Matt DiChiara's Blog

Last week we wrote an article about what kind of ad you should post if you are looking for a roommate; we got some feedback and decided to combine the two options that we proposed and we had 8 people contact us, all very interested in moving in, within the first 45 minutes. That posting, in it's brilliant tenant enticing entirety is reprinted here with my permission:

$750 Room for Rent July 1st

Hello everyone, we are looking for a new roommate to join us at our lovely 4 bedroom apartment. We are friends who have lived together for about a year; we spend a lot of time at our apartment telling jokes over beers and macaroni and cheese, but we also like to get out into the city, be it for dinner, drinks, concerts or outdoor activities, and have found our neighborhood to be conveniently located for all of these things.

Room for Rent: Very sunny, especially in the mornings, room overlooking Larkin Street in the front of our apartment available for a month to month rent.

Breaking Ground

A new report from the Commerce Department showed that residential construction increased in January, driven by a 9.2 percent increase in new apartment and multifamily developments. Total construction, which includes both single and multifamily projects, rose just 2.8 percent. [Wall Street Journal, subscription]

This is an encouraging start to the year as in 2009 new multifamily starts fell 58 percent to 92,000 units and vacancy rates soared to an all time high of 8 percent.

One company that is contributing to the new starts is AvalonBay Communities, Inc., which recently announced a plan to invest around $400 million into some cities with lower than average vacancy rates. AvalonBay hopes to use the revenue from more profitable years to get a head start on the competition by targeting regions that have the highest growth potential and taking advantage of depressed construction costs. [BusinessWeek]

Yesterday, we took a broad look at the real estate vertical by comparing for rent search terms with for sale search terms and found that the market share of for rent terms had overtaken that of for sale terms in 2009. Just to review, by market share for search terms, we mean the percentage of the 10 million U.S. internet users who searched with a given keyword (search term) and from that query clicked on a site that Hitwise categorizes as part of the Real Estate Industry (of which there are a few thousand).

So, today we wanted to get a little more granular to see what specific terms or perhaps keyword and its permutations had contributed to the new trend towards renting. Yesterday, we compared all terms that included the word rent versus all terms that included the word sale to draw our conclusions; today, we are going to look at one specific term to gauge the shift, 'homes for rent' versus 'homes for sale.'

We saw enormous gains from 'homes for rent' in 2009. There are two charts below, the first, shows that both 'homes for rent' and 'homes for sale' gained market share in 2009. However, the market share for 'homes for rent' skyrocketed nearly 150 percent from January 2009 to January 2010, although 'homes for sale' retains a slight edge, gaining around 41 percent in the same time period.

In the real estate space, rent search terms surpassed the market share than sale terms in 2009, according to Hitwise Real Estate Weekly Reports. Is this an online reflection of the housing crisis? Are there a few terms that are swinging the tally or is the long tail responsible? In either case, what does this mean?

Last week, we took a look at two Hitwise's Monthly Category Reports for the real estate industry, one from December 2009 and one from July 2008. In the interest of full disclosure, we were mostly interested in how MyNewPlace was ranking among the other real estate websites. MyNewPlace entered the top 20 in July 2008 at nineteen and by December 2009, we ranked number eleven.

Today, we wanted to take an in depth look at another section of the Hitwise report, the 'Search Term' section. We wanted to see what had changed over the course of 2009, so we pulled weekly reports from January 2009, July 2009 and January 2010.

As prologue let's define an important term that we will use throughout this analysis, 'market share'. By Market Share we mean the percentage of the 10 million internet users sampled by Hitwise whose search queries resulted in a click to one of the thousands of sites that Hitwise categorizes as in the Real Estate Category. We will also be looking at rank (of the top 1000 search terms) and number of terms that include a certain phrase (think broad match) as well as exact phrases. Here is what we found:

A recent U.S. District Court decided in favor of Post Properties, who had been sued by the Equal Rights Center (ERC) for violations of the Fair Housing and Americans with Disabilities Acts. The judge granted the defendant's Motion for Summary Judgment and ruled that the plaintiff did not have legal standing in a court of law.

In both cases, advocacy groups filed suit after visiting rental properties to determine whether they were up to code and were then dismissed. We'll start with the facts of each case and then move onto our opinion of the opinion.

Hello Insiders,

 MyNewPlace recently conducted a survey of internal data and found that renters across the nation are increasingly searching for 3 BR apartments instead of 1 BR apartments. The trend began right after the official beginning of the recession, in 2007. Nationally, 3 BR apartment searches overtook 1 BR searches in the first quarter of 2009.

 

Last week's Personal Journal section of the Wall Street Journal featured a lengthy article profiling families who bought houses, but ended up needing to move and then couldn't sell their house for anywhere near the amount they had bought it. Their stories really show how homeowners should consider the"five year rule," which warns that unless you plan on staying in that location for more than five years, you will save money by renting.

So, the homeowners now live somewhere else, pay rent on that apartment or home rental, pay their mortgage, property insurance, tax, maintenance and in many cases a property manager to try to get back some money on their home.

Last week I was troubled by this section of the NMHC Q2 Market Trends report regarding Apartment Rents, which stated very clearly that one index showed record breaking declines and the other index showed the biggest increases in 55 years:

"Apartment rents measured by public and private data sources continued to diverge widely.  Same store rents for professionally managed apartments tracked by M/PF Research declined by 3.4 percent, the biggest decline on record.  Rents continued to decline in all four regions for a second straight quarter.  (Note that since overall inflation was negative in the quarter, the "real" rent decline was smaller at  -2.2 percent.) The West had by far the largest decline at -6.5 percent, while smaller declines were posted in the Northeast (-2.1 percent), the Midwest (-1.8 percent), and the South (-2.0 percent).  In contrast, the CPI rent index, which covers all rental housing, not just apartments, rose by 2.9 percent in the second quarter.  This was the lowest such increase in over four years. Coupled with the negative inflation of the quarter, however, "real" rent actually rose by a startling 4.1 percent, the highest in 55 years."

 To me, since the M/PF sample is comprised of investment grade apartments and the CPI rent index includes all rental housing, but only in urban areas, it would seem that rent gains are occurring in affordable urban areas compared to falling demand suburbs or exurbs.

Today, I wrote a post over at the MyNewPlace Blog about this really cool new vertical indoor garden that I thought would be a perfect way for apartment dwellers to enjoy the outdoors and have a little vegetation without a yard.

As I did more research, it also seemed as though property managers could capitalize on a variation of this idea, and wondered if anyone else out their concurred or is doing anything like this.

According to a report on the Greenspaces Blog, a building in New Delhi was able to make their office building healthier as well as more efficient:

I just saw an article this morning entitled "President Shifts Focus to Renting, not Owning", which argued that the new administration has changed courses on housing issues. The article states that Obama will be focusing on providing affordable renting options differing from the less balanced approach of the Bush years.

The plan is to spend a lot of money, a few billion's worth to create more affordable housing by converting vacant foreclosed homes and building housing projects.

Now, I am not sure if this technically qualifies as an ideological shift that will yield a more balanced housing policy or whether this is simply a good way to create some short term construction jobs and reduce unsold housing stock.