Suddenly hot: 1-bedoom apartments
September 30th, 2012, 2:24 pm ? ? posted by Jon Lansner
The multifamily housing market is hot for local landlords, with rents and occupancy rising ? and new projects on the way. We asked Laura Khouri, president of Western National Property Management ? the big complex owner and manager from Irvine, for her view of the apartment landscape.
Us: What?s your general ?State of the Market??..where are rents/occupancy now vs a few years ago?
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Laura: The multifamily industry market is very dependent upon the overall growth or loss of employment in the area. As the national and regional economy has improved, so has the employment picture in Orange County. The county has seen the unemployment rate fall from the 4th quarter of 2009 from 9.3% to 7.8% percent currently. The combination of the improved employment picture, the lack of home affordability and the continued drop in construction has helped the county?s overall multifamily market during 2011 and 2012.
The overall rents from 4th quarter 2009 have gone from a decrease of 2%-5% in overall rents to an overall increase of 3%-5% in the many markets from 2011 to 2012. The demand for multifamily units reflected a positive increase in 2011 but at a much slower pace than expected. Santa Ana and Huntington Beach were among some of the submarkets that experienced some of the greatest levels of net absorption while Newport Beach experienced a greater loss than other submarkets.
Us: Are these trends broad-based by geography of complex quality or more limited?
Laura: The trends appear to be submarket based and continue to show signs of improvement in most areas but with varying growth rates. Again, one of the most varying reasons for the swings in occupancy and rents are specifically due to the employment rates for the specific areas. Orange County is still currently lower in unemployment than neighboring metro areas such as Los Angeles, San Diego and the Inland Empire.
Us: What kind of folks are powering this new wave of renters in and around Orange County?
Laura: The Orange County renter varies, and includes many families that may have lost their previous home due to the mortgage situation and have been forced to downsize into an apartment or townhome. Many of these families have also had to add other family members to their overall composition. During the most recent six months of 2012, we have noticed an increased rise in one bedroom units being rented again by young single professionals. (This) wasn?t a common trend during late 2009 and 2010. Both of these factors are upswings for the multifamily industry, however, either may be affected by any change in unemployment rates and better jobs being made available with any changes in Orange County?s economy.
Us: What kind of advice would you give a renter looking for a ?deal??
Laura: Buyer be aware. One slight bit of advice many renters in the ?shadow or grey market? sometimes overlook is the real validity of the ?deal? they may be receiving and longevity thereof. For example there are still many foreclosures taking place and homeowners looking for a large upfront move-in costs (commonly referred to as a deposit needed) and minimal or no lease terms required. These large deposits are many times actually being realized by the current homeowner to pay their own personal expenses and the home is actually in foreclosure proceedings. The renter then receives a very short notice to vacate the premises as the foreclosure has recorded and the bank wants possession of their new owned real estate. Resulting in a very quick and costly move to the current renter having no knowledge of the prior foreclosure situation.
Us: What kind of prospective owners are looking at O.C. apartments as investments?
Laura: The current trend seems to be larger investment companies or trusts with established investors. The Institutional agencies that are more focused on a 7-10 year hold of the real estate are very common and competitive in the Orange County market today.
Us: How long do you think this ?landlord?s market? will last in and around Orange County?
Laura: The improvement in the overall multifamily industry in Orange County doesn?t necessarily determine it to be a ?landlord?s market?. With the addition of 2,883 new units in Irvine spread over 8 projects in 2012, there certainly could be some fluctuation in the overall rental rates and occupancy rates in the 4th quarter of 2012 in the Irvine submarket. In Los Angeles there are 2,375 units scheduled for delivery, San Diego there are 939 units scheduled for delivery and the Inland Empire is scheduled for 450 new units to be completed in 2012. In prospective, the Irvine market could be the most impacted due to the supply demand and fluctuating rental structures that are already impacting the submarket.
Source: http://lansner.ocregister.com/?p=166684
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