The apartment vacancy rate is at its lowest level since late 2001 as the rental market continues to soar, according to the latest fourth-quarter data by Reis Inc.
As demand increases, the vacancy rate for apartments dropped in the fourth quarter to 5.2 percent compared to 6.6 percent a year prior.
“Multifamily property has been the star of the real-estate sector for more than a year, generating profits for landlords but headaches for renters struggling with the economic downturn,” an article in The Wall Street Journal notes. “Demand has swelled from people being foreclosed out of their houses as well as those unable or unwilling to buy.”
Landlords are also raising their rents. Asking rents moved up 0.4 percent in the fourth quarter, averaging $1,064 a month nationwide — compared to $1,026 in 2009. New York City continued to have the highest rent in the country at $2,876 a month.
Meanwhile, as the rental market takes off, builders are rushing to play catch up in building new units to meet the demand. In 2011, Zelman & Associates estimates that more than 173,000 units were started, and about 225,000 and 280,000 starts are expected in 2012 and 2013.
Source: “Apartment-Vacancy Rate Tumbles to 2001 Level,” The Wall Street Journal (Jan. 5, 2012) [Log-in required.]
Thursday, January 5, 2012
Fed Advocates REO Rental Program
The Federal Reseve called on lawmakers to do more to help the ailing housing market, which has been blamed for dragging down economic recovery. In a 26-page white paper, the Fed told lawmakers that more aggressive action is needed in preventing home values from falling further and handling the large supply of foreclosures that continue to plague many markets.
One program the white paper suggested was a government program to start renting out single-family homes in foreclosure, even allowing the former owners who were foreclosed upon to rent the properties back.
An REO rental program by the government-sponsored enterprises may cost mortgage servicers and bond investors, but the benefit of such a program in the long run needs to be weighed, the Fed said. "Some actions that cause greater losses to be sustained by the GSE in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery," according to white paper.
Moreover, renting out some of Fannie Mae’s REO inventory, for example, might “deliver a better loss recovery than selling the property,” the white paper states.
The Fed also warns in the white paper to lawmakers that the “extraordinarily tight” mortgage lending standards is also harming the real estate market and keeping many from home ownership.
Without more action by the government to help housing, the Fed warns that "the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current home owners and the resultant drag on the economy at large."
Source: “Bernanke Calls for Nationwide REO Rental Program,” HousingWire (Jan. 4, 2012) and “Fed Urges Action on Housing,” Wall Street Journal (Jan. 5, 2012) [Log-in required.]
One program the white paper suggested was a government program to start renting out single-family homes in foreclosure, even allowing the former owners who were foreclosed upon to rent the properties back.
An REO rental program by the government-sponsored enterprises may cost mortgage servicers and bond investors, but the benefit of such a program in the long run needs to be weighed, the Fed said. "Some actions that cause greater losses to be sustained by the GSE in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery," according to white paper.
Moreover, renting out some of Fannie Mae’s REO inventory, for example, might “deliver a better loss recovery than selling the property,” the white paper states.
The Fed also warns in the white paper to lawmakers that the “extraordinarily tight” mortgage lending standards is also harming the real estate market and keeping many from home ownership.
Without more action by the government to help housing, the Fed warns that "the adjustment process will take longer and incur more deadweight losses, pushing house prices lower and thereby prolonging the downward pressure on the wealth of current home owners and the resultant drag on the economy at large."
Source: “Bernanke Calls for Nationwide REO Rental Program,” HousingWire (Jan. 4, 2012) and “Fed Urges Action on Housing,” Wall Street Journal (Jan. 5, 2012) [Log-in required.]
Erratic Economy Could Disrupt CMBS Market
While liquidity has been returning to the U.S. commercial mortgage backed securities (CMBS) market, current macroeconomic uncertainty has the potential to disrupt financing in 2012, according to forecasts from bond rating agencies Moody's Investors Service and Fitch Ratings.
Even if the Eurozone crisis moves forward from the present uncertainty, investors have plenty of other concerns, including the global economy's foundations are shaky with large trade imbalances, U.S. fiscal issues, lack of economic expansion, concerns of a hard landing for the Chinese economy, and tamed consumer spending. They could make for a potentially tentative lending environment with tighter lending standards and, as a result, lead to an overall lack of liquidity in the market.
The CMBS market depends on the availability of financing as term debt matures as much as the ability of commercial real estate properties to generate cash flow. A potential extended illiquid market would undermine the encouraging signs seen in property fundamentals in 2010 and 2011, which include increase in rent growth and occupancy levels in the multifamily sector, recovery in major metropolitan markets for the office sector, higher occupancy and revenue in the hotel sector, and the stabilization of the retail sector.
Moody's: Return to Peak Property Values Still Years Away
New CMBS issuance should hit $40 billion in 2012, down slightly from 2011, Moody's is projecting.
CMBS issued in 2012 in the U.S. will perform well given that the underlying loans will be underwritten to values and rents that are well below peak levels, Moody's said.
Property values in aggregate should remain at current levels or slightly lower into 2014, followed by moderate growth in subsequent years, Moody's said.
"However, even though low interest rates are currently serving as a mitigant, particularly for 5-year maturity loans that originated at the peak, we are concerned that ongoing volatility in the credit markets may reduce liquidity," said Keith Banhazl, Moody's vice president and senior credit officer.
The outlook for 2016 and 2017, when the 10-year loans originated during the peak 2006 and 2007 mature, is much more negative.
"We don't expect the peak valuations from 2007 to return before these 10-year loans mature. As a result, we're going to see numerous maturity defaults five to six years out, many of which will result in extensions to maturities," Philipp said.
"In 2012, new issue credit quality for CMBS will start the year consistent with that of normal pre-peak vintages, although there will be the risk of slipping as competition heats up among conduit lenders," said Tad Philipp, Moody's director of commercial real estate research.
Moody's expects $15 billion of the $40 billion of CMBS issuance in 2012 to come from the guaranteed portion of Freddy Mac sponsored bonds collateralized solely by multifamily loans.
Non Freddy Mac issuance will be light in the first half because of crimped conduit loan origination pipelines resulting from Euro area turmoil, but will ramp up as loan spreads tighten.
Moody's also said it expects the ratings of existing deals to remain stable, with the majority of loans maturing in the next two years in good shape for refinancing.
Moody's also said it expects the proportion of specially serviced and delinquent CMBS loans to remain within a few percentage points of their respective current levels during 2012. The current delinquency rate is near the high-water mark Moody's expects for this cycle.
Loans entering and leaving special servicing will remain roughly in balance during 2012. The delinquency rate will then transition downward until the problematic 2016-2017 refinancing years cause it to reverse, although not back to current levels.
Fitch Ratings: Slowly Improving Fundamentals
Property market fundamentals will continue the positive momentum from 2011 and slowly improve. Investment-grade ratings will be mostly stable in 2012, while non-investment-grade ratings will have greater potential for downgrades, according to Fitch Ratings
Hotels and multifamily properties, which through the cycle exhibited the worst delinquency performance, are now stabilizing or, in some markets, showing reasonably strong income growth. Conversely, properties with longer term lease agreements largely insulated against dramatic cash flow fluctuations, such as office properties, will continue to see mixed results, as major metropolitan markets may see rental growth and smaller, weaker, mostly suburban markets will show continued weakness.
Larger metropolitan areas will continue to outperform smaller cities, tertiary markets, manufacturing hubs, and markets with heavy exposure to the housing industry downturn. This continues to make the Washington, DC/Northern Virginia, New York metro, San Francisco, and Boston markets well positioned to take advantage of the economic recovery. Conversely, Phoenix, Detroit, Atlanta, Las Vegas, most Florida cities, and certain California markets will remain weak.
Multifamily:
Multifamily has recovered well and continues its positive momentum from 2010-2011. Most notably, properties in the Northeast and West regions continue to trade at lower cap rates, and have shown significant improvement, as vacancy levels have dipped. Occupancy levels and rent growth should continue to be bolstered by a positive trend in household formations, home prices not yet stabilizing, tightening lending standards for home mortgages, and a lack of confidence in the labor markets. Concessions are lessening as demand builds; Class A and B properties should perform best, as renters continue to trade up. Fitch does expect to see more building starts that will add inventory and have the potential to undermine any improvement in stronger markets.
Retail:
Although unemployment remains high, and consumer confidence has shown little improvement, there have been optimistic signs that consumer spending may be returning. Retailers continue to take a conservative stance managing their inventory in an uncertain economic and consumer environment. Luxury retailers continue to outperform the overall industry, and tenant sales have trended upward in 2011 from trough levels, particularly at top-tier malls. Fitch said it anticipates a slowdown in bankruptcy announcements similar to Borders and Syms/Filene's Basement, with expectations that retailers will need to be more measured about store expansion with the potential of store closing announcements similar to recent actions taken by Gap, Best Buy, and Lowe's. At the real estate level, retail properties will recover, though at a relatively slow pace.
Hotel:
Historically proven most volatile during period of economic stress due to daily rate resetting and generally limited advanced bookings, the hotel sector quickly turned positive as the economic recovery took place in late 2010 through mid-2011. Fitch anticipates that hotels will be able to continue to capitalize on the stabilization, helped by an uptick in corporate bookings.
Office:
The office sector is expected to show signs of a mixed recovery, as major metropolitan office markets will continue to outperform secondary and suburban markets. Major office markets were able to stabilize quicker than other markets, and vacancies and rents were not as severely affected. Historically, the sector has had exposure to rollover risk, as expiring leases are marked to market, but due to the so-called flight to quality trend in certain major markets, the risk has been mitigated due to improved economics in these markets.
Even if the Eurozone crisis moves forward from the present uncertainty, investors have plenty of other concerns, including the global economy's foundations are shaky with large trade imbalances, U.S. fiscal issues, lack of economic expansion, concerns of a hard landing for the Chinese economy, and tamed consumer spending. They could make for a potentially tentative lending environment with tighter lending standards and, as a result, lead to an overall lack of liquidity in the market.
The CMBS market depends on the availability of financing as term debt matures as much as the ability of commercial real estate properties to generate cash flow. A potential extended illiquid market would undermine the encouraging signs seen in property fundamentals in 2010 and 2011, which include increase in rent growth and occupancy levels in the multifamily sector, recovery in major metropolitan markets for the office sector, higher occupancy and revenue in the hotel sector, and the stabilization of the retail sector.
Moody's: Return to Peak Property Values Still Years Away
New CMBS issuance should hit $40 billion in 2012, down slightly from 2011, Moody's is projecting.
CMBS issued in 2012 in the U.S. will perform well given that the underlying loans will be underwritten to values and rents that are well below peak levels, Moody's said.
Property values in aggregate should remain at current levels or slightly lower into 2014, followed by moderate growth in subsequent years, Moody's said.
"However, even though low interest rates are currently serving as a mitigant, particularly for 5-year maturity loans that originated at the peak, we are concerned that ongoing volatility in the credit markets may reduce liquidity," said Keith Banhazl, Moody's vice president and senior credit officer.
The outlook for 2016 and 2017, when the 10-year loans originated during the peak 2006 and 2007 mature, is much more negative.
"We don't expect the peak valuations from 2007 to return before these 10-year loans mature. As a result, we're going to see numerous maturity defaults five to six years out, many of which will result in extensions to maturities," Philipp said.
"In 2012, new issue credit quality for CMBS will start the year consistent with that of normal pre-peak vintages, although there will be the risk of slipping as competition heats up among conduit lenders," said Tad Philipp, Moody's director of commercial real estate research.
Moody's expects $15 billion of the $40 billion of CMBS issuance in 2012 to come from the guaranteed portion of Freddy Mac sponsored bonds collateralized solely by multifamily loans.
Non Freddy Mac issuance will be light in the first half because of crimped conduit loan origination pipelines resulting from Euro area turmoil, but will ramp up as loan spreads tighten.
Moody's also said it expects the ratings of existing deals to remain stable, with the majority of loans maturing in the next two years in good shape for refinancing.
Moody's also said it expects the proportion of specially serviced and delinquent CMBS loans to remain within a few percentage points of their respective current levels during 2012. The current delinquency rate is near the high-water mark Moody's expects for this cycle.
Loans entering and leaving special servicing will remain roughly in balance during 2012. The delinquency rate will then transition downward until the problematic 2016-2017 refinancing years cause it to reverse, although not back to current levels.
Fitch Ratings: Slowly Improving Fundamentals
Property market fundamentals will continue the positive momentum from 2011 and slowly improve. Investment-grade ratings will be mostly stable in 2012, while non-investment-grade ratings will have greater potential for downgrades, according to Fitch Ratings
Hotels and multifamily properties, which through the cycle exhibited the worst delinquency performance, are now stabilizing or, in some markets, showing reasonably strong income growth. Conversely, properties with longer term lease agreements largely insulated against dramatic cash flow fluctuations, such as office properties, will continue to see mixed results, as major metropolitan markets may see rental growth and smaller, weaker, mostly suburban markets will show continued weakness.
Larger metropolitan areas will continue to outperform smaller cities, tertiary markets, manufacturing hubs, and markets with heavy exposure to the housing industry downturn. This continues to make the Washington, DC/Northern Virginia, New York metro, San Francisco, and Boston markets well positioned to take advantage of the economic recovery. Conversely, Phoenix, Detroit, Atlanta, Las Vegas, most Florida cities, and certain California markets will remain weak.
Multifamily:
Multifamily has recovered well and continues its positive momentum from 2010-2011. Most notably, properties in the Northeast and West regions continue to trade at lower cap rates, and have shown significant improvement, as vacancy levels have dipped. Occupancy levels and rent growth should continue to be bolstered by a positive trend in household formations, home prices not yet stabilizing, tightening lending standards for home mortgages, and a lack of confidence in the labor markets. Concessions are lessening as demand builds; Class A and B properties should perform best, as renters continue to trade up. Fitch does expect to see more building starts that will add inventory and have the potential to undermine any improvement in stronger markets.
Retail:
Although unemployment remains high, and consumer confidence has shown little improvement, there have been optimistic signs that consumer spending may be returning. Retailers continue to take a conservative stance managing their inventory in an uncertain economic and consumer environment. Luxury retailers continue to outperform the overall industry, and tenant sales have trended upward in 2011 from trough levels, particularly at top-tier malls. Fitch said it anticipates a slowdown in bankruptcy announcements similar to Borders and Syms/Filene's Basement, with expectations that retailers will need to be more measured about store expansion with the potential of store closing announcements similar to recent actions taken by Gap, Best Buy, and Lowe's. At the real estate level, retail properties will recover, though at a relatively slow pace.
Hotel:
Historically proven most volatile during period of economic stress due to daily rate resetting and generally limited advanced bookings, the hotel sector quickly turned positive as the economic recovery took place in late 2010 through mid-2011. Fitch anticipates that hotels will be able to continue to capitalize on the stabilization, helped by an uptick in corporate bookings.
Office:
The office sector is expected to show signs of a mixed recovery, as major metropolitan office markets will continue to outperform secondary and suburban markets. Major office markets were able to stabilize quicker than other markets, and vacancies and rents were not as severely affected. Historically, the sector has had exposure to rollover risk, as expiring leases are marked to market, but due to the so-called flight to quality trend in certain major markets, the risk has been mitigated due to improved economics in these markets.
2012: Better? More of the Same? or Total Economic Chaos?
he commercial real estate world this year will look a lot like it did in 2011, according to CoStar newsreaders.
During the last few weeks of the year, we asked readers to give us your boldest, best predictions that you could take to Las Vegas and put money on. Based on that proposition, readers have decided that the best bets are going to be to 'let it ride,' expecting a continuation of current market trends.
Among the top expectations: Banks and servicers will continue to jettison the worst performing assets and seek to workout recapitalization opportunities on the better-quality assets. Similarly, institutional property investors will also continue to reposition their portfolios away from secondary markets in favor of core stable assets in primary metropolitan markets.
Multifamily properties will continue their hot streak as pent up and new demand will keep vacancies low and spur continued new construction and property retrofitting of older other property type buildings.
And, both U.S. political inaction/posturing in an election year and world economic uncertainty will continue to weigh down true recovery.
Just how safe are readers playing it? Here is what one reader jested: "It's also possible I will get a year older, well, at least I hope so."
Hoping that the New Year brings you good fortune and prosperity, here are more of our readers' predictions for 2012; we've saved the boldest few for the very last.
Playing the Slots: Small Bets with Big Potential
Multifamily investments continue to rule the CRE landscape, investors seeking yield and upside from increasing renter demand and rising rents, in lieu of a continued weakening economy, limited job growth, and increasing global pressures from Europe. Best bets for multifamily acquisition will remain in coastal markets, urban city centers, transit-oriented live/work locations, and markets with solid job growth from tech, energy and health care.
Kevin Russell, Managing Partner, Gibraltar Commercial Properties, Culver City, CA
In the industrial market, rental rates will continue to trend upwards in the Miami Airport West submarket with positive absorption continuing. New spec development shall commence after four years of no new construction of industrial product.
George I. Pino, President, State Street Realty, Doral, FL
2012 will see continued yet slow incremental improvement in U.S. CRE markets. Secondary markets in Florida, California and Nevada will continue to underperform national averages for absorption and rental rate growth. Those markets hardest hit by foreclosures and high unemployment will continue to lag behind the primary markets through 2012 and 2013, with marked improvement in 2014-15. Institutional owners will continue to dispose of underperforming assets in the secondary markets focusing on primary U.S. and International CRE markets seeing the most growth.
Jeff Lamm, Associate, Industrial Property Group Inc., Tampa, FL
Because of the November 2012 elections and the accompanying uncertainty of tax policy, employer costs of health benefits, capital costs in a screwy global market the economy, lack of new jobs, consumer and corporate fear about spending, commercial real estate will remain largely stagnant. 2012 will be a good time to develop a new strategy and train the people who can execute the strategy. The majority of 2012 activity will again center on the sale of large distressed portfolios by lenders and core properties in 24/7 cities.
Susan Lawrence, President, CEO, Real Estate Strategies Inc., Winter Park, FL
In 2012 we will see modest to tepid growth while some investors and companies wait to see the results of the U.S. elections and the European Union. Core stable assets will continue to see low cap rates and high demand. Class A apartments will continue to experience strong investor demand and class B and C apartment performance will pick up some pace. Single tenant net lease and medical properties will continue to be sought after assets and cap rates in these sectors will compress in 2012. Office, industrial and retail performance growth will remain stable but low overall with the significant improvements concentrated in areas with strong job markets. Industrial will lead office and retail with improving performance related to e-commerce and lack of recent new construction.
Michael Bull, President & Founder, Bull Realty Inc., Atlanta, GA
My 2 cents on this subject is that the worst is clearly past us if you examine the major metrics, and that is corroborated by the sentiment on the street. An uptick in pricing can be seen in almost all markets and asset types, excepting the most distressed assets and locations. However, this optimism needs to be tempered by the fact that the 2007 CMBS vintage loans are all maturing over the next 12 months, and since this vintage entailed the worst underwriting standards, it stands to reason there will be plenty of work left to do for CMBS special servicers.
A.J. Beachum, Senior Sales Associate Income Property Organization, Bloomfield Hills, MI
Overall, the investment real estate market will be flaccid in 2012, by-and-large because it's an election year. The best values will be had in the fourth quarter of 2012 and first quarter of 2013, as the meek will be sitting on the sidelines during the regime change. Hub-area industrials will gradually gain strength, spurred on by local government incentives and gradual growth. The Better Buildings Challenge will continue to gain grassroots momentum until Congress finally gets on board.
Jodi Summers, Founder of The SoCal Investment Real Estate Group, Sotheby's International Realty, Los Angeles, CA
Urban retail rental rates in Philadelphia will most certainly increase. That will also be the case for the other major metropolitan marketplaces in the U.S. Most residential apartment developers and even select condo developers have continued to adaptively re-use or even build ground up, properties in urban settings. The main factors in this are that hospitals, schools and law firms are jam packed with students, patients, and workers and they continue to grow each year.
Stephen J. Jeffries, Partner & Co-Founder, Precision Realty Group, LLC, Philadelphia, PA
For 2012, in Phoenix, I see more transaction velocity in the retail and industrial segments. Rents are at or close enough to a bottom in both of those segments. Prices are starting to match up to the new rent amounts and are under replacement costs in most cases. Investors are starting to feel more confident that if they buy today (or in 2012) that the holding period of a flat/negative cash flow will be at a minimum with good opportunities of improved cash flow in the near term.
Nicholas L. Miner, Vice President - Investments, Commercial Properties Inc., Scottsdale, AZ
We anticipate below 1-percentile fluctuations in vacancies for retail, office and industrial as well as multifamily markets. But the multifamily market has gained the game momentum of late and this trend will continue into 2012. There are more and more households becoming lessees - the American Dream is on the move. One enjoyable see saw sector will be the hotel/hospitality market where the tourism industry has suffered significant declines, yet these products are fit for the market fluctuations so there may be some retrofitting to satisfy the growing multifamily appetite.
Brian Merzlock, Valuation Manager, Williams & Williams, Tulsa, OK
Black Jack: Riskier but Holding
The 2012 forecast is mired in uncertainty in large extent due to a very high complex emergent world economy adapting to increasing public and private debt of over 80 trillion. With world GDP at just over 50 trillion, the world will be challenged to grow out of this global debt crisis. Both income property and single-family real estate debt remains at a high risk of default in the U.S. for 2012 for debt extended from 2004 through 2007. New debt extended in 2010, 2011 and into 2012 at conservative underwriting will be good investments. Not rosy, but a reality.
Marc Thompson, Senior Vice President, Manager of Senior Housing and Care Lending Group, Bank of the West, San Francisco
Functional obsolescence will be the coming opportunity. Arthur Nelson at VA Tech says that huge amounts of existing real estate is functionally obsolete and needs to be rebuilt. His estimates are as follows:
Type: Existing Amount -- In Need of Replacement
Residential: 146 billion SF -- 37 billion SF
CRE: 63 billion SF -- 44 billion SF
These numbers seem almost unbelievable but the point remains salient. There is a ton of functional obsolescence out there. Whether it's the ranch home, the dead mall or the Main & Main, single-story office building, older product in great locations needs to be upgraded to modern standards.
Jeffrey DeHart, Manager, S. J. Collins Enterprises, Fairburn, GA
Look for the government(s) to be the biggest active player in virtually every market in the USA during 2012 as they shed properties and try to right size their respective ship(s).
Dan Colton, Principal, Colton Commercial, Tempe, AZ
We will see a "tsunami of product" coming to the market from community banks in 2012. The market will clear itself as supply and demand come into equilibrium in 2013/2014.
Matt Ochalski, Managing Member, GD Realty LLC, Chicago, IL
Long Shots: The High Rollers
The election will look increasingly foregone. The Fed will lose control of inflation. Sunk under its low yielding and inflation-pounded T-bill assets, it will be folded into government like the GSEs. Inflation fear causes the public to run from the dollar. When gold tops $3,000 the White House & Senate propose a buy-back program at $1,500 and a renewal of FDR's ban on public gold ownership. House prices take off...
Charles Warren, Principal, Warren & Warren, San Francisco
In 2012 Fannie Mae and Freddie Mac will begin to bulldoze excess housing inventory in an effort to support prices and the empty spaces will become community gardens.
Walter Brauer, Associate, Marcus & Millichap, Encino, CA
1. Banks will not renew many commercial loans and will begin foreclosing on properties that are poor locations/designs based upon new market realities.
2. Spike in bank collapses & closures in 2012.
3. Large, major cities will thrive with new CRE projects: NYC, SF/Bay Area, Chicago, Miami, LA.
4. Increased density and urbanization of cities, sprawl reduced.
5. Transit oriented development projects thrive, convenience is the key.
6. Creative, new mini-cities will spring up in Plains states.
7. Government finally curtails spending, Feds stop printing dollars and stop propping up stock markets, and the GNP/GDP returns to normal, lower level.
8. CRE assets decline 20%.
9. Europe monetary system collapses.
9. U.S.-based international companies grow substantially.
10. The working and non-working poor take over empty houses and commercial buildings.
Terence Kramer, President, Kramer Management Consulting, Scottsdale, AZ
During the last few weeks of the year, we asked readers to give us your boldest, best predictions that you could take to Las Vegas and put money on. Based on that proposition, readers have decided that the best bets are going to be to 'let it ride,' expecting a continuation of current market trends.
Among the top expectations: Banks and servicers will continue to jettison the worst performing assets and seek to workout recapitalization opportunities on the better-quality assets. Similarly, institutional property investors will also continue to reposition their portfolios away from secondary markets in favor of core stable assets in primary metropolitan markets.
Multifamily properties will continue their hot streak as pent up and new demand will keep vacancies low and spur continued new construction and property retrofitting of older other property type buildings.
And, both U.S. political inaction/posturing in an election year and world economic uncertainty will continue to weigh down true recovery.
Just how safe are readers playing it? Here is what one reader jested: "It's also possible I will get a year older, well, at least I hope so."
Hoping that the New Year brings you good fortune and prosperity, here are more of our readers' predictions for 2012; we've saved the boldest few for the very last.
Playing the Slots: Small Bets with Big Potential
Multifamily investments continue to rule the CRE landscape, investors seeking yield and upside from increasing renter demand and rising rents, in lieu of a continued weakening economy, limited job growth, and increasing global pressures from Europe. Best bets for multifamily acquisition will remain in coastal markets, urban city centers, transit-oriented live/work locations, and markets with solid job growth from tech, energy and health care.
Kevin Russell, Managing Partner, Gibraltar Commercial Properties, Culver City, CA
In the industrial market, rental rates will continue to trend upwards in the Miami Airport West submarket with positive absorption continuing. New spec development shall commence after four years of no new construction of industrial product.
George I. Pino, President, State Street Realty, Doral, FL
2012 will see continued yet slow incremental improvement in U.S. CRE markets. Secondary markets in Florida, California and Nevada will continue to underperform national averages for absorption and rental rate growth. Those markets hardest hit by foreclosures and high unemployment will continue to lag behind the primary markets through 2012 and 2013, with marked improvement in 2014-15. Institutional owners will continue to dispose of underperforming assets in the secondary markets focusing on primary U.S. and International CRE markets seeing the most growth.
Jeff Lamm, Associate, Industrial Property Group Inc., Tampa, FL
Because of the November 2012 elections and the accompanying uncertainty of tax policy, employer costs of health benefits, capital costs in a screwy global market the economy, lack of new jobs, consumer and corporate fear about spending, commercial real estate will remain largely stagnant. 2012 will be a good time to develop a new strategy and train the people who can execute the strategy. The majority of 2012 activity will again center on the sale of large distressed portfolios by lenders and core properties in 24/7 cities.
Susan Lawrence, President, CEO, Real Estate Strategies Inc., Winter Park, FL
In 2012 we will see modest to tepid growth while some investors and companies wait to see the results of the U.S. elections and the European Union. Core stable assets will continue to see low cap rates and high demand. Class A apartments will continue to experience strong investor demand and class B and C apartment performance will pick up some pace. Single tenant net lease and medical properties will continue to be sought after assets and cap rates in these sectors will compress in 2012. Office, industrial and retail performance growth will remain stable but low overall with the significant improvements concentrated in areas with strong job markets. Industrial will lead office and retail with improving performance related to e-commerce and lack of recent new construction.
Michael Bull, President & Founder, Bull Realty Inc., Atlanta, GA
My 2 cents on this subject is that the worst is clearly past us if you examine the major metrics, and that is corroborated by the sentiment on the street. An uptick in pricing can be seen in almost all markets and asset types, excepting the most distressed assets and locations. However, this optimism needs to be tempered by the fact that the 2007 CMBS vintage loans are all maturing over the next 12 months, and since this vintage entailed the worst underwriting standards, it stands to reason there will be plenty of work left to do for CMBS special servicers.
A.J. Beachum, Senior Sales Associate Income Property Organization, Bloomfield Hills, MI
Overall, the investment real estate market will be flaccid in 2012, by-and-large because it's an election year. The best values will be had in the fourth quarter of 2012 and first quarter of 2013, as the meek will be sitting on the sidelines during the regime change. Hub-area industrials will gradually gain strength, spurred on by local government incentives and gradual growth. The Better Buildings Challenge will continue to gain grassroots momentum until Congress finally gets on board.
Jodi Summers, Founder of The SoCal Investment Real Estate Group, Sotheby's International Realty, Los Angeles, CA
Urban retail rental rates in Philadelphia will most certainly increase. That will also be the case for the other major metropolitan marketplaces in the U.S. Most residential apartment developers and even select condo developers have continued to adaptively re-use or even build ground up, properties in urban settings. The main factors in this are that hospitals, schools and law firms are jam packed with students, patients, and workers and they continue to grow each year.
Stephen J. Jeffries, Partner & Co-Founder, Precision Realty Group, LLC, Philadelphia, PA
For 2012, in Phoenix, I see more transaction velocity in the retail and industrial segments. Rents are at or close enough to a bottom in both of those segments. Prices are starting to match up to the new rent amounts and are under replacement costs in most cases. Investors are starting to feel more confident that if they buy today (or in 2012) that the holding period of a flat/negative cash flow will be at a minimum with good opportunities of improved cash flow in the near term.
Nicholas L. Miner, Vice President - Investments, Commercial Properties Inc., Scottsdale, AZ
We anticipate below 1-percentile fluctuations in vacancies for retail, office and industrial as well as multifamily markets. But the multifamily market has gained the game momentum of late and this trend will continue into 2012. There are more and more households becoming lessees - the American Dream is on the move. One enjoyable see saw sector will be the hotel/hospitality market where the tourism industry has suffered significant declines, yet these products are fit for the market fluctuations so there may be some retrofitting to satisfy the growing multifamily appetite.
Brian Merzlock, Valuation Manager, Williams & Williams, Tulsa, OK
Black Jack: Riskier but Holding
The 2012 forecast is mired in uncertainty in large extent due to a very high complex emergent world economy adapting to increasing public and private debt of over 80 trillion. With world GDP at just over 50 trillion, the world will be challenged to grow out of this global debt crisis. Both income property and single-family real estate debt remains at a high risk of default in the U.S. for 2012 for debt extended from 2004 through 2007. New debt extended in 2010, 2011 and into 2012 at conservative underwriting will be good investments. Not rosy, but a reality.
Marc Thompson, Senior Vice President, Manager of Senior Housing and Care Lending Group, Bank of the West, San Francisco
Functional obsolescence will be the coming opportunity. Arthur Nelson at VA Tech says that huge amounts of existing real estate is functionally obsolete and needs to be rebuilt. His estimates are as follows:
Type: Existing Amount -- In Need of Replacement
Residential: 146 billion SF -- 37 billion SF
CRE: 63 billion SF -- 44 billion SF
These numbers seem almost unbelievable but the point remains salient. There is a ton of functional obsolescence out there. Whether it's the ranch home, the dead mall or the Main & Main, single-story office building, older product in great locations needs to be upgraded to modern standards.
Jeffrey DeHart, Manager, S. J. Collins Enterprises, Fairburn, GA
Look for the government(s) to be the biggest active player in virtually every market in the USA during 2012 as they shed properties and try to right size their respective ship(s).
Dan Colton, Principal, Colton Commercial, Tempe, AZ
We will see a "tsunami of product" coming to the market from community banks in 2012. The market will clear itself as supply and demand come into equilibrium in 2013/2014.
Matt Ochalski, Managing Member, GD Realty LLC, Chicago, IL
Long Shots: The High Rollers
The election will look increasingly foregone. The Fed will lose control of inflation. Sunk under its low yielding and inflation-pounded T-bill assets, it will be folded into government like the GSEs. Inflation fear causes the public to run from the dollar. When gold tops $3,000 the White House & Senate propose a buy-back program at $1,500 and a renewal of FDR's ban on public gold ownership. House prices take off...
Charles Warren, Principal, Warren & Warren, San Francisco
In 2012 Fannie Mae and Freddie Mac will begin to bulldoze excess housing inventory in an effort to support prices and the empty spaces will become community gardens.
Walter Brauer, Associate, Marcus & Millichap, Encino, CA
1. Banks will not renew many commercial loans and will begin foreclosing on properties that are poor locations/designs based upon new market realities.
2. Spike in bank collapses & closures in 2012.
3. Large, major cities will thrive with new CRE projects: NYC, SF/Bay Area, Chicago, Miami, LA.
4. Increased density and urbanization of cities, sprawl reduced.
5. Transit oriented development projects thrive, convenience is the key.
6. Creative, new mini-cities will spring up in Plains states.
7. Government finally curtails spending, Feds stop printing dollars and stop propping up stock markets, and the GNP/GDP returns to normal, lower level.
8. CRE assets decline 20%.
9. Europe monetary system collapses.
9. U.S.-based international companies grow substantially.
10. The working and non-working poor take over empty houses and commercial buildings.
Terence Kramer, President, Kramer Management Consulting, Scottsdale, AZ
Wednesday, January 4, 2012
Serious Delinquencies Decline, Foreclosure Rates Steady
Serious delinquencies are on the decline, while foreclosures have steadied at 5.5 percent, according to recent data from Foreclosure-Response.org, a joint venture of the Local Initiatives Support Corporation, the Urban Institute, and the Center for Housing Policy.
Among the 100 largest metropolitan areas, serious delinquencies – those 90 days or more past due or in foreclosure – declined from 10.4 percent to 9.3 percent from its December 2009 peak to June 2011.
The decline in serious delinquencies can be attributed to a decline in delinquent loans, according to Foreclosure-Response.org, which states delinquencies fell from 5.5 percent at the end of 2009 to 3.7 percent in mid-2011.
Areas experiencing higher rates of serious delinquencies include Florida, California and some areas of New Jersey, the Great Lakes region, and the South.
Areas with lower rates of serious delinquencies include Texas, the Central and Mountain Time zone regions, and some areas of the Pacific Northwest.
Seventeen of the top 25 metros ranked for serious delinquencies and four of the top five are located in Florida.
While serious delinquencies decline, foreclosures have “flat-lined,” according to Foreclosure-Response.org. The foreclosure rate has stayed at about 5.5 percent over the three quarters ending in June.
The two metros experiencing the greatest decline in foreclosures are in California – Riverside (1.9 percent) and Stockton (1.7 percent).
In contrast, metros in Florida, New York, and Illinois are seeing rising foreclosure rates. Tampa saw a 2.8 percent increase from December 2009 to June 2011, while Chicago saw a 2.3 percent increase, and New York saw a 2.1 percent increase.
Foreclosure-Response.org notes that these three states are judicial states, which “can create a significant backlog of foreclosures.”
“The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear,” said Urban Institute research associate Leah Hendey. “At the current pace of foreclosure sales, we are looking at a process that could take decades to complete.”
“It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets,” Hendey continued.
Among the 100 largest metropolitan areas, serious delinquencies – those 90 days or more past due or in foreclosure – declined from 10.4 percent to 9.3 percent from its December 2009 peak to June 2011.
The decline in serious delinquencies can be attributed to a decline in delinquent loans, according to Foreclosure-Response.org, which states delinquencies fell from 5.5 percent at the end of 2009 to 3.7 percent in mid-2011.
Areas experiencing higher rates of serious delinquencies include Florida, California and some areas of New Jersey, the Great Lakes region, and the South.
Areas with lower rates of serious delinquencies include Texas, the Central and Mountain Time zone regions, and some areas of the Pacific Northwest.
Seventeen of the top 25 metros ranked for serious delinquencies and four of the top five are located in Florida.
While serious delinquencies decline, foreclosures have “flat-lined,” according to Foreclosure-Response.org. The foreclosure rate has stayed at about 5.5 percent over the three quarters ending in June.
The two metros experiencing the greatest decline in foreclosures are in California – Riverside (1.9 percent) and Stockton (1.7 percent).
In contrast, metros in Florida, New York, and Illinois are seeing rising foreclosure rates. Tampa saw a 2.8 percent increase from December 2009 to June 2011, while Chicago saw a 2.3 percent increase, and New York saw a 2.1 percent increase.
Foreclosure-Response.org notes that these three states are judicial states, which “can create a significant backlog of foreclosures.”
“The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear,” said Urban Institute research associate Leah Hendey. “At the current pace of foreclosure sales, we are looking at a process that could take decades to complete.”
“It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets,” Hendey continued.
New Law Requires GSEs Increase Guarantee Fees
The two-month extension of the Temporary Payroll Tax Cut, signed by President Obama December 23, holds immediate implications for the GSEs. The law requires the Federal Housing Finance Agency (FHFA) to increase Fannie Mae’s and Freddie Mac’s guarantee fees by at least 10 basis points over the 2011 average for all single-family, mortgage-backed securities.
The increase will “be remitted to the U.S. Treasury, rather than retained as reserves by the Enterprises,” said Edward J. DeMarco, acting director of the FHFA in a statement announcing the fee increase.
The law goes into effect immediately. Therefore, the average guarantee fees charged this year must be at least 10 basis points higher than the average in 2011.
The FHFA must also create a schedule of guarantee fee increases over the next two years.
DeMarco required both Fannie Mae and Freddie Mac to inform servicers that the fees on all single-family residential mortgages are to increase effective April 1.
“In early 2012, FHFA will further analyze whether additional guarantee fee increases are appropriate to ensure the new requirements are being met,” DeMarco said in his statement at the end of 2011.
The increase will “be remitted to the U.S. Treasury, rather than retained as reserves by the Enterprises,” said Edward J. DeMarco, acting director of the FHFA in a statement announcing the fee increase.
The law goes into effect immediately. Therefore, the average guarantee fees charged this year must be at least 10 basis points higher than the average in 2011.
The FHFA must also create a schedule of guarantee fee increases over the next two years.
DeMarco required both Fannie Mae and Freddie Mac to inform servicers that the fees on all single-family residential mortgages are to increase effective April 1.
“In early 2012, FHFA will further analyze whether additional guarantee fee increases are appropriate to ensure the new requirements are being met,” DeMarco said in his statement at the end of 2011.
FHA Waives Anti-Flipping Rule Through Year-End to Speed REO Sales
The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.
FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.
The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.
FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and
stability and we must make every effort that to promote recovery in every responsible way we can.”
According to FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.
Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.
In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.
As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.
FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.
The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012.
FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.
“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and
stability and we must make every effort that to promote recovery in every responsible way we can.”
According to FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.
Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.
In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.
FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.
Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.
The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.
As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.
Construction Spending Rises, Hopeful Sign for Economy
Construction spending on single-family homes, apartments, and remodeling projects increased in November, helping the economy finish 2011 strong and start 2012 with yet another sign that points to an economy finally in recovery mode, the Associated Press reports. The news joins other recent reports that show consumer confidence is up, manufacturing activity is pushing higher, and the unemployment rate is at a three-and-a-half-year low.
Construction projects in November increased 1.2 percent in November to a seasonally adjusted annual rate of $807.1 billion, the largest increase since August. Yet, the number is still about half the $1.5 trillion pace that economists consider healthy for the sector.
"While spending on single-family construction still remains extremely depressed, it has now increased for six straight months and looks consistent with other indicators signaling some improvement in the housing market," Daniel Silver, an economist with JPMorgan Chase, told the Associated Press.
In November, spending on home improvement projects soared 9.5 percent, the Commerce Department reports. Single-family home construction spending increased 1.5 percent, and apartment building spending increased 1.3 percent in November.
Source: “Higher Manufacturing Activity, More Construction Spending Shows Growth Accelerating,” Associated Press (Jan. 3, 2012)
Construction projects in November increased 1.2 percent in November to a seasonally adjusted annual rate of $807.1 billion, the largest increase since August. Yet, the number is still about half the $1.5 trillion pace that economists consider healthy for the sector.
"While spending on single-family construction still remains extremely depressed, it has now increased for six straight months and looks consistent with other indicators signaling some improvement in the housing market," Daniel Silver, an economist with JPMorgan Chase, told the Associated Press.
In November, spending on home improvement projects soared 9.5 percent, the Commerce Department reports. Single-family home construction spending increased 1.5 percent, and apartment building spending increased 1.3 percent in November.
Source: “Higher Manufacturing Activity, More Construction Spending Shows Growth Accelerating,” Associated Press (Jan. 3, 2012)
Mixed Views on FHA Financial Strength
ome housing commentators warn that the Federal Housing Administration is depleting its cash reserves due to a spike in delinquencies on older FHA-insured loans, and the agency may soon be calling on taxpayers for help, CNNMoney reports. But other commentators say home price trends are what’s important to FHA’s reserve fund strength and the federal housing secretary says FHA’s reserves are up from last year.
The percentage of FHA loans with three or more missed payments increased 9.3 percent in November. FHA’s reserve funds depleted to 0.24 percent in 2011, which is below the 2 percent level it’s mandated to maintain by Congress. The FHA insures lenders against defaults; it does not issue mortgages.
"It's highly likely that the FHA will need a taxpayer bailout over the next three to five years," real estate professor Joseph Gyourko, author of a report entitled "Is FHA the Next Big Housing Bailout?," told CNNMoney.
In December, Shaun Donovan, the Secretary of the U.S. Department of Housing and Urban Development, testified to the House Financial Services Committee that the FHA’s financial problems were mostly centered on loans issued prior to 2009 and that more recent loans were having a sharp decline in defaults. Donovan told the committee that the FHA should be able to return the reserve fund back up to the required 2 percent level by 2014.
But analysts are projecting more defaults on the horizon, and they are skeptical the FHA will be able to reach its goal. Home prices will be key, Guy Cecala, publisher of Inside Mortgage Finance, told CNNMoney. If further home price declines occur, the agency likely will be exposed to greater losses, Cecala said.
However, the FHA says its total liquid assets are higher now than they were a year ago -- $400 million higher. The FHA also says that home prices would have to fall 4 to 5 percent before the agency would need a bailout from taxpayers.
Source: “Bailout Concerns Mounting for Federal Housing Agency,” CNNMoney (Jan. 3, 2012)
The percentage of FHA loans with three or more missed payments increased 9.3 percent in November. FHA’s reserve funds depleted to 0.24 percent in 2011, which is below the 2 percent level it’s mandated to maintain by Congress. The FHA insures lenders against defaults; it does not issue mortgages.
"It's highly likely that the FHA will need a taxpayer bailout over the next three to five years," real estate professor Joseph Gyourko, author of a report entitled "Is FHA the Next Big Housing Bailout?," told CNNMoney.
In December, Shaun Donovan, the Secretary of the U.S. Department of Housing and Urban Development, testified to the House Financial Services Committee that the FHA’s financial problems were mostly centered on loans issued prior to 2009 and that more recent loans were having a sharp decline in defaults. Donovan told the committee that the FHA should be able to return the reserve fund back up to the required 2 percent level by 2014.
But analysts are projecting more defaults on the horizon, and they are skeptical the FHA will be able to reach its goal. Home prices will be key, Guy Cecala, publisher of Inside Mortgage Finance, told CNNMoney. If further home price declines occur, the agency likely will be exposed to greater losses, Cecala said.
However, the FHA says its total liquid assets are higher now than they were a year ago -- $400 million higher. The FHA also says that home prices would have to fall 4 to 5 percent before the agency would need a bailout from taxpayers.
Source: “Bailout Concerns Mounting for Federal Housing Agency,” CNNMoney (Jan. 3, 2012)
Fed to Begin Publishing Rate Forecast
Beginning Jan. 25, the Federal Reserve will start to publish a forecast four times a year that includes predictions about the direction of short-term interest rates, The New York Times reports. The report will include a summary of how long the Fed expects to keep short-term rates at current levels.
“More guidance on rates might help lower long-term yields further -- in effect providing a kind of stimulus,” the Associated Press reported in an article announcing the change. “Lower rates could lead consumers and businesses to borrow and spend more. The economy would likely benefit.”
The Fed’s move will provide greater insight into its methodology and decision-making.
Since 2008, the Fed has left its key short-term rate at record lows near zero. This past summer the Fed announced it intended to leave the rate low until at least mid-2013.
Source: “Fed to Publish a Forecast of Rate Moves, Guiding Investors,” The New York Times (Jan. 3, 2012) and “Fed to Regularly Forecast Interest-Rate Changes,” Associated Press (Jan. 3, 2012)
“More guidance on rates might help lower long-term yields further -- in effect providing a kind of stimulus,” the Associated Press reported in an article announcing the change. “Lower rates could lead consumers and businesses to borrow and spend more. The economy would likely benefit.”
The Fed’s move will provide greater insight into its methodology and decision-making.
Since 2008, the Fed has left its key short-term rate at record lows near zero. This past summer the Fed announced it intended to leave the rate low until at least mid-2013.
Source: “Fed to Publish a Forecast of Rate Moves, Guiding Investors,” The New York Times (Jan. 3, 2012) and “Fed to Regularly Forecast Interest-Rate Changes,” Associated Press (Jan. 3, 2012)
More Americans Are on the Move, Survey Says
More households are moving to East Coast states while leaving Rust Belt states -- the area in the U.S. between the Midwest and the Northeast -- where unemployment remains high, according to the latest Atlas Lines Migration Patterns study, which has tracked the nation’s moves since 1993.
For the fifth year in a row, Washington, D.C., had the highest percentage of inbound moves while Ohio had the highest percentage of residents leaving, or “outbound moves.” Meanwhile, western states mostly stayed balanced in moves for the year. Several southeastern states, such as Florida and Georgia, also stayed balanced in moves despite high foreclosure rates, possibly because they also serve as retirement hot-spots, according to the survey.
The summer months continued to have the largest number of moves per season, according to the survey.
The following is a list from the Atlas Van Lines’ 2011 Migration Patterns study showing the top outbound states for moves (in which more than 55 percent of total shipments moved out of the state) and inbound states (in which more than 55 percent of total moving shipments moved into the state). The list is in no particular order.
Top Outbound States for Moves
Ohio
Indiana
Illinois
Kansas
Nebraska
Utah
Minnesota
Wisconsin
Louisiana
New York
Massachusetts
Connecticut
Delaware
New Jersey
West Virginia
Missouri
Kansas
Hawaii
Top Inbound States for Moves
Washington, D.C.
Maryland
Texas
Virginia
North Carolina
New Hampshire
Rhode Island
New Mexico
Alaska
North Dakota
Tennessee
Source: Atlas Van Lines 2011 Migration Patterns
For the fifth year in a row, Washington, D.C., had the highest percentage of inbound moves while Ohio had the highest percentage of residents leaving, or “outbound moves.” Meanwhile, western states mostly stayed balanced in moves for the year. Several southeastern states, such as Florida and Georgia, also stayed balanced in moves despite high foreclosure rates, possibly because they also serve as retirement hot-spots, according to the survey.
The summer months continued to have the largest number of moves per season, according to the survey.
The following is a list from the Atlas Van Lines’ 2011 Migration Patterns study showing the top outbound states for moves (in which more than 55 percent of total shipments moved out of the state) and inbound states (in which more than 55 percent of total moving shipments moved into the state). The list is in no particular order.
Top Outbound States for Moves
Ohio
Indiana
Illinois
Kansas
Nebraska
Utah
Minnesota
Wisconsin
Louisiana
New York
Massachusetts
Connecticut
Delaware
New Jersey
West Virginia
Missouri
Kansas
Hawaii
Top Inbound States for Moves
Washington, D.C.
Maryland
Texas
Virginia
North Carolina
New Hampshire
Rhode Island
New Mexico
Alaska
North Dakota
Tennessee
Source: Atlas Van Lines 2011 Migration Patterns
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