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14 July 2015 | Multi-Housing News
Source: Commentary and Data supplied by Michael Neal, senior economist, National Association of Home Builders.
Michael Neal is a senior economist with the National Association of Home Builders (NAHB). In this capacity, he monitors macroeconomic and financial issues that affect the U.S. and local housing markets. Prior to join-ing NAHB, he worked at the Joint Economic Committee of the U.S. Congress, the Federal Reserve, the Con-gressional Budget Office and Goldman, Sachs & Co.
Multifamily Starts: Measured at a seasonally adjusted annual rate, housing starts of buildings with five or more units fell by 7.1 percent over the month of March 2015 to 287,000. The number of housing starts of buildings with five or more units in February 2015 was revised up from 297,000 to 309,000. March 2015 is the first month that housing starts of buildings with five or more units was less than 300,000 since June 2014. Prior to June 2014, housing starts of buildings with five or more units was last under 300,000 in September 2013. The monthly de-cline that was recorded in March 2015 extends the decrease that took place between January and February 2015. Since January 2015, hous-ing starts of buildings with five or more units has declined by 22.0 per-cent. In tandem, the three-month moving average, which smoothes the underlying volatility in the data, fell by 6.9 percent over the same two-month period. However, despite this two-month decrease, the three-month moving average remains above the 300,000 mark. Moreover, the three-month moving average of housing starts of buildings with five or more units, 321,333, exceeds the average level between the years 2000 and 2007, 301,260, by 6.7 percent.
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Per
cent
age
Cha
nge
Mon
th-o
ver-
Mon
thMay Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.
’15Feb. Mar.Apr.
’14
Rent 3.8%
CPI 2.3%
Rent3.7%
CPI2.9%
CPI vs. Rent: Following three consecutive month-over-month declines, the seasonally adjusted Consumer Price Index—Urban Consumer (CPI), rose for the second consecutive month by 0.2 percent in March 2015. The month-over-month increase in the CPI partially reflected rising ener-gy prices. Following seven consecutive monthly declines, energy prices rose for the second consecutive month by 1.1 percent in March 2015. However, energy prices remain 18.3 percent below their level from one year ago. Food prices declined over March 2015, by 0.2 percent. Ex-cluding the more volatile energy and food prices, “core-CPI” rose by 0.2 percent over the month of March 2015. Shelter prices, which account for the largest portion of consumer expenditures, rose by 0.3 percent as rental prices increased by 0.3 percent. Since rental prices rose faster than overall inflation, as measured by core-CPI, then real rental prices also grew. NAHB’s Real Rent Index rose by 0.1 percent, over the month of March 2015. Over the year, the Real Rent Index grew 1.7 percent.
CPI vs. Rent
news & notes
Market PulseMarket Pulse section compiled by Keat Foong, executive editor. To comment, email [email protected].
250,000
300,000
350,000
400,000
450,000
Uni
ts
May Jun. Aug. Sep.Jul. Oct. Nov. Dec. Jan.’15
Feb. Mar.Apr.’14
405,000
287,000
Multifamily Starts
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www.multi-housingnews.com | July 2015 15
0.0%
1.0%
2.0%
3.0%
4.0%
May Jun. Aug. Sep. Oct. Nov. Dec. Feb.Jan.’15
Mar.Apr.’14
Jul.
3-Month Libor0.23%
3-Month Libor0.27%
10-YearTreasury2.71%
Prime Rate 3.25%
10-YearTreasury
2.04%
Prime Rate3.25%
Interest Rates
Ind
ex
Apr.’14
May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.’15
Feb. Mar.
0.87
0.91
0.8
0.9
1.0
NAHB/First American Leading Markets Index*
*An index value above 1.0 indicates the market has advanced beyond the previous sustainable level of economic activity.
Per
cent
age
Cha
nge
Mon
th-o
ver-
Mon
thJan. ’15 Feb. ’15
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Cement
Gypsum
Softwood Lumber
Plywood
Steel
3.6
4.33.9
0.0 0.2
2.0
-0.3
-1.2-1.6
-2.5
-1.8
-3.2
-1.6
-0.5
-1.9
Mar. ’15
Building Materials
Building Materials: The price of inputs to construction fell by 3.6 per-cent on a not seasonally adjusted basis over the 12 months ending in March 2015. This component of the Producer Price Index is composed of the price of inputs to new construction and the price of maintenance and repairs. Over the past year, the price of inputs to new construction eased by 3.6 percent. The price of inputs to new non-residential construction fell by 4.5 percent while the price of inputs to new residential construction dropped 2.4 percent. Meanwhile, the price of maintenance and repairs fell by 4.3 percent over the past year. The price of inputs to non-resi-dential maintenance and repairs decreased 4.3 percent while the price of inputs to residential maintenance and repairs declined by 4.4 percent. Changes in the prices of individual building materials varied. The price of cement rose by 9.5 percent, and the price of softwood plywood rose by 7.3 percent. However, the price of gypsum products fell by 1.0 percent and the price of oriented strand board (OSB) declined by 12.1 percent.
$180,000
$190,000
$200,000
$210,000
$220,000
Apr.’14
May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Jan.’15
Feb. Mar.
$205,300$201,400
Existing Condo Sales and Prices: Existing condo and co-op sales, measured at a seasonally adjusted annual rate, rose by 7.1 percent over the month of March 2015 to 600,000 units. All regions recorded month-over-month gains with the Northeast rising by 11.1 percent, the Midwest surging by 14.3 percent, the South expanding by 12.0 percent and the West increasing by 7.7 percent. In addition, the March 2015 existing con-do and co-op inventory level, 257,000, exceeded its February 2015 level, 238,000, by 8.0 percent. However, since the existing condo and co-op sales pace, 11.1 percent, exceeded the change in the inventory of condos and co-ops, then the months’ supply, which represents the number of months it would take to exhaust the existing condo and co-op inventory at the current sales pace, fell, declining by 3.8 percent over the month to 5.1 months. Median existing condo and co-op sales prices rose by 1.6 percent on a not seasonally adjusted basis over the past year to $201,400.
Existing Condo Median Sales Price
16 July 2015 | Multi-Housing News
news & notes
Unemployment RateSeasonally adjusted, 16 years and over
Source: U.S. Bureau of Labor Statistics
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
Apr. Apr.May Jul.Jun. Sep.Aug. Oct.
5.5% 5.4%
Nov. Dec. Mar.Feb.Jan.20152014
Per
cent
age
of
Une
mp
loye
d
Apartment Equity REITs Performance Period to Date Performance (%)
Dividend Yield (5-15-15) Price Return (5-15-15) 3.13 0.72
Total Returns (as of 5-15-15)
5-15-15 Q-T-D Y-T-D 0.72 -1.73 5.93
Compound Annual Total Returns Through Prior Month’s Close
1-Year 5-Year 10-Year 24.52% 14.08% 11.55%
Source: National Association of Real Estate Investment Trusts
Apartment Total ReturnsInternal Rate of Return on Investment
Commercial Real Estate Total ReturnsInternal Rate of Return on Investment
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Inve
stm
ent
Ret
urns
2012 2014
Q1 Q1Q3Q3 Q1 Q3 Q1 Q3
2.482.21
2.41 2.532.77 2.85
3.603.48
2.79 2.772.43
2.812.57 2.50 2.48
2011 2013 2015
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
Inve
stm
ent
Ret
urns 3.30
2.962.59 2.68
2.342.54 2.57 2.59 2.53
2.742.91
2.63
3.04
3.57
2.87
2011 2012 2014
Q1 Q1Q3Q3 Q1 Q3 Q1 Q3
2013 2015
Source: National Council of Real Estate Investment Fiduciaries
Multifamily MortgageDebt Outstanding
Sources: Mortgage Bankers Association, Federal Reserve Board of Governors, Wells Fargo Securities L.L.C., Intex Solutions Inc. and FDIC
CMBS, CDO andother ABS Issues
State and Local GovernmentRetirement Funds
Private Pension Funds
Non�nancial CorporateBusiness
Federal Government
2014Q4
Bank and Thrift
Agency and GSEPortfolios and MBS
State and LocalGovernment
Life Insurance Companies
Nonfarm NoncorporateBusiness
Billions
REITs
Finance Companies
2013Q4
$0 $100 $200 $300 $400 $500
412.2390.6
262.8
75.2
83.9
53.6
15.0
2.02.0
3.32.1
3.52.6
0.40.4
297.4
74.0
84.0
56.5
15.6
13.213.8
1.92.2
www.multi-housingnews.com | July 2015 17
Market Pulse section compiled by Keat Foong, executive editor. To comment, email [email protected].
Top 10 Multifamily Sales: New York CityRecorded in April 2015
Source: PropertyShark
ADDRESS BOROUGH SALE PRICE SALE DATE RECORDED DATE
311-329 West 50th St. Manhattan $72,000,000 23-Mar-15 2-Apr-15
207 West 79th St. Manhattan $39,000,000 9-Apr-15 24-Apr-15
521-523 Broome St. 558 Broome St.
Manhattan
$35,658,069 1-Oct-14 14-Apr-15
1 Watts St. 156-158 Sullivan St.
356 Bowery St. 1101 Second Ave.
1130 First Ave.
586-588 Third Ave. Brooklyn
51-10 Vernon Blvd. 24-60 32nd St. Queens
440 West 41st St. Manhattan $27,816,750 1-Apr-15 24-Apr-15
14-16 Fifth Ave. Manhattan $27,500,000 6-Feb-15 7-Apr-15
204-210 West 108th St. Manhattan $27,500,000 1-Apr-15 23-Apr-15
520 East 21st St. Brooklyn $26,500,000 30-Mar-15 22-Apr-15
117 Elizabeth St. 115 Elizabeth St.Manhattan $26,000,000 19-Mar-15 16-Apr-15
113 Elizabeth St.
238 East 33rd St. Manhattan $25,816,322 27-Mar-15 14-Apr-15
1777 Grand Concourse Bronx $25,600,000 26-Mar-15 9-Apr-15t
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