Ten Days of Buzz: May 20-30, 2012

Welcome to Ten Days of Buzz! We scour the headlines from the past ten days and pull the best quotes for your edification. Enjoy…

In most of the country, smokers have very little rights. Smoke can travel into a neighbor’s unit, which any real estate attorney will tell you is a real problem. Non-smoking tenants don’t want the smell; if they have a respiratory problem, they’ll make a legal stink about it.

–Stephanie Rabiner, Esq. at Findlaw.com. Smokers Have Hard Time in NYC Rental Market, Reuters, 5/25/2012

Rental homes comprise 34 percent of the housing stock…they’ve gone from 33.7 million in 2000 to 37.7 million in 2010, with 45.9 million rental households projected for 2015. Meanwhile, owner-occupied households are actually declining in number.

–John Burns, California-based housing consultant. Forecast jobs uptick expected to stoke apartment demand, Las Vegas Business Press, 5/27/2012

“We as bankers are not in the business to be landlords. But the folks who are buying homes right now are still looking for a bargain. We can’t afford to sell at a bargain price.”

–Erik Beishir, CEO, Truman Bank. After housing crash, some banks become landlords, STLToday.com, 5/28/2012

“In 2006 and 2007, any condominium you put on the market sold, and now the same thing is happening with rentals. I wouldn’t say we are throwing darts, but we are pushing the envelope with rental prices and seeing how high we can take it.”

–David J. Maundrell, President of ApartmentsandLofts.com. A Rental Market Surge in Brooklyn, New York Times, 5/29/2012

“There’s sufficient demand among renters to justify development which brings capital and debt is more available, conditions are in favor of development,especially for market rate rentals.” 

–Still Hunter, a Senior Vice President at Marcus & Millichap. Developers take notice of demand for apartment rentals, NBC News, 5/29/12.

“With so little multi-family coming on the market, investment in single family homes for rent is becoming hotter and hotter.”

–Karl Smith, Forbes Contributor. The Housing Recovery: A Rethink, Forbes.com, 5/30/2012


Congratulations, Graduates. Now Seattle Up!

June is nearly upon us, and that means…graduation season! As college students across the US celebrate in ceremonies with long-winded guest speakers and funny hats, you can be that Pomp and Circumstance won’t be the only tune left ringing in their ears. The other bit? Oh, just that old refrain, beating with ever-increasing urgency: What’s the plan? And even more simply, for those of us prone to panic if we think too far ahead: Where to next? 

One popular option for the graduate eager to try something new, to be somewhere dynamic and vibrant, is (of course) Seattle. Let’s face it–Seattle is downright attractive to people from other parts of the country. In fact, our fair city is full of people born elsewhere; according to the Census, recent transplants have outnumbered Washington-born Seattlites for over thirty years now. And it’s no wonder families and graduates think of Seattle when they plan their next move; we’ve covered the benefits of Seattle pretty extensively by now, and the food alone is reason enough to stay for at least a few (very delicious) years.

But we digress; back to those newly-graduated college students. CareerBuilder.com just released its annual top cities for college graduates, and Seattle made the list at number 14.  The list was based on national data regarding employment opportunities, salary, and rent, and while San Francisco beat us by a hair, we were one of just a few western cities to make the top 15 spots.

Our unemployment rate is below the national average; our one-bedroom apartments cost less than in cities like San Francisco or New York; and to top it off (while this wasn’t taken into account for CareerBuilder’s list), if you’re bored in the middle of winter, you can always play amateur competitive dodgeball. What’s not to love?

So congratulations, college students, and see you soon! When you get here, we’ll be ready with coffee, culture, and those one-bedroom and studio apartments you love so much.

The Buzz: June Gloom, the Buy-to-Rent Market, & Leasing the Family Home

Curious about the news in the rental real estate market this week? Welcome to The Buzz. We scour the news so you don’t have to!

Selling the family home? Lease it instead!

There’s a new article out in the Seattle Times about selling the family home–how strange and gut-wrenching it can be to let go of  the place you grew up in, the place your parents lovingly turned into a home so many years ago. According to the National Association of Realtors, 15% of last year’s sales involved homes that had been in the same hands for more than 20 years–and that process can be tough on a family. With the rental market where it is, maybe more families should be thinking about keeping these homes in the family, and leasing them out as rental properties. Read about families who have sold, despite their reservations, here.

Preparing for summery June showings? Not so fast…

It’s no secret that summer comes late to Seattle. But according to the 30-day forecast from Komo News, this June is set to be seriously gloomy, and even cooler than years past. These cooler-than-average temps will usher in the morning cloudcover; if you’re turning over a unit that really pops in the sunshine, aim for showings in the afternoon when things are more likely to clear up. Check out the full forecast here.

Finding the right tenant: harder than cash flow?

LeaseRunner has just released their bi-annual Rental Industry Report. Their findings include: a majority (58%) of respondents reported that finding the right tenant is the most challenging aspect of property management, with cash flow listed as the least challenging task. Listing and showing a rental property was reported as the most time-consuming aspect of renting a unit out; unsurprisingly, failure to pay rent was the most commonly reported cause for eviction. Finally, 73% of respondents reported that online tools strengthened their relationship with their tenants. Read the full report from Marketwatch here.

A Morgan Stanley Housing Chief is jumping into the Buy-to-Rent ring.

Oliver Chang is currently head of U.S. housing strategy at Morgan Stanley. During his time with Morgan Stanley, he has written more about foreclosed homes as an investment opportunity than any other Wall Street analyst–and now he’s leaving the firm to start his own buy-to-rent housing fund. “Having followed this market for the past several years, I believe it represents one of the most compelling investment opportunities available across all asset classes today,” Chang wrote Monday in a letter to his colleagues–and he’s not the only one focused on this market. Check out the full article from the Chicago Tribune here.

Next Step for the Renter Nation? Growth.

The apartment market has been in great shape for awhile now–both locally and across the nation–and a new report has the market set to enter a fresh chapter.

When focus first shifted from the permanence of owning a house to the flexibility  and freedom of renting a home, developers weren’t entirely prepared. And so for the past few years, as vacancy has continued to drop, new development has been almost nil.

According to the report, which was put out by the CoStar Group, that’s about to change. In fact, construction of new multifamily buildings is set to pick up in 2013. As CoStar puts it, new development will be a “new phase of the ongoing recovery of the US apartment market.”

Clearly, Americans are continuing to prefer renting to the hassles of purchasing a home; as new construction moves forward, the apartment supply can begin to align itself a little more with our nation’s high level of demand.

While new construction will be increasing throughout the next several years, it should be seen in perspective. 60,000 units are expected to be added this year–according to BlueStar’s Andy Cohen, that’s “well below the long-term average.” With between 100,000 and 130,000 units estimated to be added each year through 2015, the growth in supply should be “moderate, a rate expected to achieve equilibrium between supply and demand.” 

Check out the full report here for even more info and stats. And speaking of new construction, have you heard about the 40-story apartment tower planned near the Paramount Theater downtown? Looks like we know where 1,400 of those planned new units will be…

Successful Summer Showings: Five Expert Tips

First thing’s first: Moms rock. Happy belated Mother’s Day to all of you supermom landlords and property managers out there! Hopefully you all got to spend last weekend with family and friends.

Now on to the good news: We’re not weathermen, but the five-day forecast is showing very little chance of rain and temps in the mid-sixties all this week. You know what that means…summer’s just around the corner, and so is Seattle Real Estate season!

Everything looks better in sunshine, and your vacant units can practically turn themselves over if the weather and timing are good enough (especially in this market!). But there are some things you should always be sure to do when you show your units. Here are five expert tips for showing properties to prospective tenants.

Spruce and clean like there’s no tomorrow.

You may think this goes without saying, but it’s amazing how often a prospective tenant loses interest in a unit because the turnover details haven’t been attended to. Fresh carpets and paint inside combined with a power-wash and some basic landscaping in the exterior can change the first impressions of your property exponentially for the better. One reason people move is for the promise of something fresh, something renewed in their lives. To evoke that promise, an apartment must look fresh and renewed itself. Details matter!

Arrange for plenty of light.

When the previous tenant has moved out and taken all of his lamps with him, a unit may be left looking a little dark around the corners. This is often more of an issue in older buildings, where there may be fewer ceiling lamps and less natural light. Tenants don’t want to rent what they can’t see, and dark corners can tap into their fear of the unknown. So: open those blinds! Turn on the lamps you have, and if necessary, bring in some neutral lighting to brighten the unit up. A little extra light goes a long way (especially when it’s raining).

Set the temperature.

You should always strive to show apartments at a comfortable temperature. This can be a bit tricky in Seattle, of course–depending on the weather, you may need to open all the windows and get the fans going to dissipate the heat wave, or turn the heat on to warm the place up on a dreary morning. Be sure to arrive early enough that you can moderate the temperature before the prospective tenants arrive.

Consider showing a unit with–or without–furniture.

The decision to show a unit furnished or unfurnished can be a tough one–tenants may prefer to view an apartment free of distractions, while others like to see what a unit might look like once they moved in. If attractive furniture is readily available for your unit, consider its strategic use–to fill up large, echoey spaces, for instance, or to demonstrate how a small space might be cleverly used (furnish sparingly in the latter case). If a unit has been empty for awhile despite repeated showings, consider rethinking your furniture decisions.

Have an application on-hand during the showing.

Although many property managers use online applications these days, it’s good to send the tenant on their way with a next step–something tangible to connect with their thoughts and daydreams about the unit. If you utilize paper applications, hand them out along with a fax number or self-addressed envelope; if you only accept applications online, consider making up a flier with instructions and a list of questions that the prospective tenant will be asked. Smartphone or tablet users may prefer not to carry paper; offer to e-mail PDFs while they are still in the building. This will keep your unit from getting lost in the fog of the Internet as the tenant views other properties, and will make it all the easier for him to apply once he’s ready.

Seattle Who?

Did you see? The Business Journals just ranked the top cities to which college graduates are moving; Seattle, which consistently falls within the top 25 in lists like this one, came in at #16. With Boston at #1, we’re sure it would rank much, much higher in a study focusing on West-Coasters.

But it had us wondering–who really lives in Seattle? Who are our renters, our neighbors? We looked at numbers from the most recent census, as well as Zillow.com, and this is what we found (click the links for our source numbers).

1. Seattle is young.

Did you know that adults ages 18-34 currently comprise one-third of the city’s population? That’s right, one-third–that’s a lot of skinny jeans. With Seattle’s longstanding reputation as a trendsetter in basically everything worth doing, wearing, or listening to, we shouldn’t be surprised…but it’s still kind of astounding. The breakdown, by the way, is as follows: 19.9% of residents are in their twenties, with a slightly smaller 19.6% in their thirties . Incidentally, tweens and teens make up just 9.4%, while just between five and nine percent of residents are of retirement age.

2. Seattle is college-educated. 

Seattle has a higher percentage of residents with a B.A. or higher than any other major city. 56% of our residents have a college degree–that’s higher than San Francisco (52%), Washington D.C. (48.5%), and Boston (44.7%). Not surprisingly, we also have the highest percentage of high school graduates. As soon as we learned this, we wanted to check out our hunch that a higher than average number of Jeopardy contestants are from Seattle…sadly, the numbers to back that up were not immediately available.

3. Seattle doesn’t have kids. Wait, really?

While Seattle has always been a great place for singles, it seems to lend itself pretty well to bringing up a family, too–and the incidental data we’ve gathered in Top Pot on snow days has seemed to confirm that. But while there are plenty of children in the city, it turns out only 18.2% of Seattle homes actually have kids–that leaves 81.8% without. With the median age firmly at 37 years, perhaps Seattle just isn’t quite ready to settle down.

The Buzz: Going Green, Capitol Hill Development, Industrial Vacancy, and more

Welcome to The Buzz, where we break down this month’s rental real estate news into delicious bite-sized morsels. Enjoy!

1. Going green in the units you own isn’t as hard as you might think.

The Seattle Times has released a new list of ways to go green, and the good news is, they’re easy to do! Among the advice is keeping air filters clean, changing lightbulbs (compact fluorescent is still the green standard, but check out the new LED bulbs as well), emphasizing natural sunlight in the units you show (which also makes them very appealing), and replacing old ceiling fans with newer, more efficient ones. For even more tips, check out the full article here.

2. Two new apartment buildings are about to join the mix on Capitol Hill–and more are on the way.

The new Citizen apartments were developed by Wallace Properties and hold 107 units in the converted, mixed-use building. Meanwhile, Lawrence Lofts has just started leasing its 131 units; management is cultivating a community feel with a local art show. Could all of these openings lead to a glut? Perhaps…at some point. For now, Seattle apartment construction actually has to make up for lost time–according to Dupre+Scott, “Developers opened fewer than 1,800 units last year.” Check out the new buildings here.

3. Industrial vacancy is dropping in Seattle–and that’s good news for the apartment market, too.

While the national industrial vacancy rate is ringing in at 9.3%, the Seattle rate dropped to 6.6% in 2012’s first quarter. That’s according to the CoStar Group, which specializes in commercial real estate. With Amazon’s proposed office towers and plenty of other commercial projects in the works, Seattle’s strong tech, startup, and industry culture is self-sustaining nicely these days–and that makes Seattle a destination for job seekers and their families. Check out CoStar’s numbers here.

4. There’s about to be a little bit of Seattle in Washington D.C.

Ever been to the National Mall in Washington, D.C.? The iconic area is about to be redesigned, and Seattle-based landscape architecture firm Gustafson Guthrie Nichol are 1/2 of the team that’s been hired to do the redeveloping (the other half of the team, Davis Brody Bond, are from New York). The Seattle firm won out over a myriad of others with an original design that “dramatically rethinks the use of water— operating with just 10 percent of the water of the current fountain.” Conservation and smart thinking? Yup, that sounds Seattle-like. Check out the full article here.

5. Are foodie-friendly apartments the new must-have among renters?

New York City: it’s like a test kitchen for must-have apartments. And the most recent  amenity-of-the-moment coming out of NY? Foodie Friendly apartments. That’s right–the Mantena building has the only 3-Michelin-Star restaurant oustide of Manhattan (it’s in Brooklyn), and it’s leasing faster than anything else around. Know any Michelin-calibre chefs you could hire to set up shop on your ground floor? Check out the full article here.