A report from Point 2 Homes on Texas. “”Q: Would you recommend buying or renting in the largest cities in Texas this year? Shannon Cornelison-Brown Assistant Professor of Accounting Austin College: ‘In the largest cities in Texas, investor funds have caused a large supply of apartment options. An individual has a high likelihood to obtain rental concessions due to this oversupply of apartments.’”
From Nevada Business. “Apartment rents are leveling off in the Reno-Sparks area, thanks largely to the increasing number of units being built, says a report released this week by the Nevada State Apartment Association. ‘The apartment market in the Reno area has been shifting recently,’ NVSAA Executive Director Susy Vasquez said. ‘Rents have been slowing down and vacancy rates have been rising. This is largely due to the unprecedented number of new apartment units being built here. Since 2017, more than 4,000 new apartment units have hit the local market.’”
The Denver Post in Colorado. “Tenants have consistently filled the new apartments that hit the market in recent years. But Paula Munger, head of industry research and analysis for the National Apartment Association, estimates developers overshot demand by about 1,900 units last year in metro Denver. ‘I would expect slower rent growth in 2020 until demand has a chance to catch up with supply recently delivered,’ she said. ‘I anticipate continued strong demand in 2020 in metro Denver, but we may see developers hit the pause button after projects currently underway are wrapped up.’”
The Mercury News in California. “According to Rent Cafe, while the overall rental market is seeing a rare slowdown across the nation, two-thirds of the largest Bay Area cities saw annual rents rise between 1 and more than 7 percent through the end of 2019. Just three markets — Richmond, Petaluma and San Jose — saw drops throughout 2019. At the end of 2019, renters in San Jose were paying an average of $2,685, about $32 per month less than the previous year, while those in Richmond and Petaluma saw even more significant declines in rent.”
“The report looks only at market-rate multifamily properties with at least 50 units, so it doesn’t account for rents in smaller complexes or subsidized affordable housing. It also doesn’t look at the number of bedrooms in a unit. ‘The devil is in the details,’ said Doug Ressler, manager of business intelligence at Yardi Matrix, which provides data for Rent Cafe’s reports.”
The Union Tribune in California. “It appears the San Diego County apartment market is showing little signs of slowing as developers continue to benefit from ever-growing rent. The difference this year is a lack of large-scale downtown developments, particularly the massive complexes in East Village and Little Italy that made the last few years seem like downtown was a giant construction site.”
“One of the downtown’s biggest developers, Nat Bosa of Bosa Development, said there isn’t a whole lot to read into a slowdown. Bosa’s Broadway Block apartment complex, with 620 apartments downtown, is set to open in 2021. ‘A little bit of slowing down in the apartment sector is not all bad,’ he said, ‘because there has been a hell of a lot that came on scene. So, we need to absorb all that inventory.’”
“Rent profits aren’t what they used to be a few years ago, but it doesn’t seem to be stopping developers.”
From Arizona Big Media. “Lindsay A. Cullum-Colwell, managing principal, Cullum Homes: ‘The residential construction industry will grow at a steady pace in 2020. Thanks to a shortage of skilled labor in a majority of the construction trades, the market is not being overbuilt.’”
“Chapin Bell, CEO, PB Bell: ‘We continue to believe in the strength of the apartment market in the Phoenix metropolitan area. We are seeing some softness in some sub-markets, where there has been a large amount of new inventory brought to the market. Even though there is some areas of softness, we believe this is short lived as this new inventory is being absorbed … Projections continue to put Phoenix as one of the top rent growth markets in the country. One area of concern which will have an impact on the amount of new inventory added to the market, is the increase in construction costs. This will slow down the inventory growth as it will be harder to get the new deals to pencil.’”
The Wall Street Journal on New York. “As the real-estate market surged to highs in the mid-2010s, German investor Ekkehart Hassels-Weiler quietly plowed $131 million into four downtown New York penthouses, including the top perch at Herzog & de Meuron-designed skyscraper 56 Leonard. When he sold two of those units last year, he took a nearly 16% hit.”
“His fortunes reflect the declining market for high-end condos in New York City, which has fallen amid oversupply, tax changes and a decline in foreign buyers. The median sales price for a Manhattan luxury apartment fell 24% in the fourth quarter of 2019, compared with the same period the year prior, according to Douglas Elliman. Many of the biggest resale losses of 2019 were at new buildings or recent conversions, including Billionaires’ Row mega-tower One57 and 56 Leonard, where the three largest losses of the year took place. Prices at such high-rises are under pressure amid a surge in inventory.”
“Some of the largest losses of the year, based on dollar volume, occurred at this Extell Development tower that kicked off the condo boom. Retail heir David Lowy unloaded his three-bedroom, 4,116-square-foot unit at the building for $19.06 million, roughly 32% less than what he paid in 2015. It was the biggest loss of the year, based on dollar value. Mr. Lowy didn’t abandon the building; he spent about $36 million to buy a larger unit in the tower at foreclosure auction.”
“Another lower-floor unit also sold for a loss in September. The seller, a limited company bought the unit in 2018 for $23.53 million and sold for $19.913 million.”