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Understanding Familial Status and Its Protection Under the Fair Housing Act

By
By The Editors
-
Common

A look at the most common “accidental” violations of familial status by rental property owners and property managers and compliance with fair housing laws.

By The Fair Housing Institute

Familial status is a critical protected category under the Fair Housing Act, established to ensure equal housing opportunities for families with children and pregnant women.

This article delves into the history behind its inclusion, the exceptions where it may not apply, and the most common “accidental” violations property owners and staff should be aware of to maintain compliance with fair housing laws.

The Inclusion of Familial Status as a Protected Category

In 1988, during a period of high-interest rates, many young families were unable to afford homeownership, leading them to turn to the rental market.

Unfortunately, landlords at that time frequently refused to rent to families with children, going so far as to run ads explicitly stating “no children” or rejecting applications from families with kids.

Recognizing this discriminatory practice, the Fair Housing Act was amended to include familial status as a protected category. Familial status protection extended to families with individuals under the age of 18, including biological, foster, or adopted children, as well as pregnant women.

Exceptions to Familial Status Protection

The Housing for Older Persons Act (HOPA) introduced a specific exception to familial status protection to accommodate retirement housing.

However, this exception does not apply to deeply subsidized housing or properties under the purview of the U.S. Department of Housing and Urban Development (HUD). To qualify for the HOPA exemption, a property must meet one of the following criteria:

  • All residents must be 62 years or older.
  • At least 80% of the property’s units have a head of household or at least one individual aged 55 or older. The remaining 20% can have younger occupants but no children.

Additionally, the property must advertise itself as a retirement community, with community rules and policies clearly stated in the lease agreement. HUD properties designated as “elderly properties” cannot refuse occupancy to children if the household otherwise qualifies, as they are federally funded and subject to fair housing laws.

Common “Accidental” Familial Status Violations

Familial status violations represent 25% of all fair housing complaints, partly due to the complex interpretation of the law. Property owners and staff must be aware of potential discriminatory practices to avoid unintentional violations.

Three common accidental violations include:

Safety Issues: Implementing rules that discriminate against children, such as restricting pool access based on age, can lead to violations. Instead, property rules should focus on safety and competency, such as requiring swimmers to know how to swim.

Occupancy Limits: Adhering to the two-person per bedroom occupancy standard is a common practice, but other factors, such as room types and sizes, should be considered. Compliance with building and fire codes is also crucial.

Steering: While property managers may believe they are acting in the best interest of prospects, statements that imply that there aren’t a lot of children living here or perhaps another building closer to a park would be better can be viewed as discriminatory. It is best to let prospects ask questions and carefully document responses during tours.

Understanding familial status and its protection under the Fair Housing Act is crucial for property owners and staff. Regular and up-to-date training is essential to navigate the complexities of familial status regulations and maintain ongoing compliance with fair housing laws.

About the author:

In 2005, The Fair Housing Institute was founded as a company with one goal: to provide educational and entertaining fair-housing compliance training at an affordable price at the click of a button.

  

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Fair Housing And Phone Calls – Ensuring Compliance

Fair Housing Matters: Landlord Liability for Tenant-on-Tenant Discrimination

Are You Prepared for Fair Housing Testing?

Property management professionals must remain vigilant about the potential fair housing implications associated with phone calls and fair housing compliance

Can You Charge a Pet Deposit For An Emotional Support Dog?

By
Hank Rossi
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Whether you can charge a pet deposit for an emotional support dog is the question this week for Ask Landlord Hank.

Whether you can charge a pet deposit for an emotional support dog is the question this week for Ask Landlord Hank. Remember Hank is not an attorney and is not offering legal advice. If you have a question for him please fill out his form below.

Dear Landlord Hank,

Can you charge a pet deposit or rent fee for an emotional support dog?

-Taylee

Hi, Landlady Taylee,

A landlord is not supposed to look at an emotional support animal or service animal as a pet but rather as a needed medical device such as glasses, a walker, or a Seeing Eye dog.

I know a walker or your pair of glasses won’t have a urinary accident on the carpet, but you can’t charge a tenant a deposit nor extra rent for an emotional support dog, with REAL documentation, from a licensed medical provider.

Sincerely,

Hank Rossi

www.rentsrq.com

Each week I answer questions from landlords and property managers across the country in my “Dear Landlord Hank” blog in the digital magazine Rental Housing Journal.    https://rentalhousingjournal.com/asklandlordhank/

 

Whether you can charge a pet deposit for an emotional support dog is the question this week for Ask Landlord Hank.
Landlord Hank says to look at an emotional support dog as a needed medical device.

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.

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SB 1069 Brings Oregon Residential Landlord/Tenant Act Into the 21st Century

By
Brad Kraus
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Senate Bill 1069 brings the Oregon Residential Landlord and Tenant Act more into the 21st Century making changes to written notice and more

Senate Bill 1069 brings the Oregon Residential Landlord and Tenant Act a bit more into the 21st Century as it makes changes to written notice, service of final accounting and more.

By Bradley S. Kraus
Attorney at Law

The 2023 legislative session came and went and, much like others before it, particular pieces of legislation received the most fanfare.

This year’s legislative session gave us House Bill 2001, the inequitable effects of which this article series has previously covered. However, in a shocking turn of events, the legislature also passed a separate bill—Senate Bill 1069—which brings the Oregon Residential Landlord and Tenant Act a bit more into the 21st Century upon its effective date next year.

It makes changes to written notice, service of final accounting, and the available methods of returning monies for deposit returns and waiver avoidance.

Senate Bill 1069 makes significant changes to the ORLTA’s written-notice statute, ORS 90.155.

Currently, there are only three viable methods of written notice under the ORLTA: personal service, first-class mail, and post-and-mail. Senate Bill 1069 allows the landlord and tenant to agree, after the tenancy begins and the tenant has occupied the premises, to a new method of “email-and-mail” service. Along with the timeline, the addendum must (a) specify the landlord email address from which the landlord agrees to send and receive email, (b) specifies the email address from which the tenant agrees to send and receive email, (c) allow either party to terminate service via email, or to change their email address with no less than 3 days written notice, and (d) contain a specific disclosure discussed in SB 1069. If done correctly, this will allow for service timelines similar to post-and-mail notice timelines.

Return of Monies

Another change to the law, which is long overdue, affects ORS 90.412 with respect to the return of monies. Currently, if a landlord must return monies tendered by the tenant to avoid waiver, the landlord must return that personally to the tenant or via first-class mail. That return can be done with the check the tenant or other third party tendered, or the landlord can write a check. This can present accounting challenges and logistical nightmares that are unnecessary today.

Senate Bill 1069 now allows for a return of money electronically to a bank account or other financial institution designated by the tenant via a written addendum. Like the changes in ORS 90.155, the tenant must agree to receive money electronically after the tenancy begins and the tenant has occupied the premises by way of separate addendum. This change will be a welcome addition, as the current laws are unnecessarily archaic.

Security Deposit Refunds

Finally, SB 1069 makes similar “electronic transmittal” changes to security-deposit obligations. Senate Bill 1069 changes ORS 90.300 to allow for the transmission of required final-accounting documents under ORS 90.300 through email, once the addendum described above is completed.

Similarly, landlords will be allowed to return security-deposit refunds to a designated bank account or other financial institution, assuming a written addendum is in place as described above. This will remove the requirements of a physical check and final accounting being mailed to the tenant post-tenancy and will allow landlords to complete those “post-tenancy obligations” in a more modern way.

Landlords should keep in mind that these changes in the Oregon Residential Landlord Tenant Act do not take affect until January 1, 2024, so they should not implement or use these methods now. However, landlords should prepare for these changes by procuring the appropriate addendums to put in place once the calendar turns.

About the author:

Brad Kraus Portland Attorney Think Like A Tenant: Qualifying Repair and Renovation Landlord Exemption Under SB 608

Bradley S. Kraus is an attorney at Warren Allen LLP. His primary practice area is landlord/tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family law matters. You can reach him at [email protected] or at 503-255-8795.

  

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Overcoming Today’s Economic Obstacles in the Multifamily Sector

By
By The Editors
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Here are some ways to successfully and effectively overcome today's economic obstacles in the multifamily sector and navigate cycles
Surging supply of new apartment construction and economic turbulence continuing to create downward pressure on market fundamentals.

Here are some ways to successfully and effectively overcome today’s economic obstacles in the multifamily sector.

By John Carlson
President of Mark-Taylor

The state of the U.S. economy is experiencing notable changes, and the multifamily industry is no exception. Following a period of rapid expansion, the market is exhibiting signs of deceleration with oversupply affecting the Phoenix Metro multifamily sector for the first time since 2011.

Amid increasing supply-side pressure, developers, operators and property-management companies must understand how to work through long-term cycles occurring within the multifamily industry. Such shifting economic conditions separate investment managers who provide five-star services and products from those who rely on a strong market to boost their organization’s performance.

As an asset manager, here is how to successfully and effectively navigate through these cycles as well as the shifting economic landscape.

Understand the current landscape

In multifamily, it is important to remember that we are never bigger than the market. During the past two years, apartment fundamentals were overheated and unsustainable. This is reflected in the data with surging supply and economic turbulence continuing to create downward pressure on market fundamentals. Headwinds include:

  • Supply-side pressure near-term;
  • Decelerated transaction activity as cost of capital continues to rise;
  • Increasing cost of debt, which is further complicating ownership attempting to refinance or place permanent debt post-stabilization;
  • Global macroeconomics, geopolitical uncertainty and U.S. economic conditions in play; a recession is likely looming whether it be a “soft” or “hard” landing.

Adapt to ever-evolving market trends

As a market, the peak is behind us. Adapting to ever-evolving market trends in multifamily requires a willingness to embrace change and a commitment to staying ahead of the curve to meet the desires of your resident base. Doing so entails staying abreast of new trends, technologies and shifts in the market, while being able to pivot and adjust business/operational strategies accordingly.

To satisfy the consumer preferences of both clients and customers, it is vital to create an environment that meets their needs.

Build strong relationships

Transparency is the key to building trust and establishing positive relationships with investors. Although consistent conversation is necessary in all partnerships, it is vital to strategically prepare for 2024 headwinds.

Building strong relationships is critical in the multifamily industry, especially when working through long-term cycles. These relationships can help you weather difficult market conditions, and they can also provide you with valuable insights into market trends and conditions.

Use data-driven strategies

Understanding your market’s trends and economic data across submarkets is a critical component to navigating projects, specifically those in the lease-up phase. Diligently tracking key ancillary macroeconomic indicators on a monthly and quarterly basis will aid in the forecasting of market influences. This approach empowers you to make proactive, informed strategies and decisions that set your assets up for high performance in their area.

Prioritize integrity and ethics

When faced with economic challenges, it can be easy to lose sight of your mission and vision, and in turn, become hyper-focused on short-term gains or survival. By staying true to your core values, you can remain grounded in your long-term goals and more effectively navigate difficult economic conditions.

Staying in tune with where you are headed and where you want to go as an organization is the key to seamlessly balancing the needs of your business and the needs of your residents and team members. People want to work for and with companies that share their values and beliefs, prioritizing integrity and ethics in their business practices. This is how Mark-Taylor has created exceptional communities that invite, inspire and feel like home for nearly four decades.

About the author:

Here are some ways to successfully and effectively overcome today's economic obstacles in the multifamily sector and navigate cycles
John Carlson

John Carlson, president of Mark-Taylor Companies, has dedicated the last 21 years of his career to the organization. Through his strategic direction and expertise in macroeconomics, John has scaled Mark-Taylor to its largest size in the company’s history while increasing employee engagement. He credits the exceptional people and the authentic and ambitious culture at Mark-Taylor as the keys to the company’s continued success.

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7 Important Rental Property Preventative Maintenance Steps

By
By The Editors
-
Here are the 7 most important preventative rental property maintenance steps to protect your rental property investment and keep tenants happy.
Keeping the gutters cleaned and well-maintained can further prevent serious water damage .

Here are the 7 most important preventative rental property maintenance steps to protect your rental property investment and keep tenants happy.

By Bri Hilton

A survey shows 64 percent of respondents said their landlord was slow to make repairs, while more than one-third of respondents said that repairs were done badly, according to a survey of more than 1,000 tenants by the legal document company Legal Templates.

While getting the call for needed repairs can be a challenge, keeping up with preventative maintenance tasks is a fantastic way to keep the property up to par while keeping tenants happy. From checking in on the roof to pest control and beyond, here are just seven simple rental property maintenance steps that are beneficial in the long run.

No. 1 – Regularly cleaning out the gutters

Keeping the gutters cleaned and well-maintained can further prevent serious water damage to your rental and its foundation, thus making it a simple task worth setting time aside for.

According to The Spruce, regularly cleaning gutters maintains water flow from the roof to the ground (and as such, away from the house). While getting the ladder out and carefully removing any debris from the gutters is one way to get the job done, The Spruce highlights other ways to do so. Vacuuming the leaves from the gutters is just one option (which will require a 2-½-inch gutter cleaning accessory kit ‘specifically designed for wet/dry vacuums’), which will allow you to clean the gutters while standing on the ground.

However, it’s noted that this method isn’t the best option for wet leaves, in which case another route would involve blowing the leaves from the gutter with a pressure washer (though this will involve a lot of clean up).

No. 2 – Inspecting the roof

When looking to further prevent leaks and ensure that the rental is able to withstand the elements, regularly checking in on the roof will allow you to be in-the-know and up to date on its condition.

According to Build Magazine, it’s important to inspect the roof once every three months, “looking for signs of wear and tear such as broken or missing shingles, cracks in the flashing, or loose nails.” Looking for moss or algae growth is another thing to look out for, as they can cause damage to your roof over time.

Build Magazine later goes on to stress the importance of having your roof inspected by a professional each year, which will help greatly in identifying problems “before they become major issues.”

Here are the 7 most important preventative rental property maintenance steps to protect your rental property investment and keep tenants happy.
Have your roof and roof caps inspected by a professional.

No. 3 – Preventing leaks

Leaks in the home can bring a variety of issues to the table, from water damage to mold.

In addition to the cost involved, there’s no question that preventative rental property maintenance steps are key in preventing leaks and subsequent issues. In addition to keeping up with roof maintenance to prevent leaks, keeping drains clear and pipes up to date are further ways to prevent leaks.

Recognizing telltale signs of leaks when doing an inspection is another way to prevent further damage — according to one Forbes Home post, these signs include damp, dark spots on the floor, wall, ceiling and pipes, while leaks can come from several sources, such as toilets, sinks, washing machines, dishwasher, and the like.

In the case of water damage, addressing the matter as quickly as possible is imperative.

This is largely due to the fact that the longer materials are wet, the more extensive the damage can be — wood can warp, carpet can delaminate, etc. The presence of mold can also become a health and safety issue as well. While shutting off the water and fixing the issue that caused the water damage are the first steps, the water damage restoration process involves several steps to address the situation properly.

From removing any standing water using specialized pumps to removing damaged materials, involving a professional water damage restoration service is ideal in going about the matter properly and with the right tools.

No. 4 – Keeping pests at bay

About 2.9 million reported sightings of both roaches and rodents in their homes, according to the 2019 American Housing Survey (AHS).

While a variety of factors can create a pest problem (such as a dirty kitchen), keeping up with regular pest control and maintenance can be a great way to ensure that pests are kept at bay. According to RentPrep.com, preventative pest control should be done at least seasonally by landlords.

Hiring pest control professionals is a great way to go about the matter stress-free, with pest prevention treatments often involving “spraying around the exterior of the house, looking for signs of infestation, and treating the baseboards inside,” highlights RentPrep.

7 most important rental property maintenance steps to protect your rental property investment and keep tenants happy.
Pest control should be done seasonally.

No. 5 – Appliance maintenance

Maintaining a home’s appliances will not only keep them running smoothly, but will ensure they last longer, too.

In addition to checking in on the air conditioning and heating system, one Apartment Therapy post highlights the value of draining the hot water heater. “Minerals in your water will build up over time at the bottom of your tank, which also causes the tank to work harder, which often causes the hot water heater to fail, causing water damage,” explains John Bodrozic, co-founder of HomeZada, a digital home management site.

Bodrozic goes on to advise draining your tank from the bottom at least once a year (to get the sediment out) before refilling it.

No. 6 – Smart landscaping techniques

Regarding situations where landscaping responsibilities fall on the landlord, there are a variety of preventative maintenance tasks that can keep the lawn healthy and presentable.

In addition to taking advantage of low-maintenance plants, regularly pruning trees is a great way to care for the landscape as well as the property as a whole. “Pruning will help ensure the tree stays healthy by increasing airflow and light penetration.

By pruning the tree, you will also remove dead, damaged, and dying branches,” The Spruce points out, going on to note that this can work to remove hazards to people and structures around the plant. For example, a tree’s branches can scratch the siding of a home, not to mention create issues when it comes to potentially blocking gutters or preventing proper drainage.

No. 7 – Rental Property Maintenance Steps – Safety first 

A comprehensive checklist is a great way to keep track of maintenance tasks, especially when it comes to important safety maintenance such as testing the smoke alarms, carbon monoxide detectors, fire extinguishers, etc.

If you have multiple rental properties to keep up with, streamlining maintenance can be a great way to keep things up to date and lasting longer.

For example, one Zillow post highlights the value that automation can have. “Consider investing in fixtures with long battery lives or automatic features, like exterior motion lights, programmable thermostats, a bathroom fan connected to the light switch to prevent mold, or small solar lights to brighten a pathway.”

Making repairs to a property can be a stressful endeavor, though taking on preventative maintenance is a great way to keep future repairs to a minimum while improving the tenants’ stay.

From keeping up with appliances and pests to checking up on the roof, there are a variety of tasks that are well worth the effort and time in these rental property maintenance steps.

About the author:

Bri Hilton  worked in property management for almost a decade before taking a step back to start a family. She has since rediscovered her teenage talent for writing and enjoys contributing to a range of print and online publications.

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Rental Property Maintenance Checklist, Part One: Plumbing

rental property maintenance plumbing and water heater secured with straps in earthquake prone areas of the country

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Part 2 – Rental Property Maintenance: Security, Pest Control, & Exteriors

 

Finding Vendors Shouldn’t Feel Like A Game

By
By The Editors
-
Here are a couple of methods you can use to ensure your projects are noticed and not neglected, by vendors who know and serve our industry

Here are a couple of methods you can use to ensure your projects are noticed and not neglected, by vendors who know and serve our industry as finding vendors should not feel like a game.

By Scot Aubrey

Recently as my granddaughters are getting older, we’ve started playing a favorite childhood game of hide and seek.  Either I am really good at hiding or their 4- and 2-year-old minds aren’t the best at seeking, but I find myself having to give them clues to my hiding spots.

It usually starts with a small whistle or something and then as they get closer, I’ll even whisper their names so I can be found. Then I have to react with great enthusiasm once I’ve been discovered, only to reset the game and do it all over again.

As a housing provider, I feel like this same type of game takes place whenever I have a service need at a property, only this time it is the vendor for a particular service who seems to be hiding and I’m trying desperately to find them. Unfortunately for me, they aren’t always wanting to be found and aren’t really giving me any clues to their whereabouts.

One of the challenges that we as small to midsize housing providers face on a regular basis is finding vendors that will work on our projects. In a world where private equity seems to be gobbling up small businesses with regularity, we are often forced to use large vendors who treat us more like a number and less like a customer they are trying to acquire.

In an economy and workforce where these things are so challenging, here are a couple of methods you can use to ensure your projects are noticed and not neglected, by finding vendors who know and serve our industry.

JOIN A LOCAL ASSOCIATION

For most of us, there are associations in and around our local areas that are dedicated to promoting and supporting people just like you.

These associations share market updates and best practices to help everyone from the newest landlord to the seasoned veteran. One other great thing about associations is that they almost always have a supportive group of local vendors that belong to their association, vendors who can repair just about anything that can go wrong on your property.

By being part of an association, they are already showing their commitment to our industry and using them when things break at your property can be a reward for their loyalty to housing providers. These smaller vendors provide the same quality of work for a better price since they are not trying to satisfy the shareholders involved with private equity.

ASK YOUR FELLOW HOUSING PROVIDERS

One of the best parts of being an investor and housing provider is the great community that exists among us.

If you are new to the business or new to an area, find a local person who is in the same situation and start asking questions.  Who do you use for (fill in the blank)?  Why do you use them?  How much on average do they charge for this type of service?  How are they when interacting with tenants?  You’ll quickly find the vendors that you want to seek and also those you may want to hide from.

USE A VENDOR MANAGEMENT SERVICE   

We’ve all seen or heard the ads for vendor management services; they seem to be on most channels of communication multiple times a day.  When looking for vendors this way, be cautious.

Always read the reviews and when necessary, call the vendor and ask about specific reviews that you may have seen. Ask questions about both professional and criminal background qualifications that they use when hiring employees to represent them.  Incorporating the first two principals, ask if they are part of any local associations or if they provide service to other housing providers in the area.

In short, exercise your due diligence in procuring the right vendors for you and your jobs, not just ones that pay the price for national or local advertising.  As a company, we have developed a service called VendorVIP that is focused on identifying the right contractors and then connecting them with housing providers.

No more closing your eyes and counting to ten; when it comes to managing your property, leave the games to others and get serious about finding the best vendors available.  By using the resources available to you in your local community, you can more easily find the vendors that will most benefit your investment and your bottom line.

About the author:

Scot Aubrey is Vice-President of Rent Perfect, a private investigator, and fellow landlord who manages short-term rentals.  Subscribe to the weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.  To learn about VendorVIP, visit web.vendorvip.com/vvweb/

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Seattle City Council Votes Down Rent Control

By
John Triplett
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The Seattle rent-control bill failed in committee by a vote of 3-2, but will now go to the full city council in August, according to reports

The Seattle City Council voted down a rent-control bill that would have allowed rent control in the city if the state lifted the ban on rent control, according to reports at King5.com.

The council voted 6-2 against it. One of the two members who voted in favor of the bill is its sponsor Kshama Sawant.

The bill proposed the creation of rent-control provisions, regulations against rent increases, and establishing a board to authorize exceptions. It would have capped the maximum rent increase based on annual inflation rates.

“According to the real estate industry’s own figures, the shortage of apartments is not the problem. The problem is the shortage of affordable housing,” Sawant has said.

Sara Nelson was among the six council members who voted against the proposal.

“I’m concerned that this proposal will decrease existing housing supply because rental revenues won’t keep pace with increasing maintenance costs and property taxes which will result in housing providers either just selling their properties or converting them into condominiums,” Nelson told King5.

Washington state law must be repealed

The bill sponsored by Sawant was a trigger law.

If it had passed, the bill would have gone into effect in Seattle only if the Washington state law RCW 35.21.830 was repealed. The current law prohibits rent-control regulations, stating that “no city or town of any class may enact, maintain, or enforce ordinances…which regulate the amount of rent to be charged.”

The legislature convenes for a new session in January, when it could again consider proposals to allow local rent control measures.

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National Rent Growth Turned Negative Year-Over-Year

By
John Triplett
-

National rent growth turned negative for the first time since early in the pandemic, according to Apartment List’s August rent report.

“This means that on average across the nation, apartments today are renting for less than they did one year ago. This marks a major deceleration from recent years, when annual rent growth neared 18 percent nationally and soared to over 40 percent in a handful of popular cities,” write Apartment List economists in the report.

While some rents in some markets inched up slightly in July, “Rent growth in 2023 has come in at a much slower pace than previous years, thanks to a combination of sluggish demand and increasing supply.”

National rent growth turned negative for the first time since early in the pandemic as apartments today rent for less than one year ago

The Apartment List National Rent Index has proven to be a strong leading indicator of the CPI (Consumer Price Index) housing and rent components, “as we capture price changes in new leases, which eventually trickle down into price changes across all leases (what the CPI measures).

“As the CPI housing component now gradually begins to reflect the cooldown that we’ve long been reporting, it will help to further curb topline inflation in the months ahead,” the report says.

While rent growth turned negative, as mentioned above, some rents inched up in July, 0.3 percent month-over-month, but are down 0.7 percent year-over-year. Rents increased modestly in July in 71 of the nation’s 100 largest cities, but prices are down year-over-year in 67 of those 100 cities thanks to sluggish rent growth throughout the past 12 months,

“July is peak moving season and a month where we typically measure some of the fastest rent growth each calendar year. In pre-pandemic years, July rent growth averaged 0.6 percent. But in 2023, July rent growth came in at just 0.3 percent and is trending down for the season. This stagnation indicates that the market cooldown that started in the second half of 2022 is continuing, even as prices rise modestly month-over-month,” Apartment List economists write.

National rent growth turned negative for the first time since early in the pandemic as apartments today rent for less than one year ago

Seattle, Portland see some of nation’s slowest growth

The Seattle, Portland, and San Francisco metro areas also are experiencing some of the nation’s slowest year-over-year growth, signaling that the market downturn is not limited to just sprawling, high-growth metros.

These denser markets were the ones that slowed first in 2020, and are slowing again today; all three rank in the top 10 for slowest rent growth over the past 12 and 36 months.

San Francisco is the only metropolitan area where rents today are comparable to where they were at the start of the pandemic.

Vacancies continue to climb

“Our vacancy index has reached 7.3 percent, surpassing the peak vacancy rate measured at the height of the COVID-19 pandemic,” the report says.

With a record number of multifamily apartment units currently under construction, this vacancy rate will remain elevated in the near future. For the first time since the early stages of the pandemic, property owners will compete for a smaller pool of tenants instead of the other way around.

Even if the end of this summer brings a resurgence in demand, that strong construction pipeline should temper rent growth for the remainder of the year, Apartment List economists write in the rent report.

National rent growth turned negative for the first time since early in the pandemic as apartments today rent for less than one year ago

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2023 Rent Update: Midsize Markets Grow, Pandemic Boomtowns Struggle

By
John Triplett
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Rents are behaving as expected so far this year, Yardi Matrix says in a special Multifamily Rent Forecast Update, with some rent deceleration but mid-market is strong

Rents are behaving as expected so far this year, Yardi Matrix says in a special Multifamily Rent Forecast Update, with some rent deceleration happening in two geographic areas.

Yardi Matrix says the decline in asking rents was driven by actual decreases in asking rents in markets that mostly fall into two categories:

  • Florida markets that saw unbelievable growth during the pandemic are now facing major affordability problems. Five of the 10 worst-performing markets were in Florida – Southwest Florida Coast, Miami, Orlando, Jacksonville and West Palm Beach.
  • Some California markets are still struggling to find their post-pandemic footing. Of the remaining markets that saw month-over-month declines, six were in California – as Metro Los Angeles, Sacramento, East Los Angeles County, and the Bay Area: East Bay, Orange County, and the Inland Empire (Riverside).

“While there will always be month-to-month fluctuations and outlier markets, rents so far this year are behaving essentially as expected: Midsize markets, especially in the Midwest and Northeast, are seeing very strong growth in asking rents, while Western, Southwestern and many pandemic boomtown markets are struggling to regain (or gain) traction after the seasonal slowdown last winter,” writes Andrew Semmes, Senior Research Analyst for Yardi Matrix, in the bulletin.

Some struggling markets could still turn around later this year, but there are issues to watch. While the job market is strong, consumer sentiment remains down despite some positive economic news. With pandemic cash gone and student loan payments upcoming due to the recent Supreme Court decision, some renters could be left in a tighter financial situation than they expected.

Some markets will perform

“We have raised our expectations for many midsize markets throughout the Midwest, Northeast and parts of the South,” the report says.

“As affordability continues to be a concern across the country and economic uncertainty prevails, these smaller markets will continue to be more attractive, as they can provide many of the same benefits and amenities their larger siblings do at significantly lower price points.

“Furthermore, federal investments in manufacturing and infrastructure will bring many of these areas good jobs and better economic prospects moving forward,” Semmes writes in the bulletin.

See 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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How Property Managers Can Do More with Less

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By The Editors
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5 ways to maximize financial efficiency so property managers can do more with less and become good at resource management

5 ways to maximize financial efficiency so property managers can do more with less and become good at resource management in the short and long term.

By Allison DiSarro
Enterprise Bank & Trust

Many property management companies have endured challenging issues with managing ongoing expenses — a result of rising costs, competition in the market, and staffing difficulties.

In the quest to do more with less and maintain high levels of service with limited resources, industry leaders have already identified ways to trim costs first. When options are exhausted there, partnership with a financial services provider can help identify proactive strategies to make the most of available assets.

Solutions will take time because increasing operational efficiency and maximizing revenues can seem like competing interests, but there are helpful considerations to address pressures of costs, competition and staffing. Property management continues to be heavily associated with maintenance expenses and advice, but that addresses only a portion of the financial picture when balancing resources. For example, budget and asset review can reveal new opportunities to adapt, targeted marketing can counteract tightening prices and retention strategies can mitigate hiring costs over time.

No matter the size of the management portfolio, there are essential components to consider for efficient resource management in the short and long term. Beyond practical cuts, property management companies should start by reviewing well-rounded approaches to the financial picture of their businesses.

5 ways to maximize financial efficiency

Efficient changes can be a great alternative to having to make extreme cuts, but some of the opportunities likely require smart financial investment to combat inflation and the ever-present talk of recession.

When focused on reducing costs, considering broader investment choices alongside immediate operations choices can seem counterintuitive. However, strategic responses to economic factors can potentially drive higher revenues and strengthen business relationships. How can a business, along with its bank and other financial advisors, partner together to find ways to build financial flexibility both directly and indirectly?

1. Examine workforce costs

The higher prices of goods take a toll on take-home pay, and employees may want to renegotiate compensation based on the current market and outside of the annual review schedule. Prepare for this by revisiting the budget in an effort to have a plan to respond to an influx of requests. Wage pressure can happen at any level, and clear and transparent conversations about what’s being done can make a big difference. This can include talking with a compensation specialist to evaluate the status of the current wage scale and receive objective data to help align compensation levels.

Conversely, there are property management companies struggling to fully staff their organizations that are involuntarily operating with a reduced staff. A solution growing in popularity is hiring remote employees or virtual assistants to fill accounting, maintenance coordination and business development roles. While property managers can recruit remote hires on their own, many are turning to staffing companies that specialize in the property management space to help find top talent across the globe at a lower cost.

Many successful companies have implemented “lean management,” a set of principles created to improve the efficiency of processes and reduce perceived inequities between leadership and associates. Nonessential roles on a team may be taking up too much budget, and clients may not be seeing enough return on investment.

As property managers look to acquire other companies as part of a business growth strategy, a decisive factor is the size of the team they will have to put on the ground as a result of the acquisition. Property management companies making acquisitions where they already have a geographic presence may not need to make as many new hires as a company that is entering a new market through an acquisition. A sound growth strategy should determine a minimum number of units a company needs to acquire in a new city in order to make the purchase a sound investment and scrutinize the accompanying hiring implications, consolidating when possible.

2.  Revisit financial investments

Property management companies with an abundance of cash may consider investing in higher-yield assets with growth potential to keep pace with inflation. Investments in property and equipment assets historically keep pace with rising costs during inflationary periods.

To invest in growth through an acquisition or another expansion strategy, consider a line of credit through a bank that specializes in property management. With higher interest rates, many banks may be willing to lend, but that doesn’t ensure the rate will be consistent. A banking partner established in the property management space can help secure financing that fits a company’s long-term needs.

Both property management companies that are in a financial place to invest in growth and those that are not can explore other avenues to boost financial efficiency. A banking partner should help analyze opportunities to optimize. If a company’s state doesn’t allow property managers to earn interest on trust accounts, their banking partner may be able to help identify potential ways to offset banking and third-party costs through an earnings credit rate program. Banks that specialize in property management work with vendors to do this, and help clients earn credits that lower costs and maximize every dollar.

3. Evaluate pricing and marketing strategies

Remember to consider the big picture when making tactical shifts to business plans as the current economic environment is unlikely to persist long term. Rather than implementing an across-the-board price hike, consider limiting price increases to targeted components or where particularly necessary, potentially within application or other management fees.

Conduct competitor research to gauge the processes of competitors and better align with the marketplace. Rather than paying owners the earliest or charging the lowest fees, consider the financial benefits of maintaining a higher monthly average account balance and the ways to leverage financial credit earned, all while still following a standard payment timeline.

 4. Trim expenses through strategic consolidation

If property managers don’t have the expertise in-house, work with a consultant to find other expenses that can be reduced. A major expense — which affects other operating expenses as well — is a company’s software stack. Consolidating software may not only be more cost-effective, but also more convenient and functional. Consolidating accounting software with a maintenance coordinator is one example of a way to do this. Migrating to a new software provider is not a small undertaking but can be a smart financial decision that pays off in the long run.

 5. Fine-tune communication

Encourage open communication between leadership and employees. Never underestimate the power of transparent and empathetic communication in increasing employee retention. Additionally, many clients and vendors will be reconsidering expenses, and maintaining and strengthening connections during instability is crucial to the bottom line. Consider scheduling meetings to nurture the relationship base, and look into profit-sharing programs with vendors.

Reliable partners are essential during changing phases of a market and can help reduce pressure while operating a business with limited resources. Property managers should tap into their resources and network to build partnerships with specialists — from a banker to an auditing consultant — who can help find additional ways to maximize efficiencies, through deep understanding of an organization and its financial situation, and the industry as a whole. Together, a team of advisors can help property management companies find strategic ways to adapt to new circumstances and set themselves up for future financial success.

About the author:

Allison DiSarro is a senior vice president and specialty banking relationship manager at Enterprise Bank & Trust.

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