Zeitgeist – Sign of the Times
Not Paying Your Mortgage? You May be Home Free
Last month, The New York Times reported that tens of thousands of homeowners who have not been paying their mortgages for the past five years may have their foreclosure cases dismissed due to expiring statues of limitations. Depending on the state of jurisdiction, the statues range from five to seven years and the borrowers – mainly in Florida, New Jersey and New York – are not complaining about the possibility of getting their foreclosure cases dismissed and their mortgages wiped clean.
As expected, the lenders are crying foul and a portion of the blame lies with the Federal government, which has amended its mortgage modification rules almost 70 times over the past decade forcing lenders to start from scratch on foreclosure proceedings. That said, there is plenty of additional blame to go around including overextended lenders who have often lost or mishandled paperwork and borrowers who are trying to work the system to get out of their loan obligations.
The situation is now being presented to the Florida Supreme Court in what is expected to create a precedent on how the statute of limitation issue will be handled in the future. In the meantime, the fate of thousands of pending foreclosure actions which are still working their way through the system hangs in the balance.
Top 10 Cities: Rent Growth in 2014 and New Construction in 2015
Multifamily Executive recently estimated that 230,000 new apartment units will be completed in 2015 in the nation’s 100 largest metro areas. We thought it would be interesting to review where these apartments are being built as compared with where rents are growing the fastest – we’ve bolded the cities on both lists.
Seven of the ten rent growth markets and four of the ten new construction markets are on the west coast, indicating a continuing trend of western migration and growth. The six cities that saw superior rent growth in 2014 that didn’t make the construction list – Oakland, San Jose, San Francisco, Portland, San Diego and Palm Beach – should see superior rent growth again in 2015 as demand continues to outsize supply.
(Editor’s Note: Despite the pending construction in L.A., Seattle and Denver, we believe these markets have significant pent-up demand and favorable economic drivers and will continue to see sizable rent growth for the next several years.)
|3) New York||12,167|
|4) Washington D.C.||10,875|
|9) Los Angeles||7,017|
|2) San Jose||10.50%|
|3) San Francisco||9.80%|
|7) San Diego||6.70%|
|8) West Palm Beach||6.50%|
|9) Los Angeles||6.30%|
They’re Finally Moving Out
As the job market continues to improve and homeownership levels continue to fall, young people are increasingly moving out of their parents’ homes and into urban apartments. In 2014, U.S. renters paid $441 billion in rent – a $21 billion increase over 2013 – and the number of renter-occupied residences grew by 2 million. The U.S. rental vacancy rate fell to 4.1% in the first quarter of 2014, the lowest level in over 20 years.
According to Jed Kolko, chief-economist at Trulia Inc., there is a “pent-up demand for housing that’s built up as young people waited longer to enter the housing market” and “all of the reported household formation is new renter households”. This bodes well for landlords as new supply still lags behind demand and rents continue to increase. In many major submarkets, including San Diego, Seattle, Sacramento and New York, there is little to no vacancy and finding an apartment can be a highly competitive, stressful and expensive endeavor. Despite these challenges, millennials continue to gravitate to apartment living over home ownership – the home ownership rate for people under 35 fell to 35.3% in 2014, the lowest level in over 30 years. Although young people may be complaining about the challenges of finding a new apartment, landlords and parents are universally rejoicing.