRANCISCO-The multifamily market continues to get the thumbs up from Americans. According to ApartmentList.com, a locally based apartment-finding search engine, 40% of American households rent their homes, and one-fourth of these renters have no intention of becoming homeowners.

“The fact that a quarter of renters plan to never own a home indicates to us that the definition of the American Dream is changing, said John Kobs, CEO and co-founder of Apartment List, in a prepared statement. “While the resale market slowly recovers, it seems that more Americans are embracing renting for the long term. We will be keeping a close eye on how the next administration can improve the situation for renters around the US.”

Rental rates nationwide are also on the rise, according to the search engine’s first “Rentonomics” report, which uses both pricing and survey data to track the US rental economy. An overwhelming majority of states have demonstrated an increase in asking rents since January 2011, and 34 out of the 45 stakes the study analyzed showed rising rents. “One-third of renters have had their rent raised in a tough economic climate,” Kobs said.

Link to original article: http://www.globest.com/news/12_469/sanfrancisco/multifamily/-326427.html

Last Updated on Monday, 12 November 2012 01:24
 
Renter Nation Rages On As New Reality
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Thursday, 12 January 2012 22:28
From CNBC.com 
 
Despite record low mortgage rates reported today and rising affordability in most U.S. housing markets, rent is the new reality for former home owners and new households alike.
Photo by: Simon Law

 For some it is post-traumatic stress from the housing crash, for others it is the inability to get financing to buy a home. Either way, the rental market continues on its tear.

 In the last quarter of 2011, the apartment sector saw its largest quarterly increase in occupied stock of the year, according to Reis, Inc.

 The vacancy rate dropped to 5.2 percent, the lowest since 2001 and lower than the last cyclical drop in 2006.

 This bucks the historical seasonal weakness typical of the colder months of the year. The fourth quarter also tends to be a weaker leasing period, according to Reis, given that most households make moving decisions in the second and third quarters.

This surge in occupancy pushed asking and effective rents up 0.4 and 0.5 percent respectively, which Reis calls the only disappointing figures for the sector, missing expectations. Reis blames that on slow economic growth and still high unemployment.

“Higher quality properties in the most desirable locations posted rent gains in excess of 5-10 percent, while class B/C properties, catering to lower income tenants, found it relatively more difficult to raise rents,” notes Victor Calanog, head of research at Reis.

Nowhere is that more evident than in the Washington, DC metro area where rents are way up across the city, and developers are rushing to erect new multi-family buildings and rehab old ones.

“Everybody wants to be in DC,” beams Richard Key, district manager for Camden Property Trust, one of the largest publicly traded multifamily REITs in the nation. “Whereas in other markets there are deals, when you get to DC area, all the REITs want to be here, and so we're all competing for the same piece of land, and that's driving the price up. That is really is a challenge for us.”

Key is convinced that there has been a fundamental shift in attitudes toward home ownership that will last for several more years. He is not concerned that the pendulum will swing back to buying, just as all that new rental stock hits the market around 2014. Camden has seen rents on its DC properties rise over 5 percent in just the past year.

“The nice part is we haven’t seen a drop in occupancies with that rent growth, and so the hope is that we’re able to maintain our historical occupancies and continue to see that five, six, gosh, seven percent is not out of the question in the next couple of years,” says Key.

Washington, DC will likely see those higher rents because home prices didn’t fall very high during the housing crash and are already rebounding. It and Detroit were the only major markets posting annual gains on the latest S&P/Case-Shiller Home Price Index.

Other markets, like Las Vegas, where home prices are rock-bottom thanks to a huge supply of foreclosures, the rental market is tougher for developers and landlords.

As for renter society, it is also being fueled by tight mortgage underwriting. Rates may be at record lows, but only if you can get them. In a paper released Wednesday, Federal Reserve Chairman Ben Bernanke noted, “Continued efforts are needed to find an appropriate balance between prudent lending and appropriate consumer protection, on the one hand, and not unduly restricting mortgage credit, on the other hand.”

Until that balance is found, potential home buyers will stay on the sidelines, those sidelines being rental apartments. A new twist to watch, however, may be that rental nation will go single family.

With so many bank owned homes left to clear, and so many in government and the private sector looking at bulk rental investments, apartments may have big competition in the same neighborhoods where they used to compete against single family buyers.

Original article:

http://www.cnbc.com/id/45887201

Last Updated on Thursday, 12 January 2012 22:34
 
For Many, No Rush to Home Ownership
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Wednesday, 14 September 2011 21:11

From CharlotteObserver.com

As market slinks to a rebound, renters increasingly focus on saving cash and enjoying a life less marked by uncertainty.

 

When Lina and Jimi Gibson moved into their 850-square-foot apartment in 2009, they figured they'd stay two years while they planned their wedding and saved for a house. Now, with the economy in another tailspin, they're on the fence.

The couple can walk to restaurants and movies from their building in southwest Charlotte.

They have a gym and a pool, and they don't have to mow the lawn or repair the roof.

Mostly, they don't have to worry - like so many of their friends - that the housing market's slide isn't over.

"I don't want to have a house that's going to be worth nothing or a neighborhood that's going to lose everything," said Lina Gibson, 27, a bank teller. "We just want to start off strong, with no debt. We're just being very careful."

For decades, Americans have aspired to own homes, and everyone from bankers to government officials have worked to make the dream accessible. But around the country, particularly in places pummeled by the real estate bust, that's changing.

Legions of homeowners remain underwater on their mortgages or unable to move because they can't sell their house. Plenty who want homes can't buy them because credit remains tight.

Look deeper, though, and the trends suggest a larger shift in how people feel about homeownership:

 Droves of potential buyers, particularly young adults, are renting longer even when they can afford to buy, stockpiling their savings or seeking investments they see as safer, real estate brokers and economists say.

 People who do buy are increasingly opting for more modest houses. Recent data show new homes are smaller - and sport fewer pricey extras, such as fireplaces and patios - than in years past.

Homeowners are staying in their houses longer. Just 11 percent of sellers surveyed by the National Association of Realtors last year had owned their home for three years or less, down from 30 percent in 2006.

Increasingly, consumers seem to be viewing their houses simply as places to live, instead of lucrative investments.

It's not yet clear whether the shift is permanent. Memories of past recessions can fade quickly, economists say, and government policies encouraging homebuying aren't likely to disappear, because the housing market remains a critical part of the U.S. economy.

What's more, the reasons to buy, from the appeal of a long-term investment to the simple desire to own property, might outweigh even consumers' worst fears.

For now, though, some experts say the American Dream has taken a back seat to economic realities.

"We've gone through 50 years of homeownership being the American Dream, and in those 50 years, homes didn't do anything but appreciate," said Bill Miley of real estate research firm Metrostudy. "The American Dream today is job security and being able to afford gasoline to get to work. It's certainly not buying a home."

From long shot to too easy

Homeownership is a long-held dream for many Americans, but a century ago, it wasn't accessible for most. Often, the only way to buy was to pay cash or take out a pricey loan with a large down payment.

Government policy helped change that. From the beginning of the federal income tax, people have been allowed to deduct their mortgage interest. In 1938, the government established the Federal National Mortgage Association, known as Fannie Mae, to provide local banks with federal money to finance home mortgages, creating the 30-year mortgage with fixed interest and leading to more housing loans.

After World War II, the G.I. Bill helped veterans secure low down-payment loans with low interest rates. Suburbs sprang up, and the U.S. homeownership rate climbed above 60 percent from 45 percent in the first half of the century.

The U.S. had become a nation of homeowners.

Meanwhile, the government continued to encourage home buying through tax breaks and programs that push homeownership for low-income earners.

Then came the real estate boom. Credit was cheap and easy to obtain, risky products such as adjustable-rate mortgages crowded the market, and by the mid-2000s, homeownership rates had spiked to nearly 70 percent after decades in the low- to mid-60 percent range.

"If you had a pulse," Miley said, "you could get a loan."

Consumers kept buying, landing bigger mortgages and borrowing against their homes for other purchases: second homes, boats, college tuition.

Investors bought and sold homes quickly, reaping huge profits.

We know what happened next.

Still sore from 'black eye'

Since the meltdown, the housing market continues to struggle, despite record-low interest rates and attractive prices.

Prices have fallen by more than they did during the Great Depression, research firm Capital Economics reported recently. The nation's homeownership rate has dropped back below 66 percent.

Part of the reason the market remains weak is that some people who want to buy can't get loans. The National Association of Realtors, for one, is calling on banks to bring back "common-sense standards" in lending, loosening what the association considers to be too-strict requirements, spokesman Water Molony said.

That would boost sales 15 percent to 20 percent, he said. He said a homeownership rate of around two-thirds of U.S. households, closer to the pre-boom norm, is more realistic than the boom-years peak, and that some people simply shouldn't be homeowners. But, Molony added, there's a pent-up demand among other potential buyers that could help bolster the anemic economic recovery.

"Housing got a black eye," he said. "But it doesn't really take away the American Dream. People still aspire to it."

Consumers and real estate experts say attitudes about owning real estate are changing. A recent report from Morgan Stanley, for instance, found that the U.S. homeownership rate has fallen below 60 percent when delinquent borrowers are excluded, a sign of the country's move toward a "rentership society."

John Bradford of Park Avenue Properties, a Cornelius real estate and property management firm, said he's seeing more consumers hold off on buying homes while they wait for a recovery.

"I've seen cases of $400,000 and up, lake-front, golf community," he said. "Some renters are thinking, why would I buy when I can rent and invest my money in other things?"

Charlotte real estate broker Matthew Tringali began to see greater demand for rentals in 2008.

Since then, managing rental properties for homeowners who can't sell has become one of the biggest parts of his job.

"People are naturally afraid that home prices are still falling," he said.

Even longtime homeowners have begun to doubt the security of their investment.

"When I was younger, I always wanted to have a house," said Edwin Tetenbaum, 52, a Mint Hill homeowner who tutors, writes and does homeowners association administrative work. "If I was just starting out now, I would be kind of concerned about, well, why would I want to buy a house now if 1 1/2 years, two years down the road it may lose another 20 percent of its value?"

Hope alive for 'millenials'

Consumers still view buying a house as a foundation of the American Dream, though, a recent Wells Fargo & Co. survey found

The study, conducted with The Futures Co., found 36 percent of "millenials" - the largest potential first-time homebuyer group - reported owning a home. Two-thirds of millenials believe they will be homeowners within the next five years.

Jon Wilkinson, 25, planned to buy a home this spring, after his wife, Linda, finishes school at UNC Charlotte.

Given the low interest rates and prices, though - their mortgage wouldn't be much more than their current monthly rent - they decided to buy earlier.

"We've always rented, but we always thought we would buy a house one day," said Wilkinson, an accountant. "That's the No. 1 reason."

Buyers are increasingly taking a long-term view of their investment, according to a November 2010 survey from the National Association of Realtors. The survey found that typical sellers had been in their home eight years, up from seven years in 2009 - and that first-time buyers plan to stay in their new house for 10 years. Repeat buyers, meanwhile, plan to hold their property 15 years.

Personal-finance guru Suze Orman endorses the strategy in her new book, "The Money Class," reminding readers that a home is not a stock - and that buying with the intent to flip for a profit or to fund other goals through home-equity loans was never wise.

"The deflated home values have put an end to the prospect of home as retirement fund or college fund and raised the question of whether homeownership in fact even makes sense anymore," she wrote. "I am shocked by the number of people I talk to who ... regret the day they thought a home purchase was a great idea."

Buyers are drifting toward different kinds of homes, too, particularly smaller, more affordable properties closer to their jobs, data from the National Association of Home Builders show.

A study last year by the group found the median size of new single-family homes has dropped to 2,100 square feet, for instance, from a peak of 2,268 square feet in 2006.

"It's going to be a long, long time before we start seeing custom builders building very expensive homes," said Miley of Metrostudy, the real estate research firm. "It is not an investment. It is a shelter. It is a place to raise a family. It's a backyard."

A season of uncertainty

Most economists and industry experts expect the housing market to rebound, though they acknowledge recovery could be a long road.

Some say that once credit standards loosen and the economy improves, consumers will turn more readily to homeownership - and that, eventually, young adults who chose to rent for convenience and security will want to buy a house and settle down.

Experts suspect the government will always encourage ownership through the mortgage interest deduction, too.

"When they talk about tax reform, that's always on the table, as it should be, in my mind," said John McIlwain, a senior resident fellow at the Urban Land Institute, a nonprofit research organization based in Washington, D.C.

"But it's one thing to mention the possibility, and it's another thing to move forward. People say, 'Are you going to vote against homeownership?' It's like being against apple pie, motherhood, etc."

But whether potential homebuyers opt to buy in coming years or continue to hold off depends on the housing market's strength, some say.

The Gibsons of southwest Charlotte still think they'll probably buy a home someday. They got married last year and hope to start a family in the next few years, and they've already been preapproved for a home loan.

Still, they worry: One friend, unable to sell her townhome when she had to move, was forced to let it fall into foreclosure. Another owes more on his home than it's worth. The couple are looking at homes, but they wonder if many are still priced too high.

In the meantime, Lina Gibson and her husband, who works for Carolinas HealthCare System, are contributing more to their retirement accounts and padding their savings.

They clip coupons and shop at consignment stores, a dramatic shift from a few years ago. They don't have any debt, and they like the freedom that brings.

"We both have an American Dream that we focus on every day," said Lina Gibson, whose parents immigrated to the U.S. from Colombia.

"We want to work hard and then actually live the dream later."

Original article:
Last Updated on Thursday, 12 January 2012 22:34
 
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