Editors’ Weekly News Roundup July 15 – July 19
It was apartments all the way this past week as far as the readers of Connect CRE were concerned. The multifamily sector figured in all five of the most-read stories for the week ending July 20, whether the main subject was sales, development, financing—or government regulation.
A proposed carrot-and-stick approach from the Biden administration was the theme of the week’s top story. Biden Calls for Imposing Apartment Rent Caps on “Corporate Landlords” was the headline, and the President wants Congress to enact legislation mandating a 5% limit on annual rent increases for apartment owners with more than 50 units in their portfolios. Landlords who exceed that threshold risk losing a valuable tax break.
The proposal didn’t go over well with the multifamily industry. “Rent caps, also known as rent control, have never been viable solutions to the ongoing affordability challenges facing our nation’s rental housing market,” the Housing Solutions Coalition said in a statement.
Another governmental action reported this past week was more welcome to the apartment sector. Introduced by Republican Mike Carey and Democrat Jimmy Gomez, the Revitalizing Downtowns and Main Streets Act would create a tax credit to facilitate conversion of many underutilized or vacant commercial properties to residential use.
Connect CRE’s story on the legislation, CRE Industry Groups Applaud Bipartisan Bill to Incentivize Residential Conversion, was our second most-read for the week. It summarized key provisions of the bill and included statements from industry leaders Jeffrey DeBoer at the Real Estate Roundtable andMarc Selvitelli at NAIOP. Both expressed strong support for the measure.
Government’s role in our third most-read story for the week was limited to reporting data on housing construction starts and permits. The level of development activity in multifamily can fluctuate more widely from month to month than in single-family, and such a fluctuation occurred in June.
We reported the June numbers from the federal government in Surge in Multifamily Pushes Up U.S. Housing Starts for June. New construction of apartments rose 19.6% from May, while single-family starts were down 2.2% for the month. In its analysis of the June report, the National Association of Home Builders reported that multifamily construction volume has been declining over the past several months, notwithstanding monthly spikes such as June’s.
Less onerous than rent control was another regulatory initiative out of Washington, this time from the Federal Housing Finance Agency. As reported in our fourth most-read story, FHFA Implements Tenant Protections for Renters in GSE-Financed Properties, the mandate applies tomultifamily properties financed through Fannie Mae and Freddie Mac.
Here, industry response was more positive. In a joint statement, the Mortgage Bankers Association, National Multifamily Housing Council and National Apartment Association said the tenant protections were “generally consistent with practices employed by quality, professionally managed housing providers.”
Rounding out the top five was a sale transaction in Southern California. Not just any sale, though—in fact, it was among the largest year-to-date in either California or nationwide.
Trophy Apartments in Sought-After San Diego Submarket Go for $167M reported that the seller and buyer were long-established mainstays (Dinerstein and GID, respectively) and that the deal was handled by Walker & Dunlop’s Hunter Combs and his team. The story drew strong interest both in California and across the U.S.
Commercial real estate doesn’t exist in a vacuum. Macroeconomic factors such as labor and consumer spending are key factors in the industry’s level of success. Both of these factors have been sending mixed signals lately, making it difficult to gain clarity on where they’re headed. In the second installment of a four-part Weekender series, we’ve gathered some of the most insightful real estate economists in the business to help provide direction.