The U.S. Apartment Market. A $1.3 trillion industry

Transcription

1 The U.S. Apartment Market A $1.3 trillion industry Doug Bibby, July 2016

2 WHO WE ARE! National trade association with 1,200 member companies! Members are the apartment industry s largest owners, managers and developers, as well as the top lenders, investors, brokers and suppliers that serve them! Areas of focus include:! Federal advocacy! Strategic business information! Industry research & market trends! Public relations & communications! NMHC hosts five major events each year for the membership 2

3 HISTORY In 1900, 75% of urban Americans lived in an apartment 3

4 HISTORY After WWII, the highway system spurred suburban growth and homeownership expanded 4

5 HISTORY Urban decay spurred the U.S. government to build public housing for low-income families 5

6 HISTORY The advent of purpose built, professionally managed apartments began in the 1980s, creating the model of today s multifamily market 6

7 APARTMENTS TODAY 38M apartment residents 20.1M apartment homes 12.3M jobs supported $1.3T economic contribu8on 7

8 WHO RENTS? Renters 37% Owners 63% Source: U.S. Census Bureau, 2014 American Community Survey

9 WHAT DO RENTERS LIVE IN? [PERCEN TAGE] [PERCEN TAGE] [PERCEN TAGE] [PERCEN TAGE] Single-Family 2 to 4 Units 5+ Units Mobile Homes Source: U.S. Census Bureau, 2014 American Community Survey

10 WHO OWNS? Less than to to to to to Source: U.S. Census Bureau, Housing Vacancy Survey Homeownership Rate by Age Group

11 WHO RENTS? 18% 26% Under 30 Years Old Years Old 27% 29% Years Old 65 Years or Older Source: U.S. Census Bureau, 2014 American Community Survey

12 WHO WILL RENT? Change in Renter Households (millions) -1.0 Under and Over Age Group Projected Notes: Projected renter growth assumes constant homeownership rates by age, race, and household type. Constant rates are the average of rates from 2014 and Historical growth uses 3-year trailing annual averages to reduce volatility.. Sources: JCHS tabulations of US Census Bureau, Current Population Surveys and 2013 JCHS household growth projections 12

13 WHO WILL RENT? 25, to 34-Year-Olds Living with Parents 20,000 (Thousands) 15,000 10,000 5,000 - Source: U.S. Census Bureau

14 WHO WILL RENT? 61% Growth in number of renters in the top 10 percent of income earnings ( ) Source: Harvard Joint Center for Housing Studies 14

15 FINANCING Short-term construction loan Payments Money from long-term loan Apartment Owners $ $ Ownership share 20.1M Long term loan request apartment $ homes Long-term loan Investors $1.3T Hold Syndicate Enhance Sell Securi8ze 15

16 FINANCING Mortgage Debt Outstanding ($B) $57 $118 Private providers Banks $377 $1.1 Trillion $398 Life Insurance Cos. Government GSEs $108 $62 CMBS Source: U.S. Census Bureau, 2014 American Community Survey

17 FINANCING 80% 70% 60% 50% 40% GSE Market Share (%) apartment residents 20.1M MF Production Volume ($B) apartment homes $300 $250 $200 $150 30% 20% 10% 12.3M jobs supported $1.3T economic contribu8on $100 $50 0% $- 17

18 APARTMENT SALES $160,000 $140,000 $120,000 (Millions) $100,000 $80,000 $60,000 $40,000 $20,000 $ Source: Real Capital Analytics

19 APARTMENT BUYERS Cross-Border 13% Private 56% [CATEGORY NAME] [PERCENTAGE] Institutional/Equity Fund 25% Public 5% Source: Real Capital Analytics

20 APARTMENT INDUSTRY 1. Developers Responsible for the land acquisition, development and construction of apartments 2. Owners Invest in individual assets and organize the underlying financing 3. Managers Take care of the day-to-day on-site operations, including marketing, leasing and maintenance 20

21 CONSTRUCTION Annual Mul8family Comple8ons (Thousands) Source: U.S. Census Bureau

22 CONSTRUCTION 9% 7% Real median rental costs Real median renter incomes Source: Harvard Joint Center for Housing Studies 22

23 APARTMENT OWNERS 5-49 Unit Properties 50+ Unit Properties Individuals Private REIT (Public Company) Nonprofits Other [VALUE] 5% [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] [VALUE] Source: NMHC tabulations of 2012 Rental Housing Finance Survey microdata. US Census Bureau

24 APARTMENT MANAGERS Marketing Leasing Website Retrofit and maintenance Landscaping Mail and package delivery Rent setting and collection Regulatory compliance Data security Health and safety 24

25 OWNERS VS MANAGERS 25

26 OWNERS VS MANAGERS 26

27 OWNERS VS MANAGERS 27

28 APARTMENT MANAGERS 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% NMHC 50 Managers Share of Stock Source: NMHC, Kingsley Associates.

29 APARTMENTS TODAY Apartments come in all shapes, sizes, and types Urban, Suburban, Ex-Urban Low rise, Mid Rise, High Rise Wood Frame, Steel, Concrete Stand-alone, Mixed-use Affordable, Student Housing, Senior Housing 29

30 GARDEN APARTMENT 30

31 WRAP BUILDING 31

32 PODIUM 32

33 MID-RISE 33

34 HIGH RISE 34

35 WHAT RESIDENTS WANT Source: 2015 NMHC/Kingsley Associates Resident Preferences Survey 35

36 TOP TRENDS Mobile In-unit cell connectivity is becoming a bigger issue as more people forgo landlines Fitness Centers Today s fitness centers are state of the art and there s a move toward more fitness programming Packages As online shopping continues to grow, figuring out how to handle the packages on site is becoming a bigger management issue Pets Apartments are moving beyond just being pet friendly to catering to the pet owner 36

37 MOBILE 91% of respondents reported using their cell phone all the time 53% have tested connectivity when shopping for an apartment 98% say good cell phone reception is important 37

38 FITNESS CENTERS 38

39 PACKAGES Source: 2015 NMHC/Kingsley Associates Resident Preferences Survey 39

40 PACKAGES 40

41 PETS 41

42 LESSONS LEARNED! Private capital should be emphasized in financing multifamily, but will leave the market when risk/return ratio turns against it - Role of government vital as steadying influence/source of capital! Government role also important to foreign sources of investment that need reassurance about loss of capital! Underwriting risk is of paramount importance in residential real estate finance. - Did not happen in single-family sector, with disastrous results - No taxpayer liability in multifamily! The combination of private capital in first loss position and ultimate government backstop was greatly reassuring to investors in U.S. and around the world. 42

43 THANK YOU Doug Bibby President, NMHC 43