Articles of Interest
JAN
01
2016
Research Brief:
Employment

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NOV
09
2015
Research Brief:
Employment

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DEC
17
2015
Research Brief:
Rate Increase

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DEC
07
2015
Research Brief:
Employment

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SEP
09
2015
SPECIAL REPORT
Stock Market Volatility

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AUG
31
2015
Texas Apartment Research
Third Quarter 2015 Report

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OCT
29
2015
Video of Interest
Is U.S. Housing on Solid Ground?

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Capital Alerts
JUL
14
2016

The 10-year U.S. Treasury finished trading at 1.48%, about 10 bps higher than last week’s historic lows. This week the DJIA and S&P 500 both...
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JUL
21
2016

The 10-year U.S. Treasury has been trading in a narrow range over the last week and settled today at 1.57%. The Dow Jones Industrial Average...
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JUL
07
2016

The 10-year U.S. Treasury is currently trading along historic lows at 1.38%. While the DJIA and S&P 500 both took an initial hit upon...
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JUN
30
2016

The 10-year U.S. Treasury yield has been hovering just under 1.50% for the last several days since the United Kingdom voted...
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JUN
23
2016

The 10-year U.S. Treasury note is trending up around 1.74% and its yield has rebounded over the last week as the United Kingdom is...
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JUN
16
2016

Treasury prices continue to rise, with the 10-year U.S. Treasury note currently yielding 1.56%; touching the lowest level since...
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JUN
09
2016

The 10-year U.S. Treasury yield is around 1.67%, a low for the year with the exception of Feb. 11, a day when global markets were...
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JUN
06
2016

The 10-year U.S. Treasury note yield continues to trade in the low 1.80% range. OPEC maintained its oil output policy and did not...
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MAY
26
2016

The 10-year U.S. Treasury note yield is about the same this week as last: around 1.84%. Earlier today, West Texas Intermediate Crude Oil...
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MAY
19
2016

Several economic indicators, including the surprising strength on Walmart’s earnings report, have pushed the 10-year U.S. Treasury note yield...

Weekly Market Commentary - From the Desk of Norman Eastwood
JUL
07
2016

Dallas / Fort Worth Submarket Report

Last week we talked about Houston, so this week let's head north and look at the Dallas/Fort Worth metroplex. These two cities are not called the "Big D" and "Cowtown" without merit and, over the past 30 years, they have become fully diversified economies with one of the highest employment growth rates in the nation. Steady employment figures, high job creation, and a growing number of incoming corporation relocations, the Dallas/Fort Worth multifamily market is the textbook example of employment driving supply and demand. At this moment, Dallas/Fort Worth is Texas' most robust market and it is fluctuating between meeting demand and balancing supply, making it the strongest market in all of Texas. Of course, such a bold statement requires data to back it up.

           As with Houston, my team and I applied our map overlay tool and we analyzed the Dallas/Fort Worth market. Of the 36 submarkets, all except three submarkets had lower occupancy. Roughly half of the market increased concessions, whereas the other half actually rolled back concessions. Net effective rental growth also continued to rise in nearly half of the submarkets. As a long-time study of Texas submarkets, areas with adjusting concessions signal one or both of the following, the absorption of new supply and/or the stabilizing of occupancy rates. From my experience, this indicates stabilization and a possibly climbing submarket. Estimated new supply for the Dallas/Fort Worth market in 2016 is 21,794 units, of which 831 units are slated for Dallas' Central Business District and 210 units for North Dallas, temporarily slowing growth for both submarkets while the new units are absorbed. Currently, overall net absorption for the Dallas/Fort Worth market is down significantly quarter-to-quarter with 3,446 units absorbed in Q1 and -5,480 units quarter-to-date; however, let's not put the horse before the cart. According to recent projections, approximately 100,000 new jobs are coming to the area and this should more than offset the negative absorption rate. What does the future hold? New construction numbers appear to be shifting with some early estimates as low as 14,450 units by the end of 2017 and as high as 50,000 units by 2018, solidifying the stamina of the market.  I believe the Dallas/Fort Worth market will remain the most resilient overall market in Texas for the remainder of 2016, and likely into 2017.

Color Concessions Effective Rents Occupancies Overall Occupancy
Red Up Down Down < 90 Percent
Yellow Up Down Down > 90 Percent
Green Up/Down/Stable Up and Down Up and Stable > 92 Percent


JUN
28
2016

Houston Submarket Report

Investors request more information on the Houston market more than Austin, Dallas/Fort Worth and San Antonio combined. The headlines and uncertainty surrounding this market are daunting in and of themselves; declining oil prices, changes in the labor market, diminishing occupancy, lower effective rents, and the list could go on. At a macro level, it would appear Chicken Little has become the darling of the media and his side of the story is grabbing all the press. As an advisor, my responsibility is to my clients and if Chicken Little is at the helm of the ship, I want to know if, where, when and how the sky is going to fall. In order to do this, I created a tool tailored to each of the major markets, which analyzes trends such as concessions, occupancy, effective rents and new construction. The result is a color-coded map classifying each submarket into three categories based on current data and market trends (see the chart below). With this map, clients can easily see the hardest hit or stable areas in relation to their holdings. For example, of the 32 submarkets in the Houston MSA, 20 have reported lower occupancy despite increased concessions, and 12 now have lower effective rents than during the last quarter. Aggravating the situation are the 27,828 new units being delivered to the market in 2016, with 10,739 of those units located along the energy corridor. Two of the submarkets within the energy corridor, Katy and Cinco Ranch, are colored red due to their occupancies in the high 80s and their inability to absorb all the new units. When you factor in the nearly 10 percent concession load, their effective occupancy is actually closer to the high 70s. Other markets, like Downtown, are doing their best to absorb 2,278 new units and many properties are offering significant concessions to do so. With net absorption slowing (3,532 first quarter versus -866 quarter-to-date), it appears these markets will continue to decline before they improve. However, do not discount the Houston market as a whole, Baytown and South Galveston are both categorized as green and could be the silver lining. These two submarkets are mainly populated by chemical related jobs, which are rapidly expanding, and fostering stable rent growth. Many of the remaining markets are teetering and time will tell if the concessions will enable the markets to hold, or if they too will drop into the red. Now is a good time to reevaluate your investment strategies and decide who is steering your ship, you or Chicken Little. From my perspective, Houston has crested the peak and we are now witnessing the backside of the curve.

Color Concessions Effective Rents Occupancies Overall Occupancy
Red Up Down Down < 90 Percent
Yellow Up Down Down > 90 Percent
Green Up/Down/Stable Up and Down Up and Stable > 92 Percent


JUN
20
2016

The old adage, "the proof is in the pudding," I akin to Newton's law of universal gravity, it is more than just a good idea it's a law. As a real estate advisor, my "pudding" is data, and anyone who knows me is aware, I am a data junkie. A couple of weeks ago, I analyzed the relationship between job creation and new construction as it pertained to rental and occupancy rates in Austin, Dallas/Fort Worth, Houston and San Antonio. It was my interpretation these markets would continue to perform well with the exception of Houston, which I advised exercising caution. This week, Yardi Matrix published their "Matrix Monthly" and their findings echoed my earlier thoughts, rents were up and occupancy tightened in three of the four markets. Interestingly, Yardi took this report one step further and included "renter by choice" and "renter by necessity" data points. Not only did overall occupancy decline in Houston, rents only rose in the "renter by necessity" sector. Upon reading this data and coupling it with the new construction figures, I strongly believe we are witnessing critical indicators of a peaking market. In order for you to properly assess your investment objectives and timelines, I felt further inspection was warranted. My team and I procured market reports from CoStar and created four classes, A+ (the "renter by choice" sector), A, B, and C (the "renter by necessity" sector). I then reviewed all buildings in the CoStar database by class. Initial results suggest rents are plateauing and concessions are growing in all the markets except Class C assets in Austin. It also appears expanding concessions are being used to "prop-up" occupancy rates. So, what does all this mean to you? It all depends on where your investment strategy would benefit the most, before or after the peak of the cycle. I will continue to monitor the data and if effective rents slide further, signs point to a cresting market cycle. If this becomes a reality, now is the time to reevaluate your portfolios and determine how best to position yourself in each of these markets. One last point to consider, with the tightening of capital and the potential for falling net incomes, investment opportunities could get much harder to pencil, forcing the adjustment of cap rates. Over the next four weeks, I will continue to evaluate the data sets and keep you informed of further findings.

Articles:
- Costar Reports
- Yardi Matrix


JUN
06
2016

Tech hiring helps push Austin's jobless rate below 3 percent

Each day the media bombards us with articles about the market or the economy, and everyone seems to have a different opinion about how this information can impact your investments. As your trusted advisor, I have begun to sift through the numerous publications in search of articles that I believe will have the greatest impact to you. Each week I will send an article, along with my insights detailing my interpretation of its significance. I look forward to continuing to provide you with the utmost critical information about market conditions enabling you to be a well-informed investor.    

For my inaugural Article of the Week, I wanted to discuss new construction and job creation in the four major markets in Texas. In this piece, Austin's jobless rate is at an all-time low, 3 percent for the first time since late 2000, indicating the continuing strength of this particular market. After reading this article, I researched supply and job creation data for not only Austin, but for Dallas/Fort Worth, Houston and San Antonio and examined the rates of job creation compared to new construction. As you can see from the data below, the multifamily markets of Austin, Dallas/Fort Worth, and San Antonio continue to tighten from a lack of supply and increasing job creation, opening the door for potential rental increases in these markets. Conversely, the negative job growth within Houston coupled with the amount of new units being delivered in 2015 warrants caution in this market, especially with trying to forecast rental growth. We appear to remain on the upside of the market cycle given our current and projected housing demand as compared to units to be delivered in three of our four major markets. I welcome your thoughts and commentary.

   Job Creation 2015 Job Creation 2016* New Units 2016
Austin 40,014 40,000 3,186
San Antonio 20,329 30,000 2,507
Dallas/Fort Worth 98,333 100,000 3,418
Houston 3,147 -2,826 5,740
*Job data compiled from the Bureau of Labor Statistics, 2015,2016 data through April of 2016, annualized

Article:


JUN
13
2016

Lender Restraint Stunting Real Estate Growth

Credit, we all hear about it, but how are the new regulations going to impact you? At this current point in the market cycle, it is very important. Should you shop all over town to get that all-important "best deal"? Don't jump on the phone too quickly. This week, I came across multiple articles that all point to why your relationship with your lender is critical and how this relationship, or lack of, influences your ability to get the loan you desire. Government regulations, in particular the recently enacted Basel III rules, require lenders to set aside greater reserves, especially for riskier (read, "value-add") loans. The larger banks have their list of preferred clients, and if you are not on it, you are most likely paying more than their preferred borrowers and taking home fewer proceeds. If you are a new buyer, be prepared to put down much more than you think, lenders want you to have considerable "skin" in the game. Credible, well-qualified, well-connected buyers are growing their portfolios, whereas new and fringe buyers are having a hard time. Another byproduct of the tightening standards is fewer loans for construction, thus tempering supply of new product, putting additional pressure on CAP rates and product availability. Judging from the changes in the market, selecting a lender and working to build a strong relationship versus shopping the market for the best deal, appears to be the optimal strategy to achieve much higher long-term dividends. When the market turns, which every investor knows it will, having a good relationship with your lender could make all the difference in executing opportunities that arise.

Articles:


Weekly Marketwatch Reports
Austin
Dallas / Fort Worth
Houston
San Antonio
Student Housing Reports - Summer 2016
Coming Soon
College Station
Coming Soon
Lubbock
Coming Soon
San Antonio
Coming Soon
San Marcos
Waco