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Jesse McGreevy's Blog

By Jesse McGreevy 239-898-5329 | Agent in 33928
  • Is Built-to-Rent a Market, or a Phase?

    Posted Under: Home Buying in Estero, Rentals in Estero, Investment Properties in Estero  |  August 25, 2014 9:49 AM  |  8 views  |  No comments

    Construction of single-family homes that are built-to-rent is making up a smaller share of new-home construction, according to newly released Commerce Department data.

    In the first half of this year, builders began construction on 10,000 homes intended to be rentals—just 3.1 percent of all home starts, according to Robert Dietz, an economist with the National Association of Home Builders. While that is still above the nation’s average of 2.8 percent, the number of built-to-rent single-family homes is slowly dropping from recent highs. In 2013, the single-family built-to-rent market made up 3.2 percent of home starts; in 2012, it was 5.8 percent. 

    However, economists note that percentages may have been elevated in past years because overall home construction was low, which allowed built-to-rent homes to make up a larger percentage of the market. Also, builders say built-to-rent grew following the recession, as demand for rentals expanded.

    “We’re going back to 2 percent to 3 percent over the long run as first-time buyers come back into the marketplace and the rest of the single-family [for-sale] market expands,” Dietz notes.

    Still, the trend may not fade completely. Some builders are reportedly getting into the merchant-building industry, in which they’re constructing homes to be sold to investors who plan to operate them as rentals. Builders report a growth in the pool of institutional buyers from real estate investment trusts such as American Homes 4 Rent and Colony American Homes Inc. Lennar Corp.’s Chief Executive Stuart Miller recently said the company is considering getting into the merchant-building market.

    Paxis Group, a real estate company based in Atlanta, says it has begun construction on up to 375 homes in Illinois, Georgia, North Carolina, and South Carolina that will be sold to investors as rentals. The four- to five-bedroom homes will be built next to other new owner-occupant homes.

    “The constant question is if this is a market or a trend,” John Wojtas, president of Paxis Group, told The Wall Street Journal. “I really do think it is a permanent market here to stay.”

    Source: “Homes Built for Rent Claim Smaller Share,” The Wall Street Journal (Aug. 21, 201


    Jesse@DomainRealtyGroup.com

     239-898-5329
    DomainRealtyGroup.com
  • Renters Influenced by Online Property Reviews

    Posted Under: Rental Basics in Estero, Property Q&A in Estero, Rentals in Estero  |  August 22, 2014 1:53 PM  |  15 views  |  No comments

    Property managers take note: online peer ratings and reviews matter. According toApartmentFinder.com’s recent survey of more than 5,000 apartment seekers, nearly all – 96 percent – said that online reviews influence their decision when choosing an apartment. 

    Is your rental site mobile friendly? Are you listing rental properties on mobile-friendly portals? Property managers should factor mobile into their marketing strategy as nearly half (49 percent) of apartment hunters prefer to use their mobile device, according to the survey. And those mobile property hunters will take action: 45 percent will call and 42 percent will e-mail the rental office immediately from their mobile device. Of respondents who use their mobile device to shop for rentals, 49 percent will call the apartment community directly from the listing.

    “The findings reinforce the importance of leveraging leading-edge online and mobile tools to reach apartment shoppers when they are actively engaged in their search process,” says Marcia Bollinger, president of Apartment Finder.

    When it comes to making the final rental decision, cost was the biggest influencer, swaying 63 percent of respondents. Location was the deciding factor for 24 percent of renters, followed by neighborhood crime statistics at 7.3 percent, school system at 3 percent, and community amenities at 2.6 percent.

    Giving context to why renters are moving, the top three reasons listed by survey respondents included a current lease expiring (42 percent), job relocation or a new job (22 percent), and moving out of parents’ home (18 percent).

    Source: “New ApartmentFinder.com Survey Reveals Apartment Shoppers' Search Behavior and Lease Decision-Making Influencers,” Apartment Finder (Aug. 13, 2014)

    Jesse@DomainRealtyGroup.com
     239-898-5329
    DomainRealtyGroup.com
  • Rental Affordability Crisis Spreads to Middle America

    Posted Under: Rental Basics in Naples, Rent vs Buy in Naples, Rentals in Naples  |  August 13, 2014 6:57 AM  |  10 views  |  No comments

    Skyrocketing rents continue to plague renters, and the problem is going to only get worse all over the country.

    “Overall, housing dynamics are currently changing,” Mark Fleming, CoreLogic’s chief economist, said last month during panel hosted by CoreLogic and the Urban Institute. “Rental demand is rising while supply is dwindling as a result of the declining share of distressed assets relative to all homes on the market. Due to this trend, rent prices will continue to climb.” 

    Talk of rising rental costs have mostly centered on coastal areas such as New York City, San Francisco, and Miami, which have long had the highest rents in the nation. But higher rents are also increasingly hitting Middle America as well.

    In the second quarter of this year, several cities in the central part of the U.S. placed in the top 10 regions for highest rent growth, including Nashville, Tenn.; Raleigh, N.C.; Louisville, Ky.; Columbus, Ohio; and St. Louis, according to a report by Reis, a real estate research firm.

    “Although average rents in these smaller cities are still lower than in big cities, the rapid increases have been met with sticker shock by residents, especially those with lower incomes,” The Wall Street Journal reports. Economists say that landlords have the upper hand in a growing number of Southern and Midwestern cities, as they’re able to continue raising rents due to strong demand and local job growth.

    In the Nashville metro area, apartment rents are up 18 percent since 2009 while the median household income has grown by 5 percent, according to Moody’s Analytics. More than half of renter households in Nashville are paying more than 30 percent of their income to rent, which is considered cost-burdened. 

    In April, Shaun Donovan, the former Secretary of the United States Department of Housing and Urban Development, said the U.S. is in the “worst rental affordability crisis this country has ever known.”

    Source: “Rising Rent Squeezes Middle America,” HousingWire (Aug. 11, 2014) and “Nashville Rent Increases Have Residents Singing the Blues,” The Wall Street Journal (Aug. 10, 2014)

    Jesse@DomainRealtyGroup.com
     239-898-5329
    DomainRealtyGroup.com
  • Study: Rental Payment History Can Help Boosts Credit Scores

    Posted Under: Rental Basics in Naples, Credit Score in Naples, Rentals in Naples  |  August 8, 2014 1:58 PM  |  11 views  |  No comments

    The addition of rental payment data to credit files may help more potential renters become home owners.

    Experian became the first credit reporting agency to add on-time rental payments to its database. It recently conducted an analysis to determine how the added rental information has aided consumers’ credit files. 

    The study found that subprime and nonprime residents saw the greatest positive score impact by the addition of rental histories. Nineteen percent of the study participants that were considered subprime moved to at least one higher – or less risky – risk segment by the addition, opening them up to more affordable credit and additional credit opportunities, the study noted.

    For the previous unscoreable, adding the rental data has now allowed them to have a credit score, with the majority now falling in the least risky prime category too, Experian’s analysis shows.

    “Consumer financing rapidly changed during the economic upheaval, and regulatory changes forced lenders to tighten the standards for the underwriting process,” says Genevieve Juillard, president of Experian Consumer Information Services. “This excluded many Americans from the opportunity to attain credit due to a limited or no credit history. Residents who pay their rent on time month after month should be rewarded and not overlooked simply because they rent instead of own the place they call home.”

    Source: Experian

    Jesse@DomainRealtyGroup.com
    239-898-5329
    DomainRealtyGroup.com


  • Extra Perks of a Condo-Hotel Drive Revival

    Posted Under: Property Q&A in Estero, Rentals in Estero, Investment Properties in Estero  |  July 8, 2014 1:51 PM  |  28 views  |  No comments

    The condo-hotel combination is making a comeback in the U.S. market, with numerous projects underway across the country, Bloomberg reports. Developers are combining a rebounding hospitality market with rising demand for luxury homes and targeting such markets as Miami, New York, and Los Angeles.

    More residents are being drawn to the extra perks that can come with condo-hotels, such as room service, concierge, valet parking, housekeeping, and more.

    Winning in the Condo Craze

    “When you add condos to a hotel, the sum of the parts is more than the value of each individual component alone. They complement each other,” says Ian Schrager, the developer of Miami Beach’s Edition, which is a luxury condo-hotel linked with Marriott International Inc.

    The idea of a condo-hotel is not new, but the concept mostly collapsed during the housing crisis, Bloomberg reports. Some large-scale projects had been casualties of the financial fallout, such as SB Hotel Associates’ Trump International Hotel & Tower in Fort Lauderdale, Fla., and the Shangri-La hotel-condo development that came to a halt in 2008 and did not resume until 2012.

    But developers are willing to bank on such projects again, believing there is a strong market for such types of development.

    “You are seeing more and more condos that are associated with a hotel brand,” says Richard LeFrak, CEO of LeFrak Organization Inc., which is developing 1Hotel & Homes South Beach in Miami and considering another hotel with condos in Los Angeles. Residents need to only “make one phone call. ‘Change the linens, put food in my fridge, get my car ready.’ They don’t have to bother with organizing a lot of things. It’s a big draw.”

    The perk for developers is that it can attract financing that may not have otherwise been available. Different types of investors may want to get involved, fostering different types of returns on the project, says Bruce Ford, Lodging Econometrics Inc.’s senior vice president and director of business development.

    Despite rising demand, few new hotels have been built in recent years, since financing has been difficult to obtain, Ford says.

    “It’s still hard to finance a pure hotel play,” Ford told Bloomberg. In big cities, “it’s just very expensive to build. So until the hotel is completed and returns money, you can sell condos and finance the hospitality component. The hotel component in turn will provide you with long-term cash flow.”

    Source: “Homebuyers Avoiding Chores Fuel U.S. Condo-Hotel Revival,” Bloomberg (July 2, 2014)

    Jesse@DomainRealtyGroup.com
    239-898-5329
    DomainRealtyGroup.com
  • Building Giant Considers Move to Home-Rental Market

    Posted Under: Home Buying in Estero, Property Q&A in Estero, Rentals in Estero  |  June 30, 2014 7:13 AM  |  114 views  |  No comments

    Lennar Corp., one of the nation’s largest home builders, is “considering” a move to build homes intended to rent if first-time home buyers continue to be reluctant, said Stuart Miller, the builder’s chief executive, in a quarterly conference call Thursday.

    Miller says he doesn’t expect mortgage qualification standards to ease enough anytime soon for more first-time home buyers to come off the sidelines. As such, he says Lennar is eyeing the home rental market as a way to ramp up business until they do. The builder is studying whether it should begin to build single-family homes to rent, in addition to the apartments it already builds.

    Only a few builders have constructed homes exclusively for renting. The single-family rental trend has mostly been driven the last few years by big investors, such as Blackstone Group LP and Colony Capital, that are buying existing single-family homes to rent them out.If first-timers remain unable to buy, then “single family development for rent might become a part of our portfolio going forward,” Miller told investors during the call.

    Some housing analysts don’t believe this will become a trend of big builders taking their business into constructing single-family homes for rent.

    “The opportunity is pretty significant in for-sale,” Ivy Zelman, CEO of Zelman & Associates, a housing market consulting and research firm, told The Wall Street Journal. “I think that’s where they’ll remain, where they have the expertise. It’s a completely different business managing tenants.”

    Source: “As Home Sales Remain Restrained, Big Builder Eyes Home-Rental Market,” The Wall Street Journal (June 26, 2014)


    Jesse@DomainRealtyGroup.com

    239-898-5329
    DomainRealtyGroup.com
  • Stagnant Wages Put Brakes on Rent Rise

    Posted Under: Rental Basics, Rent vs Buy, Rentals  |  June 17, 2014 11:54 AM  |  77 views  |  No comments

    Rents continued to rise nationwide in the first quarter of this year — but at the slowest pace in the last 12 months. Landlords are finding it difficult to raise rents by more than 5 percent to 10 percent a year, according to a newly released report by Reis Inc.

    “With median wages not rising appreciably, unless the apartment complex caters to the top 1 percent of income earners, it will be more of a challenge for landlords to raise rents moving forward,” Reis reports.

    Asking rents and effective rents bumped up 0.5 percent and 0.6 percent, respectively, in the first quarter, Reis reports. Reis projects that effective-rent growth will be slightly stronger this year compared to last year, but mostly thanks to an influx of new apartment units arriving on the market that are priced at a premium.

    Reis projects that there will be nearly 180,000 new units in the first quarter, which will mark the highest level of new completions since 1999.

    “This amount of new supply presents competition that may further dampen the ability of landlords of existing buildings to raise rents,” according to Reis’ report. “As supply growth ramps up in response to tight multifamily fundamentals, we expect more of a moderation in vacancy trajectories.”

    Reis projects that demand for apartments will continue to be strong, even as the single-family for-sale market recovers, but the firm expects “continued outperformance to moderate in the near term.”

    Markets like San Jose, Calif., San Francisco, Seattle, and Oakland-East Bay — which are all benefiting from a booming technology sector — are among the top four markets for largest effective-rent growth over the last year. In these markets, effective rents grew by at least 5 percent in the past year.

    Source: “Q1 2014 Apartment Market Trends,” ReisReports (June 13, 2014) [Log-in required.]

    Jesse@DomainRealtyGroup.com

    239-898-5329
    DomainRealtyGroup.com
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