ACCESSLASVEGAS Y O U R A C C E S S T O T H E L A S V E G A S M U LT I - F A M I LY H O U S I N G M A R K E T
JANUARY FEBRUARY MARCH 2013
IN THIS ISSUE NATIONAL NEWS PAGE 2
SPECIAL REPORT: Panelists Predict Multifamily Industry Will Decelerate in ‘13
LOCAL EFFECTS PAGE 4
Still Not Much Momentum in Las Vegas Apartment Market MGM Resorts Sells 427 Condo Units at CityCenter Las Vegas for $119M
MANAGEMENT MINUTE PAGE 7 Build Powerful Property Management Incentive Programs
OCCUPANCY CORNER PAGE 10 MARKET ACCESS PAGE 11 ACCESSLASVEGAS
Less Apartment Refinancing, More Funding in 2013 The last few months brought good news for the U.S. housing market: construction up, more home sales, and home value growth turning positive. This has been a big change from a year ago. Given that, what are the crystal ball predictions for housing in 2013? Mortgage Rates Stay Low. Look for fixed-rate mortgage rates to remain near their 65-year record lows for the first half of 2013 then begin rising a bit in the tail end of next year. In the single-family market, this means homebuyer affordability should remain very high in 2013 for those with good credit history, stable income, and sufficient savings. Home Values Rise. Look for property values to continue to strengthen in 2013: projections are most U.S. house price indexes will likely rise by 2 to 3 percent in 2013. Like always, national statistics don’t tell the full story; some regions will post faster house price gains, while some will be stagnant or see value loss in 2013. Vacancy Rates Down. Vacancy rates have been trending lower for much of the past three years because household formations have outpaced new construction. To illustrate, in 2012, net household formations through the third quarter totaled 1.15 million but completions of newly built homes (both rental and for sale) were just under 700,000; the difference is made up by a reduction in vacancies. This trend will continue in 2013 and could bring total vacancy rates down to levels last seen a decade ago. While this is good news for property owners, tenants will likely see rents rise a bit faster than prices on all other goods. Less Refinancing, More Apartment Funding. Refinance activity accounted for the bulk of residential lending in 2012 and will account for the bulk of it in 2013, too. But, simply put, we've seen the peak in refinancing. Homeowners who obtained a loan with a low mortgage rate in 2012 or refinanced through the Home Affordable Refinance Program are unlikely to refinance in 2013. Next year’s likely pickup in home sales won’t be enough to offset the coming drop in refinance activity. Consequently, total single-family originations will probably drop by about 15 percent in 2013. On the other hand, permanent financing on newly built apartment buildings, a pickup in property transactions, and refinancing of loans exiting "yield maintenance" terms are expected to increase multifamily lending by about 5 percent. Best wishes for a healthy and prosperous 2013! JANUARY | FEBRUARY | MARCH 2013