Jon's Reading List - Week of July 30, 2021

Posted By: Jon Lowder Blog,

It's a busy week in the apartment association world and this is what I'm reading to try and keep up.

Apartment Industry

Investors Are Aggressively Bidding up Apartment Prices as Housing Shortages Loom (, July 29, 2021)
“The demographics and the housing needs point to particularly strong demand over the next few years,” he said. “Based on what investors are telling me today, the bid climate is particularly aggressive, putting downward pressure on cap rates.”

Biden urges Congress to extend eviction moratorium, saying his hands are tied by Supreme Court ruling (Washington Post, July 29, 2021)
President Biden on Thursday called on Congress to act “without delay” to extend a national eviction moratorium that is set to expire Saturday. The White House said Biden is not able to act on his own because of a Supreme Court ruling.

Conditions Ripe for Strong Second-Half Performance (Yardi Matrix Multifamily National Report, Summer 2021)
Fueled by robust demand, rent growth came roaring back in the first half of 2020. Some 174,000 units were absorbed nationally through May, putting 2021 on track to be among the hottest years since the 2008 recession. Eye-popping second-quarter growth put asking rents up 6.3% year-over-year as of June. Many secondary markets continued to post dazzling increases, and gateway markets such as New York and San Francisco are rapidly rebounding from the pandemic.

Apartment Completions Hit a Two-Decade High (, July 27, 2021)
In the second half of 2020 and the first half of 2021, roughly 363,000 rentals were delivered. Marcus & Millichap says this was the largest completion volume over a four-quarter stretch in at least two decades.
Two metros exceeded the 20,000-unit threshold. Dallas-Fort Worth led the way, adding 27,700 apartments. Houston was next with 20,200 new apartments. Another Texas market, Austin, also added more than 10,000 units.  Other Sunbelt markets, including Atlanta, Phoenix and Charlotte, also added markets at a fast clip.

U.S. Appeals Court Finds CDC Eviction Moratorium Unlawful (Reuters, July 23, 2021)
A U.S. appeals court ruled on Friday that the Centers for Disease Control and Prevention lacked authority for the national moratorium it imposed last year on most residential evictions to help curb the spread of the coronavirus.
The ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati means judges in Tennessee, Kentucky, Ohio and Michigan are no longer bound by the moratorium, said Joshua Kahane, the lawyer who argued the case for a property manager.
The unanimous decision by the three-judge panel upheld a lower court ruling in March finding the CDC overstepped its authority when it issued the moratorium last year.

Red Tape Complicates Tenant Protections (Wall Street Journal, July 23, 2021)
Problems distributing the funds—which can be used to cover back rent, future rent and utilities—often stem from bureaucratic bottlenecks. Some states are having trouble keeping up with requests for aid, while numerous renters are being disqualified for failing to complete their applications correctly, say landlords, tenants and local officials. A key sticking point: verifying an applicant’s income with either last year’s tax return or two months’ worth of paycheck documentation.

Rising Lumber Prices Add $92 Per Month to Apartment Rents (, July 21, 2021)
Increases in softwood lumber prices have raised the average rent apartment tenants would pay on new construction between April 17, 2020 and July 8, 2021 by $92 per month and $9,990 to the market value of a new rental unit, according to a new report by the National Association of Home Builders.

35% of Renters Looking to Upsize This Year as WFH Takes Root (, July 21, 2021)
About 35% of apartment hunters say they’ll upsize their apartments to set up proper home offices; predictably 60% of renters currently in studio apartments say they’ll size up. About 40% of respondents living in one bedroom apartments and 22% of two-bedroom apartment dwellers said they’d upgrade to units with more space.

Startups Bet on Flexible Apartment Leases, Even as Employees Retun to the Office (Wall Street Journal, July 20, 2021)
Investors are pumping money into real-estate startups that are pioneering flexible ways to rent apartments on the belief that remote working trends and new forms of housing demand will remain long after the pandemic is over.


U.S Home-Price Growth Rose to Record in May (Wall Street Journal, July 27, 2021)
The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 16.6% in the year that ended in May, up from a 14.8% annual rate the prior month. May marked the highest annual rate of price growth since the index began in 1987.

Will the U.S. Housing Shortage Get Worse? (Marcus & Millichap, July 26, 2021)
This 5-minute video featuring John Chang, Sr VP Director of Research Services for Marcus & Millichap, provides a really good look at the pressure on the housing market and why the market is likely to get tighter in the coming years. 

Property Investors Bed Down in the Family Home (Wall Street Journal, July 23, 2021)
Wall Street firms are more eager than ever to buy family homes. If they snap up existing supply rather than help build new dwellings, they risk killing their latest golden goose.
Last week, Blackstone’s real-estate investment trust bought a portfolio of apartments for $5.1 billion from insurer American International Group. In June, the investment firm spent $6 billion on Home Partners of America, a company that owns more than 17,000 houses across the U.S. and offers renters an option to buy. Private-equity giant KKR launched a new division that will buy homes to rent them out, Bloomberg reported.

The Eviction Moratorium's End May Not Lead to a Jump in Homelessness (, July 23, 2021)
“A lot of people have been getting [unemployment payments],” John Loper, associate professor of real estate for the USC Sol Price School of Public Policy, tells “The large number of people we’ve worried about not paying rent have been receiving government funding. I think there’s going to be very few evictions more than normal. The majority of people are getting enough money to pay rent,” whether from government aid or having jobs.

Five Major Findings in the 2021 State of the Nation's Housing Report (Joint Center for Housing Studies, July 22, 2021)
The inventory of homes for sale is at historic lows; Home prices are rising rapidly; Rents are down sharply for high-end apartments in some high-cost urban markets; Renters and people of color fared the worst during the pandemic; A growing number of people are experiencing unsheltered homelessness.

Investor Home Purchases Hit Record, Surpassing Pre-Pandemic Levels (Redfin, July 22, 2021)
Real estate investors purchased 67,943 U.S. homes in the second quarter of 2021—the highest quarterly figure on record. That’s up 15.1% from the prior quarter, and up 106.7% from the second quarter of 2020, when activity in the housing market was stalled due to pandemic restrictions.
In dollar terms, investors bought a record $48.5 billion worth of homes in the second quarter, up from $38.9 billion in the prior quarter and $20.9 billion a year earlier. The typical home they purchased cost $439,600—23.7% higher than a year earlier—amid surging housing prices.
Bokhari continued: “Investors are also taking advantage of surging demand in the rental market. With so many Americans priced out of homeownership, investors can turn an easy profit by buying up properties and renting them out.”

The Shortage of Starter Homes Extends Beyond Major Cities (Wall Street Journal, July 21, 2021)
In the late 1970s, an average of 418,000 new units of entry-level housing were built each year, according to data from Freddie Mac. By the 2010s, that number had fallen to 55,000 new units a year. For 2020, an estimated 65,000 new entry-level homes were completed.

Big Landlord Launches $5 Billion House Hunt (Wall Street Journal, July 20, 2021)
Tricon Residential Inc., TCN +0.54% a Toronto company that operates one of the largest pools of U.S. rental homes, said it has struck a home-buying pact with the Teacher Retirement System of Texas, Pacific Life Insurance Co. and one of the company’s existing foreign investors, which it declined to name. 
The parties will together contribute up to $1.55 billion in cash, which will be combined with debt to give the venture purchasing power of about $5 billion. Tricon, which operates about 25,000 U.S. rental homes as well as several apartment complexes in the U.S. and Canada, said it expects to be able to buy about 18,000 houses through the new venture. 
Mr. Berman said Tricon is looking to pay about $250,000 a home, and plans to spend $25,000 on closing costs and renovations at each property.