Memorial Day

Monday we celebrate the holiday set aside to honor those who died fighting in America’s wars.  It was first established as Decoration Day during and after our Civil War, a conflict that claimed 620,000 lives in the North and South.  May 30 was chosen for remembrance because it was a peaceful day – not the anniversary of any battle.

We should recall the impetus for such a day of remembrance.  In 1861, at the outbreak of war between North and South, our nation’s population was only 30 million.  If we experienced casualties today at the rate we did in our Civil War, there would be 6 million American dead.  So you can imagine the crushing weight of grief and the impact on society of such carnage. 

Decoration Day became Memorial Day in many places over the decades.  After World War II, May 30 became Memorial Day all over the nation.  By law it was moved officially in 1967 to the last Monday in May to make a long holiday weekend, and symbolic beginning of summer.

So nations learn how to cope, and how to honor those who sacrificed so greatly.  Our Memorial Day growing up was our most solemn and moving celebration, especially with nearly all the men in town having served in World War II.  Taps and prayers at the cemetery, decorations on graves of the fallen, comforting of those who felt the sting of loss – these helped us heal and move on without forgetting.

History provides the perspective we need to carry lessons with us, and pass them on to our children.  But Memorial Day is not merely a history lesson; it is a life lesson.  Wars take a terrible toll.  We should honor all of our veterans, who remember those that died as fellow soldiers in the crucible of battle.

 

 

Give Us theTools

The news keeps coming on.  Occupancy is staying high.  Millenials are renting, and that takes a big chuck out of the first-time homebuyer market.  Boomers are downsizing into apartments.  New household creations from new job holders leans heavily toward renting.  Even record delivery of new inventory only slightly dents the tight market.

So now that we've established a trend, likely to hold for a long while, it's time to adjust and deploy the tools we need.  Give assignees a head start with market insights.  Allow them to profile markets to focus on lifestyle preferences.  Help them with upfront funding when they have banking access issues. Get useful, actionable market data on both departure and destination markets.

Don't believe the heavy emphasis on the young & mobile using technology; everybody used tech and it has to be on the mobile phone.

It's a new normal - flip side relocation world. 

US Rental Market Continues to be Robust

Apartment metrics in the first quarter of 2015 demonstrated that things are still going strong, according to Axiometrics early release figures. The 4.9% annual effective rent growth rate is the highest since the third quarter of 2011 and the highest first-quarter rate since 2006

Among metros, Northern California again dominated the annual effective rent growth list of the top 50 apartment markets, determined by number of units. As was the case in the fourth quarter, that region had four of the top five metros on the chart. The only change among the top five was that No. 2 San Francisco and No. 4 San Jose swapped places from the fourth quarter.

U.S. apartment vacancy rate fell to 4.1 percent in the first quarter, from 4.2 percent in the fourth, while new construction declined to its lowest level since the first quarter of 2013, according to the real estate research firm Reis.

Solid job growth, single-family home affordability and the continuing trend of people choosing to rent instead of buy all contributed to the first-quarter metrics.  Wall Street Journal

The average renter paid $1,114 per month in the first quarter of 2015, $6 more than in the fourth quarter of 2014, a quarter-to-quarter effective rent growth rate of 0.5%, which matches the same rate recorded in the first quarter of 2014.

 According to REIS, New York remained the most expensive market in the country with effective rents registering $3,200 per month, a 45 percent premium to San Francisco, which remained the second-most expensive market,

Single-family rental properties have been around for a very long time, but they have become a hot commodity only in the past few years. According to the U.S. Census Bureau, the number of rental homes reached an all-time high of 14.9 million homes in 2013 (the latest data available), an increase of almost 3.0 million rental homes since the end of the Great Recession in 2009.

1918 German Assault on the Western Front

On March 21, 1918 the German army launched its massive offensive against the British and French.  With 500,000 troops from the Russian front, freed by the treaty with the new Bolshevik government, Germany intended to land a knockout punch against France, capture Paris, and win World War I.

German artillery fired a million shells against the front in just the first 3 hours.  German troops advanced rapidly and the German commander was able to get his enormous field guns close enough to begin shelling Paris itself.

But French resistance stiffened, and held once again at the Marne River.  German troops outran their supply lines and were so hungry that they stopped advancing to ransack the huge food supplies in the town of Albert.  The attack planned by the Germans to take the important city of Amiens was stalled.  And, much to the German commander Ludendorf's dismay, 250,000 American troops had arrived to replenish the French and British forces exhausted by nearly 4 years of bloodletting.

At Belleau Wood, the Americans withstood a furious German assault and saved a key point in the allied line from being overrun.  And at the Marne, the American 3rd Infantry division stood alongside the French and stopped the main German offensive in its tracks.  Today, if you visit Fort Stewart you will see the nickname given by French commanders to the unit, "Rock of the Marne".

After the failure of the German offensive, the allies launched their own offensive and drove Germans back consistently until on the 11th day of the 11th month, 1918, the guns fell silent.

Rental Market Still Strong

The Rental Market still presents rising rents and low vacancy to those seeking apartment living.  Even though about a quarter million new units were delivered in 2014, rents continue to rise and vacancy remains around 5%.  2015 is projected to add another 250,000 new apartment units to the US market, with especially high deliveries in the Texas markets

So what's keeping the pressure on rates and vacancies?  Demand - from young folks that move out of parents homes, from boomers downsizing and prefer rentals, and pent up demand from job seekers now able to form households.  The creation of new households will outstrip even aggressive building of new units and will continue absorb the single family home rentals available.  Investors are committing enough new money to demonstrate their long term optimism on the rental market.

In some cities affordability drives people to rent, even where average rents are high.  Two notable examples are New York and San Francisco where monthly rent above $3000 is still half what a mortgage payment could be.  Further, that is generally true of the west coast and the Washington DC to Boston corridor, with some exceptions.

New Inventory Coming Online

Well the apartment industry is finally catching up to the expansion of rental households.  Many thousands of properties are coming online in major cities, and that should take the edge off of the continuous rise in rental costs.  Units coming online offer very fine finishes and amenities plus workout rooms and plush social commons.  Although the slow down in the demand/supply ratio will help, pressure from normally first-time home buyers opting to rent, and boomers trading (disappointing) home ownership for the freedom of renting mean that prices will slow but not stabilize.

The multi-family housing industry is also tackling the eruption of demand in oil fracking - usually remote - towns, especially in North Dakota.  Development has accelerated as the activity (boom!) drives more and more workers to small towns in northwest North Dakota and eastern Montana, plus the Ohio/PA border area.

New York just defies all the odds as average rental costs approach $4000 per month.  And that's for a smallish unit with ordinary amenities.  It's still expensive just to get the apartment with broker fees at about 15% of the annual rental expenditure.  Still, it is New York and one of the world's great mega-cities!

Rental Market Tightens Even Further

It will be no surprise to most that the rental market continues to experience very low vacancy, and very high occupancy rates in the current market cycle.  Our many sources indicate a broad continuation of this trend.  Those seeking rentals, especially in higher end properties, should expect to see available units rented quickly.  Those who plan ahead and maintain close contact with providers will have more and better options, and can act quickly when time is of the essence.  

 Axiometrics forecasts U.S. apartment occupancy to reach 94.9% by the end of 2013, and effective rent growth to measure 3.6%. The occupancy forecast is 0.6% above the 2012 rate but the rent growth forecast is 0.2% below the 2012 rate. Why?  Because more supply is coming into the rental market through both new building and continued growth of REO to Rental homes.

Our research has identified a clear correlation between file notice and results.  An increase of only a few days in the amount of time between the initiation to the supplier and the tour date can increase rental placements by 30%.  Conversely, an urgent (as opposed to “rush”) file presents a far higher chance that an assignee will have a less than excellent experience.  So don't let those rental files accumulate until Friday afternoon, then send them along and expect the best results.  You know who you are ....