Wednesday, February 2, 2022

Rising Rents and Cheap Money Flowing —So Apartment Prices Are Soaring

Source:

"Fannie Mae announced last week that it provided nearly $70 billion in multifamily financing last year.

The government lender crowed about $9.6 billion of the total being for affordable housing projects and $13.5 billion financing projects deemed “green and sustainable” units.

This helped Fannie “grow its Multifamily Green MBS (mortgage backed securities) issuance to more than $100 billion last year,” according to the press release.

Fannie Mae apartment loan pricing and terms are attractive: the five-year fixed rate starts at 2.74 percent to the thirty-year fixed starting at 3.81 percent.

Thirty-year amortizations are available and in some cases interest-only loans can be negotiated, as well as non-recourse loans.

The larger point is that with the Consumer Price Index at 7 percent in December, the real interest rate on these Fannie Mae loans is negative.

According to Multi-Housing News,
   “On an annual basis through December, rents increased by double-digit percentages in 26 of the top 30 metros, six of which posted gains of 20 percent or more:
Phoenix (25.3 percent),
Tampa (24.6 percent),
Miami (23.5 percent),
Orlando (22.7 percent),
Las Vegas (22.2 percent) and
Austin (20.9 percent).”

So with rents rising and cheap money flowing, the prices of apartment projects are soaring.

The latest Las Vegas multifamily announced sale is Ideal Capital Group’s purchase of the 287-unit Jade project near the Rio hotel and casino for $124.5 million.

That is a whopping $433,798 per unit.

The covid shutdown in 2020 slowed project sales as many renters lost their jobs.

But “Las Vegas’ rental market has since heated up with fast-rising rents and shrunken availability,

in part as people sought more space amid widespread work-from-home arrangements,

and investor sales have rebounded,” reports Eli Segall for the Las Vegas Review-Journal.

Jade went for double 2021’s average sales price per unit, $215,151.

Average apartment sales per unit have risen over 460 percent, from $38,219 in 2011 to last year’s price.

Wolf Richter writes on his site, wolfstreet.com, that working people are harmed by inflation because their wages never catch up, while people with assets, inflated in value by low interest rates, reap the benefit.

He writes,
  “The wealth of the wealthiest 1% of households spiked, creating the biggest and worst wealth disparity ever to the bottom 50% and even to the bottom 99%, based on the Fed’s own wealth distribution data.”

Over lunch recently I expressed my astonishment over the $400,000-per-unit sales to a developer (and apartment project owner) I used to bank.

He told me units would be selling for $500,000 by the end of this year.

I said rents would have to jump even more or capitalization rates would have to go to virtually nil for that to happen.

He said emphatically, “Rents are going up.”

People moving in from California believe rents in Vegas are cheap.

Not for long."


Source:




 


The 34 Cities where 
1-BR rents jumped 15% – 28%

    1-BR $     Y/Y %
1     Fresno, CA     $1,410     28.2%
2     Scottsdale, AZ     $1,940     27.6%
3     Orlando, FL     $1,620     27.6%
4     Knoxville, TN     $1,070     27.4%
5     Boston, MA     $2,720     26.5%
6     Glendale, AZ     $1,200     26.3%
7     Tampa, FL     $1,590     26.2%
8     Austin, TX     $1,550     26.0%
9     Miami, FL     $2,340     25.8%
10     New York, NY     $3,260     25.4%
11     Anchorage, AK     $1,140     25.3%
12     Tulsa, OK     $800     25.0%
13     Mesa, AZ     $1,270     24.5%
14     Boise, ID     $1,430     24.3%
15     St Petersburg, FL     $1,500     24.0%
16     Las Vegas, NV     $1,240     24.0%
17     Jacksonville, FL     $1,190     22.7%
18     Gilbert, AZ     $1,620     20.9%
19     Henderson, NV     $1,560     20.0%
20     Chattanooga, TN     $1,200     20.0%
21     Laredo, TX     $770     18.5%
22     Seattle, WA     $1,820     16.7%
23     Detroit, MI     $1,040     15.6%
24     Irving, TX     $1,270     15.5%
25     El Paso, TX     $820     15.5%
26     Bakersfield, CA     $980     15.3%
27     Raleigh, NC     $1,210     15.2%
28     Lincoln, NE     $910     15.2%
29     Plano, TX     $1,370     15.1%
30     Tucson, AZ     $840     15.1%
31     San Diego, CA     $2,070     15.0%
32     Denver, CO     $1,610     15.0%
33     Chandler, AZ     $1,530     15.0%
34     Reno, NV     $1,230     15.0%

The 8 Cities where 1-BR rents fell
    1-BR $     Y/Y %
1     Newark, NJ     $1,310     -25.1%
2     Milwaukee, WI     $1,000     -16.7%
3     Richmond, VA     $1,110     -12.6%
4     Minneapolis, MN     $1,190     -8.5%
5     St Louis, MO     $920     -7.1%
6     Kansas City, MO     $950     -5.0%
7     Cincinnati, OH     $890     -4.3%
8     New Orleans, LA     $1,400     -1.4%

The 100 largest markets:  
1-BR & 2-BR median asking rents

    1-BR $     Y/Y %     2-BR $     Y/Y%
1     New York, NY     $3,260     25.4%     $3,400     27.3%
2     San Francisco, CA     $2,850     6.3%     $3,930     12.3%
3     Boston, MA     $2,720     26.5%     $3,150     26.0%
4     San Jose, CA     $2,390     12.2%     $2,870     7.9%
5     Miami, FL     $2,340     25.8%     $3,100     24.0%
6     Washington, DC     $2,250     14.8%     $3,010     14.9%
7     Los Angeles, CA     $2,220     14.4%     $2,940     8.9%
8     Oakland, CA     $2,100     5.0%     $2,770     9.5%
9     San Diego, CA     $2,070     15.0%     $2,900     20.8%
10     Scottsdale, AZ     $1,940     27.6%     $2,660     26.7%
11     Fort Lauderdale, FL     $1,940     14.8%     $2,810     27.7%
12     Santa Ana, CA     $1,940     14.1%     $2,600     15.0%
13     Seattle, WA     $1,820     16.7%     $2,570     25.4%
14     Anaheim, CA     $1,790     7.8%     $2,400     18.8%
15     Atlanta, GA     $1,700     14.9%     $2,140     15.1%
16     Long Beach, CA     $1,700     6.3%     $2,320     14.9%
17     Honolulu, HI     $1,660     13.7%     $2,190     15.3%
18     Orlando, FL     $1,620     27.6%     $1,850     27.6%
19     Gilbert, AZ     $1,620     20.9%     $1,850     14.9%
20     Denver, CO     $1,610     15.0%     $2,210     15.1%
21     Tampa, FL     $1,590     26.2%     $1,810     27.5%
22     Sacramento, CA     $1,590     13.6%     $1,870     8.1%
23     Chicago, IL     $1,590     3.2%     $1,800     -4.8%
24     Providence, RI     $1,580     8.2%     $1,860     3.3%
25     Henderson, NV     $1,560     20.0%     $1,620     14.9%
26     Austin, TX     $1,550     26.0%     $1,930     25.3%
27     Chandler, AZ     $1,530     15.0%     $1,880     20.5%
28     St Petersburg, FL     $1,500     24.0%     $2,190     25.1%
29     Portland, OR     $1,500     7.1%     $1,830     6.4%
30     Nashville, TN     $1,490     14.6%     $1,670     15.2%
31     Philadelphia, PA     $1,470     8.9%     $1,780     4.7%
32     Boise, ID     $1,430     24.3%     $1,550     21.1%
33     Fresno, CA     $1,410     28.2%     $1,700     26.9%
34     Charlotte, NC     $1,400     14.8%     $1,630     12.4%
35     Dallas, TX     $1,400     14.8%     $1,880     14.6%
36     New Orleans, LA     $1,400     -1.4%     $1,800     5.9%
37     Plano, TX     $1,370     15.1%     $1,940     25.2%
38     Cleveland, OH     $1,310     13.9%     $1,360     13.3%
39     Newark, NJ     $1,310     -25.1%     $1,660     -14.9%
40     Baltimore, MD     $1,290     9.3%     $1,400     4.5%
41     Virginia Beach, VA     $1,280     13.3%     $1,450     11.5%
42     Mesa, AZ     $1,270     24.5%     $1,580     21.5%
43     Irving, TX     $1,270     15.5%     $1,660     15.3%
44     Durham, NC     $1,250     6.8%     $1,450     15.1%
45     Las Vegas, NV     $1,240     24.0%     $1,530     27.5%
46     Reno, NV     $1,230     15.0%     $1,640     14.7%
47     Houston, TX     $1,220     10.9%     $1,500     10.3%
48     Raleigh, NC     $1,210     15.2%     $1,440     15.2%
49     Salt Lake City, UT     $1,210     13.1%     $1,510     13.5%
50     Glendale, AZ     $1,200     26.3%     $1,440     22.0%
51     Chattanooga, TN     $1,200     20.0%     $1,300     14.0%
52     Pittsburgh, PA     $1,200     11.1%     $1,410     8.5%
53     Jacksonville, FL     $1,190     22.7%     $1,400     22.8%
54     Minneapolis, MN     $1,190     -8.5%     $1,740     -2.8%
55     Fort Worth, TX     $1,180     9.3%     $1,550     10.7%
56     Aurora, CO     $1,180     6.3%     $1,610     12.6%
57     Phoenix, AZ     $1,160     14.9%     $1,460     15.0%
58     Chesapeake, VA     $1,160     6.4%     $1,380     15.0%
59     Anchorage, AK     $1,140     25.3%     $1,270     10.4%
60     Norfolk, VA     $1,120     14.3%     $1,350     22.7%
61     Richmond, VA     $1,110     -12.6%     $1,380     -6.8%
62     Colorado Springs, CO     $1,090     0.0%     $1,390     6.9%
63     Madison, WI     $1,080     0.9%     $1,450     4.3%
64     Knoxville, TN     $1,070     27.4%     $1,240     24.0%
65     San Antonio, TX     $1,070     12.6%     $1,370     18.1%
66     Buffalo, NY     $1,050     0.0%     $1,150     -0.9%
67     Detroit, MI     $1,040     15.6%     $1,100     1.9%
68     Rochester, NY     $1,040     3.0%     $1,250     4.2%
69     Arlington, TX     $1,030     8.4%     $1,330     10.8%
70     Spokane, WA     $1,010     14.8%     $1,300     15.0%
71     Milwaukee, WI     $1,000     -16.7%     $1,150     -8.0%
72     Bakersfield, CA     $980     15.3%     $1,280     16.4%
73     Louisville, KY     $950     9.2%     $1,090     14.7%
74     Indianapolis, IN     $950     1.1%     $1,050     5.0%
75     Kansas City, MO     $950     -5.0%     $1,200     3.4%
76     Augusta, GA     $920     12.2%     $1,050     14.1%
77     St Louis, MO     $920     -7.1%     $1,250     0.0%
78     Lincoln, NE     $910     15.2%     $1,050     15.4%
79     Tallahassee, FL     $910     13.8%     $1,000     7.5%
80     Syracuse, NY     $910     8.3%     $1,020     5.2%
81     Memphis, TN     $900     8.4%     $980     11.4%
82     Corpus Christi, TX     $900     5.9%     $1,150     3.6%
83     Des Moines, IA     $900     1.1%     $950     1.1%
84     Winston Salem, NC     $890     11.3%     $980     12.6%
85     Cincinnati, OH     $890     -4.3%     $1,230     7.9%
86     Omaha, NE     $880     10.0%     $1,100     6.8%
87     Columbus, OH     $880     2.3%     $1,100     0.9%
88     Albuquerque, NM     $850     14.9%     $1,090     14.7%
89     Greensboro, NC     $850     2.4%     $960     4.3%
90     Tucson, AZ     $840     15.1%     $1,190     21.4%
91     Baton Rouge, LA     $840     5.0%     $990     4.2%
92     El Paso, TX     $820     15.5%     $1,030     18.4%
93     Lexington, KY     $810     6.6%     $1,030     8.4%
94     Tulsa, OK     $800     25.0%     $970     16.9%
95     Oklahoma City, OK     $800     3.9%     $960     6.7%
96     Laredo, TX     $770     18.5%     $920     -6.1%
97     Shreveport, LA     $700     6.1%     $800     6.7%
98     Lubbock, TX     $670     3.1%     $830     -2.4%
99     Akron, OH     $650     8.3%     $800     8.1%
100     Wichita, KS     $620     1.6%     $800     6.7%

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