Multi-Housing News - December 2008 - (Page 8)

executive insight Brighter Skies Ahead Michael B. Cohen is a research strategist with Property & Portfolio Research Inc. (PPR), an independent real estate research and portfolio strategy firm in Boston. Cohen tracks the U.S. multifamily market, is frequently quoted in the national press and is the author of several white papers on the state of the apartment market, including “The End of the Housing Party: Will Commercial Real Estate Investors Wake Up With a Hangover?” He shares his views with MHN Contributing Editor Jeffrey Steele. How is the credit crisis impacting multifamily, regarding both the approval of new renters and getting new projects financed? An obvious casualty of the present dislocation/risk Q&A aversion in the real estate capital markets is the apartment supply pipeline. Financing for new apartment construction has become considerably more difficult to secure. Thus, following net completions of about 140,000 units in 2008 and 120,000 units in 2009 across the PPR54 (the 54 largest metros in the U.S.), expected deliveries in 2010-11 should be extremely modest. On the resident side of the equation, payroll losses and high levels of home foreclosures mean that landlords are facing a pool of renters who have a more challenging credit background. How will that affect property owners? Apartment absorption is closely correlated to employment growth. Simply put, if you don’t have a job, you can’t pay the rent. During extended periods of job loss, we generally see slower household formation and would-be renters consider alternative living arrangements, such as moving in with family members or doubling/tripling up. U.S. payroll losses are over 760,000 through October 2008 and unemployment is sitting at about 6.1 percent, with the job market poised to deteriorate even further into 2009. This will represent a major headwind for landlords in terms of maintaining occupancy. What is the impact of the shadow market? First of all, it’s important to understand that the shadow supply market includes both single-family homes as well as condos. PPR’s Michael B. Cohen discusses the impact of the credit crisis on the coming year For more information, visit www.multi-housingnews.com/productinfo 8 December 2008 | Multi-Housing News | Producer of Multi-Housing World http://www.humphreys.com http://www.humphreys.com http://www.multi-housingnews.com/productinfo

Table of Contents for the Digital Edition of Multi-Housing News - December 2008

Multi-Housing News - December 2008
Contents
From the Editor
NMHC Notebook
Executive Insight
Finance: Acquisitions/Rehabs
Market Pulse
Development & Design: Student Housing
Market Report: 2009 Best Bets
Directory: Software Providers
Tech: Leasing Tools

Multi-Housing News - December 2008