This year, real-estate investment trusts, or REITs, are expected to start close to $1 billion in new multifamily projects, according to real-estate research firm Green Street Advisors. While that still is less than average, it is a significant increase over the $100 million of development starts in 2009.
Analysts caution that the increase in construction doesn't mean there has been an improvement in the business. Apartment vacancy is at a record and unemployment, essential to the sector's health, remains elevated.
But operators are betting that limited new supply, combined with an improving economy, will lead to ideal market conditions nationwide starting in 2011 or 2012. From then until 2015, "apartment REITs may generate the best property net operating income growth that they've seen in a very long time, maybe ever," said Haendel St. Juste, a REIT analyst with Keefe, Bruyette & Woods Inc.
To be sure, there are risks. Given the multiyear construction window, companies have to start now to be ready in time. If the economy weakens further and recovery is delayed, landlords may be forced to keep rents low or offer free rent to get leases signed.
"There's an element of risk," said Andrew McCulloch, an analyst with Green Street. "But if you were to go back a year, the outlook is much more clear today. Their confidence level in that eventual recovery is much higher."
Owners said the rent declines appear to have bottomed out in some areas and concessions are moderating.
Thursday, March 04, 2010
Rebound beginning in apartment complex construction
Real estate investment trusts are betting on an eventual economic recovery by starting construction on more apartment complexes:
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Could renting get any more attractive than it already is???? The answer is YES!!!!
ReplyDeleteIt sure is....except in DC where Forbes now says its smarter to buy than rent...
ReplyDeletehttp://www.forbes.com/2010/01/21/buying-versus-renting-lifestyle-real-estate-homes.html
Anon, 12:49, Francesca Levy is an idiot.
ReplyDeleteFirst of all, she cites low interest rates as a factor weighing in favor of buying. If, however, interest rates have nowhere to go but up, then prices have nowhere to go but down. This blog, and every bubble blog on the net has been over the "low interest rate" fallacy a thousand times, so I won't repeat all of the reasons why Ms. Levy is wrong on this. However, I refer you to patrick.net, which has the best rendition of the argument that I know of.
Also, the article baldly states, "And economists predict a significant home-price hike in five years." Really? What economists? All of them, or just the ones that missed the entire bubble the first time around? Also what is the basis for this prediction? Is it that "real estate prices only go up?"
What trenchant analysis by Francesca Levy, the REIC hack. I've never thought that Forbes was a serious economics publication. This moronic fluff piece confirms my beliefs.
"except in DC"
ReplyDeleteyeah cause paying $1100 in rent is way worse than paying $100K down and $4500 a month in mortgage and taxes!
"If, however, interest rates have nowhere to go but up, then prices have nowhere to go but down. This blog, and every bubble blog on the net has been over the "low interest rate" fallacy a thousand times, so I won't repeat all of the reasons why Ms. Levy is wrong on this."
ReplyDeleteToo bad it doesnt work that way in real life:
http://seattlebubble.com/blog/wp-content/uploads/2010/02/KC-Home-Price_1950-2009-nominal.png
Look at the way interest rates exploded into the teens and prices in nominal terms didnt go down one red cent. Look too at James graph on the right side of this front page. Huge interest rates in the 70s & 80s didnt do jack squat to prices. That is the "inconvenient truth" the bubble blogs dont like to discuss.
its funny how people just post links but if you actually quote the article that sums up everything it says.....
ReplyDelete"Note that buying isn't necessarily cheaper than renting in these metro areas. In fact, it often remains a more expensive proposition. But for those determined to own, that investment is a better one now than it normally is."
"Huge interest rates in the 70s & 80s didnt do jack squat to prices. That is the "inconvenient truth" the bubble blogs dont like to discuss."
ReplyDeleteNotice the affordability of those homes compared to now based on those graphs too! That is also an "inconvenient truth" that bulls dont like to discuss.
"Look at the way interest rates exploded into the teens and prices in nominal terms didnt go down one red cent. Look too at James graph on the right side of this front page. Huge interest rates in the 70s & 80s didnt do jack squat to prices."
ReplyDeleteInteresting graph. Ive often been skeptical of the "higher interest rates = lower prices" meme, because I do remember the 80s spike when my brother was paying 8.5% interest on his place. When he sold, the rates had spiked to 12 or 13% rate, and prices definitely didnt go down. Good to know.
Dont you tools think there is a difference between high interest rates during super economic booms and high interest rates during the worse economic situation next to the great depression?
ReplyDeleteSo what your brother sold his home during the tech boom when people were making millions doing nothing at all? Right now your brother probably doesnt have a job and is over extended on his current home....and guess what, prices are going down.
So what your brother sold his home during the tech boom when people were making millions doing nothing at all? Right now your brother probably doesnt have a job and is over extended on his current home....and guess what, prices are going down.
ReplyDeleteNo asshole, learn to read. My brother didnt sell during the tech boom, he sold in the 1980s when interest rates were soaring and stagflation was all the rage. Oh and if you must know, you are right, my brother doesnt have a job now. Thats because he died of cancer in 2006. Asshole.