Apartment Sector Boom Set to Continue in 2018 in Hunterdon and Somerset Counties

Apartment Sector Boom Set to Continue in 2018 in Hunterdon and Somerset Counties

Reposted from the National Real Estate Investor

As 2017 comes to a close, multifamily investors and developers are getting ready for another year of steady demand.

“Overall, we expect that same stability to hold in 2018, with occupancy and rent growth anticipated to basically mirror 2017’s statistics,” says Greg Willet, chief economist for RealPage Inc., a Richardson, Texas-based provider of property management and software services.

In 2017, multifamily developers opened a very high number of new units, but occupancy stayed high as demand for apartment rentals continued to grow. Rents also continued to rise, though certain cities and sub-markets faced some challenges. Next year, the amount of new construction is expected to slow down somewhat, but the overall trends are expected to stay the same.

Steady as she goes

In 2017, the apartment sector easily absorbed a huge amount of new construction. Developers have been opening close to 100,000 new apartments per quarter. That’s up by more than one third compared to earlier in the recovery.

The level of new construction is high even compared to the last real estate boom in the mid-2000s. Developers are still finishing new apartments at a rate approaching 400,000 a year. “There’s still lots of new supply on the way that will deliver in 2018, especially in the first half of the year,” says Willet.

And yet occupancy hovered around the 95-percent mark for most of the year. “The apartment sector’s performance results proved incredibly stable during 2017,” Willett notes.

The continued competition from new construction may finally make a small dent in occupancy levels in 2018. “Occupancy will begin to have a slight downward trend in 2018 as new supply is introduced,” says Doug Ressler, director of business intelligence for commercial real estate data firm Yardi Matrix. The percentage of vacant apartments averaged 95.6 percent at the end of 2017.

By the end of 2018, it will likely be at 95.4 percent, according to Yardi’s forecast.

Developers may also slow the pace of new construction as the year progresses. That would improve the outlook for 2019 and beyond. “It’s getting tougher to source individual development deals that work financially, so it wouldn’t be surprising to see starts drop somewhere in the range of 10 percent to 20 percent,” says Ressler.

Continued high occupancy rates will encourage property managers to hike their rents again in 2018. “We see national rent growth continue its positive climb in 2018,” says Ressler. Rents grew an average of 2.4 percent in 2017. In 2018, they will likely grow by 2.9 percent, Yardi forecasts.

Competition from for-sale homes may put a little more pressure on the apartment sector in 2018, but demand is expected to continue to grow as the economy expands, keeping occupancy rates high. In addition, the new tax framework may steer more people away from purchasing homes as certain tax benefits of home ownership are eliminated.

The strongest sub-markets and asset classes

Though the apartment sector overall will remain stable, certain markets and types of properties will be more hurt by competition from new construction.

Developers have so far concentrated their efforts on building luxury apartments, charging high rents to offset the high cost of development. That often means that new class-A apartments face a lot of competition. “It will be tough to achieve any rent growth for class-A properties in the neighborhoods where completions will be heaviest,” says Willet.

Developers have also concentrated on a handful of prime markets and sub-markets. “Those neighborhoods with the most intense concentrations of new supply on the way tend to still be in the country’s urban cores, although some suburban locations will add considerable new product, too,” says Willett.

The strongest markets may be those that are located close enough to the growing core cities to benefit from strong demand for apartments without suffering from competition from new construction. “Sub-markets adjacent to large metro and gateway markets are already seeing the influx of a ‘spillover affect’ in the rising rental demand. Good examples are suburban Atlanta, Tacoma [Wash.] and the East Bay (Oakland) [Cali.f] area,” says Ressler.

 


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Homeownership rate reaches highest level in three years in Hunterdon and Somerset County

Homeownership rate reaches highest level in three years in Hunterdon and Somerset County

But remains historically low

 

Reposted from Housingwire.com

The national homeownership rate reached its highest level since the fourth quarter of 2014, increasing slightly in the last quarter of 2017, according to the Quarterly Residential Vacancies and Homeownership report from the U.S. Census Bureau.

The homeownership rate remained statistically unchanged, inching up to 64.2% in the fourth quarter. This is up from 63.7% the year before and 63.9% in the third quarter.

The chart below shows the homeownership rate has been steadily rising since 2016, however it remains historically low.

homeownership

 

“After bouncing around near 50-year lows for the past few years, the national homeownership rate finally seems to be gaining sustainable, meaningful upward momentum,” Zillow Senior Economist Aaron Terrazas said. “The fourth quarter of 2017 was unseasonably strong, driven by buyers determined to make a deal in a highly competitive market.”

“And for would-be buyers struggling to save for a down payment or figuring out how to make the monthly mortgage math pencil out, changes in the tax code that potentially put more money in their pockets could be the push they need to move out of an apartment and into a first home,” Terrazas said.

Among Millennials, the homeownership rate ticked up slightly from 35.6% to 36%. Among older generations, the homeownership is significantly higher at 75.3% for those aged 55 to 64 years and 79.2% for those aged 65 years and older.

“What’s even more positive news for the housing market is that much of the increase in the homeownership rate over the past year has come from 18 to 44-yearolds,” Trulia Chief Economist Ralph McLaughlin said.

“Increases in homeownership amongst these two cohorts are a sign that the scars of the Great Recession are finally starting to heal, and provide a source of optimism that the owner-occupied segment of the housing market will continue to grow throughout the remainder of this economic cycle,” McLaughlin said.

Among the non-Hispanic white population, the homeownership rate increased from 72.5% in the third quarter to 72.7% in the fourth quarter. However, homeownership rates for other ethnicities are much lower.

The black homeownership rate increased 0.1 percentage point, but remains far below average at 42.1% in the fourth quarter. The Hispanic homeownership rate saw the highest increase, rising .5 percentage points to 46.6%.

This growth among the Hispanic population continues the trend outlined last year by the National Association of Hispanic Real Estate Professionals which showed the Hispanic homeownership rate accounted for 74.9% of the total net growth in the overall homeownership rate in the U.S.

The national homeowner vacancy rate decreased 0.2 percentage points from last year at 1.6%, while the national vacancy rate for rental housing remained unchanged at 6.9%.

 


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Buying A Home Is More Affordable Than Renting In 54% Of US Counties including Hunterdon and Somerset

Buying A Home Is More Affordable Than Renting In 54% Of US Counties including Hunterdon and Somerset

According to ATTOM Data Solutions’ 2018 Rental Affordability Report, “buying a median-priced home is more affordable than renting a three-bedroom property in 240 of 447 [or 54% of] U.S. counties analyzed for the report.”

For the report, ATTOM Data Solutions compared recently released fair market rent data from the Department of Housing and Urban Development with reported income amounts from the Department of Labor and Statistics to determine the percentage of income that a family would have to spend on their monthly housing cost (rent or mortgage payments).

Daren Blomquist, Senior Vice President of ATTOM Data Solutions had this to say:

“Although buying is still more affordable than renting in the majority of U.S. housing markets, the majority is shrinking as home price appreciation continues to outpace rental growth in most areas.”

However, the report also shows that the average fair market rent rose faster than average weekly wages in 60% of the counties analyzed in the report (266 of 447 counties). With rents rising, many renters should consider buying a home soon.

Bottom Line

Rents will continue to rise, and mortgage interest rates are still at historic lows. Before you sign or renew your next lease, let’s get together to help you determine if you are able to buy a home of your own and lock in your monthly housing expense.

 


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How to Say Goodbye to Renting and Hello to Home Ownership in Hunterdon and Somerset Counties

How to Say Goodbye to Renting and Hello to Home Ownership in Hunterdon and Somerset Counties

Some sage advice:

Becoming a first-time homeowner takes a lot more than a desire to buy a house. It takes a lot of effort on your part to save up a down payment — which is usually a pretty good sized chunk of change — research neighborhoods, get pre-approved for a loan and other steps. Fortunately, it is quite possible to say goodbye to renting and hello to homeownership, especially when homeowners-to-be consider the following tips:

Focus on the Down Payment

In order to leave the land of rent, you are going to need a down payment — plain and simple. While it is common to put down 20 percent, some lenders now allow a much smaller amount, and first-time home buyer programs may go as low as 3 percent. While a smaller down payment may sound enticing, a 5 percent down payment on a $200K home is still $10,000 — not exactly a small sum. If saving money does not come naturally for you, don’t worry. With some relatively minor lifestyle changes you can speed up the down payment savings process.

Come up with a savings plan to determine how much you need to set aside every week or month and then find ways to “find” that money in your budget. Using the $10,000 example from before, if you are determined to buy a home in two years, you’ll have to come up with about $415 a month to stash into your down payment account.

Take a close look at your monthly bills and determine what you can pare down or eliminate — maybe you are paying $75 a month for a gym membership you rarely use, or you pay $40 extra for premium satellite channels that no one watches. These services can be cancelled and the money can go directly into your savings account. Eat out less, have Starbucks twice a week instead of every day and if you need to, consider a side hustle on the weekends to reach this magical monthly amount of $415.

Avoid Identity Theft

Unfortunately, the chances of becoming a victim of identity theft increase when you are buying and moving into a new home. The stacks of documents that are part of buying a home and that are filled with your personal information may accidentally fall into the wrong hands, and once you move, mail may not be routed correctly and thieves may steal your mail and your identity from your old mailbox.

Prevent this situation from happening by purchasing an identity theft protection program; find a trusted company that will help safeguard your personal data. In addition to letting you know when a bank pulls your credit report and asking if you have authorized this inquiry, certain services will monitor your financial activity and alert you if anything is amiss.

Check Your Credit Report

When you start the pre-approval process for a loan and then move on to the Big Kahuna of applying for an actual mortgage, your credit report will be pulled numerous times. Your credit score will then be used to determine if you are approved for a loan, and what type of interest rate you will get. Please do not wait until you have the down payment saved and you are champing at the bit to go look at houses to check your FICO score — check your credit as early in the process as you can.

If you have a credit card that has been issued through your bank, give them a call and see if they can run your report for you for free; in the cases of some credit cards, they also offer a free monthly FICO score check. Read through the report and check for any errors; this includes credit lines you never opened and delinquent payments that you know were made on time. Dispute any mistakes that you find and look for ways to boost your credit score, like paying down credit card bills and setting up automatic bill pay so you are never late with your payments.

 

 


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Renting homes is overtaking the housing market in Hunterdon and Somerset Counties. Here’s why…

Renting homes is overtaking the housing market in Hunterdon and Somerset Counties. Here’s why…

Single-family rentals — either detached homes or townhomes — are developing faster than any other portion of the housing market. These rentals outpace both single-family home purchases and apartment-style living, according to the Urban Institute.

“Almost all the housing demand in recent years has been filled by rental units,” says Sara Strochak, a research assistant with the Urban Institute. She also states that single-family rentals have gone up 30% within the last three years.

This change is unique to newer generations. But when did rentals become so popular? And why are people more inclined to rent than to buy? Below, we’ll further discuss the rise in rentals and how it affects the housing market.

When did the rise in single-family rentals start?

The housing bubble collapse and the recession that followed shattered the decades-old tenet of American wisdom that you can’t go wrong buying a home. Most of the housing market fallout from the Great Recession has finally receded — foreclosures and underwater mortgages are back to traditional levels and housing values have recovered in most places. But one thing hasn’t recovered: Americans’ unquestioned desire to own a home

Today, single-family rental homes and townhomes make up 35% of the country’s 44 million rental units, compared to 31% in 2006.

Who is leading this trend?

Millennials are leading the way to single-family rentals, and myriad factors contribute to this trend. Many young adults aren’t in a hurry to lay down roots, whether they’re prone to traveling or simply aren’t ready to commit to one area or one home. Student loans and stagnant incomes can also make it harder to save up for a down payment. And it’s inevitable that young people who came of age during the housing bubble would be reluctant to take a leap of faith and commit to a 30-year mortgage

“While the age distribution of the U.S. population suggests most millennials are reaching the age of household formation and demand for single-family homes, much of this demand is likely to be channeled into the rental market,” says Strochak.

Are only Millennials affected?

However, it’s not just young people. Americans over 55 have also grown more interested in renting. According to RENTCafé, the number of renters aged over 55 has grown by a whopping 28% between 2009 and 2015. Many of them want to rent homes instead of apartments. From 2010 to 2016, single-family rental households in the US increased by nearly 2 million—1.26 million of those renters were 34 to 65 years old, while just under a half million were 65 or older, according to a RENTCafé Census data analysis provided by Adrian Rosenberg. In places like Miami, Houston, and Minneapolis, more than two-thirds of new single-family renters were over 65.

What led to this trend?

When did home renting become so popular? The trend began with large firms buying up cheap homes during the recession and turning them into cash-generating rentals—often rented by families who’d lost their own homes or who could no longer qualify for mortgages. Institutional investors, which are organizations like banks, hedge funds, and mutual funds, gobbled up millions of single-family homes that fell into foreclosure. In Phoenix, for example, the total of single-family homes occupied by homeowners—instead of renters—dropped by 30,000 from 2007 to 2010. Two-thirds of those homes were bought by institutional investors, the Urban Institute says.

But as prices have recovered, that business model no longer works. Instead, small-time landlords now dominate the market, explains Strochak. Investors who have fewer than 10 units own 87% of all single-family rentals, while investors who have only one rental unit own 45%.

How does this change the home-building market?

Big players continue to push the trend, some deploying a new build-to-rent model. Housing firms are actively building single-family homes intending to rent them rather than sell, says ATTOM Data Solutions, a firm that analyzes housing market data.

“I can buy lots in areas that I can’t sell homes, but I can rent,” real estate agent Adam Whitmire told ATTOM in a recent report. “The local economy may not have enough income or enough credit to buy but there is enough income to rent.”

While big-time rental firms are backing off in some larger cities, the single-family rental investment play is picking up in smaller markets around the country in places like Dayton or Chattanooga, according to ATTOM.

How does renting affect local neighborhoods?

The movement to more single-family rentals is a mixed bag, says Daren Blomquist, senior vice president at ATTOM. On the one hand, the professionalization of the single-family rental industry is good for both families and neighborhoods, as there could be more standardized levels of maintenance and management services.

But there will likely be “unintended consequences as the nature of some neighborhoods change,” Blomquist warns. Renters might not be as invested in communities as owners.

“For example, people who want to own a home may no longer be as active in the typical suburban white picket fence neighborhood as properties in those neighborhoods become more prominently rentals,” he says. “That may push those homebuyers back into more urban, walkable environments, or it might push them further out to more rural areas.”

Should you rent a home instead of buying?

Renting a home instead of buying can be a sensible choice for those looking to break out of apartment life. It can even serve as a good halfway step toward owning, to make sure single-family home life is really for you before you commit to a mortgage.

The main attraction to renting is obvious: buyers don’t need a large down payment to move in. While plenty of mortgage programs give would-be buyers a break on the traditional 20% down mortgage model, skyrocketing prices in urban areas like Seattle or Washington DC mean that even 5% can be a prohibitive down payment requirement. So renting might make sense if you are ready to live in a house.

What should you know before renting a single-family home?

While all rental transactions are similar, there are a few things you should consider before moving to a home rental. If you’re moving from an apartment, utilities will probably be considerably more expensive — after all, you’ll be heating and cooling an entire home much of the year. There’s also quite a few more maintenance requirements, particularly if there’s a yard. Ensure your lease has clear terms regarding who pays for upkeep of the property. Gardening might seem appetizing if you are sick of your apartment, but it can be a year-round job, so make certain you’re ready for the extra work. If you want to paint the walls or make other changes, know that you will need permission in writing.

Additionally, because you will inevitably have more possessions than in an apartment, it’s more important than ever to get renter’s insurance — your landlord’s policy likely won’t cover damage to or theft of your property. You should also consider liability insurance, in case you’re found responsible for any kind of accident at the property that causes personal or property damage.

If you’re moving to a single-family rental for more space or for monetary reasons, remember to adjust your budget to accommodate the new utility and rental costs.

Reposted from USA Tosay


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