David Jannarone

INDUSTRY NEWS The NIC Senior Housing Analyst Review and Outlook Series inaugural segment provides insights into the senior housing market from 2024 to 2026, emphasizing the gap between construction pace and growing demand. #SeniorHousing #HousingTrends

8

Accelerated Supply of Affordable Production Housing Act (ASAP), is the latest brainchild of Bronx Rep. Ritchie Torres to remove all bond cap limits from affordable housing until 2034. Roughly 20 states have exceeded their bond cap limits and the competition for the available funds is fierce. The senator believes this will allow for a doubling of affordable housing production. Bond cap directly plays into the delivery of 4% tax credit deals due to the 50% test. The 50% test stipulates that more than 50% of the financing for these deals come from bonds. To help provide some background. Low Income Housing Tax Credit (LIHTC) deals come in 2 types, 4% and 9%. (9% don't use bonds, different conversation) You calculate these by taking your total eligible basis (bricks and sticks plus soft costs) and multiply by the eligible percentage. Example: Basis of $10,000,000 x .04 = $400,000 per year for 10 years or $4,000,000 in tax credits. These are then sold to an equity provider (right now for about $0.85, so $1,000,000 in tax credits = $850,000 in capital) in exchange for equity day one. The equity provider then takes the credits over the next 10 years. Which is why they tend to stay in the deal until all of those are paid back. Because the cost to build has gone up by 30-50% since 2019 but bond cap has not, those funds are not going as far. Thus, not only are they competitive, but the number of units that they provide has decreased. Another proposed solution to this problem has been reduction of the 50% test to a 25% test, but it hasn't gotten much traction. I'm not so sure that this will be the panacea the senator is expecting. Because ultimately, if we double the amount of tax credits, we have to have buyers for them. These buyers only buy to the extent that they have taxable liability that they need to offset. Therefore, unless taxes drastically increase, they have a capacity limit. Prior to the tax cuts during the Trump administration, tax credit prices were as high as $1.17. Barring massive tax increases the effect of a large increase in credits could dilute the entire pool. As a result, what we could see is a decrease in the price per credit, from the current .85 cents to say .50 cents. These prices dictate the amount of equity, which dictate whether a project "pencils." The only way I see the numbers working would be to increase the buyer pool for the credits. Current rules do not allow these credits to offset earned income. Which means they don't do any good for a doctor. If we amended those rules and thereby increased the buyer pool, then maybe we would actually see positive effects from increased bond cap and thus increased tax credit deals. https://lnkd.in/eutsJk6a

8

2 Comments

Urban Institute’s new report puts a sharper focus on the lack of diversity within the commercial real estate development industry nationwide. Read their report “Examining Trends of Housing Developers by Race and Gender: An Analysis of 10 Cities” here: https://lnkd.in/ehkKHjdX

62

This article is totally on point, we have to accept our new financing reality and come up with a new set of tools, it can’t be business as usual. #affordablehousingchallenges #cmcdevelopmentgroup

13

1 Comment

With tomorrow being election day, the intersection of politics and real estate in the DC area is becoming more significant. Voters are increasingly aware of how election outcomes could affect housing policies, market trends, and affordability, making it crucial for homebuyers, sellers, and investors to understand these dynamics. #realestate #DMVhomes #dmvrealtor #dmvhousingmarket

1

1 Comment

The most-read story from the previous week's Developer's Digest®, published by Crain's New York Business, covers office-to-residential conversions gaining traction in New York City as a solution to the housing shortage and office surplus, bolstered by a new state budget tax incentive. The Adams administration has launched a portal on the Department of Housing Preservation and Development's website detailing the program, which starts accepting applications later this year. Projects must begin between 2023 and July 2031 and be completed by December 2039, offering tax benefits lasting up to 35 years based on the project start date. To qualify, conversions must include at least six residential units, with 25% of the units being permanently affordable for households earning up to 100% of the area median income. At least 5% of these affordable units must serve households earning no more than 40% of the area median income, and the overall affordability average must not exceed 80%. Additionally, half of the affordable units must be two-bedroom units or larger, and no more than 25% can be studios. Conversions can occur citywide, with more substantial tax benefits for projects in Manhattan below 96th Street, where they will receive a 90% tax exemption initially, decreasing over time. To read more stories like this and to stay on top of the most recent news from the development world, subscribe to our Developer’s Digest® using the link below: https://bit.ly/3Qg1qXV #digest #dsa #nyc #weknowzoning #deveopmentsites #developmentnews

3

RealPage Senior Director of Research and Analysis Carl Whitaker emphasized the significance of April's positive occupancy increase, noting that it reflects a continuation of the strengthening apartment demand witnessed in the highest-ever first quarter tally. The first quarter saw absorption of more than 100,000 units on net, underscoring the resilience and sustained momentum in the apartment market. 📈🏢 #ApartmentDemand #RealEstateMarket #OccupancyRates #MarketAnalysis

5

In the state of Georgia regulatory fees account for more then 23% of the cost of a new construction home. While it is important to examine the impact of regulatory fees, there are other ways to achieve more attainable priced housing and create a path to homeownership, equity, and generational wealth. Today the National Association of Home Builders released its 10 point plan to Build More Homes and Ease the Housing Affordability Crisis. This list is a great start.

32

3 Comments

Seniors Housing Financing Heats Up Amid Occupancy Gains and Market Shifts Slowly but surely, the performance of seniors housing assets is improving. While rent growth in 2022 in the sector represented a period of catch-up after the pandemic stymied the ability of operators to raise lease rates, continuing rent increases in 2023 began contributing to more meaningful net operating income recovery, according to Walker & Dunlop’s recently released Seniors Housing Outlook report. Now, seniors housing owners are positioned for a sustained period of significant revenue expansion amid improving occupancy and a shortfall of new inventory, reports the Bethesda, Maryland-based commercial real estate financing and advisory firm. The undeniable demographic trends remain favorable: By 2035, Walker & Dunlop points out that the number of U.S. citizens over the age of 85 years old will increase by approximately 75 percent to over 11 million individuals. Currently, there are roughly 2 million individuals in nursing homes and assisted living communities across the country. Nursing facility data from the Center for Medicare & Medicaid Services (CMS) and assisted living data from the American Health Care Association and the National Center for Assisted Living (AHCA/NCAL) indicates that the expected 75 percent increase will occur over the next decade, according to Walker & Dunlop. It is likely there will be supply shortage unless more communities are built. “We continue to recover from COVID, and this year has been a nice move toward more normalization across the board with annual rent rates growing at approximately 4 percent in the third quarter this year. And, many primary markets are still achieving rent growths in the high single digits,” observes Kevin Giusti, senior managing director in Walker & Dunlop’s Charlotte, North Carolina office, who is responsible for seniors housing, skilled nursing and hospital financing. “Operating margins still aren’t where they were prior to the pandemic, but they’re closing the gap as occupancy improves, expenses plateau and rents grow.” Plus, insight from Daniel Baron, director of Federal Housing Administration (FHA) finance with Walker & Dunlop in Charleston, South Carolina https://lnkd.in/d2nsQpPQ Sponsored by Walker & Dunlop #seniorshousing #seniorhousing #multifamily

1

Thanks to #JayParsons for bringing this article to my attention. The author, Harvard Professor Edward L. Glaeser, a fellow at the American Enterprise Institute, suggests that the housing crises could be partially addressed by reforming our zoning codes to allow more housing to be built. However, given the extreme local nature of these laws, he recommends a series of carrots and sticks to encourage them to adopt more permissive rules. Such as the withholding of federal funds for cities that fail to meet certain benchmarks. As I have stated on prior posts, I am NOT a fan of top-down control and enforcement. On the other hand, I have more than my share of direct exposure to the ways in which local housing permits and codes are making development expensive and often impossible. Our building/zoning codes are, at best, antiquated. When combined with NIMBYism which makes it twice as hard for affordable housing it's no surprise to me that we are in a housing crisis. Here is a brief sample of issues I have personally been involved with... A client I am currently working with is resubmitting their development plan to a local municipality for the 3rd time. At an extra cost of $40,000 and 6 months of lost time. On a project designed to provide affordable senior housing. The reason? The city has to see the final development plan, which is exactly the same as the first development plan, which then has to be reviewed and approved by more than a dozen internal departments for the 2nd time. A plan which has already been in front of city council twice and been approved unanimously. Another client has a subdivision plan ready with a builder wanting to build, but the local government won't sign off. Despite the fact that workers are being bussed from 50+ miles away because they have nowhere to live adjacent to employment. Another project I was involved with had to buy an adjacent lot that was attached to a historic home and pave it over in order to get certificates of occupancy for the project. This was after they bought a formerly derelict building in an Opportunity Zone and made it a thriving part of the community again. The reason, parking minimum requirements. As of today, the parking lot is hardly ever used, there is a bus stop in front of the building which is in a historic district. My developer clients have many, many, many more stories to tell. All of which add time and expense at best, or block development altogether at worst. Local municipalities have little incentive to actually change the process. Change isn't popular. It could cost their seat on city council or get them in trouble with city government. The status quo is so much safer and easier. It may take top-down pressure to help us fix this and thereby allow developers the opportunity to provide the housing we desperately need. https://lnkd.in/dhEGSu4h

4

Freddie Mac’s 2024 Midyear Multifamily Outlook paints an intriguing picture: While the surge in new supply will lead to modest rent growth (2.7%) and higher vacancy rates (6%), there’s excitement on the horizon. The Sun Belt and Mountain West are buzzing with new developments, and secondary markets with lower supply are set to shine. High-interest rates have nudged up cap rates, causing property prices to dip. But don’t fret—the long-term outlook is bright! A housing shortage, pricey for-sale markets, and favorable demographics promise growth ahead. If market conditions stabilize, transaction volumes could bounce back to $320 billion. 📈

14

2 Comments

How does real estate development contribute to the momentum of the local economy? Chance Carlisle (River City Momentum Fund) joins us in the studio to discuss local projects, the need for a new collaborative capital fund, and the overall impact of real estate developments. Building a more prosperous and vital city rich with talented professionals cannot be a reality without residential and commercial real estate. Learn more about where Memphis stands in comparison to other cities, how the process for development projects differs, and more in this conversation. Tune in here: https://apple.co/48i4OIK

2

Less housing is not very inclusionary. #REITsforHousing #housingsupply #affordability

22

This seems like a promising approach to produce more housing - density zones https://lnkd.in/gtBGb7df

1

A recent article from CRE Daily has reported that demand for mid-priced, three-star-rated apartments - a category which Class C Workforce Housing falls into - has surged in 2024, with absorption already exceeding last year’s total. Overall, 3-star-rated properties are outperforming the overall market in many regions. In 14 of the top 15 markets - which include COFI Portfolio Markets Columbus, OH and Washington, D.C. among others - vacancy rates for mid-priced apartment units are lower than the total market average, while rent growth is stronger in 10 of those markets, indicating sustained demand for affordable housing. Read more: https://lnkd.in/e_t_hE6q

13

The Flywheel Economics Podcast presents: An intersection between affordability and sustainability in housing. Join us over a series of episodes as we follow the stories and solutions behind affordable housing with a focus on emerging markets. We'll sit down with industry experts and begin the journey of uncovering the much needed answers to the world's growing housing crisis. Coming soon!

3

🚀 The Future of Multifamily: Positioning Condos and Co-ops for Success in DC and NYC 🌆 Are you involved in the multifamily housing sector? Join us for a crucial webinar on navigating the current Building Performance Standards (BPS) landscape in Washington, DC, and New York City. Event Details: 🗓️ Date: November 7, 2024 💻 Format: Virtual 💰 Cost: Free This event, hosted by the Building Energy Exchange, Building Performance Partnership, will feature insights on how condos and co-ops can strategically prepare for compliance with evolving regulations. Hear from industry experts, including real case studies from NYC and DC, followed by a moderated discussion with service providers and condo board members. Why Attend? ✔ Understand the unique challenges condos and co-ops face in meeting BPS compliance. ✔ Learn best practices and actionable strategies for short- and long-term success. ✔ Network with peers and gain insights from experienced professionals. Presenters: Thomas Ostrowski, Co-op Board President, 172 E. 4th Street @Nigel Twose, Co-op Board President, Shoreham West Panelists: Max Bremner Bremmer, Senior Energy & Decarbonization Project Manager, Baumann Consulting Darren Johnson, Account Manager, Bright Power, Inc. And more! Institute for Market Transformation Don’t miss out on this opportunity to position your property for success in the evolving multifamily landscape! 👉 Register now: https://lnkd.in/eVGHCAAs #Benchmarking #BEPS #BestPractices #CoOps #CondoToolkit #MultiFamily #BuildingPerformance #Sustainability #Webinar #EnergyEfficiency

3