Tuesday, January 18, 2011

Apartments: "Consensus has a high price"

by Bill McBride on 1/18/2011 03:15:00 PM

A few random thoughts from the apartment conference ..

• Rent growth is mostly from reduction in concessions. Not as much top line growth.

• Austin: rents are up 13%, but there is huge building boom (seems like every builder is planning or already started a project in Austin, so people are talking about the coming flood of supply)

• CAP rates look a little like a bubble ... people are buying the low 5s in some areas. There is plenty of capital flowing into multi-family.

• Greg Mutz (CEO AMLI Residential Properties) joked "Consensus has a high price"!

• Investment money is flowing into the sector.

• On submarkets: Las Vegas, Phoenix, Inland Empire, parts of Florida, Altanta were all named as disappointing.

• Everyone likes Boston, Seattle, Austin (although afraid of the coming supply) LA, Orange County ...

• Almost all areas are showing improvement.

• Several people have noted that turnover is at record lows (people aren't moving for jobs). Some people are concerned that as the economy improves turnover will increase again - and that eventually some people will choose to own.

• 2010 was beyond all expectations, and that is part of the reason for the optimism. The low level of completions in 2011 suggests the markets will be even tighter.

• Walt Smith, CEO Riverstone Residential (manages 162,000 units) said it is "Pedal to the metal" on rents.

For more, please see the previous post.