Rental Housing Journal On-Site
February 2017
3. The Informed Investor - Utilizing Changes 5. Home Buyers in Expensive Markets See a Longer Wait to Break Even 6. Dear Maintenance Men – Caulk, Plumbing, Doors and Curtains 7. Prepared Property Managers Can Handle What Comes Down the Pipeline
8. Pockets of Affordable Housing Exist Within the Most Expensive Markets 9. The Value of Strategic Planning 10. Examining the National Boom in Markets Demand for Luxury Apartments 11. Are Urban Areas Running Out of Millennial Renters? 13. More Young Unmarried Couples Buying Homes Together
14. Swift Gains in Fourth Quarter Push Home Prices to Peak Levels in Majority of Metro Areas 15. Americans Overoptimistic About Homeownership This Year 16. The Best Real Estate Investment Opportunities in 2017
www.rentalhousingjournal.com • Professional Publishing, Inc 17,000 Papers Mailed Monthly To Puget Sound Apartment Owners, Property Managers & Maintenance Personnel Published in association with Washington Association, IREM & Washington Multifamily Housing Association
Handling Pierce-Kitsap-Thurston Shows Employee Continuing Strength Evictions
Seattle - Apartment Insights 4th quarter results show the continuing strength of the rental market. The vacancy rate is 3.64%. Rents climbed 1.5% to $1,111 per month. Not considering rent levels, the market here outperformed metro Seattle for the third straight quarter according to Tom Cain, the firm's principal. The data are from his Seattle firm’s statistics and trends on 50+ unit properties in Pierce, Kitsap and Thurston counties.
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any communities require their employees to live onsite, and the often include an apartment as part of their compensation. As in any business, management must sometimes terminate employees. This article will examine the acceptable grounds for termination and the procedures to require terminated workers to vacate the premises. Most employees are “at will.” This means they work at the pleasure of the employer. The law presumes every employment contract for an indefinite term to be terminable at will. As an “at will” employee, his or her employment is for an indefinite term at sufferance. Either party could terminate employment at will for no cause or any cause. Another term for this is the employmentat-will doctrine. continued on page 21
Vacancy: 3.64% The market vacancy for our nonrandom survey of conventional, stabilized 50+ unit properties in all three counties is 3.64%, up from 3.32% continued on page 19
Jobs For Property Managers Pay Higher Than Average U.S. Salary by John Triplett, Desert Path Marketing Group
J
obs for property managers pay higher than the average salary in the U.S. at $55,380 per year and show growth potential of 8 percent through 2024, according to a release. The property managers jobs were in a list put together by CareerToolkit.com of high paying jobs that anyone can review free of charge. The salaries range from $50,000K up to $100,000 and more per year. The report chose $50,000 as high-paying since the average median wage is $36,200 per year according to the Bureau of Labor Statistics (BLS) May 2015 reports. “Employment of property, real estate, and community association managers is projected to grow 8 percent from 2014 to 2024, about as fast as the
average for all occupations,” according to the BLS. “Job opportunities should be best for those with a college degree in business administration or real estate and for those who obtain professional credentials,” according to the BLS website. While the average salary was $55,380, there is a range among property managers and association managers, according to the survey. • Median salary - $55,380 • Salary range - $28,490 to $123,790 per year • Job growth – 8% (as fast as average) continued on page 17
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Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
The Informed Investor Utilizing Exchanges
Roger W. Bowlin | Real Estate Transition Solutions, LLC
S
avvy real estate investors know that 1031 exchanges are a tool unlike any other for maximizing their investment real estate holdings. 1031 exchanges can be applied in numerous ways to facilitate portfolio growth, cash flow, diversification, estate planning or many other objectives investors pursue. Every investor should be familiar with exchange mechanics, considerations and replacement options. Throughout the following six issues of OnSite, we will provide key educational articles for owners focusing on The Internal Revenue Code (IRC) Section 1031 exchange. The intent of this series is to demystify the code and the process of implementing an exchange while sharing opportunities resulting from the revenue code and various pitfalls to be aware of. The upcoming educational series will cover the following topics:
1031 Overview A properly structured 1031 exchange allows an investor to sell a property, to reinvest the proceeds in a new property and to defer all capital gain taxes. IRC Section 1031 (a)(1) states: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment,
if such property is exchanged solely for property of like-kind which is to be held either for productive use in a trade or business or for investment.” Investors often ask themselves, why would the IRS include such an effective tool for wealth creation in the revenue code? We will unpack the history of the code as well as where it stands within the current tax reform debate.
Exchange Implementation and Execution Maximizing an exchange requires forethought, planning and time. There are several considerations to take into account in order to achieve the most value out of an exchange. Furthermore, executing a compliant exchange means sticking to a rigid timeline, both before and after the sale of the property to be exchanged. We will discuss the issues, strategies and pitfalls that rise from the exchange implementation and execution.
far from the truth. Here we will present a myriad of options one may apply exchange proceeds toward, including pros and cons of each so you, the investor, can determine how they best fit in your real estate strategy. 1031 exchanges present a tremendous opportunity for real estate investors, especially those owners looking to transition from active to passive ownership as they move through the third and fourth quarters of life. Our firm, Real Estate Transition Services,
looks forward to sharing with the RHJ community our knowledge acquired through advising on and executing numerous exchanges. Throughout our series, we may reference previous topics discussed. Please visit us at www.RETransition.com for an archive of all previous topics as we move through this educational series. Furthermore, please do not hesitate to contact us as RWBowlin@Re-Transition.com if you have a question as it relates to your specific situation.
Exchange Variations and Applications The beauty of a 1031 exchange lies not only in the tax treatment, but the breadth of options available for the proceeds of the exchange. Investors often assume they are limited to exchanging one-for-one into another direct ownership property, but that is
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Rental Housing Journal On-Site
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Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
Home Buyers in Expensive Markets See a Longer Wait to Break Even It takes at least 1.5 years longer to break even on buying a than it did a year ago
H
ome value appreciation is expected to slow in some of the nation's most expensive markets, and as a result, it now takes longer to break even on a home in those markets compared to renting it. Nationally, buying a home becomes a better financial decision than renting it in just under two years, according to the Q4 2016 Zillow® Breakeven Horizoni. When home values grow quickly, home equity also accumulates faster, helping to offset and eventually recoup the large upfront costs of buying a home more quickly. But home value appreciation is slowing down in some places, especially expensive areas like Silicon Valley and the San Francisco Bay Area. This makes building home equity a slower process, and the Breakeven Horizons in both the San Jose and San Francisco metros are nearly two years and 1.5 years longer, respectively, than they were the year before. No other major metros saw the Breakeven Horizon grow as much in a single year.
Home value appreciation isn't slowing everywhere. Home values in the Washington metro, for example, are expected to grow at a faster pace over the next year after staying largely flat recently, leading to a shorter Breakeven Horizon. Buyers in this area can now expect to break even after 3.5 years.
Overall, U.S. home value growth accelerated at the end of 2016, ending the year at a 6.8 percent annual appreciation rate. At the same time, rent appreciation slowed significantly, only growing at 1.5 percent annually. These shifting dynamics can make the question of whether to buy or rent less clear in many markets.
"There are many factors that go into the decision on whether to rent or buy," said Zillow Chief Economist Dr. Svenja Gudell. "Zillow's Breakeven Horizon can help people better understand the longer-term financial calculation. It's also helpful for buyers to understand that as home value appreciation moderates, it will take them longer to break even than in past years. San Jose buyers, for example, will have to stay in a home for at least five years to offset the high upfront costs necessary to make that purchase." Among the biggest U.S. metros, it takes the longest to break even on a home purchase in large California markets. In San Jose, San Francisco, Los Angeles and San Diego, the Breakeven Horizon is at least four years. Buyers will break even fastest in the South and Midwest. In Indianapolis, Orlando, Detroit, Atlanta, and Tampa, it takes less than 1.5 years to break even on a home. continued on page 22
ONLINE SCREENING AT Y O U R F I N G E R T I P S R H AW A’ S O N TA P © F U L L C R E D I T R E P O R T S Detailed credit information in an easy to read format RUN YOUR OWN REPORTS Complete the full credit landlord certification process*
(*The certification process requires a federally mandated site inspection of your office.)
continued on page 16
Provide your applicant with a link to the Application for Tenancy.
Prospective tenant pays screening fee, and fills out and signs the application.
Upon your approval, the tenant screening report will be processed instantly!
Contact RHAWA tenant screening specialists to get started:
T (800) 335 - 2990 | tenantscreening@RHAwa.org *Must have an active RHAWA membership and be Full Credit Certified. RHAWA’s Tenant Screening department does its due diligence to make sure that we are in compliance with these and any other mandated regulations.
Rental Housing Journal On-Site · February 2017
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Rental Housing Journal On-Site
DEAR MAINTENANCE MEN Caulk, Plumbing, Doors and Curtains
By Jerry L’Ecuyer & Frank Alvarez
Dear Maintenance Men: I’m attempting to remove old caulking from around a bathtub. Are there any tricks or chemicals to help with this job?
Steve
Dear Steve: Most bathtub caulking is either silicon or latex based. If originally installed properly, it should stick pretty well. Most household chemicals will not affect the caulking or help in its removal. The best method is to use a razor knife to cut along either side of the bead. Then pull the bead out by hand as you cut. The balance of the material can be removed with a flat razor, either along the old bead or perpendicular to the bead. After all the material is removed, use a damp rag to remove any loose bits. Before installing the new caulk, be sure the area is clean and dry. You can use a wet/dry vacuum to suck up any water left over from your cleaning. Dear Maintenance Men: I have two units that have back to back kitchen plumbing that drain into a single pipe. They are constantly blocking up. We snake them on a regular basis, but to no avail. How can I solve this problem?
Julia
Dear Julia: Unfortunately with two units draining into one drainpipe, you double the drain’s workload. This means the drain line has twice the grease, twice the soap and twice the food etc. In this case we will assume that your waste plumbing system consists of galvanized & cast iron piping. These two types of metal drainpipe’s inner lining tends to corrode and become rough and flake. This allows solid waste to form on the rough surface. A solution to the problem is to instruct your residents on the proper use of the garbage disposal. The water must be running before you turn on the disposer and continue running after the disposer is turned off. This will insure that the waste has been washed all the way down the pipe. The garbage disposer must run a sufficient amount of time to insure the proper 6
breakup of the waste. The residents should also be instructed to feed the disposer slower, and not to cram food down the drain. For persistent drain problems, we highly recommend getting the drain line Hydro Jetted and then have the line inspected with a camera. This will determine exactly where and why you have a constant problem with your drain line.
Dear Maintenance Men: I’m starting a rehab in my unit’s bathroom and thinking of replacing the shower curtain as part of the work. A shower curtain is a fast and easy job. What are the pros and cons of a shower door versus a shower curtain in my rental unit’s bathtub? How do you install a shower door? I don’t want to poke holes in the bathtub.
Bryan
Dear Bryan: While appearing as a guest on "The Tonight Show" one evening many, many years ago, famed hotelier Conrad Hilton was asked by his host (Johnny Carson) whether he had a "message" for the American people. With great gravity, Hilton paused momentarily continued on page 22 before turning to the camera. "Please," he pleaded, "put the shower curtain inside the tub!" Keeping with Mr. Hilton’s thoughts, we are big fans of shower doors as opposed to shower curtains, because residents also leave the shower curtain outside the tub. Shower door installations are a great do-it-yourself project, because it is easy to do and the results looks great. After removing the existing shower curtain, clean the tub and walls to remove any accumulated soap scum. Measure the tub ledge wall to wall and subtract 3/16th of an inch (to leave room for the wall channels) and transfer the measurement to the bottom rail track of the shower enclosure. After measuring twice and cutting once, continued on page 19
Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
Prepared Property Managers Can Handle What Comes Down the Pipeline By Marc Courtenay, www.propertymanager.com
I
n case you haven’t read the following quote in awhile, “an ounce of prevention is worth a pound of cure.” Benjamin Franklin gets the credit for this piece of powerful wisdom. Whether it’s taking on a new partner, new employees, more risk, less risk or using intuition to keep up with the latest trends in our industry, we can’t be too prepared.
Tip #1 is to be “written ready.” What that means is to write yourself a list of possibilities for the immediate future. It’s not like predicting the future. It’s about anticipating what you’ll need and what may change in your area. Start a written list today of what you’re hearing, seeing, feeling and knowing regarding the rental housing market, the property management business. Write it on the list even if it’s unlikely or absurd. Why would you want to be “written ready”? It’s because you want your unconscious to be able to expect the unexpected, or at least be processing all the possibilities. Psychologists and neurologists know that the operating system of our human awareness is mostly subliminal and below the surface of our waking thoughts. What they’ve also recognized is that we
can “program” the subconscious to create possible scenarios and relevant responses. Yes, it’s amazing!
Tip #2 is to know the trends that are already in full momentum. You can do this by reading articles like this one and subscribing to trade journals and the publications of our industry’s associations. If you haven’t joined your local and national associations, don’t hesitate to do so soon. A good example is The National Association of Residential Property Managers (NARPM®), which I recently wrote about. One trend that’s getting lots of publicity now is an increase in innercity evictions. Researchers found that one of the major reasons is that
Rental Housing Journal On-Site · February 2017
institutional investors now own more rentals than ever. These large, corporate investors evicted at higher rates even after accounting for the demographics of the community where the rental units were located. They know the eviction laws and have investors or shareholders to answer to. The National Rental Home Council reports that institutional investors have purchased large blocks of homes and used them for rentals. This is one of the reasons that in many areas of the country there is a limited supply of lower-priced houses for sale. The corporate or syndicate investors also purchased rental units from other landlords and inherited residents who
sometimes can’t afford to pay rent. Anecdotally, they also tend to evict more quickly. Government researchers don’t say why many institutional investors evict at higher rates. Some say it’s because their size enables them to negotiate less expensive legal rates and replace renters more quickly than smaller, local property managers. Be aware of that possibility going forward. Local landlords and managers tend to treat responsible residents more patiently. They’re more likely to work with someone who has lost a job or can’t pay for the short term. Emphasize this in your marketing. Prepare for the advantages and disadvantages of what may impact your corner of the property management world. Remember “Brexit” and the 2016 presidential elections as poignant examples of unexpected outcomes. Every time you hear a rumor, opinion or statistic that’s relevant to your work, add it to your list. Have a fist full of preventive “ounces” so you won’t need a “pound of cure.”
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Rental Housing Journal On-Site
Pockets of Affordable Housing Exist Within the Most Expensive Markets Even in metros where homebuyers have the biggest mortgage burdens, some cities within those metros provide relatively affordable housing options.
T
he San Jose metro has been one of the hottest housing markets in the country. Homebuyers in Palo Alto can expect to spend 75 percent of their income on a house paymenti. But just 15 miles away, buyers in Milpitas, Calif. need only spend 35 percent. This example of disparity in the Silicon Valley demonstrates how hot housing markets are fueled by cities where high demand for jobs and amenities drive housing values to far outpace incomes. The phenomenon is one reason there is more inequality in very expensive markets. Zillow's latest research on mortgage burdens at the city level illustrates how hot spots within popular housing markets have caused runaway housing costs that place significant burdens on the people who live and work there, even as the cities next door remain more affordable. However, choosing a more affordable city likely requires trade-offs, such as fewer amenities or longer commutes.
8
"The Bay Area and other expensive West Coast markets get a lot of attention for being unaffordable, but even they have some areas where the share of income spent on housing is relatively low," said Zillow Chief Economist Dr. Svenja Gudell. "Of course, buyers have to be willing to make some trade-offs to live in more affordable cities within the metro. Some cities in the most in-demand housing markets across the country have such a high housing burden that they are simply not feasible for buyers with lower incomes. If income growth doesn't keep pace with home value growth, especially as mortgage rates rise, inequality will persist." In San Francisco, the flourishing tech industry and physical boundaries of
Metropolitan Area United States
the city have created a housing market with a high housing burden – buyers in San Francisco need to spend nearly 54 percent of their income on mortgage payments. Across the bay, homebuyers in Oakland fare a little better. Mortgage payments there require 42 percent of the typical household income. Within the Seattle metro, Bellevue buyers would have to spend the greatest share of income on housing – 29.6 percent. Less than 10 miles away, Kirkland buyers only need to set aside 22 percent of their income to pay their mortgage. This phenomenon doesn't play out in less heated housing markets. Buyers in almost any part of the Kansas City metro, for example, can expect to spend
Metro-level Mortgage Burdenii, 2015 14.6%
between 7.3 percent and 13.2 percent of their income on a mortgage. Similarly, buyers in the Las Vegas metro can expect to spend between 14.4 and 18.9 percent of their income on mortgage payments, no matter which city they are in. Buyers moving to the Detroit suburbs will have similar mortgage burdens, with buyers having to spend between 10.2 and 15.3 percent of their income on mortgage payments. The city of Detroit itself has the smallest mortgage burden in the country – just 5.9 percent of the typical income needed to pay the monthly mortgage.
City with the Smallest Mortgage Burden, 2015
City with the Greatest Mortgage Burden, 2015
Detroit, MI – 5.9%
Palo Alto, CA – 75.4%
New York/Northern New Jersey Los Angeles-Long Beach-Anaheim, CA Chicago, IL
24.9%
Brentwood, NY -- 14.7%
Passaic, NJ -- 45.7%
39.7%
Lancaster, CA -- 18.5%
Santa Monica, CA -- 66.1%
14.0%
Gary, IN -- 6.8%
Evanston, IL -- 20.1%
Dallas-Fort Worth, TX
12.6%
Grand Prairie, TX -- 10.6%
Lewisville, TX -- 16.1%
Philadelphia, PA
14.2%
Camden, NJ -- 11.8%
Wilmington, DE -- 13.7%
Houston, TX
11.9%
Pasadena, TX -- 9.6%
Baytown, TX -- 9.9%
Washington, DC
17.8%
Waldorf, MD -- 13.1%
Washington, DC -- 29.9%
Miami-Fort Lauderdale, FL
19.5%
Lauderhill, FL -- 10.3%
Miami, FL -- 42.8%
Atlanta, GA
11.8%
Johns Creek, GA -- 14.0%
Sandy Springs, GA -- 26.4%
Boston, MA
21.7%
Lowell, MA -- 21.3%
Boston, MA -- 35.9%
San Francisco, CA
39.0%
Antioch, CA -- 21.9%
Berkeley, CA -- 58.4%
Detroit, MI
10.3%
Detroit, MI -- 5.9%
Rochester Hills, MI -- 15.3%
Riverside, CA
23.6%
Victorville, CA -- 18.1%
Upland, CA -- 35.2%
Phoenix, AZ
16.8%
San Tan Valley, AZ -- 12.0%
Scottsdale, AZ -- 23.6%
Seattle, WA
21.4%
Marysville, WA -- 16.2%
Bellevue, WA -- 29.6%
Minneapolis-St Paul, MN
13.8%
Maple Grove, MN -- 12.4%
Minneapolis, MN -- 17.1%
San Diego, CA
33.0%
Chula Vista, CA -- 29.5%
El Cajon, CA -- 39.4%
St. Louis, MO
11.0%
Saint Louis, MO -- 11.6%
Saint Charles, MO -- 12.7%
Tampa, FL
14.3%
Riverview, FL -- 11.3%
Clearwater, FL -- 16.0%
Baltimore, MD
15.5%
Baltimore, MD -- 11.8%
Ellicott City, MD -- 20.4%
Denver, CO
19.6%
Highlands Ranch, CO -- 16.3%
Denver, CO -- 25.0%
Pittsburgh, PA
10.6%
Pittsburgh, PA -- 11.1%
n/aiii
Portland, OR
20.8%
Hillsboro, OR -- 17.1%
Portland, OR -- 24.1%
Charlotte, NC
12.7%
Gastonia, NC -- 11.3%
Rock Hill, SC -- 14.9%
Sacramento, CA
23.3%
Elk Grove, CA -- 18.3%
Davis, CA -- 44.4%
San Antonio, TX
11.8%
New Braunfels, TX -- 14.3%
n/a
Orlando, FL
15.5%
Pine Hills, FL -- 10.5%
Kissimmee, FL -- 14.9%
Cincinnati, OH
11.1%
Cincinnati, OH -- 14.2%
n/a
Cleveland, OH
11.1%
Parma, OH -- 8.3%
Lorain, OH -- 8.3%
Kansas City, MO
10.8%
Kansas City, KS -- 7.3%
Overland Park, KS -- 13.2%
Las Vegas, NV
16.8%
Enterprise, NV -- 14.4%
Paradise, NV -- 18.9%
Columbus, OH
11.9%
Columbus, OH -- 10.7%
n/a
Indianapolis, IN
11.4%
Fishers, IN -- 8.5%
Carmel, IN -- 12.1%
San Jose, CA
39.4%
Milpitas, CA -- 34.8%
Palo Alto, CA -- 75.4%
Austin, TX
15.9%
Round Rock, TX -- 13.0%
Austin, TX -- 20.3%
Rental Housing Journal On-Site · February 2017
711 Powell Ave. SW, Suite 101 Renton, WA 98057 (425) 656-9077 • (425) 656-9087 (fax) admin@wmfha.org
A
Executive Director - Jim Wiard Treasurer - Sheri Druckman
Board President - Brett Stevens Vice President - Becky Sanders Vice President of Suppliers Council - Rob Pendleton Immediate Past President - Kris Buker
Secretary – Laura McGuire
The Value of Strategic Planning
nnually, the Washington MultiFamily Housing Association brings together current and past association leaders, decisionmakers, key member stakeholders and association staff to conduct a Strategic Planning event intended to discuss and evaluate ways to improve the association’s ability to grow and serve our members and our communities. Annual Strategic Planning is essential for organizations and companies to meet with engaged participants to develop plans for the future direction of the organization and prioritize resources to be used to accomplish collective goals. Good Strategic Planning anticipates the inevitability of change, and focuses on the organization’s mission, while producing a plan that is realistic, comprehensive, and integrated across all organization functions. Strategic Planning, if done right, can provide a comprehensive planning methodology that: establishes specific, measurable, and achievable objectives; develops guidelines and processes that shape the culture of the organization; addresses the barriers and critical success factors affecting your success; develops measurable action plans to achieve each of your priority strategies;
and, provides a monitoring plan to follow to measure your success. Strategic Planning can be short term in nature – developing and outlining goals for the next 12 months – or planning can be long range – outlining 3-5 year or even 10 year vision and goals. The result of this effort leads to objectives, timeframes, human and financial resources that will be required to achieve your strategies, the measurement of success that everyone can aim for, and who is responsible for the strategy you have outlined. In January, WMFHA conducted our annual Strategic Planning retreat.
The meeting started by re-visiting our mission, values and guiding principles. We asked ourselves - Who are we? What do we do? Who do we serve and why? What are we seeking to become? and, What is our definition of success? Our Strategic Planning first involved assessment and an overview of the purpose of our association: Mission vs. Vision – while mission answers what we do, for whom, and the benefit, vision describes what the future will look like if we achieve our mission. Vision will inspire our organization to “reach higher” and provide aspirational direction. Mission is, in effect, our
purpose for existence and what we do every day to work toward that organizational vision. Goals vs. Objectives – while goals define the broad aims necessary to achieve our mission, each goal has a set of specific, measurable targets that define accomplishment of the goal for the time period. Organizations should have no more than 3-5 goals: each goal will have strategies that support its achievement. Core Values – what will our culture be when our mission, vision and goals are integrated? Values included service, responsiveness, professionalism, ethical practices, innovation, stewardship and effective learning. We conducted a SWOT analysis, evaluating our Strengths, Weaknesses, Opportunities and Threats. Effectively, what’s working, and what’s not working. Our strengths included outstanding membership and staff leadership, successful core programs such as educational courses and networking events, enhanced charitable giving, tremendous growth and responsible government affairs advocacy. The opportunities outlined for the association included community outreach, diversification, political continued on page 17
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Rental Housing Journal On-Site · February 2017
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Rental Housing Journal On-Site
Examining the National Boom in Market Demand for Luxury Apartments
T
he philosophy of "The American Dream" has seen considerable alterations as it evolved over decades. Today, Americans view it as a lifestyle that offers less maintenance costs, more social mobility; community engagement with less seclusion - but more exclusivity; high-style amenities with a smaller, greener footprint; and urban convenience with a picturesque view. Marcus Hiles, Chairman and CEO of Western Rim Property Services, responds to the current national boom in demand for luxury apartments by creating affordable, environmentally responsible, and socially friendly highend apartments. Dallas is experiencing what Marcus Hiles calls a new norm in urban residential living. Millennials and retiring baby boomers increasingly want luxury without the labor. But, the reality is there are other forces at work here too. The high demand is also driven by large segments of the population that cannot qualify for a high down payment mortgage, are not looking to buy, or are downsizing - all at the same time. Hiles believes affordable upscale rental communities will continue to grow in popularity as affluent Americans become city dwellers - some by choice, others out of
necessity. The popularity of renting over buying is significant, considering people are still choosing to rent even with historically low interest rates. This trend underscores a shift in priorities toward increased mobility and less commitment without sacrificing amenities and lifestyle. Properties developed by Hiles' Western Rim are located near outstanding educational opportunities, shopping centers, and feature golf courses, swimming pools, and clubhouses with everything from European Grand Spas, hair and nail salons, an on-site doctor's office,
an executive business center, and a Starbucks café - designed to satisfy the rental consumers. Marcus Hiles is committed to creating high-quality residential rental communities. As the Founder, Chairman, and CEO of Western Rim Properties and Newport Classic Homes, Hiles is responsible for managing more than 15,000 luxury properties that include world-class amenities and a focus on a healthy lifestyle with ecological public spaces, top school districts, and recreation locations.
cusHiles-News.com MarcusHilestx (Marcus Hiles) - DeviantArt: http://marcushilestx.deviantart.com Marcus Hiles (@marcus_hiles) - Twitter: https:// twitter.com/marcus_hiles Marcus Hiles - New Luxury Apartments in Frisco, TX - YouTube: https://www.youtube.com/ watch?v=dmsJNbfOh-g SOURCE Marcus Hiles http://www.MarcusHiles-News.com
Marcus Hiles - Chairman & CEO of Western Rim Property Services: http://www.Mar-
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Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
Are Urban Areas Running Out Of Millennial Renters? By John Triplett, Desert Path Marketing Group
A
s apartment rents are peaking and even starting to moderate or decline in some urban areas from Seattle to Denver, and New York to Los Angeles, some experts are asking whether we may have reached “Peak Millennial” status and the number of Millennial renters will begin to decline.
These experts say the urban core renters may have reached the saturation point, and in coming years will stop growing and begin a decline. Their argument is that as Millennials age and start families, they will want to move to the suburbs for more space for housing and better schools than in the urban core.
city districts was 2015, and their declining impacts will become apparent before 2020. “Millennials were doubled up at entry levels of their housing life cycle, blocked by older peers who were unable to turn over their apartments for better homes,” Myers writes. “With renewal of new construction and home buying, stronger vacancy chains will again stimulate outflow. “The combined effect of the three reversed cycles will reduce central concentrations of young adults. Preferences may persist for urban walkability but, freed of their former constraints, preferences will now be expressed through choice from a broader range of locales. Cities and suburbs can compete for Millennials passing age 30 with walkable districts, transit, and better schools and housing,” he says.
Dr. Dowell Myers, a demographer and urban planner at the University of Southern California, has written a paper called, “Peak Millennials: Three Reinforcing Cycles That Amplify the Rise and Fall of Urban Concentration by Millennials.” Myers argues that the peak year of Millennial presence in inner
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Portland not peak Millennial However in Portland, Joe Cortright, president and principal economist of Impresa, a consulting firm specializing in regional economic analysis, innovation and industry clusters, argues that the answer is, “No,” that we have not reached peak Millennial. continued on page 23
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Rental Housing Journal On-Site
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Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
More Young Unmarried Couples Buying Homes Together
A
lmost 15 percent of all young homebuyers are unmarried couples, up from 11 percent prior to the recession. The percentage of homebuyers who are single has been declining since 2010. The share of young unmarried couples buying homes together has been on the rise over the past decade, according to a new Zillow® analysis[i]. Across the country, almost 15 percent of all homebuyers age 24-35 are unmarried couples, up from 11 percent in 2005. Of the markets analyzed[ii], Washington, D.C. had the greatest increase in the share of unmarried homebuyer couples -- almost 16 percent of all young homebuyers in D.C. are unmarried couples, up from 7.5 percent in 2005. Philadelphia and Miami also had large increases in the share of young unmarried couples buying homes together. The majority of homebuyers have long been married couples, but as home values continue to rise, more unmarried couples are buying homes together since it's more affordable with two incomes. Home values across the country are rising at their fastest pace since 2006, and some of the nation's hottest
housing markets -- like Seattle, Denver and Portland, Ore. -- have surpassed peak home values reached during the housing bubble. The median home value in the U.S. is now $193,800 -- up 7 percent over the past year. As homes become increasingly expensive, the need to purchase a home with someone else becomes a necessity -- almost 75 percent of all buyers are married or in a relationship. "Buying a home is a big part of The American Dream – equally shared
by millennials and Baby Boomers alike – but it's becoming extremely difficult to make it work on a single income," said Zillow Chief Economist Dr. Svenja Gudell. "Many singles looking to purchase a home on their own may not make enough money to afford or qualify for a mortgage on their dream home. That makes buying a home with a significant other even more appealing, even if marriage isn't quite part of the picture. Simply put, buying a home is much easier with two
incomes. Assuming home value growth continues to outpace income growth, I imagine this trend will continue." While more unmarried couples are buying homes together, fewer singles are purchasing homes on their own. About 25 percent of all homebuyers age 24-35 are single, down from 28 percent in 2005[iii]. Columbus, Ohio had the greatest drop in the share of single homebuyers, followed by Las Vegas. In 2005, almost 40 percent of all young Columbus homebuyers were single. Now, it's less than 20 percent. Portland, Ore., which has the fastest home value growth in the country, has also had a large drop in the share of young singles buying homes -- there's been a 10 percentage point decline since 2005. The median age of today's homebuyer is 36 years old, and the majority shop with a significant other, according to the 2016 Zillow Group Report on Consumer Housing Trends. Millennials, age 18-34, make up 42 percent of all buyers today -- the largest share of all generational groups.
continued on page 18
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Rental Housing Journal On-Site · February 2017
13
Rental Housing Journal On-Site
Swift Gains in Fourth Quarter Push Home Prices to Peak Levels in Majority of Metro Areas
T
he best quarterly sales pace of the year pushed available housing supply to record lows and caused price appreciation to slightly speed up in the final three months of 2016, according to the latest quarterly report by the National Association of Realtors®. The report also revealed that sales prices in over half of measured markets since 2005 are now at or above their previous peak level. The median existing single-family home price increased in 89 percent of measured markets, with 158 out of 178 metropolitan statistical areas1 (MSAs) showing sales price gains in the fourth quarter of 2016 compared with the fourth quarter of 2015. Twenty areas (11 percent) recorded lower median prices from a year earlier. There were more rising markets in the fourth quarter compared to the third quarter of 2016, when price gains were recorded in 87 percent of metro areas. Thirty-one metro areas in the fourth quarter (17 percent) experienced double-digit increases – an increase from 14 percent in the third quarter. For all of 2016, an average of 87 percent of measured markets saw increasing home prices, up from the averages in 2015 (86 percent) and 2014 (75 percent). Of the 150 markets NAR has tracked since 2005, 78 (52 percent)
now have a median sales price at or above their previous all-time high. Lawrence Yun, NAR chief economist, says home-price gains showed little evidence of letting up through all of 2016. "Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 percent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment," he said. "At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market." Added Yun, "Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions." The national median existing singlefamily home price in the fourth quarter of 2016 was $235,000, which is up 5.7 percent from the fourth quarter of 2015 ($222,300). The median price during the third quarter of 2016 increased 5.4 percent from the third quarter of 2015. At the end of the fourth quarter, there were 1.65 million existing homes
available for sale2, which was 6.3 percent below the 1.76 million homes for sale at the end of the fourth quarter in 2015 and the lowest level since NAR began tracking the supply of all housing types in 1999. The average supply during the fourth quarter was 3.9 months – down from 4.6 months a year ago. NAR President William E. Brown, a Realtor® from Alamo, California, says prospective buyers will likely see competition in their market increase even more this spring. "The prospect of higher mortgage rates and more home shoppers in coming months should be enough of an incentive for those serious about buying to start their search now," he said. "There are fewer listings on the market, but also a little less competition than what's expected this spring. Buyers may find just the home they're looking for at a good price and without the possibility of having to outbid others." Total existing-home sales3, including single family and condos, rose 3.3 percent to a seasonally adjusted annual rate of 5.57 million in the fourth quarter from 5.39 million in the third quarter of 2016, and are 7.1 percent higher than the 5.20 million pace during the fourth quarter of 2015. Despite a meaningful increase in the national family median income ($70,831)4, rising prices and the boost
in mortgage rates at the end of the year slightly weakened affordability compared to a year ago. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $51,017, a 10 percent down payment would require an income of $48,332, and $42,962 would be needed for a 20 percent down payment. "Even a pick-up in wage growth may be insufficient to compensate the impact of higher mortgage rates and home prices. Increased homebuilding will be crucial to alleviate supply shortages and stave off the affordability hit," added Yun. Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing-condo price was $222,000 in the fourth quarter, up 6.1 percent from the fourth quarter of 2015 ($209,300). Nearly all metro areas (93 percent) showed gains in their median condo price from a year ago. The five most expensive housing markets in the fourth quarter were the San Jose, California, metro area, where the median existing single-family price was $1,005,000; San Francisco, $837,500; Anaheim-Santa Ana, continued on page 20
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Rental Housing Journal On-Site
Americans Overoptimistic About Homeownership This Year Half of Parents Who Own Homes Struggling to Save for the Future
5
9 million American adults (one in four) are considering buying a home this year, according to a new Bankrate.com report. That includes about 16 million who are very likely and 20 million who are somewhat likelyi. The truth is, Americans may be feeling a bit too confident about homeownership in 2017. The National Association of Realtors and U.S. Census Bureau report the total amount of existing and new home sales in 2016 at around 6 million. The NAR also notes that total housing inventory ended 2016 at the lowest level since it began
tracking the supply of houses in 1999. Almost two in five minorities report at least some likelihood of buying a house in 2017, more than double the percentage of white Americans who responded the same way. Older millennials (ages 27-36) and Gen Xers (37-52) are the generations most apt to purchase a new home this year; 20% of both age groups indicate they are very or somewhat likely to take the plunge. "Among millennials, there's a lot of pent-up demand for home buying," said Bankrate.com senior mortgage analyst Holden Lewis. "They have been stymied
by stagnant wages, student loans and a lack of available starter homes. If enough affordable homes are put on the market, we might see a surge of first-time homebuyers in their early to mid-30s." Parents with children under age 18 are also looking to make a splash in the housing market; they're three times more inclined than non-parents to say they are very likely to buy a new home this year. "Having kids and raising a family is a primary reason why Americans take the leap into home ownership – many consider it a key component of
the American Dream," Lewis added. "However, families need to be cognizant of all the expenses that come with a house. You don't want to leave yourself house poor." Over 80% of current homeowners say their mortgage payment is preventing them from saving more money. In fact, more than one in three mortgage holders report that their monthly payment has a "major impact" on their ability to save. That number jumps to over 50% for parents. Two out of three non-homeowners with young children say financial issues are preventing them from achieving the American Dream (they cannot afford a down payment or their credit is not good enough to get a home loan). Only 18% indicate that they don't want to own a home just yet, versus 42% of those who are child-free. The survey was conducted by Princeton Survey Research Associates International. PSRAI obtained telephone interviews with a nationally representative sample of 1,003 adults living in the continental United States. Interviews were conducted by landline (502) and cell phone (501, including 312 without a landline phone) in English and Spanish by Princeton Data Source from January 19-22, 2017. Statistical results are weighted to correct known demographic discrepancies. The margin of sampling error for the complete set of weighted data is plus or minus 3.7 percentage points. About Bankrate.com: http://www.bankrate.com Bankrate.com provides consumers with the expert advice and tools needed to succeed throughout life's financial journey. For over two decades, Bankrate.com has been a leading personal finance destination. The company offers award-winning editorial content, competitive rate information, and calculators and tools across multiple categories, including mortgages, deposits, credit cards, retirement, automobile loans, and taxes. Bankrate aggregates rate information from over 4,800 institutions on more than 300 financial products. With coverage of over 600 local markets, Bankrate generates rate tables in all 50 U.S. states. Bankrate develops and provides web services to more than 100 cobranded websites with online partners, including some of the most trusted and frequently visited personal finance sites on the internet, such as Comcast, Yahoo!, CNBC and Bloomberg. In addition, Bankrate licenses editorial content to more than 500 newspapers on a daily basis including The Wall Street Journal, USA Today, The New York Times and The Los Angeles Times. Ryan Feldman, Public Relations Specialist, ryan.feldman@bankrate.com, 908-415-5480 Visit this website for more information http:// www.bankrate.com/finance/consumer-index/ money-pulse-0217.aspx i
Rental Housing Journal On-Site ¡ February 2017
15
Rental Housing Journal On-Site
The Best Real Estate Investment Opportunities in 2017
T
he company has identified the best metros for real estate investing, and provides an indepth analysis of the U.S. investment housing sector HomeUnion, an online real estate investment management firm, has released its 2017 National SingleFamily Rental Research (SFR) Report. The comprehensive study ranks 31 metro areas based on several factors, including investment opportunities for 2017, yields, rental demand, investment home prices and capital markets conditions. Atlanta topped the Opportunity Rankings list as the Metro Area Atlanta Orlando Seattle Las Vegas Chicago San Diego Oakland, CA Detroit Dallas Memphis
Employment Growth 2.8% 3.2% 3.3% 2.7% 1.2% 2.5% 2.9% 2.1% 2.9% 1.3%
metro area offering the best real estate investment opportunities in 2017, followed closely by Orlando and Seattle. "An excellent mix of rental housing supply and demand fundamentals, along with low levels of new construction and favorable entry prices, which mitigates risk for investors, were the factors we used to create our opportunity rankings," explains Steve Hovland, director of research for HomeUnion and the lead author of the 2017 NSFR. Here's a list of the 10 best metros for investment opportunities in 2017:
Vacancy Decline
Rent Growth
120 basis points 300 basis points 380 basis points 150 basis points 190 basis points 90 basis points 30 basis points 150 basis points 30 basis points 300 basis points
3.5% 3.5% 3.5% 3.1% 1.9% 3.5% 4.4% 2.7% 3.5% 1.8%
Nationwide, the SFR market will remain healthy in 2017, though increased competition from a wave of new apartments will slow the pace of improvement, according to HomeUnion Research Services. Nonetheless, vacancy will continue to tighten on a national basis, reaching the lowest level of the current cycle. According to recent data available from the U.S. Census Bureau, 805,000 households were formed in 2016. Of those, 434,000 were renter households. "Strong job growth will encourage new household formation, particularly among millennials that have been living with their parents," adds Hovland. "As most of these new households are unlikely to enter the ownership pool, this will create demand for rental properties. Additionally, higher home prices, limited inventory, debt burdens and rising interest rates will limit the number of first-time homebuyers to approximately 35 percent of the market, well below the long-term trend of 40 percent."
About HomeUnion HomeUnion is an online real estate investment management firm. Based in Irvine, Calif., it provides all the services needed for individuals to invest remotely in single-family rental (SFR) properties. The company uses a combination of research and data-driven proprietary analytics to incorporate over 110 million homes and 200,000 neighborhoods into their database, and then delivers its solutions to an onthe-ground infrastructure that currently serves 11 locations. HomeUnion's role spans the lifecycle of the investment transaction: identifying sound investments, handling all aspects of acquisition, maximizing income, protecting asset value, and selling the asset when the time comes. http://www.homeunion.com
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Rental Housing Journal On-Site · February 2017
Jobs For Property Managers • Typical education – High school diploma or equivalent Property management jobs ranked overall No. 46 in the jobs in the $50,000 range, according to the survey. “Most property, real estate, and community association managers work out of an office. However, many onsite managers spend a large part of their workday doing tasks away from the office, such as showing apartments, inspecting the grounds, or meeting with owners. About two in five were self-employed in 2014,” according to the BLS. The BLS annual median wage is $36,200 per year. So jobs that pay more than $50,000 a year are quite a bit higher than average. “We put these high paying career lists together so you can search jobs grouped by income bracket. The $50,000 a year jobs list is full of interesting careers from nearly every industry. Further good news is that there are 83 jobs on this list. So there are a lot of jobs in the $50,000 a year range and even more if you want to look further up the income bracket,” according to CareerToolkit.com. Jobs in the construction industry paying over $50,000 a year include structural iron workers, plumbers, and millwrights. Each of these jobs pays significantly more than the annual median wage and typically only requires a High school diploma or equivalent. Many technician jobs pay in the $50,000 a year range also. For instance, wind turbine service technicians, industrial engineering technicians, mechanical engineering technicians, and electro-mechanical technicians all earn over $50,000 a year. In addition, each of these jobs typically requires an Associate’s degree or postsecondary nondegree award or certificate. So that means you can get started without needing years of education.
Board President - Brett Steven Treasurer - Sheri Druckman Secretary – Laura McGuire Immediate Past President - Kris Buker Vice President of Suppliers Council - Rob Pendleton Executive Director - Jim Wiard
...continued from page 1
Property managers and education In terms of education for property management positions, many employers prefer to hire college graduates, particularly for offsite positions dealing with a property’s finances or contract management. Employers also prefer to hire college graduates to manage residential and commercial properties, according to the BLS website. A bachelor’s or master’s degree in business administration, accounting, finance, real estate, or public administration is preferred for commercial management positions. Managers of commercial properties and those dealing with a property’s finances and contract management increasingly are finding that they need a bachelor’s or master’s degree in business administration, accounting, finance, or real estate management, especially if they do not have much practical experience. Experience in real estate sales is a good background for onsite managers because real estate salespeople also show commercial properties to prospective tenants or buyers, according to the BLS. Take a look at the full list of $50K a year jobs here - http://www. careertoolkit.com/high-salary-jobs-50k100k-professions.html Resources: Guide to 285 high-paying jobs http://www. careertoolkit.com/high-salary-jobs-50k-100kprofessions.html Careertoolkit.com start a career you will love http://www.careertoolkit.com/high-salaryjobs-50k-100k-professions.html Bureau of Labor statistics https://www.bls. gov/ Occupational handbook for property managers, real estate and association managers https://www.bls.gov/ooh/management/ property-real-estate-and-community-association-managers.htm#tab-1
Vice President - Becky Sanders
711 Powell Ave. SW, Suite 101, Renton, WA 98057 • (425) 656-9077 • (425) 656-9087 (fax) • admin@wmfha.org
The Value of Strategic ...continued from page 9 influence, improved technology and making the most of the talent we have. From these lists, we developed six key issues: government affairs advocacy, career development opportunities, member business development, membership growth, improved communications and financial stewardship. Critical success factors and barriers to our success were reviewed. Prior to defining strategies, our leadership team first identified key conditions for success and the major barriers standing in the way to ensure strategies addressed these important elements. We then developed stated objectives, and prioritized these objectives according to need and feasibility. Action Plans to achieve each defined strategy were then developed. For each of the priority strategies, the team developed detailed action plans that defined what will be done, who will do it, by when, the resources needed to accomplish the goal, and other related needs.
We developed methods to evaluate progress, success and ultimately accomplishment of the stated strategies and goals, and identified a plan monitor to coordinate efforts of each subsection of our plan. Involvement of a broad range of key contributors with diverse backgrounds and experiences allowed us to think outside the box to possibilities and opportunities to advance our services. There was an excitement of renewed commitment to success and an appreciation of the growth and advancement our association has achieved in the past several years. WMFHA looks forward to continuing to serve our members and the housing industry in the coming year. To get involved in the future of the industry and improve your success, call us at 425-656-9077. We’re here to serve.
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Founded in 1982, LT Services, Inc., is a Washington corporation with over 30 years of experience in the industry. The company handles evictions in King, Pierce, and Snohomish counties. ABOUT OUR COMPANY Founded in 1982, LT Services, Inc., is a Washington corporation with over 30 years of experience in the industry. The company handles evictions in King, Pierce, and Snohomish counties. ABOUT OUR COMPANY Founded in 1982, LT Services, Inc., is a Washington corporation with over 30 years of experience in the industry. The company handles evictions in King, Pierce, and Snohomish counties.
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Rental Housing Journal On-Site
More Young Unmarried Couples Buying ...continued from page 13
United States
Zillow Home Value Index (ZHVI)[iv] $193,800
% of Young Homebuyers that are Unmarried - 2005 11.2%
% of Young Homebuyers that are Unmarried -2015 14.6%
% of Young Homebuyers that are Single - 2005 27.7%
% of Young Homebuyers that are Single- 2015 25.4%
New York, NY
$402,700
9.5%
12.9%
27.7%
23.9%
Los Angeles-Long Beach-Anaheim, CA
$594,100
8.1%
11.9%
27.6%
32.7%
Chicago, IL
$204,700
12.5%
10.9%
24.6%
33.8%
Dallas-Fort Worth, TX
$201,400
8.7%
5.7%
22.2%
21.4%
Philadelphia, PA
$214,800
15.7%
23.4%
37.5%
22.1%
Houston, TX
$176,100
10.8%
11.8%
28.6%
21.0%
Washington, DC
$380,200
7.5%
15.7%
31.9%
25.8%
Miami-Fort Lauderdale, FL
$247,000
13.5%
18.4%
30.9%
29.0%
Atlanta, GA
$173,300
7.7%
11.7%
37.9%
29.7%
Boston, MA
$412,300
15.4%
16.1%
25.0%
26.2%
San Francisco, CA
$829,700
6.9%
10.8%
30.1%
31.8%
Detroit, MI
$135,900
n/a
18.4%
37.0%
32.7%
Riverside, CA
$319,400
n/a
9.0%
25.8%
27.3%
Phoenix, AZ
$230,500
14.4%
14.6%
25.7%
27.1%
Seattle, WA
$413,700
11.0%
13.9%
25.6%
23.3%
Minneapolis-St Paul, MN
$236,200
n/a
14.9%
42.9%
25.2%
San Diego, CA
$529,500
n/a
10.6%
21.3%
25.5%
St. Louis, MO
$148,900
n/a
19.9%
29.1%
25.5%
Tampa, FL
$179,600
12.1%
16.0%
30.0%
23.6%
Baltimore, MD
$257,800
n/a
13.8%
27.3%
30.7%
Denver, CO
$355,400
n/a
14.1%
35.7%
26.2%
Pittsburgh, PA
$133,700
n/a
n/a
30.9%
33.5%
Portland, OR
$354,400
n/a
19.4%
29.4%
19.6%
Charlotte, NC
$168,000
n/a
n/a
38.9%
33.8%
Sacramento, CA
$352,700
n/a
n/a
n/a
34.3%
San Antonio, TX
$156,900
n/a
n/a
n/a
31.0%
Orlando, FL
$200,500
n/a
n/a
35.3%
28.0%
Cincinnati, OH
$148,700
n/a
n/a
40.6%
35.3%
Cleveland, OH
$130,700
n/a
n/a
35.3%
36.2%
Kansas City, MO
$152,900
n/a
n/a
n/a
21.5%
Las Vegas, NV
$215,400
n/a
23.8%
47.0%
27.4%
Columbus, OH
$162,200
n/a
n/a
39.7%
17.7%
Indianapolis, IN
$134,300
n/a
n/a
n/a
35.1%
Austin, TX
$261,500
n/a
11.0%
30.1%
30.8%
Region Name
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow
also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc. [i] Zillow used The Census Bureau's American Community Survey data from 2005-2015 to find the percentage of young adults, age 25-35, who purchased homes in a given year. Zillow broke out the data by unmarried couples, married couples, and singles. [ii] Zillow analyzed 14 metros that had data on the share of homebuyers that are unmarried couples. [iii] The percent of young homebuyers that are single peaked in 2010 at 31 percent. [iv] The Zillow
Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted. http://www.zillow.com
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Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
Pierce-Kitsap-Thurston ...continued from page 1
Dear Maintenance Men ...continued from page 6
last quarter. The vacancy rate was 4.02% a year ago. The rate for all properties including those in lease-up is 3.92%.
temporally set the bottom track on the tub ledge and tape it in place. Next, set the wall channels in place, use a level to make sure it is plumb with the wall. Mark the mounting holes of the wall channel with your pencil. Do the same thing for the other side. Remove the channels and before drilling, center punch the hole mark to keep the drill bit centered. If drilling through tile, use a ceramic drill bit. Once you have made your holes, insert wall anchors. Now you are ready to set the bottom track. Use adhesive caulk and if you feel the track may be abused, also use some Liquid Nails adhesive at several spots under the track. Remove any excess caulk and then use duct tape to temporally hold the track in place. Before fitting the side channels, run a bead of adhesive caulk on the backside of the channel. Install the channel, use the supplied screws and bumper to fasten the channel to the wall, repeat on the other side. Wipe away any excess caulk. To install the top rail channel, measure from wall to wall at the top of the wall channels. Subtract 1/16 of an inch and cut the top channel to that length. Again, measure twice. The top
Pierce: 3.55% The vacancy rate in Pierce County bumped up from 3.25% to 3.55% this quarter. It was 4.22% a year ago. Gig Harbor's rate dropped to just over 2%. The rest of the submarkets are in the 3% range with the exception of Tacoma South, which is 4.3% vacant. Kitsap: 4.6% Kitsap County's vacancy rate climbed to 4.6% from 4.36% last quarter. It was 3.44% a year ago. The vacancy rate shot up nearly a full percentage point to 5.21% in Bremerton. Port Orchard is the strongest submarket with a vacancy rate of 3.47%. Thurston: 3.31% Thurston County continues to have the lowest vacancy rate, 3.31%. Still, it is up half a point from third quarter. A year ago it was 3.64%. Olympia at 2.92% vacancy is the strongest submarket in Thurston. Rental Incentives Pierce: $5 per Month (0.5%) Kitsap: $4 per Month (0.3%) Thurston: $1 per Month (0.1%) The average overall rental incentive for the three counties crept up from $2 to $5 per month. Five percent of the properties are offering rental incentives, the same as last quarter. Rents: $1,111 per Unit $1.29 per Square Foot Average rents climbed $16 to $1,111 per month and $1.29 per foot, an increase of 1.5% over last quarter. They increased 11.7% over the past year. Over the past five years the average annual increase is $6.1% Pierce: $1,101 per Month $1.28 per Square Foot Kitsap: $1,197 per Month $1.41 per Square Foot Thurston: $1,058 per Month $1.24 per Square Foot
New Construction There are 2,045 units under construction, which is 600 more than last quarter. The majority of these are in Pierce County. There are another 2,212 units that have successfully completed the design review and permitting process. Additionally, 3,276 units are in the earlier stages of the construction pipeline. Featured in the photo, Arbors at Edgewood opened in Pierce County. The 130-unit phase II is scheduled for completion in mid-2017. It is managed by Greystar. Observations This is the third straight quarter that Pierce-Kitsap-Thurston has outperformed the metro Seattle market, not counting overall rent levels. The three-county market had a 1.5% rent increase this quarter, whereas rents went down in metro Seattle. The 3.64% vacancy rate here is a full percentage point lower than metro Seattle's. Mortgage lender Freddie Mac recently predicted that Tacoma is a top ten market nationwide for apartment rent growth. It is rated number three. They expect rents to increase 5.8% in 2017. As long as the economies in these three counties remain strong, we expect the markets to continue to perform very well. Factors such as a relatively low level of apartment construction together with the limited inventories and rising prices in the residential market will help ensure it. For decades Tom Cain has supported a variety of industry organizations and events with his data and expertise as a foremost expert in the apartment industry. His company surveys the five counties in Central and South Puget Sound. This article highlights survey results that subscribers can access from an online database of all 50u+ properties. Apartment Insights also provides customized rent reports and market reports. www.apartmentinsightswa.com 206-632-2220
channel should fit snug between top of the wall channels. Lastly it is time to hang the doors and adjust the fit. Most doors come with good instructions, read them, as there may be details not included in our explanation. Bio: If you need maintenance work or consultation for your building or project, please feel free to contact us. We are available throughout Southern California. For an appointment please call Buffalo Maintenance, Inc. at 714 956-8371 Jerry L'Ecuyer is a licensed contractor & real estate broker. He is currently on the Board of Directors and Chairman of the Education Committee of the Apartment Association of Orange County. Jerry has been involved with apartments as a professional since 1988. Frank Alvarez is the Operations Director and co-owner of Buffalo Maintenance, Inc. He has been involved with apartment maintenance & construction for over 20 years. He is also a lecturer & educational instructor. Frank can be reached at (714) 956-8371 Frankie@BuffaloMaintenance.com For more info please go to: www.BuffaloMaintenance.com
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Rents increased $20 in Pierce, $11 in Kitsap and $7 in Thurston. Submarkets topping the list for largest rent increases over the past quarter are both in Kitsap. They are Port Orchard and Bremerton. The lowest average rent can be found in Lakewood. At $956 per month it is the only submarket with average rent under $1,000.
Landlord-Tenant and Real Estate Attorneys Areas of Practice Evictions & Notices
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Rental Housing Journal On-Site ¡ February 2017
Landlord Tenant Relations & Disputes Lease Drafting & Review Real Estate Litigation Collections & Judgment Recovery Fair Housing Complaint Defense We serve residents of King County, Washington and surrounding areas, including: Snohomish, Thurston, and Pierce Counties.
19
Rental Housing Journal On-Site
Swift Gains in Fourth Quarter
...continued from page 14
California, $745,200; urban Honolulu, $740,200; and San Diego, $593,000. The five lowest-cost metro areas in the fourth quarter were YoungstownWarren-Boardman, Ohio, $87,600; Decatur, Illinois, $92,400; Cumberland, Maryland, $94,000; Rockford, Illinois, $109,500, and Binghamton, New York, $109,700.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries. NOTE: NAR releases quarterly median single-family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant. Data tables for MSA home prices (single family and condo) are posted at http://www.realtor.org/topics/ metropolitan-median-area-prices-andaffordability/data. If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®. 1 Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at: http://www. census.gov/popu lation/estimates/ metro-city/List4.txt. Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller
Regional Breakdown Total existing-home sales in the Northeast jumped 10.5 percent in the fourth quarter and are now 6.4 percent above the fourth quarter of 2015. The median existing single-family home price in the Northeast was $254,100 in the fourth quarter, slightly lower (0.2 percent) from a year ago. In the Midwest, existing-home sales climbed 2.3 percent in the fourth quarter and are 8.8 percent above a year ago. The median existing single-family home price in the Midwest increased 5.7 percent to $181,100 in the fourth quarter from the same quarter a year ago. Existing-home sales in the South increased 2.6 percent in the fourth quarter and are 5.4 percent higher than the fourth quarter of 2015. The median existing single-family home price in the South was $210,500 in the fourth quarter, 7.9 percent above a year earlier. In the West, existing-home sales rose 1.6 percent in the fourth quarter and are 9.1 percent above a year ago. The median existing single-family home price in the West increased 7.8 percent to $348,800 in the fourth quarter from the fourth quarter of 2015.
metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings. NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series dates back to 1989. Because there is a concentration of condos in high-cost metro areas, the national median condo price often is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report. 2 Total inventory and month's supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns. 4 Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 4.0%. NOTE: Existing-Home Sales for January will be released February 22, and the Pending Home Sales Index for January will be released February 27; release times are 10:00 a.m. ET. 3
Information about NAR is available at www. nar.realtor. This and other news releases are posted in the "News, Blogs and Videos" tab on the website. Statistical data in this release, as well as other tables and surveys, are posted in the "Research and Statistics" tab. http://www.realtor.org
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Rental Housing Journal On-Site · February 2017
Rental Housing Journal On-Site
Handling Employee Evictions
...continued from page 1
Management can fire an employee for good cause or no cause, but not for “bad” cause. For example, an employer and employee agree that the employee will do the required work and employer will provide the necessary working conditions, as well as pay the employee for the work done. However, there cannot be a guarantee of continued employment or tenure. The very nature of the “at-will” precludes any claim for a prospective benefit. Either employer or employee may terminate the contract at any time.
of their compensation. The Arizona Residential Landlord and Tenant Act does not protect these individuals in employee-termination situations.
Good Cause Good cause for termination includes lying, fighting, destroying company property, inability to perform the duties of the job, and insubordination. The employer can terminate the employment if he or she makes a subjective determination that the employee’s work is unsatisfactory. Often times, multi-housing employees receive housing as part
A.R.S. § 33-1308 states in part: Exclusions from application of chapter Unless created to avoid the application of this chapter, the following arrangements are not covered by this chapter... 5. Occupancy by an employee of a landlord as a manager or custodian whose right to occupancy is conditional upon employment in and about the premises. Management should draft a written agreement stating that employees are not residents; the agreement is not a lease and the time frame for vacating the unit following termination. If the employee is a current resident, the landlord should cancel their lease agreement and inform the individual
that the employee agreement takes precedence over the lease. Once management terminates an employee, it should personally deliver to him or her a five-day notice to vacate under the conditions of A.R.S. § 12-1173 (the forcible detainer statute). However, if, at the time of hiring, the employee signed an agreement specifying the amount of time he or she has to vacate, this takes precedence over the statute. Additionally, it is a good idea to issue this notice at the time of termination. Although lockouts are permissible as long as they do not cause a breach of peace, most courts do not look favorably on them. For example, a judgment has in the past awarded $5,000 in punitive damages to a former employee because of a lockout situation. At the end of the notice period, management may file a forcible detainer eviction requesting possession of the unit, fair rental value from the termination date, attorney fees and costs. This procedure is identical to
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a normal eviction for nonpayment of rent. Following the hearing and judgment, the constable can evict the employee under a writ of restitution after five days.
Example Consider the following example: Clydesdale Apartments hire Miller Tyme and his girlfriend, Amber Lager, to perform maintenance and housekeeping duties. Apartment manager Bud Wizer requires that the two sign an employee agreement stating they must move out within 48 hours in the event of their termination. After a few weeks, Bud Wizer smells alcohol on their breath, frequent absences and poor work performances. The property owners, Mr. Brew and Mr. Stout, elect to terminate Miller Tyme and Amber Lager. They verbally request that the two vacate within the 48-hour period stated in their contract. Miller Tyme and Amber Lager refuse to move and the owners file eviction proceedings against them. At court, Judge Fosters dismisses the eviction because management did not deliver written notice. On the way out the courthouse, Miller Tyme tells Amber Lager, “It doesn’t get any better than this.” Andrew M. Hull, Esq. Hull, Holliday & Holliday, PLC www.doctorevictor.com 602.230.0088
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Rental Housing Journal On-Site
#starttoday
Home Buyers in Expensive ...continued from page 5 Breakeven Horizon, 2016 Q4 United States 1 year, 11 months New York/Northern New Jersey 2 years, 6 months Los Angeles-Long Beach4 years, 2 months Anaheim, CA Chicago, IL 2 years Dallas-Fort Worth, TX 1 year, 6 months Philadelphia, PA 2 years, 5 months 1 year, 11 months Houston, TX Washington, DC 3 years, 6 months Miami-Fort Lauderdale, FL 2 years, 3 months Atlanta, GA 1 year, 5 months 2 years, 8 months Boston, MA San Francisco, CA 4 years, 6 months Detroit, MI 1 year, 5 months Riverside, CA 2 years, 2 months Phoenix, AZ 2 years, 5 months Seattle, WA 2 years, 5 months Minneapolis-St Paul, MN 2 years, 3 months San Diego, CA 4 years, 1 month St. Louis, MO 1 year, 10 months Tampa, FL 1 year, 5 months Baltimore, MD 2 years, 5 months Denver, CO 2 years, 3 months Pittsburgh, PA 2 years Portland, OR 2 years, 1 month Charlotte, NC 1 year, 8 months Sacramento, CA 2 years, 5 months San Antonio, TX 1 year, 9 months Orlando, FL 1 year, 5 months Cincinnati, OH 1 year, 8 months Cleveland, OH 1 year, 10 months Kansas City, MO 1 year, 7 months Las Vegas, NV 1 year, 10 months Columbus, OH 1 year, 9 months Indianapolis, IN 1 year, 4 months San Jose, CA 5 years, 2 months Austin, TX 2 years, 5 months Metropolitan Area
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Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.
Breakeven Horizon, 2015 Q4 1 year, 10 months 3 years, 2 months 4 years, 1 month 2 years, 1 month 1 year, 3 months 2 years, 10 months 1 year, 5 months 4 years, 5 months 2 years, 6 months 1 year, 5 months 3 years, 1 month 2 years, 11 months 1 year, 4 months 1 year, 10 months 2 years, 4 months 1 year, 11 months 2 years, 3 months 3 years, 5 months 1 year, 9 months 1 year, 11 months 3 years 1 year, 9 months 1 year, 9 months 2 years, 1 month 1 year, 9 months 2 years, 1 month 1 year, 6 months 1 year, 11 months 1 year, 7 months 1 year, 6 months 1 year, 6 months 1 year, 8 months 1 year, 8 months 1 year, 4 months 3 years, 3 months 1 year, 11 months
horizon one can be indifferent between buying and renting). We compute the breakeven horizon for each household by comparing the costs of owning a home versus renting a home at the end of each year for 30 years (assuming the house is purchased using a 30 year fixed mortgage). Our buy versus rent analysis incorporated all possible costs incurred when purchasing a home as well as those incurred when renting a home to make the comparison between these costs as realistic as possible. The full methodology can be found here: http://www.zillow.com/ research/rent-vs-buy-breakeven-horizon-analysis-methodology-updated-3549/ Zillow –http://www.zillow.com
The breakeven horizon is the number of years after which buying is more financially advantageous than renting (at the precise breakeven i
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Are Urban Areas Running Out of ...continued from page 11 “While it’s fashionable to describe the trend toward city living as something caused by the unique preferences of Millennials, the shift toward city living both predates the maturation of the Millennial generation—and promises to continue as their places among the young adult age group are taken by the post-Millennials (or whatever name is attached to the succeeding generation),” Cortright writes. The relative preference for urban living for 25 to 34 year-olds has been increasing over the past two decades. The New York Times explores this topic in a recent article here - https:// www.nytimes.com/2017/01/23/upshot/ peak-millennial-cities-cant-assume-acontinued-boost-from-the-young.html?_ r=0
Declining Millennial renters presence in cities “After a decade of rapid increase, we now can expect rapid slowing and then deconcentration,” Myers writes. “The explanation for why the urban episode of the Millennials will not persist is given by a tracing out of three cycles that worked together first to amplify the presence of Millennials in cities, and now are all reversing their effects and interacting together to reduce Millennial presence. “The impacts of Millennials will not disappear but will slacken as they shift toward their new life-cycle stage of early middle age. The young people of the next decade are less likely to fill the gap left behind by the Millennials,” Myers writes.
He sets out three reasons Millennial renters will decline in urban centers. • The first is often overlooked but the most fundamental, namely the rise and fall of the number of births two decades ago that formed the Millennial generation, those born between 1980 and 1999. With the largest Millennial birth cohort passing age 25 in 2015, and smaller cohorts to follow, there may be grounds to declare we have reached the day of peak urban Millennials. • The second is the housing life cycle. The Millennial renters are currently poised at the threshold of housing independence, many residing with their parents in the suburbs and others in central neighborhoods of urban areas. In the next 5 years, when the larger cohorts of Millennials have moved into their 30s, and given continued recovery in the housing
market, their residence will likely progress to a different stage, and likely in different neighborhoods. • The impact of the great recession. This severe economic volatility slowed the rate of job growth at the crucial time when Millennials sought entry-level positions. Now that economic growth has resumed and new construction of housing is on the rise, we might expect that previously stalled progress through the life cycle will at least partially resume. This economic recovery will also accelerate renewed progress through the housing life cycle as well.
His conclusion on Millennial renters: “The period preceding and following the Great Recession may become known as a great natural experiment in urban flows. Whereas the demographic pipeline pumped young adults into cities at full volume, the normal
turnover and outflow was clogged by older peers who lacked the job and housing opportunities to advance to the next stages of their employment and housing careers. “Millennial presence was amplified in cities because the drain was plugged, but now we can anticipate an amplified outflow of those who had been pent up,” Myers writes. The New York Times article says, “If there is an economic lesson that the Great Recession has stamped upon many Millennials, it’s that there is often a big difference between what you want and what you can afford. So while some 22-year-old Millennials might have made a declaration that they would rather die than live in a suburb, their 35-year-old selves might feel differently, especially when they discover suburban houses are often cheaper and suburban schools are often better.” Resources: Cities cannot assume a continued boost from the young https://www.nytimes.com/2017/01/23/upshot/peak-millennial-cities-cant-assume-acontinued-boost-from-the-young.html Peak Millennials: Three Reinforcing Cycles That Amplify the Rise and Fall of Urban Concentration by Millennials http://popdynamics.usc.edu/pdf/2016_Myers_Peak-Millennials.pdf Not peak Millennial: The coming wave http://cityobservatory.org/not-peak-millennial-the-coming-wave/
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