Industry News | Week of March 16
HOT & RELEVANT TOPICS
Why the Housing Market Might Dodge the Recession
The real estate market couldn’t rescue the economy after the Great Recession of 2009 because the market itself was on life support. While economic contraction is inevitable as the country shuts down for an undetermined period of time, the housing market could essentially dodge the recession and continue to thrive when things rebound. That’s because, unlike last time, the real estate market is exceedingly healthy entering these murky times and is not poised to suffer the same fate as, say, the travel industry. Goldman Sachs economists estimate that GDP growth will contract 5% in the second quarter, yet jump 3% in Q3 and 5% in Q4 as pent-up demand drives business activity. Read Kathleen Howley’s article in Housingwire.
Association advocacy during coronavirus pandemic
With the economic fallout from the impact of COVID-19 (coronavirus), Congress is evaluating how to support individuals and industries that might be suffering financial hardships. In fact, unemployment offices across the country are already overwhelmed, as many Americans have lost income because of the COVID-19 outbreak. This will make it difficult for them to pay rent, which could result in cash-flow challenges for multifamily owners and operators as they continue to pay team members and satisfy other financial obligations. Multifamily industry associations have asked Congress to focus on proposals that provide direct assistance to individuals and support for impacted companies. Read the letters sent to Congress on the NMHC website
Carson Addresses Coronavirus, Deregulation at NAA’s Advocate Conference
Ben Carson still has the long-term goal of reducing some of the red tape developers and builders face in producing new housing. But the U.S. Secretary of Housing and Urban Development noted last week at the National Apartment Association’s Advocate Conference that the COVID-19 situation has upended everything. While Carson’s primary focus is to find solutions for those directly impacted, his long-term ambition is to make it easier to produce housing for workers of all types. “We have teachers, nurses, policemen and firemen who can’t afford to live in the neighborhood where they work, and that is not only a disservice to them, but is a disservice to the community as well,” Carson said. Read Les Shaver’s article on the NAA Website.
IN THE NEWS
Boston Pauses ‘Non-Essential’ Construction in City
In what could become a nationwide practice, the city of Boston has put a temporary pause on non-essential construction. That means many multifamily projects could be put on hold. Construction will still be permitted in the city for emergency utility, building work for occurrences such as gas or water leaks and roadwork for sinkholes and other immediate-repair items. In addition, new projects cannot be started beginning March 23. While the move was designed for safety amid the COVID-19 situation, it was not met with unanimous approval. Stephen E. Sandherr, chief executive officer of the Associated General Contractors of America, said: “Halting construction activity will do more harm than good for construction workers, community residents and the economy.” Read John Jordan’s story on GlobeSt.com.
Government Might Let Student Housing Owners Turn Assets to Hospital Beds
The U.S. Administration is mulling a plan that would allow student-housing communities to master lease their assets to create makeshift hospital beds during the pandemic. That’s according to Willy Walker, chief executive officer of real estate financial services provider Walker & Dunlop. The need is clear, as the U.S. currently has approximately 924,000 hospital beds, and high-end predictions estimate COVID-19 will eventually lead to 4.8 million hospitalizations. Many student communities have availability since most students have already been sent home for the semester. Walker noted the challenge is that the virus is a “binary event,” meaning it’s unclear whether it will have receded by fall. Read Erika Morphy’s article on GlobeSt.com.
Uncertainty Increases Multifamily’s Investment Appeal
In the wake of the novel coronavirus pandemic and global financial market declines, individual and institutional investors are taking a closer look at commercial real estate—particularly the multifamily sector. Multifamily’s large resident base and relatively short-term leases provide the needed flexibility to adjust rates to match economic conditions, making multifamily properties more attractive to investors. Projected demographic trends could also lead investors to the housing markets in southern states, where costs are comparatively lower. There are still market-specific risks to be considered, including the local development pipeline, the likelihood of layoffs, and the material needs of the property at a time when resources may be scarce. Read Joseph Lubeck’s story in National Real Estate Investor.