3 Takeaways From ULI’s Housing Report

A just-released study from the Urban Land Institute reveals what stakeholders from all areas of the nation’s rental housing market see as the most urgent issues in today’s environment—and critically—what needs to be done to ensure more stability for both renters and property owners.The report, Stable Residents, Stable Properties, was authored by Senior Visiting Research Fellow Michael Spotts of ULI’s Terwilliger Center for Housing and was formulated through 30 interviews and 280 survey responses from tenant advocates, renters, public officials, housing affordability researchers, developers, and property owners. Spotts discussed the report and moderated a panel discussion with ULI Minnesota Executive Director Stephanie Brown and Principal Research Associate at the Urban Institute Christina Plerhoples Stacy on the findings during a Dec. 15 webinar. “Resident/housing system stability will not be solved without addressing root causes and long-term issues,” Spotts wrote in the report. Here are three top takeaways from the study:

A holistic approach

One of the overarching themes of the report, which took a deep dive into the challenges faced by owners and residents in today’s rental market, was the need for a more universal approach by stakeholders in order to improve resident stability. “…improving resident stability requires a holistic approach that considers both the needs of renter households and the realities of high-quality property operations and management,” Spotts wrote in the study. “The challenges are not separate, but two sides of the same coin.”

Bad-faith actors

The study found that perspectives of the whole are often shaped by the few when it comes to the rental housing landscape, and it can have a disproportionately negative impact on stability and policy. Bad-faith actors, whose numbers are typically very small, tended to impact how both renters and property owners viewed the group in general. “The problems created by bad-faith actors have a toxic effect on policy discourse, eroding trust and inhibiting good-faith dialogue,” read the report.

Finding common ground

The wide-ranging report found key areas of agreement that could help form a solid action plan going forward. There was a general consensus that the status quo of the market was “unsustainable” and respondents showed significant support for public policy to increase affordability and neighborhood choice. Property owners and managers and tenant advocates agreed that there was a need for more rental housing across a range of income levels, the addition of which could help to cool down rental prices and offer more options for renters.

The study found common ground for implementing and improving best practices for resident stability. Practitioners were generally supportive of efforts that would identify and disseminate best practices for improving resident stability, while tenant advocates showed wide support for a ‘renter bill of rights that would present a set of principles and policy recommendations for local and state officials looking to level the playing field and/or improve tenant protections.

---

  Source: 3 Takeaways From ULI’s Housing Report

https://www.creconsult.net/market-trends/3-takeaways-from-ulis-housing-report/

Fed Projects Multiple Interest Rate Hikes In 2022 To Combat Inflation — But 'Big Unknown' Still Lingers

Photo by Konstantin Evdokimov on Unsplash

 

High inflation is now the beast that the Federal Reserve is out to slay.

At least that's the big takeaway from Federal Reserve Chair Jerome Powell after the Federal Open Market Committee meeting on Wednesday — though he didn't use such metaphorical language.

Rather, Powell said that “elevated inflation pressures” spurred the central bank to plan to cut asset purchases twice as fast as it previously announced, which sets the stage for interest rate increases starting in 2022. “They are revising up inflation, revising down unemployment, and as a result, they’re pushing up the path for interest rates,” Renaissance Macro head of U.S. economics Neil Dutta told The New York Times. “It’s a bit of a 180 on Powell’s part.” Consumer inflation is as high as it has been since the early 1980s, and the government reported on Tuesday that wholesale prices jumped at a rate of 9.6% year-over-year in November, the fasted pace on record. “I think it’s the impact on the broader population that’s really the Fed’s challenge,” Logan Capital Management Principal Stephen Lee told NBC.

Bankrate Chief Financial Analyst Greg McBride told the network that until there is greater clarity about the transmissibility of the omicron variant and its possible economic fallout, with the latest move the central bank left itself room to reverse course on its monetary policy, if necessary.

At the latest meeting, the FOMC didn't raise interest rates, but it did forecast that there will be three hikes next year — up from the two it anticipated in September. The committee also foresees three more increases in 2023 and two the following year. The median projection among FOMC members for the federal funds rate in 2022 is to end the year at 0.9%, while the median for 2023 is 1.6%, and the committee expects the long-term rate to be 2.5%. The tapering of asset purchases gives the Fed flexibility when it comes to starting rate hikes, Janus Henderson Investors Global Bonds Portfolio Manager Jason England told Bisnow by email. “This should put pressure on the front-end of the U.S. Treasury curve, leading to more flattening, with the trajectory of front-end rates higher,” England said.

Powell stressed that the Fed isn't going to move precipitously in its monetary policy, with two more meetings to go until asset purchases are completely wound down. On the other hand, he also said that he didn't anticipate much of a waiting period afterward before interest rates rise, as occurred in the mid-2010s.

Moreover, the central bank also said that it is waiting for the labor market, which has been improving lately, to improve more before it ramps up interest rates.

“With inflation having exceeded 2% for some time, the committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment,” the Fed said in a statement.

When asked what would constitute maximum employment, Powell wasn't specific, saying that it would be a judgment call on the part of the committee, based on the unemployment rate, but also the labor participation rate, as well as wages and other factors.

Investors reacted positively on Wednesday, with the Dow Jones Industrial Average and the S&P 500 both up. The Dow gained 1.08% for the day, while the S&P 500 was up 1.63%. The FTSE NAREIT Composite index likewise had a good day on Wednesday, ending up at 1.32%.

---

 

Source: Fed Projects Multiple Interest Rate Hikes In 2022 To Combat Inflation — But ‘Big Unknown’ Still Lingers

https://www.creconsult.net/market-trends/fed-projects-multiple-interest-rate-hikes-in-2022-to-combat-inflation-but-big-unknown-still-lingers/

Is a Bubble Forming in Commercial Real Estate?

 

• The big question on many investors’ minds – “Is a bubble forming in CRE?”
• From a macro level, Retail, Urban Office and Suburban Office are clearly not in a bubble
  • -  Price growth has been moderate, and fundamentals have kept pace with price gains
• While Apartment values have climbed considerably, historically strong vacancy and rent growth support strong appreciation – Structural housing shortage also a strong tailwind
• Similarly, Self-Storage price gains are backed up by record property performance
  • -  Vacancy at all-time low and rent growth is strong
  • -  COVID helped quell overdevelopment risk, keeping supply and demand in balance over the short-term
• Even Industrial, where exuberance has been strongest, is likely not in bubble territory
  • -  Vacancy, rent growth and NOIs support the aggressive price appreciation
  • -  eCommerce and supply chain disruptions provide long-term tailwinds to the industry
• Investors should closely monitor the supply and demand outlook for the next 3 to 5 years

 

https://www.creconsult.net/market-trends/is-a-bubble-forming-in-commercial-real-estate/

US Property Price Growth Breaks Records as Demand Swells

 

The headline rate of U.S. property price growth climbed to the fastest annual rate in the history of the RCA CPPI in October amid intense investor demand for commercial real estate. The RCA CPPI National All-Property Index rose 15.9% from a year ago and 1.7% from September, the latest RCA CPPI: US report shows.

For the year through October, investors acquired $523.8 billion of commercial property assets, a 70% increase on the same period in 2021, as shown in the US Capital Trends report, also released this week.  Investors spent more than $200 billion on apartment properties in the first 10 months of 2021, almost double the activity seen at this point in 2020, and more than $100 billion on industrial properties.

Industrial prices rose 18.9% in October from a year ago and 1.9% from September, the fastest annual and monthly rates among the major property sectors. The apartment index climbed 16.8% from a year ago, the fastest rate in the history of the RCA CPPI for this sector. Apartment prices rose 1.4% from September.

The office index increased 13.7% year-over-year in October, a fourth consecutive month of double-digit growth. Suburban office prices continued to drive gains, increasing 15.6% from a year prior. The CBD office index rose 0.9% year-over-year, an improvement from the declines seen for most of 2021.

---

Source: US Property Price Growth Breaks Records as Demand Swells

https://www.creconsult.net/market-trends/us-property-price-growth-breaks-records-as-demand-swells/

Here Are the Apartment Markets Attracting New Renters

 

Remote work continues to dominate renter migration patterns, according to data released this week by Apartment List—particularly in tech-hub markets such as San Jose, Raleigh, and Austin.

Dramatic rent increases have hit virtually all corners of the nation in 2021. Nationally, the median rent price is up over 16% since January, and in some cities rent growth is more than double that, Apartment List reported.

“Today, renters who are looking to move are not only dealing with this affordability crunch, but also navigating a tight market with historically low vacancy rates,” according to the report. “At the same time, migration patterns are also being impacted by one of the most significant societal shifts brought about by the COVID pandemic—remote work.”

Top Three ‘Revolving Door’ Markets

San Jose, Raleigh, and Austin are experiencing high turnover with many renters considering moving both in and out.

These three “revolving-door” metros are the only places that appear in the top 10 for both metrics. In San Jose and Raleigh specifically, the cross-metro rate exceeds 50% for both outbound and inbound searches.

These regions stand out as technology hubs heavily disrupted by the remote work revolution. In fact, they rank first (San Jose), fourth (Austin), and eighth (Raleigh) in terms of the share of their workforce that have remote-friendly occupations.

This quarter’s report incorporates the search preferences of users who registered with Apartment List between July 1 and Sept. 30, 2021.

“Newfound flexibility has likely given many residents of these three metros the opportunity to move somewhere new, which in turn creates vacancies that attract new renters from afar,” Apartment List reported. “We have seen this dynamic play out in local rent prices, where over the last 18 months these cities experienced dramatic rent declines followed by similarly-dramatic rent rebounds as residents cycle in and out of the rental market.”

Beyond these three, other technology-friendly markets that are experiencing high outbound migration this quarter (e.g., San Francisco, Boston, Denver, Baltimore) also rank high in terms of remote-friendly workforces and dramatic price swings.

Long-Distance Moves on the Increase

This collision of market trends and changing preferences may result in a greater number of longer-distance moves—in Q3 2021, 40% of Apartment List users were searching to move to a new metropolitan area, and 26% were searching in a different state altogether.

Despite being separated by more than 1,000 miles, Miami is the number one destination for New York City renters, narrowly edging out nearby Philadelphia. 6.1% of searches leaving the New York City metro are destined for Miami, and another 7.8% are destined for other parts of Florida, namely Tampa, Orlando, and Jacksonville metros.

California: A Major Exporter of Renters

As a large, expensive, and politically liberal state, California has long held a reputation for exporting residents across the country and altering economic and political landscapes along the way. This notion hit a major milestone in 2020, when for the first time in its 170-year history California experienced net population loss, losing over 182,000 residents in the wake of the COVID-19 pandemic.

Apartment List search data indicate that this trend may be continuing, as California supplies more search interest across the country than any other state. In the most recent quarter, eight states—Alaska, Hawaii, Washington, Oregon, Nevada, Arizona, Utah, and Texas—received more searches from California than any other state. In Nevada specifically, over half of all apartment searches came from California residents.

---

Source: Here Are the Apartment Markets Attracting New Renters

https://www.creconsult.net/market-trends/here-are-the-apartment-markets-attracting-new-renters/

Congress wants to kill the 'backdoor Roth IRA.' Here's what it means for you

 

 

Tax-free savings in retirement are great to have at your disposal. But provisions in the Build Back Better bill would limit some of the ways to accrue them in the future -- at least for high-income savers. The provisions are included in the version of the bill that recently passed the House, and is set to go to the Senate for consideration in December.

No more 'backdoor' conversions to Roth IRAs

A key way to build tax-free savings is to contribute to a Roth IRA.

While you won't get a tax break for your contributions to a Roth IRA, the after-tax money you put in will then grow tax-free and can be withdrawn tax-free once you reach retirement age. In 2022 you can contribute up to $6,000 a year ($7,000 if you're 50 or older).

High earners, however, are prohibited from contributing directly to a Roth IRA if their modified adjusted gross income in 2022 is at least $144,000 ($214,000 if married).

But they can still create a Roth IRA through a so-called "backdoor" strategy that involves converting their other IRA savings.

Although high-income taxpayers are precluded from making deductible contributions to a traditional IRA, they are allowed to make non-deductible ones.

In transferring a non-deductible IRA to a Roth, you would owe tax on the gains that had accrued on your contributions. That's avoidable, however, if you make the conversion immediately after making your non-deductible IRA contribution, since there would be no time for the money to grow.

But this strategy may get the ax. Starting next year, the House-passed bill would prohibit all taxpayers from converting their after-tax contributions using this "backdoor" conversion method to a Roth IRA.

No more 'mega backdoor' conversions to a Roth 401(k) either

The bill would also prohibit a similar strategy that is currently permitted when it comes to Roth 401(k)s.

Roth 401(k)s are another great way to build tax-free retirement savings and they are now offered by a majority of employers that offer tax-deferred 401(k) plans. Unlike Roth IRAs, Roth 401(k)s do not have any income eligibility rules and they allow for much higher contributions -- up to the 401(k) limit of $20,500 starting next year ($27,000 if you're at least 50).

On top of that, your employer also may let you make after-tax contributions to your regular 401(k), the gains on which would be taxable when you withdraw them. Under current law, you may convert those pre-tax and after-tax savings from your 401(k) account into a Roth and thereby skip having to pay taxes on future withdrawals.

In total, savers effectively can sock away up to $61,000 next year ($67,500 if you're at least 50) -- once your contributions, your employer match and your after-tax contributions are counted.

So for high-income earners, it is possible to convert large sums of money into a Roth 401(k) through what's known as a 'mega backdoor' strategy. Under the bill, however, starting next year, taxpayers would be prohibited from converting the after-tax portion of their 401(k) savings into a Roth.

Then, a decade from now -- in 2032 -- anyone with modified AGI over $400,000 (or $450,000 if married and filing jointly) would also be prohibited from converting their pretax savings into a Roth. That would apply whether their pre-tax savings come from their 401(k) or a traditional, deductible IRA.

What won't change

There is no predicting whether lawmakers will preserve the Roth restrictions in the House-passed Build Back Better bill -- or even if the bill itself will become law. But if the prohibitions on backdoor Roth conversions do survive, Roth IRAs, Roth 401(k)s and Roth conversions will still be useful vehicles for the many savers who meet the income and other eligibility rules governing Roths.

And nothing likely will change for anyone when it comes to their 2021 savings strategies. "We're executing 2021 contributions [and] conversions by December 31 as our best thinking is the bill will have no effect on 2021. For 2022 and beyond, we're taking a wait-and-see approach," said New Jersey-based CPA and certified financial planner Joseph Doerrer.

But for his high-income clients, Doerrer said he is strategizing when and what portion of their savings it makes sense to convert to a Roth before the window potentially closes for them in 2032.

"We're modeling out smaller piecemeal conversions, if we have any favorable play in their tax brackets, to chip away at their pre-tax balances in the event there is the 10-year or so proposed window after which Roth conversions would be unavailable to higher income individuals."

For Florida-based certified financial planner Mari Adam, her advice to clients remains the same regardless of the fate of the Roth provisions in the bill.

"Save consistently, spend moderately and invest for the long-term," she said. "The only advice I would add? Stay nimble. Tax rules change, so stay flexible and avoid committing to any financial strategy that can't easily be undone when the tax regime changes."

---

 

Source: Congress wants to kill the ‘backdoor Roth IRA.’ Here’s what it means for you

https://www.creconsult.net/market-trends/congress-wants-to-kill-the-backdoor-roth-ira-heres-what-it-means-for-you/

Just Sold Amber Ridge Apartments & Indian Creek Apartments Aurora IL

 

Just Sold!

Aurora, IL, December 6th, 2021 – Marcus & Millichap (NYSE: MMI), a leading commercial real estate brokerage firm specializing in investment sales, financing, research and advisory services, announced today the sale of two adjacent 24-unit apartment properties located in Aurora, IL, according to Steven D. Weinstock, regional manager and first vice president of the firm’s Chicago Oak Brook office. The assets, Amber Ridge Apartments and Indian Creek Apartments, sold for $1,850,000 and $1,885,000 respectively.

The sellers and buyer of both properties were secured and represented by Randolph Taylor, Senior Associate, and an investment specialist in the National Multi Housing Division in Marcus & Millichap’s Chicago Oak Brook office.

The properties are located at 1015 N Farnsworth Ave and 991 Tollview Ave in Northeast Aurora, IL. The properties were sold to a repeat buyer for the agent and the firm and were financed by the Marcus & Millichap Capital Group. 

 

# # #

About Marcus & Millichap (NYSE: MMI)

With over 2,000 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research and advisory services. Founded in 1971, the firm closed 8.954 transactions in 2021 with a value of approximately $43.4 billion. Marcus & Millichap has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more, please visit: www.MarcusMillichap.com.

 

how Can We Help You?

Are you looking to Buy, Sell or Finance/Refinance Multifamily Property?

contact us

https://www.creconsult.net/market-trends/just-sold-amber-ridge-apartments-indian-creek-apartments-aurora-il/