Jon's Reading List - Week of August 27, 2021
Things I read this week to try and stay abreast of developments that affect the apartment industry...and maybe some random stuff that's just fun to read.
Lumber Prices are Down but There are Other Issues Afoot (GlobeSt.com, August 24, 2021)
While attention is frequently on lumber, many other needed products are still scarce and expensive. “The price of LVL is still way up high because there’s not enough production to bring it down,” Setzer says. “There’s not enough production to meet demand, and a lot of these manufacturers have corporate partners, like distribution partners, that are on allocation because they’re so far behind on production. That won’t change. Overall, your total package for building a multifamily home is still going to be supply constrained and still going to have a handful of items that are going to be expensive.”
Builder Confidence for New Multifamily Dips in Q2 (GlobeSt.com, August 23, 2021)
The Multifamily Production Index, which measures builder and developer sentiment about current conditions in the apartment and condo market, dropped three points to 48 compared to the previous quarter. The trade group (NAHB) explained a number below 50 indicates that more respondents report conditions are getting worse than report conditions are improving...
In an encouraging move for new construction the Multifamily Occupancy Index, which tallies the multifamily housing industry’s perception of occupancies in existing apartments increased six points to 70.
Real Estate Interests Ask Supreme Court to Block Biden's Eviction Moratorium (Wall Street Journal, August 20, 2021)
A group of property managers and real-estate agents asked the Supreme Court to block the Biden administration’s new eviction moratorium Friday, filing papers hours after a federal appeals court rejected their challenge to the pandemic-relief policy.
The move followed a decision by a three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit, which declined an emergency request by the real-estate interests to lift the moratorium that the Centers for Disease Control and Prevention imposed on Aug. 3. The appellate court’s order was brief and didn’t offer detailed legal reasoning.
Apartment Rents Move Beyond Pre-Pandemic Levels (GlobeSt.com, August 20, 2021)
Rents grew 9.2% year-over-year in July, pushing beyond pre-pandemic levels, according to the July 2021 Zillow Real Estate Market Report.
The monthly increase in the Zillow Observed Rent Index (ZORI) was the fastest observed by Zillow, which has been tracking data since 2015. In addition, Zillow estimates that the US ZORI in July was 2.9% ($52) higher than where it would have been if the last roughly 18 months had been more ‘normal.’
Landlords look for an exit amid federal eviciton moratorium (Associated Press, August 19, 2021)
“Without rent, we’re out of business, ” said Gary Zaremba, who sold 40 of his properties in Ohio due to the moratorium and still has a quarter of his tenants in the remaining 100 buildings struggling to pay rent. He has helped some apply for rental assistance, he said.
“It’s like a restaurant that doesn’t have patrons,” he said. “I don’t get the rent. I can’t pay my maintenance staff. I have to lay them off. I can't fix the buildings and keep them in good repair. So, that means they are going to get even worse off. I can’t pay my taxes.”
Commercial Real Estate
CRE Lending Index Nears Pre-Pandemic Level (GlobeSt.com, August 24, 2021)
Commercial lending markets strengthened in Q2 2021, staying on pace with the wider economic recovery, with borrowers’ growing risk appetite fueling increased demand for transitional financing, such as bridge loans, according to research released this week by CBRE.
Banks accounted for 24.3% of total loan volume in Q2 2021, dropping from their top rank in Q1 2021. Regional and community banks were the most active. Construction loans accounted for 46% of bank lending volume in Q2 2021, largely as a result of increases in industrial and multifamily housing development.
North Carolina/Piedmont Triad News
Davidson County Schools makes masking mandatory (Winston-Salem Journal, August 24, 2021)
With the number of quarantines skyrocketing after one week of school, the Davidson County Schools Board of Education voted 5-0 on Monday to reverse its masking policy for students and staff, switching from optional to mandatory masking for at least four weeks...
Stokes, Wilkes and Yadkin counties remain mask-optional. Davie County Schools will start the new school year on Tuesday with mandatory masks, reversing a decision the school board made in late July.