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New Apartment Construction Steadily Being Absorbed

By
John Triplett
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Multifamily rents continue to rise slightly as the market absorbs the steady supply of new apartments, Yardi Matrix says in the April Report.

Multifamily rents continue to rise slightly as the market absorbs the steady supply of new apartments, Yardi Matrix says in the April National Multifamily Report.

“Although rent growth remains moderate, there are plenty of encouraging signs in the data. Most importantly, demand for apartments continues unabated due to high levels of household formation stemming from the strong job market, large numbers of immigrants and ongoing migration to the South and West,” the report says.

Also, the absorption of new apartment units was strong around the county and “particularly in high supply metros where there is concern about supply’s impact on occupancy rates and rent growth.

“Absorption is not near 2021’s peak levels, but 2024 started at a pace that would be on par with an average year and slightly ahead of 2022 and 2023 levels,” Yardi Matrix says in the report.

Highlights of the report

  • April heralded good news for the multifamily market, as rents rose solidly for the second straight month. The average U.S. asking rent increased by $6 to $1,725, while year-over-year growth was unchanged at 0.7%.
  • Multifamily faces challenges that include increased expenses and insurance costs plus higher- for-longer interest rates, but post-pandemic demand for units has remained consistent, leading to healthy absorption numbers in most locales.
  • The single-family rental market also had its second straight strong month, with rents increasing $9 in April to an all-time high of $2,154. The year-over-year growth rate rose 10 basis points to 1.3%, and occupancy rates were unchanged at 95.4%.

Increase in renewal rents

The national lease renewal rate averaged 65.8% in March, a low that has not been recorded in nearly two years. Lease renewal rates were highest in New Jersey (83.8%) and lowest in Los Angeles (56.1%).

Multifamily rents continue to rise slightly as the market absorbs the steady supply of new apartments, Yardi Matrix says in the April Report.

Looking ahead

While apartment demand has cooled after 2021’s record 620,000 units, it remains consistent.

“That’s good news with supply growth at multi-decade highs. Over the next year or two, it may take longer to lease up new properties in high-supply Sun Belt markets, and owners may have to offer concessions to attract and retain tenants, but if demand remains healthy, fundamentals will return to normal after new stock is digested,” the report says.

Read the full report here.

About Yardi Matrix

Yardi Matrix researches and reports on multifamily, office and self-storage properties across the United States, serving the needs of a variety of industry professionals. Yardi Matrix Multifamily provides accurate data on 18+ million units, covering more than 90 percent of the U.S. population. Contact the company at (480) 663-1149.

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HUD Warns About Using AI for Tenant Screening and Advertising

By
John Triplett
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HUD has issued two warnings about using AI for tenant screening and advertising due to potential Fair Housing violations using AI

The U.S. Department of Housing and Urban Development (HUD) has issued two guidance documents addressing the application of the Fair Housing Act to two areas in which the use of artificial intelligence (AI) poses particular concerns: the tenant-screening process and its application to the advertising of housing opportunities through online platforms that use targeted ads, according to a release.

“We have released new guidance to ensure that our partners in the private sector who utilize artificial intelligence and algorithms are aware of how the Fair Housing Act applies to these practices,” acting HUD Secretary Adrianne Todman said in the release.

Demetria McCain, principal deputy assistant secretary for Fair Housing and Equal Opportunity said, “Housing providers, tenant-screening companies, advertisers and online platforms should be aware that the Fair Housing Act applies to tenant screening and the advertising of housing, including when artificial intelligence and algorithms are used to perform these functions.”

“Housing providers have a legitimate interest in selecting tenants who will pay their rent and otherwise comply with lawful requirements of their lease. However, some tenant-screening practices do not in fact serve these goals.

“Tenant screening based on imprecise or overbroad criteria may unjustifiably exclude people from housing opportunities in discriminatory ways. These issues have been magnified in recent years by the increasing reliance by housing providers on tenant-screening companies to drive tenant-selection decisions.

“An increasing number of tenant-screening companies claim that they use advanced technologies, such as machine learning and other forms of artificial intelligence (“AI”). These technologies can increase these companies’ capacity to access and analyze information about applicants that has not been widely used for rental decisions until recently but may have little bearing on whether someone will comply with their lease.

“These technologies can also lead to a less transparent process by obscuring the precise reasons for a denial from the housing provider and applicant,” HUD says. “The Fair Housing Act applies to housing decisions regardless of what technology is used. Both housing providers and tenant-screening companies have a responsibility to avoid using these technologies in a discriminatory manner.”

On the advertising side, HUD cautioned that online advertising-targeting tools are covered by the Fair Housing Act. The release said violations  “may also occur when ad targeting and delivery functions are used, on the basis of protected characteristics, to target vulnerable consumers for predatory products or services, display content that could discourage or deter potential consumers, or charge different amounts for delivered advertisements.”

Read the full statement here.

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Photo credit amgun via istockimages

Back to Basics: What Today’s Residents Want

By
By The Editors
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Operators should concentrate on the basics of what residents want so here are 4 upgrade measures to contemplate for capital improvements.
The addition of pet spaces, such as dog parks and pet-wash stations, can make an impact at pet-friendly communities,

In the current multifamily marketplace, operators should concentrate on basics and functionality that today’s residents want. So with that in mind, here is a look at the four upgrade measures most likely to pencil out from a value-proposition perspective for capital improvements.

By Tim Bruss

As apartment owners and operators clamor to offer more attractive communities than their competitors, it can seem like a creativity contest at times.

The temptation to incorporate previously unseen amenities and in-home features certainly exists. While that approach might evoke an initial reaction, however, it doesn’t necessarily have the desired long-term impact.

Amenities such as theater rooms might appear sophisticated, but in actuality, residents might use them once, then check off the experience from their to-do list. When a property is performing upgrades, the same space almost certainly would be better allocated toward attractions that would be used more frequently, such as coworking spaces or other features that cater to the work-from-home resident.

While maybe not as eye-popping as a novelty-type amenity such as an onsite arcade, items such as coworking spaces are more functional and ultimately are more likely to drive resident retention. That is part of the big-picture premise that in the current multifamily marketplace, operators should concentrate on basics and functionality when contemplating any renovations or capital improvements.

This is particularly paramount at a time when, because of the expense involved, owners and operators must be highly strategic with any upgrade measures, making certain that they’ll move the needle in a positive direction.

With that in mind, here is a look at the four upgrade measures most likely to pencil out from a value-proposition perspective:

No. 1 – Clean outdoor spaces

While it might sound ultra-basic, a clean outdoor environment is among the most compelling attractions for residents.

When considering upgrades, properties can boost their appeal by implementing functional outdoor community spaces, such as barbecue areas, grills and fire pits, well-manicured courtyards and added features to the pool area.

The addition of pet spaces, such as dog parks and pet-wash stations, can make an impact at pet-friendly communities, although operators should make certain to also incorporate multiple pet-waste stations to ensure resident cooperation with maintaining a clean community.

No. 2 – Upgraded security features

Above all, residents want to feel safe at a property.

If they do not believe that they are, they will be vocal about it and the community could get skewered in online reviews.

Enhancing security isn’t always a budget-breaker. From an amenity perspective, it could include the installation of cameras in common areas, LED lighting for a bright nighttime environment and damage-resistant gates and fences to further protect the community.

Operators should concentrate on the basics of what residents want so here are 4 upgrade measures to contemplate for capital improvements.
LED lighting for a bright nighttime environment is not a budget breaker.

No. 3 – Resources to make things easy

Today’s residents don’t want to jump through hoops to schedule a tour, sign a lease, pay rent or submit a service request.

They desire an easy process, and in an increasingly digital environment, operators should make every effort to provide it.

While capital improvements are generally thought of as common-area additions and upgraded features within the apartment homes, properties can also augment their digital footprint by offering tech-savvy ways to navigate the leasing process. This includes offering options for virtual tours, contactless leasing and innovative resident portals that enable one-click rent payments and quick-hit maintenance requests.

No. 4 – Every community is different

It might seem easy to use a cookie-cutter approach when considering community improvements. What works for one property, though, might not necessarily work for another.

As such, operators should treat each property as its own entity and factor in location, demographic, type of community and any other potential factors that might affect the type of upgrades craved by the resident base.

For instance, prospective residents in a property located in Phoenix may prioritize a high-end resort-style pool, whereas residents in Seattle may prioritize a well-lit and spacious clubhouse with an indoor fitness center. The climates of each region dictate different needs and demands.

Summary

With the multifamily market experiencing price challenges with regards to materials, labor and insurance, the sector is in a cycle in which operators could greatly benefit from returning to fundamentals. Part of that approach includes refraining from high-priced upgrades that might have cosmetic value but are least likely to drive ROI.

By concentrating on the basics and functionality, owners and operators can ensure that their improvement measures are truly providing a return on investment.

About the author:

Tim Bruss is the managing director of Asset Management for Hamilton Zanze, a San Francisco-based real estate investment firm that owns more than 120 multifamily communities nationwide.

Building Code Changes Affecting Rental Housing Affordability

By
John Triplett
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Building code changes over the past 10 years have been the single biggest driver in increasing rental housing affordability

Building code changes over the past 10 years have been the single biggest driver in increasing rental housing affordability, according to a release from the National Multifamily Housing Council (NMHC).

The NMHC conducted a survey of its membership to gain more clarity on specific building-code cost drivers and feasibility deterrents.

The NMHC Pulse Survey on Building Codes and Standards was conducted from March 5 -19, 2024, and received 41 responses from multifamily builders, developers and operators across the United States. All data are available in a downloadable PDF.

The release says that on average, respondents reported that more than half (55%) of the projects they are involved with are townhouse/garden style, while a third (34%) are mid-rise and 10% are high-rise.

As government officials put in more layers of building codes and regulations, “housing providers grapple with increased costs and technologically or structurally infeasible requirements.”

Building code changes over the past 10 years have been the single biggest driver in increasing rental housing affordability

Topics that cause the most challenges for rental housing providers

The codes and standards that caused the most significant challenges were:

  • Over two-thirds (68%) of respondents agreed or strongly agreed that mechanical/electrical codes posed significant compliance challenges, followed by compliance challenges related to energy performance and efficiency (66%), electrification/net-zero emissions (63%) and fire protection (61%).
  • Over half of respondents agreed or strongly agreed that codes and standards related to sustainability/green building (54%) and accessibility (51%) caused them significant challenges.
  • Although 49% of respondents agreed or strongly agreed that structural codes and standards caused significant compliance challenges, another 49% of respondents reported being neutral or disagreed about the challenges related to structural codes and standards.
  • Codes and standards related to existing buildings as well as those related to resiliency were reported as less problematic. The largest share of respondents for both groups reported being neutral—37% for codes and standards related to existing buildings and 63% for those related to resiliency.

Inconsistency between jurisdictions – Key factors

The report said for those respondents who agreed or strongly agreed that at least one area of codes and standards posed significant challenges for their business, they heavily attributed those challenges to a few key factors:

  • Of those respondents who reported challenges, 92% agreed or strongly agreed that those challenges could be attributed to variation in code requirements/interpretation between jurisdictions. Respondents noted that interpretations of fire codes, for example, could even differ depending on an individual fire marshal.
  • Similarly, 82% of respondents agreed or strongly agreed that interpretability (i.e., that codes are difficult to interpret) was a source of significant challenges.
  • Eighty-nine percent of respondents agreed or strongly agreed that compliance challenges could be attributed to the effect of construction costs.
  • Separately, 89% of respondents agreed or strongly agreed that building code requirements in general affect the cost and viability of construction projects.
  • Respondents also largely agreed that challenges could be attributed to design issues (82% agree or strongly agree), material selection and availability (79%), as well as enforcement and inspection (79%).
  • Compliance challenges were less attributed to workforce availability and training (50% agree or strongly agree; 47% neutral or disagree) or resident preferences and marketability (37% neutral and 26% disagree).

“Multiple respondents highlighted Austin as a place where these issues were particularly acute, as well as locales in North Carolina such as Chapel Hill or Charlotte,” the report says.

Read the full report here.

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Using A Code Word Helps You Get the Right Tenant

By
Scot Aubrey
-
Using A Code Word Helps You Get the Right Tenant

A veteran landlord shares one of the best methods for helping you find the perfect tenant for your property using a code word.

By Scot Aubrey

With summer just around the corner, I look forward to slipping on my waders, stepping into a river, and casting my fly rod in search of that trophy fish. But before I do, I always go through a list of things to prepare me for success. I check the local regulations and consult the local guides and experts to see where the fish are and what they are biting. Armed with this knowledge, it is left up to me to identify the specific fish (usually German brown or rainbow trout) I want to cast to and catch.

Landlords across the country are going to be facing a similar situation this summer, as the eviction moratorium looks to be ending soon. You will be casting into an ever-expanding pool of potential tenants and, as a landlord, you want a tenant that wants your house, not just any house. A tenant who just wants any house, in a year when the lease is up, will be ready for any another house. A tenant who wants your house will become a valuable business partner and stay there for years.

One of the best methods for helping you find the perfect tenant for your property sounds mysterious but is quite simple and straightforward: a code word, which might be a specific word or phrase you place in your listings that you request they use when they respond to your listing. With the increased number of online rental platforms available to you, using a code word in your listings will help you in the following ways:

Using A Code Word Helps You Get the Right Tenant

WHAT IS A CODE WORD?

Your code word should be something that you use to emphasize specific features or requirements of your property. They may include things like the property characteristics, availability date, smoking policy, length of lease, or anything else you want to highlight as being important to you. A word of caution: Avoid any words or phrasing that would indicate discrimination or violation of protected classes. A phrase like “Please acknowledge in your showing request that you understand this property does not allow pets” is a perfect example of a code word.

WHERE DO I PLACE A CODE WORD?

David Pickron, president of Rent Perfect, discussed this at length on a recent podcast. He advises that landlords place their code word in one of the last two sentences of the listing to find candidates who are responsible enough to read the entire listing, and not just hit “apply” to every possible property that comes across their view.

When fishing, it is critical to present your fly to the fish you are trying to catch, otherwise you are just fishing water. By having the right fly presented in the right way to attract the attention of the fish, you exponentially increase the odds of attracting the fish you want to catch. The same reasoning applies as you are trying to identify a responsible, attentive tenant for your property. If you have a potential tenant that reads an entire listing and sees your code word that says, “I will not respond to your request to view the property unless you acknowledge that this property is not available until July 1.” When 20 potential tenants request a showing of the property and only two of them respond with the required code word/phrase, I am only going to show the property to those two people. This attention to detail from a tenant signals that they will also read the entire lease and understand the relationship we are creating, which saves me a lot of time in showing the property to the 18 other people who would be happy with any property.

A CODE WORD SAVES YOU TIME: Whether you are a full-time landlord or have a single property, time equals money, and showing the property and reviewing applications can be extremely time-consuming. Using a code word is just one way to pre-screen applicants and free your time up for those individuals who are truly interested specifically in your property. With several of the rental-property platforms in the market today, an applicant can pay a monthly fee and submit their application as many times as they want to as many properties as they want. If you’ve ever found yourself responding to an applicant inquiry only to have the applicant ask, “now, which property is yours,” chances are they have applied all over town and will take any property that comes along. This person doesn’t want your house, they want a house, and they are not the business partner you are looking to have for the next five years.

Imagine how frustrated you would be if you planned a trip to catch cutthroat trout and showed up only to find that in addition to trout, the game warden had also stocked catfish, carp and bluegill. In the next few months, the places we go to find potential tenants will be flooded with all sorts of applicants, and likely many of them will have been recently evicted. By using a code word, along with the other tools we train on, you can make sure that the tenant you put into your property is the business partner worth $120,000 that you are fishing for.

About the author:

Scot Aubrey is vice-president of Rent Perfect, a private investigator, and a fellow landlord who manages short-term rentals.  Subscribe to the weekly Rent Perfect podcast to stay up to date on the latest industry news and to get expert tips on how to manage your properties.

Don’t Let Rental Criteria Be Your Kryptonite

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Do You Know The 5 Questions Landlord Hank Asks Tenants When They Call?

By
Hank Rossi
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Renting during the moratorium ask Landlord Hank

Ask Landlord Hank is done each week by veteran landlord and property manager Hank Rossi who takes on questions each week from landlords and property managers. Remember Hank is not an attorney and cannot answer legal questions.

His goal is to help educate fellow landlords and property managers on issues he has seen in his 30 years in the business.

This week the question from a property manager is about what questions you ask when the tenant first calls?

Dear Landlord Hank: What is the first question you ask?

Question: You have received your first inquiry regarding your rental property, via phone or email. What do you ask someone inquiring for information about your property and why, when they first contact you? Hank’s Answer: Even though you may have put an ad on the internet loaded with details and photos, someone may have seen a sign for your property or heard about the unit through a friend or current resident.

No. 1 – So my first question is, “How do you know about our property”?

If the prospective tenant says they saw an ad, then most of their questions will have been answered in the ad.

If they haven’t seen an ad I do a brief description of the unit and development.

No. 2 – My second question then is, “When do you need to begin a lease?”

If someone wants to rent a currently available unit NOW, then you may have a candidate. If prospective tenant’s current lease isn’t up for six months, then your immediately available unit will be long gone. If you have multiple units, perhaps another down the road could work for this prospect.

No. 3 – My third question is, “Do you have any other questions?

Answer any specific questions related to the property so prospective tenant can determine if they would like to move forward to a tour.

No. 4 – This is really a series of questions

These relate to determining if you as a landlord could want this prospect as a tenant.

    • For instance, if your community doesn’t accept pets you could ask, “Do you have pets?” If you do accept pets, you’ll need that information as well, as prospective tenant could have a pack of pit bulls.
    • Next I want to know how many individuals will be in the unit. We don’t want two families sharing a unit, etc.
    • By now, you will have built up some rapport with prospective tenant and you could ask, “Is there anything else you would like to tell me?
    • Maybe you’ll find out that the prospective tenant had an unreasonable landlord. Or maybe they will say, “We just lost our house!” Or, maybe the prospective tenant has a legitimate complaint about their current property. There could be issues around poor maintenance history, poor management, unpleasant living conditions such as noisy neighbors, barking dogs, a messy complex, parking problems, etc.

No. 5 – If I consider this prospect a potential tenant then I ask, “When would you like to tour the property?”

The sooner the better so you can begin the process of vetting the tenant and renew the income stream from this unit.

Ask Landlord Hank Your Question

Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.

  • This field is for validation purposes and should be left unchanged.

A few final thoughts:

You as a landlord spent time and money to develop this lead. So treat this prospective tenant with respect, kindness and honesty just like you’d want someone to treat you. This prospective tenant could spend much of their life in your rental as a great tenant, but you never know.

    • If you have a chance to see tenant’s car, take a look. Often one’s car care will reflect the living situation. If they open the car door and trash falls out or the muffler is held up with a coat hanger, you’ll have a feeling about this prospective tenant. Hopefully they drive up in a well-kept auto.
    • Also, notice and evaluate the prospects themselves. Do they reek of smoke and are seeking to rent a “no smoking” unit, etc?
    • Lastly, never take a tenant because either you or they are desperate. If a tenant doesn’t make the grade and have the required funds your guidelines require, then reject them, properly. Either take a good tenant or no tenant.

Visit the Ask Landlord Hank page here for more questions and answers

About Landlord Hank Rossi:

“I started in real estate as a child watching my father take care of the family rental maintenance business, in small town Ohio. As I grew, I was occasionally Dad’s assistant. In the mid-90s I decided to get into the rental business on my own, as a sideline. In 2001, I retired from my profession and only managed my own investments, for the next 10 years. Six years ago, my sister, working as a rental agent/property manager in Sarasota convinced me to try the Florida life style. I gave it a try and never looked back. A few years ago we started our own real estate brokerage focusing on property management and leasing and I continue to manage my real estate portfolio here in Florida and Atlanta.”

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The Role of Mapping Technologies in Self-Service Leasing

By
By The Editors
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The role of mapping technologies in self-service leasing is how interactive technologies have optimized many facets of leasing.

The role of mapping technologies in self-service leasing and how interactive technologies have optimized many facets of leasing. 

By Andrew Rhuland

“Show and tell” has taken on a whole new meaning since the rapid acceleration of self-guided tours and self-service leasing.

Whether due to the desire to tour alone or simply being drawn to a more convenient way to tour communities, prospects are engaging self-guided tours more than ever before. At this point prospects expect that apartment communities will offer self-guided tour options, and there is no turning back to the way things once were.

While convenient, self-guided tours have uncovered new challenges for prospects when it comes to navigating the community grounds. Some garden-style communities are sprawling with buildings that all look the same and offer a multitude of amenities throughout the property. High-rises are more compact, but prospects may have to visit multiple floors, different wings or even visit controlled areas to get the full tour experience. To help prospects be more comfortable touring a community, operators have engaged new interactive mapping technologies.

The Role of Mapping Technologies in Self-Service Leasing

Interactive community maps display entire properties with more granular details that prospects want to know, such as real-time pricing, availability, apartment views and exact location.

Prospects can see where an apartment is located within the context of a community, observe its proximity to amenity spaces, and peruse interior apartment features.

Another key layer to interactive maps is wayfinding technology. Similar in concept to Google Maps and Apple pin functions, wayfinding technology within interactive maps shows prospects exactly where they are on a property with an easy-to-follow blue dot. Wayfinding empowers prospects to seamlessly navigate communities during self-guided tours and provides another level of transparency with key route-finding tools to get prospects to the apartments they’re interested in seeing.

“When a prospect comes to tour a community, they want to know the overall community layout, which apartments are available and where the apartments are located within the property,” said Stephanie Shore, director of marketing and brand development at Bozzuto. “They’re keenly interested in pricing and availability. A visual representation of the community with those key pieces of information in real-time is essential for empowering prospects to tour on their own and give them key details up front to help guide decisions.”

Google Analytics data from Bozzuto indicates unit-level map integration can enhance the floor-plan search experience for interested users specifically on desktop, allowing them to dive deeper into unit location. In reviewing a subset of community websites over a three-month period in 2023, desktop users spent significantly more time on Engrain’s SightMap pages compared to overall time spent on static floor plan pages.

The interactive maps are not only easy to add to any community website, but also create a more visual, robust visitor experience. Prospects have real-time info at their fingertips to make better, more informed decisions and be more confident with their choices. On community websites or during a self-guided tour, prospects have the ability to filter by unit type and receive accurate real-time pricing and availability. This experience offers prospects more visibility into where their future home is relative to amenities and common areas.

“Filtering tools are critical for prospects to drill down into what’s most important to them, like their desired floor plan type and any differences in pricing or square footage,” Shore said. “For example, some apartments might be on the top floor and have a better view, so all those details make more sense when you have the context of seeing where the apartment falls within the building. Prospects want to know exact details, so the interactive maps provide much more insight.”

Interactive Insights for Leasing Teams

Interactive maps and wayfinding technology offer benefits to both onsite teams and prospects. Real-time availability enables leasing teams to optimize pricing while improving and streamlining revenue-management practices.

Shore notes that leasing teams can get a much better snapshot of apartment-stack trends – which ones aren’t renting, and why. A visual representation with real-time data provides much more concise, easy-to-understand information that can often be overlooked when combing through data in traditional or static spreadsheets and charts.

The technology gives leasing teams a greater understanding of why certain units are slower to rent and the ability to identify trends within leasing, which in turn provides more power in pricing decisions.

“Having those insights allows us to get ahead of the curve a bit in pricing and make sure we’re marketing those units correctly,” Shore said. “We’re able to make more informed, strategic decisions with interactive mapping technology.”

Technologies to Make Interactive Maps Work

While mapping technologies and visualization are streamlining processes for touring and leasing, a few other technologies are needed to ensure the interactive maps operate smoothly.

Access control is essential for running self-guided tours and self-service leasing effectively. Prospects may be able to navigate a community, but they need the ability to access it on their own. Access control coupled with interactive maps can not only show prospects which entrance they need to go to, but can also provide an access code to get them inside the community for their tour.

Interactive maps and self-service leasing platforms also rely on WiFi to operate for the duration of the self-guided tours. This is important for operators to keep in mind, as ubiquitous community WiFi has become a foundational component of new self-service leasing technology and tools.

By integrating mapping technologies and visualization into current systems, apartment operators are further optimizing leasing, pricing, touring and more. These technologies not only drive better decision-making for operators and leasing teams, but also enhance the overall renter journey with a much more fluid, robust leasing experience.

About the author:

Andrew Ruhland is an account executive and content writer for LinnellTaylor Marketing, which focuses exclusively on the rental housing industry, its trends and technology innovations.

The Changing Economy and Its Impact on Rent Collection

Rent Prices Continue To Climb For Third Month

By
John Triplett
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Rent prices continued to climb for the third month in a row, and while rent increases were modest and sluggish, further increases could stall

Rent prices continued to climb for the third month in a row, and while rent increases were modest and sluggish, further increases could stall, Apartment List says in its May report.

The rental market is transitioning into the busy season, with the national median rent increasing for the third straight month but the pace of that positive rent prices growth slowed in April.

“Rent growth is stalling out at the time of year when the rental market is normally gearing up for its busy season. Year-over-year rent growth is also indicative of a sluggish market, remaining negative at -0.8 percent,” Apartment List says in the report.

https://www.apartmentlist.com/research/national-rent-data

Is rental market headed for slow summer?

“The national median rent increased by 0.5% in April and now stands at $1,396, but the pace of growth slowed slightly compared to last month.

“This is typically the time of year when rent growth is accelerating heading into the busy moving season, so the fact that growth stalled this month could be a sign that the market is headed for another slow summer,” Apartment List economists write in the May report.

Apartments on average remain cheaper today and they were a year ago.

The report says 83 of the nation’s 100 largest cities saw rents go up in April. But on a year-over-year basis, rent growth is positive for only 43 of these cities. Many of the steepest year-over-year declines remain concentrated in Sun Belt cities that are rapidly expanding their multifamily inventory, such as Austin (-7.4 percent year-over-year), Raleigh (-4.4 percent), and Orlando (-3.9 percent).

New apartment supply continues to impact rents

Apartment vacancies continue to rise, and the vacancy index should continue to increase for the rest of the year.

New apartment construction continues at the highest level in 50 years “and an even greater number of new units are expected to come on the market this year. This means that renters should have more available options than they have in some time, especially in the Sun Belt markets where construction activity has been strongest,” the report says.

https://www.apartmentlist.com/research/national-rent-data

Conclusion

The report says rent increases are currently being moderated by a robust construction pipeline expected to deliver a decades-high number of new apartment units in 2024. Improving consumer sentiment about broader macroeconomic conditions may be driving a modest rebound in rental demand, but that bounce back has so far been outweighed by the impact of incoming supply.

Read the full report here

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Landlord To Pay $600,000 In Sexual Harassment Consent Order

By
By The Editors
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A Georgia landlord who owns and manages 45 properties has agreed to pay $600,000 in a consent order to settle a sexual harassment charge

A Georgia landlord who owns and manages more than 45 properties has agreed to pay $600,000 in a consent order to settle a sexual harassment charge with the U.S. Department of Justice, according to a release.

According to the release, Iraj Shambayati, a landlord who owns and manages over 45 residential properties in and around Savannah, Georgia, has agreed to pay $600,000 to resolve allegations that he violated the Fair Housing Act (FHA) by sexually harassing and retaliating against his female tenants for over 15 years.

“Sexual harassment by a landlord is never acceptable,” U.S. Attorney Jill E. Steinberg for the Southern District of Georgia, said in the release. “This consent order takes Iraj Shambayati out of the property management business and emphasizes the Justice Department’s commitment to hold accountable landlords who would use their power to exploit tenants.”

The consent order “requires the defendants to vacate any retaliatory eviction judgments obtained against these tenants and to take steps to correct the tenants’ credit histories. The defendants are also prohibited from managing residential rental properties in the future and must retain an independent property manager for the properties.”

The lawsuit, filed in August 2023, alleged that, since at least 2008, Shambayati harassed female tenants by making repeated and unwelcome sexual comments and advances, inappropriately touching their bodies without their permission, entering their homes without their permission or knowledge, requesting sexual acts from them in exchange for rent or other housing-related benefits and taking retaliatory actions against female tenants who rejected his sexual advances or complained about the harassment.

Shambayati’s attorneys, James Durham and Patrick Schwedler, said in a release, “As the settlement makes clear, Mr. Shambayati denies he sexually harassed, discriminated, or retaliated against anyone.  The U.S. Government didn’t just sue Mr. Shambayati; it also sued his son and his best friend with unsubstantiated claims that they had anything to do with this case.  Before agreeing to settle, Mr. Shambayati insisted the U.S. Government dismiss the cases against his son and best friend, which it did.  Mr. Shambayati agreed to settle the case rather than put his family through years of litigation.”

The Justice Department’s Sexual Harassment in Housing Initiative is led by the Civil Rights Division, in coordination with U.S. Attorneys’ Offices across the country. The goal of the department’s initiative is to address, deter and raise awareness about sexual harassment by landlords, property managers, maintenance workers, loan officers or other people who have control over housing. Since launching the initiative in October 2017, the department has filed 40 lawsuits alleging sexual harassment in housing and recovered nearly $12 million for victims of such harassment.

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Is Surge in Built-for-Rent Single-Family Homes Good?

By
John Triplett
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Is surge in built-for-rent single-family homes – with corporate ownership that resembles multifamily housing - good for housing long-term?

The surge in built-for-rent single-family homes – many with corporate ownership that resembles multifamily housing – have experts split on the long-term housing implications of this trend, according to a report from Apartment List.

“Single-family homes account for roughly two-thirds of the nation’s housing stock, and the majority are occupied by the families that own them. But a sizable share – 16.6 percent – are rented instead, and recent trends in construction data suggest that these single-family rentals will become an increasingly popular housing option in the years to come,” Rob Warnock writes in the Apartment List report.

Warnock writes that single-family rentals are typically operated by a mom-and-pop landlord or a small institutional investor. But the new model that is becoming increasingly common is the “built-for-rent” (BFR) community: a large-scale development of single-family homes that are designed for renter occupancy from the start. BFRs borrow some features of multifamily housing, like professional leasing offices, on-site property management, and community amenities, and are marketed as a middle-ground between renting and homeownership.

Is surge in built-for-rent single-family homes – with corporate ownership that resembles multifamily housing - good for housing long-term?
Chart courtesy of Apartment List.

Proponents of built-for rent argue:

  • Single-family rentals allow greater financial flexibility and access to single-family neighborhoods, and that the surge in built-for-rent communities is a natural response to demographic shifts, particularly a large generation of millennials who are increasingly starting families, working from home, and valuing the extra space that comes with suburban living.

Detractors of built-for-rent argue:

  • Institutional investors tend to buy homes at lower price points, further locking out families from buying starter homes that are already in short supplyand concentrating the equity gains of homeownership in corporate ownership instead of people.

Conclusion

“In any case, large-scale investor involvement in the single-family sector remains nascent and will surely draw the attention of policymakers in coming years as housing affordability remains a top-of-mind issue for many American households,” Warnock writes.

 

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