homesmillbrae.com » Young Adults

Jobs report tempers mortgage rates

Fri, 06 Sep 2013 18:51:18 +0000

The jobs picture improved slightly in July, but its impact on the housing recovery is more murky.

Mortgage bankers shed 1,200 jobs, as their refinance business has dropped dramatically due to higher rates. The unemployment rate for young adults rose to 7.8 percent, with just 74.8 percent of them working, according to the Bureau of Labor Statistics. That is the lowest share in a year.

(Read more: Jobs growth misses high hopes; rate drops to 7.3% )

“Without jobs, fewer young adults will buy, rent, or even move out of their parents’ homes, which holds back future household formation and longer-term demand for new construction,” noted Jed Kolko, chief economist for Trulia.

On the other hand, large downward revisions in overall jobs in July kept mortgage rates from rising even further. Conforming loan rates are tied to mortgage-backed-securities, or MBS, which tend to correlate with U.S. Treasuries.

Conforming loans are those backed by Fannie Mae, Freddie Mac or other government agencies. Their limit is $417,000 but can be as high as $625,500 in high-cost housing markets.

Article source: http://www.cnbc.com/id/101014193

Why Women are Driving the Demand for Rental Apartments

Fri, 15 Feb 2013 23:38:27 +0000

No, according to a recent Raymond James report:

Renter household formation remains at the strongest level in decades. Roughly 1.32 million new renter households were formed in the past year (including owner conversions), while the number of owner-occupied households declined by 175,000. Resident turnover and move-outs to homeownership remain near historic lows for most operators. Incoming leasing traffic is more than offsetting move-outs while paying higher rates.

The home ownership rate declined yet again in the fourth quarter of 2012, according to a new report from the U.S. Census today. It now stands at 65.4 percent, down from 66 percent a year ago and from a high of 69.2 percent in 2004. If you include the 5.3 million borrowers who are delinquent on their mortgages or in the foreclosure process, per Lender Processing Services, the real home ownership rate is even lower.

“The fact that the housing recovery is being driven principally by investor demand means that the slight decline in the homeownership rate in the fourth quarter is unlikely to be the last,” notes Paul Diggle of Capital Economics.

(Read More: World’s Most Expensive City to Rent Is…)

There is also a tremendous amount of pent-up demand for the rental market, as nearly 23 million young adults, male and female, under age 35 (31 percent of the cohort) are currently classified as ‘living at home’ with parents, according to Raymond James’ analysis. As job growth improves, they will move to rental apartments; the homeownership rate for this group is only 34 percent.

(Read More: Rentals Chip Away at Home Builder Gains)

Investors are also concerned about a 49 percent jump in multi-family construction permits from a year ago, but those permits are still running well below normal levels, and every year about 150,000 units are removed from housing stock for various reasons, like age and damage.

Suffice it to say that the apartment sector and the multi-family REITs will likely see a surprise to the upside in 2013. Rents will still rise, despite housing affordability and growth in the single family market.

(Read More: Real-Estate Tips from a Mega-Broker to the Stars)

Article source: http://www.cnbc.com/id/100416547

Who’s Driving the Demand for Rental Apartments?

Wed, 30 Jan 2013 09:05:59 +0000

No, according to a recent Raymond James report:

Renter household formation remains at the strongest level in decades. Roughly 1.32 million new renter households were formed in the past year (including owner conversions), while the number of owner-occupied households declined by 175,000. Resident turnover and move-outs to homeownership remain near historic lows for most operators. Incoming leasing traffic is more than offsetting move-outs while paying higher rates.

(Read More: World’s Most Expensive City to Rent Is…)

(Read More: Rentals Chip Away at Home Builder Gains)

(Read More: Real-Estate Tips from a Mega-Broker to the Stars)

Article source: http://www.cnbc.com/id/100416547

Bay Area renters squeezed in tight market

Tue, 17 Apr 2012 18:28:05 +0000

A surge of tech hiring and the aftereffects of the housing crash are filling up apartments in Silicon Valley and pushing renters toward the East Bay, where rents also are rising and vacancies dropping, according to a new housing report.

Natalie Gonzales has been looking for an apartment or home to rent in the East Bay for six months, and she’s ready to give up and stay put in Pacifica.

“I feel like it’s impossible to find a decent place for a good price,” she said.

Three factors have converged to make apartment hunting a misery in the Bay Area, experts say: the resurgence of tech hiring that has brought more people to Silicon Valley; potential homeowners still uncertain how far prices will drop continuing to rent; and the release of pent-up demand from young adults moving to their own digs after living with family or roommates during the downturn.

“All three have all happened almost simultaneously during the last 18 months,” said Hessam Nadji, managing director for research at Marcus Millichap, a commercial real estate brokerage with offices around the Bay Area.

The company expects vacancies in Silicon Valley this year to drop below 3 percent, a level not seen since the dot-com boom. Rents will hit $1,522 per month, a more than 7 percent increase from 2011. For San Francisco and the Peninsula, the company forecasts a 7.2 percent increase to $1,947 a month.

East Bay-bound

The

tight Silicon Valley rental market is expected to push more apartment hunters to the East Bay, where rents could rise to $1,361 a month, an increase of 3.8 percent this year, on the heels of a nearly 3 percent increase last year, the company said. East Bay vacancies are expected to drop to about 3.2 percent this year. Marcus Millichap’s forecast is for the entire apartment market for 20 units and above.

“Most of the time everything’s just too expensive,” said Jamie Atkinson, an administrative assistant at an upscale Peninsula grocery store who has searched for a new apartment on the Peninsula and in Hayward, Alameda and South San Francisco. “Big complexes, little complexes, everything — they have gone to outrageous prices.”

The low number of vacancies in large apartment complexes has made the San Jose area the best place in the U.S. for new developments, the company said.

“We’ve had many, many months of increasing employment,” said Steven Seligman of Marcus Millichap in Palo Alto. “There are going to be some apartments coming on line, particularly in San Jose, but in general there hasn’t been lot of construction over the last few years and rents had significant increases in 2011, and most are predicting increases in 2012.”

That’s put pressure on tech workers looking for apartments in complexes that have all the amenities.

Kimberley McInnis, a systems engineer with a startup, was faced with a rent increase and found a place in one weekend of intensive searching — $1,765 a month for a small one-bedroom in a better complex in Sunnyvale. “Rents are ridiculous,” she said.

Aditya Shukla, a project manager at Hewlett-Packard (HPQ), said that three weeks of searching for a new place in Cupertino or Sunnyvale has convinced him that rents are up 10 to 15 percent from last year. “I was able to find multiple apartments,” he said, possibly because he’s looking for a two-bedroom. But they were for high monthly rates with large deposits and “no negotiation — you have to put down this much, then move in if you want.”

New projects

Apartment developers are racing to complete projects, including Crescent Village, a 1,750-unit Irvine Co. development in north San Jose. The first phase with 380 units just opened, with 1,000 to be completed by the end of the year. The units go for $1,750 to $2,950 a month.

“There are all these jobs coming into the market, but there’s been very little construction over the last three or four years,” said Kevin Baldridge, Irvine Co. executive vice president for apartment communities. “We’ve been in an undersupplied environment for the last two to three years. That will begin changing.”

Irvine Co. already has signed 32 leases and had 200 visitors since the first units at Crescent Village opened April 2.

Adding to the rental pressure are foreclosed homeowners looking for places to live. After bailing on a $6,000 monthly mortgage, a $2,000-a-month rental looks affordable to a foreclosed homeowner, said Ron Stern of BayRentals.com, a Bay Area referral service.

Rents are more affordable for smaller units such as duplexes and fourplexes, Stern said. “There’s pretty good supply and rents are reasonable, especially in the smaller units that don’t have all the pools and rec rooms. You can definitely get better deals on them.” But Stern said he thinks rents will rise toward the middle of the year.

Contact Pete Carey at 408-920-5419.

Article source: http://www.montereyherald.com/business/ci_20410464/bay-area-rent-renters-expensive-squeeze-tight-market