HUD Announces Increased Payment Standards, More Vouchers | National Apartment Association

On September 1, 2022, the U.S. Department of Housing and Urban Development (HUD) released its updated fair market rents (FMRs) for fiscal year 2023. Each year, HUD updates the FMRs to, among other things, set a reasonable payment standard for public housing agency (PHA) payments to housing providers participating in the Section 8 Housing Choice Voucher (HCV) program. Nationally, the average FMR increased by about 10 percent.

This update to payment standards comes at a critical time when pandemic recovery, inflationary pressures, and the massive housing shortage have forced average rents up across the country. For example, FMRs in Phoenix will increase by 33 percent in response to significant demand.

“These new FMRs will make it easier for voucher holders facing this challenge to access affordable housing in most housing markets while expanding the range of housing opportunities available to households,” said HUD Secretary Marcia Fudge in a press release.

Here are some of the key takeaways from the announcement.

New Data sources

Typically, HUD utilizes the Census Bureau’s American Community Survey (ACS) to estimate the 40th percentile gross rents of households that recently moved into an area. This often provides an accurate picture of near-median rents for new leases. Last year, however, the Census Bureau announced that it would not release the estimates from the 2020 ACS because the COVID-19 pandemic had interfered with data collection.

Instead, HUD supplemented private market data to maintain the accuracy of the FMRs, sourcing data from RealPage, Moody’s Analytics, CoStar Group, CoreLogic, Apartment List and Zillow, as examples. Industry groups, including NAA, raised concerns about the use of this data. Using private data precludes stakeholders from checking to see if the data are consistent across time and location, and if they are representative of the population in question rather than collected based on the company’s anticipated ability to sell them. HUD is expected to use solely once again the ACS data in the following years.

New Vouchers

In addition to higher rates, HUD will award approximately 19,700 new Housing Choice Vouchers to PHAs. This increase is made available by the Consolidated Appropriations Act of 2022 which was signed into law on March 15, 2022. HUD has sent a notification to eligible PHAs informing them of the new vouchers providing a deadline of September 2 to accept or decline the increase.

Policy Outlook

The National Apartment Association (NAA) urges policymakers to adopt responsible and sustainable housing policies. Additional vouchers and FMR increases are desperately needed for low- and moderate-income households and housing providers who have been thrust into financial uncertainty amid economic turmoil due to the pandemic.

 

Nevertheless, there is more to be done. The HCV Program is fraught with payment delays, impractical inspection requirements and administrative red tape which makes housing provider participation infeasible in countless markets. To help address the industry’s concerns, NAA continue to prioritize and encourage support for the Choice in Affordable Housing Act (S. 1820/H.R. 6880), introduced by Senators Chris Coons (D-DE) and Kevin Cramer (R-ND) in the Senate, and by Representatives Emmanuel Cleaver (D-MO-05) and John Katko (R-NY-24) in the House.

 

NAA worked closely with the bill’s sponsors to include several industry priorities, which were formulated with NAA member feedback, in the legislation to speed up tenancy approval processes, reduce duplicative inspections requirements and provide better ongoing support for housing provider participants. We look forward to continuing this work with Congress and the Administration to advance the industry’s advocacy goals and responsibly and sustainably address the nation’s housing affordability challenges.

 

For more information on Housing Choice Voucher Program policy, please contact Ben Harrold, NAA’s Manager of Public Policy.

 

Source: HUD Announces Increased Payment Standards, More Vouchers | National Apartment Association

https://www.creconsult.net/market-trends/hud-announces-increased-payment-standards-more-vouchers-national-apartment-association/

Record-low vacancy rates mean a good second half of 2022 for multifamily

Resilient. That’s how a new report from The Laramar Group describes the multifamily market across the nation and the Midwest.

According to the Laramar Group’s Mid-Year Multifamily Review, record-low vacancy rates and double-digit rent growth will continue to fuel the multifamily market across the United States.

This doesn’t mean that this sector won’t face challenges throughout the rest of 2022 and into next year.

Interest rates remain a major concern. Laramar Group says that rising interest rates during the second quarter of this year have already had an effect on capital markets, resulting in lower loan-to-value ratios, increased borrowing costs, and an uneven transaction market.

“We are expecting a continued upward trajectory for rents in the multifamily sector, especially in the Southeast and Mountain states where demand drivers such as job and population growth are strong,” said Bennett Neuman, a chief investment officer with Laramar. “At the same time, the recent dislocation in the capital markets may present interesting acquisition opportunities on a selective basis.”

According to Laramar, investment volume will remain elevated but may decrease from recent record levels. The multifamily market saw $63 billion in sales in the first quarter of 2022, a year-over-year increase of 56%.

This was the strongest first quarter on record for overall multifamily activity, according to CBRE research. But rising interest rates will have an impact on investment activity and pricing through the remainder of 2022.

Laramar predicts that multifamily construction will continue at a steady pace. Given population shifts and housing demand, Gateway and Texas markets are leading the way for new supply.

During the first quarter of 2022, the multifamily market saw the highest absorption in more than 20 years. New York topped the list for absorption in the first quarter, with 105,600 units.

Among the other top 15 markets noted by CBRE are high-population growth markets such as Denver, which ranked ninth, and Orlando, which ranked 12th, as well as mature markets such as Chicago, which ranked fifth, and Washington, D.C. which ranked sixth.

Another study, commissioned by the National Multifamily Housing Council and the National Apartment Association, said that the United States needs 4.3 million new apartments by 2035.

In the Midwest, markets such as Indianapolis and Columbus will each need 3,000 additional units annually by 2035 to meet market demand. Apartment construction represents a notable segment of the economy, generating $984 million for the local economy in Columbus and $779.5 million in Indianapolis, according to the NMHC/NAA study.

CBRE research from the first quarter of this year shows several Midwest markets with 10% or higher yearly rent growth, including Detroit (10.4%), St. Louis (10.4%), Kansas City (10.5%), Cincinnati (10.6%) and Indianapolis (13.0%).

 

Source: Laramar Group: Record-low vacancy rates mean a good second half of 2022 for multifamily

https://www.creconsult.net/market-trends/laramar-group-record-low-vacancy-rates-mean-a-good-second-half-of-2022-for-multifamily/

Apartment rental rates drop for first time in two years

The spike in rental property rates across much of the United States is finally starting to level out, according to a September analysis by data company CoStar Group.

The fall is good news for millions of renters who have seen prices jump 23% to record highs over the past two years. CoStar reported that August month-to-month asking prices fell 0.1% from July — the first decrease in the multifamily market since the pandemic began.

COVID-19 coupled with the boom in home sales boosted the rental market demand, which pushed prices to new highs. However, increases in new apartment construction and shifts in consumer sentiment have prevented renters from signing pricey multiyear leases, contributing to lower rent prices, the Wall Street Journal reported.

“After a 20-month run of positive monthly growth dating back to December 2020, the market finally witnessed negative asking rent growth on a monthly sequential basis from July to August, with rents down 0.1% in July,” said Jay Lybik, the national director of multifamily analytics for CoStar Group. “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand.”

While the slight decrease has some economists cheering, others warn that apartment rents in most of the country are still much higher than they were a year ago.

August 2022 rents were 7.1% higher than the year before, according to CoStar.

How much relief renters will see depends largely on where they live.

For example, Florida's West Palm Beach has seen rental prices go down 0.5%, but in San Diego, rent has continued to climb.

Still, CoStar analysts seem optimistic that more declines may be on the way.

 

Source: Apartment rental rates drop for first time in two years

https://www.creconsult.net/market-trends/apartment-rental-rates-drop-for-first-time-in-two-years/

eXp Commercial Partner O’Connor Focuses on Property Tax Reduction

When asked about the greatest challenges their clients face, real estate agents often mention cash flow and high commercial and residential real estate costs. To provide solutions to these hurdles, the eXp Partners program has partnered with O’Connor, a property tax consulting firm.

 

Through O’Connor, eXp Realty residential and commercial agents can help their clients reduce high costs through property tax reduction, federal tax reduction through cost segregation, and commercial appraisals. O’Connor only charges clients a fee if they successfully reduce their taxes.

eXp real estate agents and their clients have access to the following through eXp Partner O’Connor:

• Residential Property Tax Reduction: O’Connor’s tax consultants provide valuation intelligence and work with the assessor, appraisal review board, and judicial appeal process.
• Commercial Property Tax Reduction: Licensed tax agents help eXp Commercial clients by filing an appeal, reviewing financials, protesting over-assessed property values, and pursuing every legal avenue to lower taxes.
• Federal Tax Reduction: O’Connor helps eXp Commercial clients increase cash flow by reducing taxable income through cost segregation, a tool that allocates property components for federal income tax depreciation calculations.
• Commercial Appraisal: O’Connor’s appraisers gather and analyze data to make informed decisions about real estate values.

To enroll or learn more about services, contact us.

Interested in jump-starting your real estate career? Join Us

 

Source: eXp Commercial Partner O’Connor Focuses on Property Tax Reduction

https://www.creconsult.net/market-trends/exp-commercial-partner-oconnor-focuses-on-property-tax-reduction/

Multifamily great place to be

Multifamily is a great place to be. One of the reasons for that is due to the Agencies, Fannie and Freddie, that provide liquidity to that market. There isn't that liquidity in the other commercial real estate asset classes. As well, apartment buildings across the country are full and they are able to push rents right now. Until we see more supply come online rents will continue to go up. #multifamily #commercialrealestate https://www.cnbc.com/video/2022/10/12/banks-pull-back-loans-from-the-commercial-real-estate-sector.html?

Legislation Introduced to End Federal CARES Act Notice to Vacate

On September 30, 2022, Rep. Barry Loudermilk (R-GA)introduced the “Respect State Housing Laws Act,” federal legislation that would end the CARES Act notice to vacate requirement. The National Apartment Association (NAA), working alongside the National Association of Residential Property Managers (NARPM), collaborated with Rep. Loudermilk to secure the introduction of this important bill.

In immediate response, NAA and the National Multifamily Housing Council (NMHC) released a statement applauding the introduction of legislation that would help restore normalcy and balance to rental housing operations.

In March 2020, Congress passed the CARES Act, legislation that included a temporary 120-day moratorium on evictions and late fees for federally-backed and federally-assisted housing. The moratorium featured what should have been a temporary notice to vacate requirement. Due to a drafting error in the legislation, however, this provision – which intrudes state and local notice periods – has remained in place long past the moratorium’s expiration, and remains a disputed issue in courts today. Read more on the notice to vacate requirement.

For more than three years, rental housing providers have navigated immense operational hurdles and financial challenges, only exacerbated by federal interference into state and local law. The introduction of this bill is a critical step in the right direction, and NAA will steadfastly advocate to ensure it crosses the finish line.

 

Source: Legislation Introduced to End Federal CARES Act Notice to Vacate | National Apartment Association

https://www.creconsult.net/market-trends/legislation-introduced-to-end-federal-cares-act-notice-to-vacate-national-apartment-association/

Just Sold! Former UAW Local No 145 Office Building Montgomery IL

Montgomery, IL September 29th, 2022 – eXp Commercial (NASDAQ: EXPI), the fastest growing national commercial real estate brokerage firm, announced today the sale of a 6,758 SF Office Building located in Montgomery, IL.

The property is located at 1700 Oakton Rd in West Suburban Chicago Montgomery, IL and consists of a free-standing 6,758 SF Office Building/Meeting Hall on a 4.7 acre lot. This surplus property intended for the expansion of the adjacent 152 Unit Multifamily Property Victorian Apartments also sold by Randolph Taylor, was formerly owned and operated by the United Auto Workers Local No 145 in Montgomery. The Buyers of the property will be operating the property as a Church. 

This was an exclusive listing and the transaction was brokered and both Buyer and Seller were represented by Randolph Taylor a Senior Associate and Multifamily Investment Sales Broker with the Chicago-Naperville eXp Commercial office.

Randolph can be contacted at (630) 474-6441  |  rtaylor@creconsult.net  

https://www.creconsult.net/company-news/just-sold-former-uaw-local-no-145-office-building-montgomery-il/