May was the fourth straight month prices showed a year-over-year increase.

“Home price appreciation stabilized as home buyer tax credit-driven sales peaked in late spring,” says Mark Fleming, chief economist for CoreLogic. “But given that the labor market and income growth remain tepid, we expect prices to moderate and possibly decline the rest of the year.”

Jul 13, 2010 – Washington. D.C.—A recent webinar conducted by the National Association of Homebuilders titled ‘The Demographics of Today’s Renters – Who Are They and How are They Different?’ addressed questions about demographic, generational and lifestyle shifts as well as economic realities, all of which help predict fundamental trends that will unfold in the future for the multifamily market.

James Chung of Reach Advisors, panelist at this webinar, presented several demographic changes that are creating and driving rental demand.

Chung went back to demographic trends from the past several decades. “What we see is starting in the mid 60s and throughout the 70s saw a very powerful population surge-the baby boom and they drove massive growth in demand and supply of multifamily housing product,” explained Chung. “It tapered off in the 90s and then we saw the same trend with Gen X, and now we see same thing with Gen Y. They will be driving the demand.

He emphasized that though population growth drives demand, it does not correlate well with supply. “Basically it is access to capital that drives supply of multifamily product,” says Chung.

While supply plummeted in 2009 and 2010, it will be good for the short term as excess supply that was built up during the boom will get absorbed. This will also buffer the cyclical impact caused during boom. However, going forward, growth is going to look a lot different.

What does population growth look like as we go from 300 million to 400 million? By ethnicity, the fastest growth will be among mixed Americans, second fastest will among the Hispanic (because they already have a large base) and Asian population doubles during that time. Chung said, “America is the only fully industrialized country with positive population growth, which is a very positive thing.”

Population growth is lumpy and isn’t necessarily happening in places with the highest incomes. What kind of product is going to be in demand will be determined by dynamics of population growth. Shifts will have significant impact on preferences for housing, marketing for housing etc. “On the one hand, it will be challenging in the sense that it’s different, but overall it’s positive, especially for multifamily compared with all other commercial sectors. But demand is decoupled with supply, which makes it challenging on market by market basis,” said Chung.

There are four generations in today’s adult marketplace and two are particularly relevant to multifamily development. The Generation Y and baby boomers. The economic environments these two generations go through will shape their choices. The future is looking a lot less like what we have seen in the past.

The Generation Y has a dramatically different view of customization. It is a lot more female—at least in the high-end and higher priced market.

“This trend is going to shape renter demand. Given their incomes, rental product is more likely to compete with homeownership. Various consumer health trends also have a big impact on housing preferences/desires. Consumer attitudes toward health change dramatically. We are at the cusp of another shift and this is the decade of total wellness. I am pretty sure that’s going to drive consumer healthcare demand as well as where people live,” Chung added.

There are a couple of demographic mismatches, according to Chung. 18 percent of the multifamily product is designed for sale and rest is for rental. “Right now, all these trends seem to have little to do with real estate, but when you dig deeper, it has a lot to do with real estate. One in six Americans is unemployed, has stopped looking or is working part time. One in four or five households is affected,” added Chung.

Demographic winds have changed for real estate and there are massive head winds ahead. The good news is that multifamily still has good tail winds ahead—much more than other sectors. As bad as the recession was, it has corrected the market and has presented a window for reinvention. It isn’t all bad news—as long as developers understand the differences, Chung concluded.

Transwestern arranged the sale of the property on behalf of Weidner Investment Services, which purchased it from Aslan Realty Group. Negotiating the sale for the buyer were the leaders of Transwestern’s Phoenix multifamily team: Vice President Bret Zinn and Vice President Jack Hannum.

According to Hannum and Zinn, Weidner Investment Services, based in Kirkland, Wash., plans to own the property on a long-term basis to take advantage of increasing net rental income and diminishing vacancies as the Phoenix market begins its recovery over the next 18 months.

Monterra consists of 258 units, totaling 207,290 square feet, and is positioned in a strong urban-infill location near the Loop 202 freeway.

“Weidner Investment Services acquired a solid, Class A community significantly below replacement cost in an area close to excellent employment opportunities and transportation,” says Zinn. “With Monterra poised to see solid increases in its net rental income, both parties participated in one of the smoothest and most professional sales we have ever conducted.”

Hannum notes that the sale follows two successive quarters of rising multifamily sales in the Phoenix market, indicating increasingly positive demand and activity in the area.

Transwestern identified the property as an off-market opportunity that had been marketed in the past, and proactively negotiated an offer on behalf of Weidner Investment Services to Aslan Realty Group,” says Hannum.

At 1333 N. 24th Street, Phoenix, Monterra enjoys proximity to central Phoenix, Sky Harbor International Airport, Scottsdale, Tempe and the Camelback Corridor. It is adjacent to the Loop 202 freeway which is currently being widened.

Still, the low rates may not provide much of a boost for the housing market because many people do not qualify for new mortgages or have already obtained loans at low rates this year.

“There is no doubt that we have overbuilt in the condos market like anywhere else in the country,” Mickey Pascarella, real estate agent for the project, tells MHN. “That said, the great product at a great price and good financing always sells. That’s our strategy.” Pascarella has a point—considering that the first two towers, The Regatta and The Peninsula, have been completely sold out.

He admits the condo market is a buyers’ market right now. “We have a 10.3-month absorption rate. For a balanced market it should be a five to seven-month absorption rate. A lot of projects didn’t get built in the first place (for example the Trump project which would have been right across from Waterfront), or were made rental instead of condos,” explains Pascarella.

Waterfront Square is located across 9.5 acres on the banks of the Delaware River and is the city’s only gated waterfront property. It offers hotel-style amenities, around-the-clock concierge service and valet parking. Owing to the economic downturn, Waterfront Square’s most recently completed building—the third tower, The Reef—is now on the market for 30-49 percent off original prices. Prices start at $318,500 and go all the way to 3.3 million for the bi-level penthouse.

All the buildings are situated around Philadelphia’s largest green roof, with an expansive and manicured park, as well as a private putting green.

Inside, each condominium is laid out with 10-ft. ceilings, spacious marbled bathrooms and custom kitchens, available in one-, two- and three-bedroom units or penthouse suites. Every condominium features a private, glass-railed terrace with views of the Ben Franklin Bridge, Delaware River and the Center City skyline.

The property’s riverfront health, fitness and recreation complex, The Lighthouse, features an Olympic-sized indoor/outdoor pool, sauna and steam rooms, fitness center, sun decks, a European spa and more.

Pascarella says the new sales team recently came on board. “Our first order of business was to do a 38 percent price drop on 25 of our units to reset the pricing. Since then we have sold five units. It did take a reset and relook at pricing to make sure we were at or below market value,” he says.

So who exactly are these buyers flocking to buy conods in Philadelphia? “In the beginning, when market was crazy, there was an investor push. People thought they would make a lot of money by flipping condos. But now 95 percent of the project is owner occupied,” he says.

Pascarella expects it will take about 12 months for the third tower to sell out. Since no other new condo projects are coming on the market in the next 12-18 months, Pascarella’s prediction will probably come true. Unless of course the September 2010 opening of a gaming casino called Sugar House steps away from Waterfront discourages people from buying there.

July 7, 2010 – By Allison Landa – Better times are afoot for the Manhattan commercial real estate market, according to Cushman & Wakefield. The firm today released second-quarter statistics showing that the vacancy rate declined to 10.8 percent in June from 11.6 percent in March.

That decline dovetails with the strongest quarter for new leasing activity in Manhattan since the third quarter of 2006 – 6.9 million square feet of new office leases were signed, bringing the midyear total to 12.6 million square feet. That’s up a whopping 98 percent year over year.

Manhattan’s Class A vacancy rate dropped to 11.6 percent in June from 12.6 percent at the end of the first quarter, while the overall Midtown Manhattan vacancy rate declined to 11.5 from 12.6 percent. Those figures entail all sectors of real estate.

“In Midtown, the market has clearly trended from stabilization to recovery over the past six months,” C&W managing director of research for the New York metro region Ken McCarthy said when announcing the news.

The quarter’s top five leases included a 380,000-square-foot renewal and expansion for Jones Apparel Group at 1411 Broadway, a 378,304-square-foot new lease for Proskauer Rose at 11 Times Square, a 352,000-square-foot renewal for Willkie Farr & Gallagher at 787 Seventh Ave., a 280-square-foot new lease for Local Union 32BJ at 620 Avenue of the Americas and a 260,994-square-foot new lease for Tiffany at 200 Fifth Ave.

Mortgage rates have sunk to levels not seen in more than a half-century — a seductive 4.58 percent for an average 30-year fixed loan. Yet brokers and lenders report not a flood but a trickle of customers.

So what’s going on?

Call it a tale of the haves and have-nots.

The haves are those who stand to save money from refinancing and have the financial standing to do so. Since mortgage rates have been low for so long, most of them already have refinanced in the past 18 months. Doing so again wouldn’t be worth the cost for most.

The have-nots? Those are the millions of Americans pummeled by the housing collapse. They have little or no home equity or no money for down payments. Or they lack the credit or steady income to get or refinance a mortgage.

The result is that brokers like Ginny Ferguson are filling their days doing something other than handling a stampede of customers buying homes or refinancing.

Ferguson, CEO of Heritage Valley Mortgage in Pleasanton Calif., has managed to stay busy: She’s archiving files, reviewing marketing plans and calling previous clients and agents to try to drum up business.

“Am I sitting around playing Solitaire on my computer? No,” she says.

The 4.58 percent average for a 30-year fixed-rate loan last week was the lowest on records that mortgage company Freddie Mac has kept since 1971. The last time rates were lower was the 1950s, when most long-term home loans lasted just 20 or 25 years.

Under normal circumstances, 4.58 percent would be irresistible. A decade ago, if you’d told David Christensen, owner of Mountain Lake Mortgage in Lakeside, Mont., that rates would drop this low, he wouldn’t have believed you. And if rates did somehow fall this far, he never thought he would lack for customers, as he does now.

Yet both have come true.

Christensen argues that mortgage lending standards have tightened so much since the financial crisis that many people with decent but not-stellar credit can’t qualify. Lenders are demanding stronger credit scores and higher down payments or home equity.

“The pendulum has swung too far the other way,” Christensen said. “It needs to come back to the middle.”

Overall lending has ticked up in recent weeks, driven by borrowers looking to refinance. But it remains only about half the level of early 2009.

Stricter lending rules aren’t the only factors behind the restrained demand. A tax credit for home buyers that helped lift home sales expired April 30. The result is that fewer people are taking out loans to buy homes.

And some borrowers who do have good credit and solid jobs are still being rejected for refinanced loans. It’s because their homes are worth less than they owe on their mortgage. They’re “under water,” in real estate parlance. About a quarter of American households with a mortgage are in this predicament.

Blame the housing bust. It shrank home values and depleted home equity.

Most people in the lending industry acknowledge that lending standards were far too lax during the boom. Yet these days, some brokers recall the boom times with a tinge of nostalgia. Buyers and refinancers were everywhere. And yet rates were higher than they are now.

Jul 2, 2010 – New York–Two reports on the Manhattan residential market by two locally based residential specialists, both released in early July, point to improvement in sales volume and prices compared with the depths of the recession last year. According to the 2Q10 market report by Brown Harris Stevens, for example, the total number of closings in Manhattan recorded during the quarter — 2,522 — was up 81 percent when compared to the same period a year ago.

The average Manhattan apartment sale price of $1,377,135 was up slightly from last quarter and up 9 percent from the same period in 2009, the report notes. The average price for cooperatives sold during the first quarter of 2010 was $1,065,814, up 16 percent from a year ago. At $1,686,690, the average condominium price was up 4 percent from a year ago.

On the West Side, as was the case in the last quarter, closings in new developments helped bring the average condo price up. The average price per room of West Side co-ops also saw an increase; when compared to the second quarter of 2009, this figure was up 13 percent for prewar and 3 percent for postwar co-ops.

The 2Q10 Prudential Douglas Elliman Manhattan Market Overview, prepared by Miller Samuel Inc., also showed a Manhattan housing market that showed some improvement over the past year. Among other metrics, the report noted that price per square foot for Manhattan residential properties in 2Q10 was $1,051, down 0.5 percent from $1,056 in the same period a year earlier but up 1.2 percent from $1,038 in the prior quarter.

Also, the median sales price for Manhattan residential was $899,000, up 7.6 percent from 2Q09 and up 3.6 percent from the prior quarter. Average sales price was $1,432,712, up 9.1 percent from the prior-year quarter and up 0.4 percent from $1,426,994 in the prior quarter. The number of sales, according to this report’s reckoning, surged 79.9 percent, compared with 2Q09, to 2,756 sales, and increased 15.6 percent from the prior quarter.

“The disconnect between buyer and seller expectations continues to remain,” Jonathan J. Miller, president and CEO of Miller Samuel, tells MHN. “The listing discount—the difference between list price and contract price—expanded in the second quarter to 9.1 percent from 5.1 percent during the first quarter as sellers ‘tested’ the waters this spring by listing higher after observing the sharp increase in sales.”

Buyers were having none of that, however. “Buyers resisted and prices remained flat,” Miller continues. “Sellers had to travel further to meet buyers to have a ‘meeting of the minds’ and agree on the price.”

Jul 1, 2010 – Washington, D.C.–The apartment market in Greater Washington, DC, did not escape the consequences of the recession, but Bainbridge Cos. is preparing for the impending return of demand. The Wellington, Fla.-based residential and commercial real estate concern has just revealed that it will erect a 200-unit high-rise apartment property in downtown Bethesda, Md., less than 10 miles outside of the nation’s capital.

In addition to upscale apartment residences, the as-yet-unnamed, 17-story apartment building will feature approximately 7,700 square feet of ground-level retail space. Bainbridge is still in the process of finalizing project costs, but the estimated development price of approximately $400,000 per-unit signifies that the project will cost a minimum $80 million to realize.

Bainbridge is not going at it alone on this endeavor. The company has secured Restis Group as an equity partner on the project, and has also obtained equity from National Real Estate Advisors. Bainbridge closed the acquisition of land for the development without any hindrances from the credit market, Jared Miller, Vice President of Marketing for Bainbridge, tells MHN, and is on track to break ground this fall.

Apartment market demand took a beating during the recession, but despite the pummeling, which did not spare the suburbs of Washington, D.C., Bainbridge is keen on Bethesda. “We like the Bethesda market due to the high barriers to entry and the lengthy entitlement process,” Miller said. “We started the entitlement process some time ago, but if we started it today it would probably take 4 to 5 years to complete.” The new apartment community is scheduled to welcome its first residents in 2012.

If all goes as Bainbridge plans, there will soon be more apartment projects on its plate. “The Bainbridge Companies is actively seeking low-, mid- and high-rise multifamily development and acquisition opportunities in the metro D.C. area, as well as the corridor between DC and Boston” Richard Schechter, company Chairman and CEO, told MHN.

July 1, 2010 – NEW YORK — A handful of reports released Thursday shows the Big Apple’s housing market in recovery, though headwinds like high unemployment, tight credit and shadow inventory still linger.

Manhattan home prices edged up in the second quarter as sales surged from their lows last year.

Low mortgage rates and relatively affordable prices helped to lift sales of condominiums and co-op units by as much as 81 percent from last year, depending on the report. Sales activity is now at levels averaged over the last decade.

The median price for an apartment ranged from $800,000 to $899,000, an increase of 3 percent to 8 percent from last year, the reports showed.

Prices were buoyed by more sales of larger apartments, said Jonathan Miller, president and chief executive of real estate appraisal and consulting firm Miller Samuel Inc., which analyzed the data for Prudential Douglas Elliman.

Sales of three-bedroom apartments made up 18 percent of all sales, compared with 12 percent a year ago, he said.

New buyers came into the market and helped create bidding wars, said Pamela Liebman, president and CEO of The Corcoran Group. A survey of Corcoran agents showed that in two-thirds of bidding wars in the second quarter, the winning offer was at or above the listing price.