Gary Wilson
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On a Personal Note
In this first article, I provide information I thought you'd find most valuable for your business this month. Below this article, you'll find more fun and interesting content, including our Quiz Contest. Play today!
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NREI Update
Since the election, “uncertainty” has been a buzzword among economists. The direction of U.S. policy is not clear on major issues ranging from immigration to tax reform. But the fundamentals of the apartment sector are relatively strong despite it all.
“I hear people talk about ‘uncertainty,’ but when I boil it down to how it will affect the multifamily market, I don’t see any huge change,” says John Sebree, director in the national multi housing group of brokerage firm Marcus & Millichap.
Rents will continue to grow faster than inflation and the average percentage of occupied apartments will continue to be relatively healthy in 2017. Developers will open more apartments than they did last year, but not enough to push the supple demand balance to the breaking point. And the new class-A construction is still concentrated in “core” downtown markets, leaving suburban markets and class-B apartment buildings relatively free from competition.
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High occupancy rates continue. The percentage of apartment units with signed leases shrank a little in 2016, and will shrink a little more in 2017, but not by much.
“We’re anticipating that the occupancy rate backs off by 60 basis points in 2017, but that shift still leaves the rate very healthy at 95.5 percent,” says Greg Willett, chief economist with RealPage Inc., and head of MPF Research. Marcus & Millichap anticipates a slightly stronger, but similar national occupancy rate of 96.0 percent by the end of 2017.
At the same time, developers will complete 363,000 units in 2017, up from 289,000 in 2016. The number of new apartments under construction has increased in almost all metro areas, according to MPF. Marcus & Millichap anticipates a similar 371,000 units of new construction.
Demand not as strong in 2017. Potential changes in federal policy—from a promised federal infrastructure program to higher interest rates—could have a big effect on the U.S. economy. But the apartment business is relatively protected.
The demand for apartments will drop to 252,000 units in 2017, down from 289,000 units in 2016. “Nothing in this outlook is especially different from the expectations we had earlier,” says Willett. “For a while now we’ve been saying that occupancy in 2017 would ease somewhere between 40 and 80 basis points and that rent growth would cool to somewhere in the range of 3.0 percent to 3.5 percent.”
“I am not anticipating any giant surprise for 2017,” says Sebree.
Job growth has slowed over the past year and continues to do so. The market overall is expected to add only up to 2.3 million jobs in 2017, a little less than last year. “The general trend of slowing job growth is affecting rent growth,” according to data firm Axiometrics.
But the U.S. economy still continues to produce new jobs. “Even if job growth slows, it is still growing,” says Sebree.
The apartment sector also continues to benefit from the lack of competition from single-family homes for sale. “At this point in the last real estate cycle, renters were going out and buying single-family homes,” says Sebree.
Core markets face the toughest competition. The strain on apartment properties is still concentrated in the urban markets where most new construction has taken place. “We’re anticipating a competitive leasing environment for top-tier, urban core product,” says Willett.
Apartments further from downtown areas face less competition. “There still should be considerable momentum in performances for suburban class-A projects, as well as for class-B communities in all locations,” says Willett.
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Win a Free 30 Minute Coaching Call
It's easy to win a little extra support! Just look for the quiz question down in this email, then email your answer at the click of a button. Everyone has an equal chance of winning, and I'll be in touch with the winner to arrange your coaching session.
Last Month's Quiz & Answer:
Q: What does the average adult human heart weigh?
A: 8.5oz/250g (women) - 10.5oz/300g (men), less than a can of soda.
Congratulations to C Chris Smith from Allen TX!
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Monthly Marketing Report
Be the most knowledgeable person in the crowd! Review the latest monthly market report and be the go-to person for up-to-date real estate market knowledge.
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 Welcome New Friends!
Thank you to all who've trusted me to help them so far, and a warm welcome to all our new members who joined in January:
Beth, Gregory, Denise, Tammie, Deborah, Marcia, Alissa, Meleah, Dallas, Valeria, Berry (Nick), Therese, Jennifer, Shirley, Diane, Troy, Charles (Chris), Maura
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What Does “mad as a March hare” Mean?
It's an English idiom derived from the observed antics of the European hare (a rabbit) during the March breeding season.
The idea was popularized in by Lewis Carroll in his 1865 book Alice's Adventures in Wonderland, in which the March Hare is a character who has a mad tea party with another mad character, the Mad Hatter.
The character of the Mad Hatter derived from madness experienced by hatters who inhaled mercury fumes during the felting process.
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FREE CONSUMER REPORT TO PASS ALONG
Do open houses work…or are they a waste of time?
There are definite reasons to hold open houses, and reasons to not hold open houses. Read this report to evaluate your best course of action!
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Story: Teaching the Victim a Lesson
A small boy at summer camp received a large package of cookies in the mail from his mother. He ate a few, then placed the remainder under his bed.
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The next day after lunch, he went to his bunk to get a cookie. The box was gone. He told the camp counsellor what had happened.
Later that afternoon the camp counsellor saw another boy sitting alone by the lake, eating the stolen cookies. "That boy," he said to himself, "must be taught a lesson."
He sought out the boy whose cookies had been stolen. "Billy," he said, "I know who stole your cookies. Will you help me teach him a lesson?"
"Well, OK—but you aren't going to hurt him, are you?" asked the boy.
"No, that would only make him resent and hate you," the counsellor explained. "I want you to call your mother and ask her to send you another box of cookies."
The boy happily did as asked and a few days later, he received another box of cookies in the mail.
"Now," said the counsellor, "the boy who stole your cookies is by the lake. Go down there and share your cookies with him."
"But," protested the boy, "he's a thief."
"I know. But try it—see what happens."
Later the camp counsellor saw the two boys coming up the hill walking together. The boy who had stolen the cookies was earnestly trying to get the other to accept a toy in payment for the stolen cookies, and the victim was just as earnestly refusing the gift, saying that a few old cookies weren't that important anyway.
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STYLE TREND
"Please, Close Off My Kitchen"
For years the concept of a grand room with an open kitchen has been all the rage. Countless walls have been knocked down as a result, and it’s rare to find newer houses without open kitchens.
But is the tide turning? Are we returning to days when the kitchen was an isolated room where smells were trapped and messes hidden?
Increasingly home builders are hearing requests from customers for a closed off kitchen, and remodeling companies are being asked to put the walls back.
Perhaps it's a matter of the grass being greener on the other side...if you've lived your life with a closed-off kitchen, maybe you want an open space. And if you've lived your life with an open floor plan, maybe the novelty of a closed-off kitchen is appealing.
This is a natural cultural shift. If you look at homes from the 1920's, bathrooms were seldom put inside a master bedroom, kitchens were almost always isolated, and garages weren’t attached. By contrast, homes built in the last 20 years typically have attached garages, large master baths, and open kitchens.
But there’s a shift taking place among builders, who take their cues from the market. People are starting to ask for smaller homes and cozier spaces, pushed in part by high property costs and in part by a desire for simplification.
Ultimately, the footprint of homes over the next several decades will depend on the cultural preferences of people who live in an area, since we tend to take our housing cues from one another in a community.
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March Quiz Question
What is the typical color of the sky looking up from the surface of Mars?
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Just For Fun: IOU What?
A woman went to a lawyer. “My neighbor owes me $500, and he won’t pay up. But I don’t have the loan in writing. What should I do?”
The lawyer said “Easy! Write a letter asking for the $5,000 he owes you.”
“But he only owes me $500,” the woman said.
“And when he writes you back to tell you that, then you’ll have your proof!”
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Adventure Jobs Over 50: Traveling Brand Ambassadors
Here’s a story that might give you some new ideas about retirement! See the full article with other ideas by Gwen Moran on nextavenue.org.
After Silvana and Allan Clark’s youngest daughter went off to college, the couple got the itch to travel and try something new.
They were fans of the charity Soles4Souls, which provides footwear for poor people in the United States. So Silvana approached the nonprofit with an idea:
If Soles4Souls would buy the Clarks an RV, they would drive around the country, giving away free shoes and promoting the organization.
The Clarks were effectively offering themselves as brand ambassadors. The charity signed on and gave them the titles “Sole Ambassadors.” For 19 months, the Clarks lived out of a Soles4Souls-branded RV, never once returning home. After arriving in a town, they’d receive shipments of shoes and would sort, organize and distribute them out of the RV.
See the full article at https://www.nextavenue.org/career-shift-youre-never-too-old-success-stories/
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Thanks for reading. If you need any advice or have any success stories to share, please reach out to me at Gary@MyInvestmentServices.com
~ Gary Wilson
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