Boise Idaho Investment Real Estate Information

Monday, December 22, 2014

November (Apartment) Sales are Slow, But Cap Rates Still Fall

November Sales are Slow, But Cap Rates Still Fall
So far this year, apartment transactions have totaled $96.9 billion.
By: Les Shaver, MultiFamily Executive

As the year winds down and investors gear up for 2015, apartment sales slowed in November.

Apartment transactions totaled $8.7 billion in the month, which was a 14 percent year-over-year decline, according to New York based Real Capital Analytics (RCA). The sale of garden communities fell 5 percent and mid- and high-rise sales dropped 27 percent.
Though the pace of sales slowed, cap rates continued to compress in November, dropping 10 basis points to 5.8 percent nationally. In the third quarter, cap rates hit record lows.

For 2014, the apartment sector has accounted for $96.9 billion, which is up 7 percent from last year.

“The sector is well on track to beat the $102.5 billion of volume recorded in 2013, and may top the all-time high of $105.2 billion recorded in 2007 but much of it depends on activity in December,” RCA said in the report.

Cap Rate Compression Since 2010

The deals closed in December to date, and the pipeline of end-of-year deals, has been modest, RCA reports. But a slowdown in the last two months of the year may actually be a sign of a strong market, unlike the spike in volumes seen earlier in the recovery

“We typically see a push to get deals out the door early in the fourth quarter in an effort to get them done before the end of the year,” says Joshua Goldfarb, managing partner of Atlanta-based Multi Housing Advisors. “In the holiday period, you see less new offerings and a lot of closings. In 2010 and 2011, we saw tremendous volume in the fourth quarter, but that was banks who wanted to get toxic assets off of their balance sheets by the end of year."

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Saturday, December 6, 2014

Overvaluation Feared as Cap Rates Keep Shrinking

Overvaluation Feared as Cap Rates Keep Shrinking
Many industry vets wonder if today's investment market is getting a little too overheated.
By: Les Shaver, Multifamily Executive

How low can they go?

From 2005 through 2006, apartment cap rates hit a floor of 6.2 percent multiple times, before spiking back up to 7.2 percent after the credit crisis of late 2008, according to Real Capital Analytics (RCA).

But cap rates found a new bottom this year. In the third quarter of 2014, they fell to 5.9 percent, an all-time low, according to RCA. While there may not be a cataclysmic event like the 2008 financial crisis on the horizon, some apartment investors and owners are beginning to wonder if some buyers may be getting too aggressive.

While he still sees strong fundamentals, David Schwartz, CEO of Chicago-based Wateron Associates, is concerned some investors may be too reliant on interest rates staying low.

“It’s a great time to lock 10-year money today,” he says. “A lot of people are floating everything. That is generating good yields but it has risk.”

Matt Lester, the founder and CEO of Bloomfield Hills, Mich.-based Princeton Enterprises, thinks buyers who overpaid in the top markets may ultimately have a shorter lifespan because of overly optimistic rent growth predictions.

“There have been deals that got done, where any blip in performance or any unforeseen hurdle, could cause their acquisition or venture to tank,” he says. “I think we’re past the peak in cap rate compression.”

Not everyone has such dire predictions, but they’re prepared if multifamily has passed its peak in the cycle, which is now five years into recovery.

“If I’m paying the same cap rate in the fourth inning of a recovery as I am in the seventh inning, I don’t feel as comfortable,” says Bobby Lee, president and COO of Los Angeles-based JRK Property Holdings. “You have little bit less of runway. Pricing may have been the same as year ago, but know you have one less year of this outsized growth."

If buyers don’t realize that, Lee thinks they could be in trouble.

“To me the fundamentals of multifamily won’t kill multifamily,” Lee says. “Unless there is massive overbuilding in a market, what can kill multifamily is if you buy too expensively and overleverage. The price and value of what you pay for today is probably your single biggest risk on a micro basis.”

Sunny Days Ahead?

While even observers like Schwartz might have questions about certain deals, there are a couple of notable differences in today’s market versus the mid 2000’s.

Positive leverage on deals (with cap rates trending higher than interest rates) and strong demand (the last cycle saw high moveouts to home ownership) gives the apartment business a boost it didn’t have last time.

“I still think the fundamentals are terrific and the stars are aligned from the standpoint of capital,” says Mark Alfieri, CEO of Plano, Texas-based Monogram Residential Trust. “I don’t see anything in multifamily sector from a supply or demand standpoint that has me concerned right now.”

When judging cap rates, observers usually look to the risk premium, or the spread between cap rates and the 10-year Treasury. And right now, things are solid on that front.

“The spreads between rates and treasuries are still pretty wide and the outlook for NOI is pretty good right now,” says Ben Thypin, director of market analysis at RCA.

Brian E. McAuliffe, senior managing director for Los Angeles-based CBRE Group, is maybe even more bullish. While oversupply, a spike in treasuries, or a political event could push up cap rates, he points to demographics (Millennials moving into higher paying jobs), positive job growth, and a sluggish single-family markets as factors that could continue pushing cap rates down.

“There has been a lot of discussion about whether we we’re in the seventh inning or eighth inning of the recovery,” he says, going back to the baseball analogy. “Given where performance was on the supply side, there is a significant amount of experts who think we’re in the fourth and fifth inning of multifamily performance.”

Multifamily Executive
Boise Idaho Investment Properties

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Wednesday, November 26, 2014

Boise home prices return to 2008 levels

Boise home prices return to 2008 levels

Median housing prices nationwide – and in Boise – are at the highest rate since 2008, according to statistics released by RealtyTrac, a leading housing data source.

Ada County’s average home price for 2014 is $209,900, a 6 percent increase over last year, according to the Ada County Association of Realtors.

RealtyTrac pegs the national median sales price for October at $183,000, up 16 percent from a year ago to the highest level since September 2008.

“I think around 200,000, 205,000, 210,000 is the right place for us to be right now,” said Marc Lebowitz, executive director of the Ada County Association of Realtors.

Ada County bottomed out at $146,000 in 2011.

Combining Ada and Canyon Counties, RealtyTrac placed Treasure Valley among 21 cities deemed to have “lost steam” with home price appreciation from October 2013 to October 2014. Home appreciation in Boise-Nampa stumbled from 23 to 0 percent in the last year, the lowest among all the “losing steam” cities that include nine California metros and Phoenix.

Lebowitz, however, sees a half-full glass with home price appreciation.

“We are ahead of the timeline,” he said. “Our prices increased ahead of theirs, ours fell sooner than theirs and our recovery is starting sooner than theirs.”

Lebowitz believes home appreciation in Boise is starting an upward trajectory while other “losing steam cities may still see drops in home appreciation rates.”

Boise, however, is ahead of the nation on foreclosures. It is seeing half the foreclosure rates of the country as a whole. Foreclosures among outstanding Boise mortgages in September were at .8 percent, down from 1.47 percent in September 2013, according to real estate data provider CoreLogic.

The national foreclosure rate was 1.6 percent, CoreLogic reported.

Monday, November 17, 2014

Kennedy Wilson Acquires 324-Unit Apartment Community in Boise

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs. Kennedy Wilson Acquires 324-Unit Apartment Community in Boise

YTD acquisitions for Company and its equity partners exceed $3 billion as global multifamily portfolio tops 20,000 units

BEVERLY HILLS, Calif., Nov 13, 2014 (BUSINESS WIRE) -- Global real estate investment and services firm Kennedy Wilson (NYSE: KW) today announced that the Company purchased Reflections at River’s Edge, a 324-unit apartment community located in Boise, Idaho for $29.75 million investing $15.3 million of equity in the transaction (including closing costs). The Company also assumed debt of $15.2 million through Fannie Mae at a fixed rate of 5.3% with 5-years of interest only remaining.

“We are extremely excited to begin our presence in the Boise market with the acquisition of Reflections at River’s Edge,” said Kurt Zech, President of Kennedy Wilson Multifamily. “Boise is a strong, stable market with unemployment well below the national average. Employment and population growth has been very strong and have outpaced the national growth rate over the past decade.”

Reflections is located in the West End neighborhood of Boise. The property sits on a picturesque lake and is located 1.5 miles from downtown Boise. The adjacent greenbelt bike path provides tenants with easy access to Downtown and Boise State University. Immediately north of Reflections, a large parcel will soon be developed into a multi-use regional park. The Esther Simplot Park is a 55-acre property that includes 17 acres of ponds and will include fishing ponds, picnic areas, green spaces, public amphitheater and a whitewater park.

Kennedy Wilson’s global multifamily portfolio now totals 20,007 units. Real estate related acquisitions by the company and its equity partners year-to-date total more than $3.0 billion, which includes approximately $2.3 billion acquired by Kennedy Wilson Europe Real Estate plc.

About Kennedy Wilson

Founded in 1977, Kennedy Wilson is a vertically integrated global real estate investment and services company headquartered in Beverly Hills, CA, with 25 offices in the U.S., U.K., Ireland, Spain, Jersey and Japan. The company, on its own or with partners, invests opportunistically in a variety of real estate related investments, including commercial, multifamily, loan purchases and originations, residential, and hotels. Kennedy Wilson offers a comprehensive array of real estate services including investment management, property services, auction, conventional sales, brokerage and research. For further information on Kennedy Wilson, please visit www.kennedywilson.com.

SOURCE: Kennedy Wilson

Kennedy Wilson
Christina Cha, 310-887-6217
VP of Corporate Communication
ir@kennedywilson.com
www.kennedywilson.com

Copyright Business Wire 2014

Thursday, November 13, 2014

Multifamily Holding Strong!

Multifamily Holding Strong!

The national apartment market strength is not slowing down though many predicted it would. As national effective rent growth reached a 35 month high in September, occupancy remained above 95 %.

September’s effective rent growth of 4.3%, the strongest since the 4.4% of October 2011, is a 22-basis-point (bps) increase from August 2014′s 4.1% and a 131-bps difference from September 2013′s 3.0%.

Year-to-date (YTD) effective rent growth decreased by 2 bps to 5.5% in September, which is not surprising given the trends of the recovery period. YTD rent growth has peaked in August or September during the past four years and then declined somewhat before the end of the year.

Meanwhile, YTD effective rent growth was stronger than any other post-recession year for the sixth straight month and is still stronger than the 5.2% recorded for the first nine months of 2010 and 2011.

National occupancy declined by 10 basis points from August’s 95.2% to 95.1%, the second highest rate since Axiometrics started reporting on a monthly basis in April 2008.

Historically, occupancy peaks in August or September, so the market appears to be following its seasonal pattern, but at a higher level.

This apartment cycle – which began in 2010 – is already longer than the last one (2004 -2008), and the market continues to perform strongly. The apartment sector’s strength is surprising to many analysts, especially so deep into the current cycle.

The main factors driving this cycle’s second peak include the growing number of prime renters, those between 20-34 years old, and the fact that these renters are unwilling or unable to purchase homes.

The population in the prime renter cohort is larger than in the last cycle. Also, the home ownership rate has decreased from the last cycle. The prime renter age group is either not willing to or not able to purchase a home.

Ten years ago, the prime renter age group population (red bars in the chart below) was smaller. This cohort was also more interested in owning homes.

Another reason for the spike in rent growth at the beginning of the current cycle is that supply and demand were misaligned. Rent growth really started to pick up when the economic recovery began and job growth accelerated. Meanwhile, little, if any, new apartment supply was being delivered. Now that new units are being delivered, job growth and rent growth are more in balance.

-Axiometrics Inc.

The Iron Eagle Realty Team's mission is to assist you, our client, in the sale and acquisition of real estate properties in the state of Idaho, specifically the Boise Idaho Real Estate Market. Whether you are buying or selling a home, whether it is a foreclosure, short sale or equity property, we handle our customers and clients with empathy and honest truths so they can make informed decisions as they advance in the process of buying and selling real estate that meet specific needs.

Thursday, October 16, 2014

JUST LISTED - 7.25%+ Cap 13 Unit Apartment Building Caldwell ID blocks from College of Idaho

Indiana Avenue Apts. Thirteen Unit Apartment Building close to College of Idaho in Caldwell. Eight units on main floor with highly desirable townhouse style 2 Bedroom and 1 bath units. Four lower level apartments and one exterior apartment; all 2 bedroom 1 bath units. Low vacancy rates; vacant units typically pre-rented. Located close to business corridor between Nampa and Caldwell; shopping, employment centers, movie theater/restaurant complex, etc. Convenient coin operated laundry in building. Click here for listing for listing information.

Friday, October 3, 2014

Looking to Move to Boise Idaho or Invest in Boise Idaho Real Estate? Check out this video!

Check out this REALLY cool video from Greenbelt Magazine. If you are looking to move to Boise Idaho, you'll see a host of reasons to do so in this video. If you are looking for a home in Boise Idaho or an investment property in Boise Idaho, please call or email us. We can help you!