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NMHC has long been known as the place where the best and brightest come together to shape a positive future for their businesses. It’s also the place that provides our members opportunities for high-level contact with the nation’s leading policymakers.

September 17, 2014

USA Today: Millennials are not big homebuyers MARKET TRENDS NEWSLETTER near term.

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September 25, 2013

About Apartment Wire

A must-read for top apartment industry professionals, The nation’s news source ran a feature article on the front page of its Money section on how the Apartment Wire is a timely recession and large student loan debts have made renting for the long term more appealing for review of emerging trends Gen Yers. In fact, Millennials are likely to be among a growing number of “career renters.” NMHC in apartment Apartment vacancy rates declined in the third quarter of 2013 Sponsored by finance, Chief Economist Mark Obrinsky and Equity Residential CEO David Neithercut quoted. development, management and technology and more, FIGURE 1 Read More Bureau vacancy rate for The U.S. Census featuring both exclusive content Renter Vacancy Rates all rental apartments (in buildings with 5 from NMHC’s staff of experts September 17, 2014 and provocative articles from or more units) decreased 30 basis points All Units 5+ Units across the web. (bps) to 9.2 percent from the second quar-


14 ter and 20 bps from the 9.4 percent rate recorded a year ago. The MPF Research 12 Top News Upcoming Meetings About Market Trends national vacancy rate for investment-grade 10 apartments also declined slightly to 4.6 Sponsored By Market Trends is a high8 percent from 4.7 percent during the previTOPIC NEXT WEEK level quarterly summary of returns this week, and while housing ous quarter; however, it was unchanged The StateCongress of6Multifamily Finance 2013inNMHC Fall Board key trends the industry for nance and tax reform remain front-and-center from the year-ago level. The MPF of Directors andEach Advisory Withvacancy the flurryfiof administrative and legislative activity focused on the apartment executives. on 4 NMHC/NAA’s legislative agenda, they arelandscape fast Committee rate remained the same or decreased in Economist GSEs, Chief Mark Obrinsky reviews the current of issue features the Meeting latest data being crowded out by efforts to avert a government September 17–19, 2013 2 multifamily all regions as well. The Northeast contin- mortgage finance. on demand and supply trends shutdown, the battle to raise the debt limit and The Fairmont Hotel for apartment residences, along ued to have the lowest vacancy rate at 3.6 in Washington, DC the0ongoing crisis in Syria.The issue may be being with vacancy rate, absorption percent, while the South had the highest overshadowed, ‘70 ‘75 but ‘80it’s not ‘85 gone ‘90 entirely ‘95 from ‘00 the ‘05 ‘10 and rent trends. In addition, vacancy rate at 5.5 percent, 10 bps lower Congressional radar. NEXT WEEK coverage includes an overview NMHC Emerging Leaders September 25, 2013 than last quarter. The Midwest remained of the apartment transaction Speakers Series — the same at 4.3 percent, and the West On Tuesday, the Senate Banking, Housing and marketWashington, with data on D.C. apartment Urban Affairs Committee will hold a hearing on decreased 10 bps to 4.1 percent. sales volume and Each September 19, pricing. 2013 “Essential Elements of Housing Finance Reform. At Lorem ipsum dolor sit amet, consecteturTOPIC adipist. issue also contains a special Sequoia in Washington, DC a separate hearing last and week…..some Forbes: Replacing Fannie Freddiecommentary analysis of an important and Multifamily 3Q 2Q Change 3Q Change from % the hearing here…talk a little about Corker-Warner, Corker urged the committee to mark up NEXT MONTH Has With theYear Problem timely trend. Vacant 13 13 Nothing last to Qtr. Do 12 Ago. the measure, etc. During the hearing, Mark Zandi, Chief Economist, Analytics to praised NMHC Student Research Notes Contributor Mark Greene argues that Moody’s political proposals fix the the nation’sAbout2013 US — Census 9.2 9.5 -0.3 9.4 -0.2 Corker-Warner bill, Housing Conference housing finance system place sole blame on Fannie and Freddie for the & Exposition MPFit — 4.6 saying” is Census an excellent starting point. shows a-0.1 lot hard4.6 worklenders and a0.0and lot ofthen good ideas and sins4.7 ofItthe banks andofmortgage hand over the keys toPublished quarterly, Research Tools September 30–October 2, 2013 thoughts.” Zandi will also be a featured speaker at this NMHCdisaster. Fall Board meeting. the same architects of week’s the mortgage A review of some proposals:

Whither Housing Finance Reform?


Making the Case for the Industry

How Big Is The Excess Inventory of Vacant Apartments?

Notes offers exclusive, The Sheraton Hotelin• Bipartisan Bill Kick-Starts Housing Finance Reform depth analysis from NMHC’s in New Orleans, LA More Print-Friendly Version In theRead aftermath of the Great Recession, absorptions dried up, causing the number ofBill vacant • House Republicans Release Housing Finance Reform research team on topics of RSS apartmentsMultifamily to rise beyond the normal range and creating what are termed “excess” vacant units. • Opinion: A Third Path for Housing Finance Reform SOON to apartment building starts and completions rose. special interest 2013 OpTech This excess inventory signaled a supply-demand imbalance that led to a sharp cutback in new Searchprofessionals, BackNMHC Issues industry from (Multifamily Business TOPIC production(Note: and lower returns.government Over the past three years, however, the increase in apartment the demographics behind FIGURE 2 The October shutdown Operations and Politics Dominate NMHC’s Business Meeting apartment demand to effect of demand has outstripped thereleases; increaseconstruction in supply, causing occupancy rates to trend upthe again and Teekay delayed some data Technology Conference House Republicans are Fall picking up pace on tax More than 300 NMHC Board of Directors and Advisory Committee changing economic conditions & Exposition) reducing excess But Permits to what extent has that excess vacant data areapartment for July andinventory. August only.) reform, according to Theinventory Hill. The of rest of this text Questions & Comments 12,000,000 1999 members gathered in NMHC’s hometown last week for a multi-day event industry. November 11–13, 2013 apartments shrunk?to a seasonally adjusted annual is literally lifted from The Hill, which we couldn’t do, 2009on the multifamily decreased that created constructive dialogue between leaders of the apartment The Hilton Anatole in Dallas, TX 10,000,000 rate (SAAR) of 297,000, down 8.2 percent but we’d rewrite it with our spin on what it means. Questions or comments industry and key policymakers. Despite 8,000,000 all the pressing distractions on Capitol Hill, from the previous quarter and 1.2 percent on Research Notes Unfortunately, public data are too limited to provide a clear and simple answer. What follows House Ways and Means Committee Chairman from a yearofago, an increase last along6,000,000 should be directed to is a brief summary dataafter sources and issues, with a standard estimate of excess Dave Camp (R-Mich.) and other Republicans on Mark Obrinsky, NMHC’s StartsFollowing increasedthat 2.7 percent to Tools apartmentquarter. vacancies. is an assessment of theinsist reliability ofstill thisplenty sort ofofestimate. panel there’s political space In265,000 Case You Missed 17.6 It per- the4,000,000 Senior Vice President a SAAR ofis andisremained for them to pushThis ahead on tax reform meet Our best estimate that there little excess vacancy nationally. means that whileand there is of Research Version and Chief 2,000,000 Print-Friendly cent higher than the year-ago level. Even Camp’s goal of passing a bill out of committee excess vacancy in some metro areas, it is offset by other markets where the number of vacant this Economist, at hand-selected collection of GOP noteworthy articles onprivately a wide with theA increase, however, starts remain year. 0 panel members huddled onvariety RSS apartments is below average. below the 300,000 level reached in the rst Tuesday forexecutives. Moran met with (R-MI) the first of as many as six meetings ofChairman issuesDave ofCamp interest tofiapartment or 202/974-2329. Search Back Issues quarter. After a slight decrease in the sec- over the next two weeks, as Ways and Means



Overview of Public ontheVacancies Committee membersData dive into crevices of the code. “We’re definitely going to step up the pace visits to the NMHC/NAA this fall, no doubt about it,” Camp told reporters after Tuesday’s meeting. Earlier this year, NMHC/ before the data House Ways and hearing entitled,rates: “Tax Housing Reform and ThereNA aretestifi foured main federal sources thatMeans provideCommittee estimatesatofarenter vacancy pro-apartment website, Residential Real Estate.” Vacancy Survey, Decennial Census, American Housing Survey and American Community Survey. The most widely used is the Housing Vacancy Survey (HVS). It is available quarterly, making it the most frequent and timely data source, and has metro area vacancy rate estimates as well as ond quarter, rose a SAAR FHFAcompletions Asks for Ideas ontoGSEs’ Future of 190,000, an increase of 11.1 percent Why the U.S. Needs to Fall Out of Love With Homeownership from last quarter and 10.9 percent higher NMHC/NAA Initiate Grassroots Effort in Response to FHFA’s Proposal to Further than a year ago. (Note: In the table below, Reduce GSEs’ Footprint unadjusted 3Q 2013 permit numbers were

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Couples with based Children Portion of All Households estimated by NMHC onShrinking data for July and estimates August.) vacancy rate for apartments. sample size is rather small, however, and Nationalspecifically Journal: Walking the Path to The Citizenship

it provides housing inventory data only for all renters combined, with no breakdown by housing news stories promoting the Multifamily Insider type, such as single-family rentals, small multifamily buildings (2-4 units per building) or apartment buildings (5+ units). $1.1 trillion apartment IRS Issues Long-Awaited Final Regulations The Decennial Census has the most reliable data Repair as it covers all households and housing units industry generated by NMHC/ Rules when apartment owners must depreciate or expense expenses related to data and has the address most extensive geographic breakdowns. How-ever, the drawbacks are that the acquiring, maintaining and improving their buildings. Final rule makes important changes sought are available only every 10 years and no longer include a breakout for apartments. NAA’s public relations initiative be NMHC/NAA to the “de minimus” provisions.

NMHC’s Betsy Feigin Befus on what immigration reform means for the apartment industry

Multifamily 3Q 2Q Change Is Suburban Sprawl on Its Way % Vacant 13 13 Back? last Qtr. TAX US — Census 9.2 Aren’t Luring 9.5 Stock Investors -0.3 REITs for Houses

MPF — Blackstone Census 4.6Former AvalonBay 4.7 -0.1 Adds Chairman to Unit’s Board

Building Housing That Some People Can’t Afford Isn’t Racist









55 thousand


NMHC’s “Apartments. We Live Here” PR campaign is Up Tax Reform Heats the first-ever pro-apartment campaign designed to tell policymakers how our members’ apartments are helping people live in a home that’s right for them.

North Dakota

We bring the nation’s influential political and business leaders to you as speakers at our events. Past NMHC event speakers have included President George W. Bush, President Bill Clinton, President George H.W. Bush, former Secretary of State Hillary Rodham Clinton and former Florida Governor Jeb Bush.


South Dakota

High-Level Networking Opportunities with Industry Leaders and Policymakers

Questions & Comments Questions or comments on Research Notes should be directed to Mark Obrinsky, NMHC’s Senior Vice President of Research and Chief Economist, at or 202/974-2329.

Teekay Survey (AHS) is available more frequently—every other year—and Multifamily Market Dashboard

Read MoreHousing The American

includes detail on the number of units in the housing structure. However, similar to the HVS, it has FIGURE 3 Net absorptions of investment-grade apartments tracked by MPF Research a fairlyCAPITAL small sample size. Metro area data also are not generally available, and users must Vacancy dig Renter Rates MARKETS were positive in the thirdTK quarter, but they were lower than second quarter Teaser line

U.S Multifamily Permit Inssuance Stats and Completions (in 00s)

the micro-data files to access relevant information. Sen. Chuck Schumer (D-NY) with NMHC Secretaryinto David Schwartz, results. The absorption of 47,330 apartments was 26.0 percent lower than Federal Offi cials Issue More Relaxed CMBS the Retention year-earlier figure. The trailing four-quarter sum 125,182 unitsand in Multifamily building permits continue tototaled rise, while starts Risk Rules Waterton Associates By comparison, American Community Surveyquarter. (ACS) has a much sample, metro the thirdthe quarter, an 11.5 percent decrease from 141,839 unitsincreased inlarger the sec14 area completions fell in the second Permits to

5+ Units Starts All Units Completions Permits

500 regulators have issued a revised proposal that weakens the risk retention requirements renterFederal vacancy rates and aadrop detailed breakdown by units in structure (national not by ond quarter and of 16.6 percent from the(SAAR) year-ago of 150,039 a seasonally adjusted annual rate oflevel 323,700, updata 9.3 only, originally proposed by regulators in 2011. While much of the new proposal concerns 12 the singlemetrofamily area). However, similar to the AHS, users must manipulate the files for data, units. Completions of multifamily units remain andboth occupancy rates percent from the previous quarter. While starts and com400 sector, it does include provisions sought bylow, NMHC/NAA andmicrodata others to revive thethe mortgage remain high. As inslipped previous quarters, it is and the low of newrespectively, supply, rather from10 whichbacked greatly restricts usage of market. this dataset. pletions 14.3 percent 4.4level percent, securities (CMBS)



As starts have backed off the 300,000 level reached in the first 6


than any lessening of both demand for apartment residences, is restricting last quarter, remain significantly higherthat than a year ago.

Readabsorptions. More

Determiningquarter, the Right Levelabout of Vacancy concerns overbuilding seem to have lessened correspondingly. 3Q







100 The optimal vacancy rate balances the desire of prospective residents to Year find Ago. homes against owners’ desire to manage the 2 % Vacant 13 13 last Qtr. 12 Hill Watch business in an efficient and cost-effective manner. While an exact measure may be hard the long-term average 0 to ascertain, 0 US — Census 9.2 9.5 -0.3 9.4 -0.2 provides a reasonable approximation of a “normal” vacancy rate, which will suffice for present 2000 purposes. ‘70 ‘75 ‘802002‘852004‘90 2006 ‘95 2008 ‘00 Senate on Immigration Reform, September MPFHearing — Census 4.6 4.7 Tuesday, -0.1 4.6 23 0.0

© 2015 National Multifamily Housing Council

2012 2010 ‘10 ‘05

The chart to the left (Fig 1) shows a rising trend for the overall rental vacancy rate, which includes single-family and small multifamily Renter Vacancy Rates Bipartisan Policy Commission Hearing on Housing Finance Reform, Thursday, September 26 rentals as well as apartments. By contrast, the rate for just the All Units 5+ Units sector trended down in the 1990s before turning up again Apartment Rent Growth Remained Solid Inapartment The Third Quarter in the current decade, first as a result of the housing bubble, then as 14 Apartment rent growth remained solid in the third quarter, though a slower(andFIGURE a result of itatbursting taking3 the economy with it). In estimating 12 Media Roundup Renter Vacancy pace than the trend from 2Q 2011 – 2Q 2012. Same store rentsrate, for proa normal based My on Email historical trends,Rates it probably makes sense to Manage / Unsubscribe Contact Us Connect 10 fessionally managed apartments tracked by MPF Research increased 3.2 add Please ‘’ to your email address book exclude the bubble period (2000 and after). All Units 5+ Units Rejects Tradition Social Media’s Power percent year over year, for 10 bps less than the 3.3 percent increase experior Safe Sender List. 8 Beyoncé 1850 M Street, NW, Suite 540, Facebook The enced New York Times in the third quarter of 2012. Rents were up in all four regions by similar If you are overall still14 having problems receiving our communications, From 1970-1999, the rental vacancy averaged 6.5 percent, Washington, D.C. 20036-5803 Twitter 6 seethe our White12List page for more details. amounts. The biggest rise was once again in the West at 4.5 percent; Linkedin while the vacancy rate for 5+ multifamily units averaged 8.7 percent. Leadership Is About Emotion Northeast percent. The CPI rent 4 Forbes 202had 974 the 2300lowest Officeincrease, unchanged at 2.2 (Note that Census Bureau 10vacancy rates tend to be higher than HUD FIGURE 1 expected to issue FY2014 Fair Market Rents

index, which covers all rental housing, rose 2.9 percent versus a year earlier,

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