LeadingAge to Meet in Denver, October 21-24, 2012

The LeadingAge annual meeting, the largest gathering of aging services and senior housing professionals, will be held this year at the Colorado Convention Center in Denver, starting Sunday, October 21 at 1 pm through Wednesday, October 24th at 4:00 pm. Addressing LeadingAge members in the general sessions to inspire and to encourage service and advocacy in aging services will be Archbishop Desmond Tutu, widely known as “South Africa’s moral conscience," Dr. Atul Gawande, a practicing surgeon, writer, and Harvard professor, and Joseph Coughlin, director of the Massachusetts Institute of Technology AgeLab and author of Disruptive Demographics.

Each day the conference will focus on the varying needs of seniors (and other populations), the models of service and care delivery that will be required to serve them, and the ethical, philosophical, and practical questions associated with the various models. The conference will include sessions covering all the hot topics of management and operations, development, tax credits, preservation, housing with services, and going green in development and management. For more information about the conference, click on the link below.


Association News
2013 Appropriations to be Addressed in a 6-Month Continuing Resolution
Section 202 Program: Stakeholders Provide Comments to HUD on Proposed 202 Changes
Section 8 Renewal Guide Changes Have Major Impacts on Option 4 Renewals
Section 202 Prepayment and Refinancing: HUD Issues New Requirements
NAHMA Offers Green Housing Management Publication

Industry News
"4 Ways to Monetize Your Green Investments"
"Warning: Your Assessor Doesn’t Understand Tax Credit Properties"
"Smart Growth: The Economic Impact of LIHTC Development"
"LIHTC Market Issues Raised at NCSHA Conference"
"Minimize Real Estate Transfer Taxes in Low-Income Housing Transactions"
"Gasson: More Work Needed on LIHTC Advocacy Efforts"
"Green Mortgages Are Making Headway"
"Housing's Latest Dilemma: Affordability Worsens as the Market Mends"
"Assets Disposed of for Less Than Fair Market Value"
"Expiration of 9 Percent Fixed Rate Looms"
"Multiple Families, One Roof"
"Construction Financing Could Be Impacted By Libor Scandal"
"HUD Releases Smoke-Free Housing Toolkit"
"Tiny Apartments in S.F. Worth a Try"
"Investors Get Creative With Hot Rental Market"
"The Multifamily Housing Opportunity"

Association News

2013 Appropriations to be Addressed in a 6-Month Continuing Resolution

So far, the House of Representatives has passed a 2013 HUD appropriations bill and the Senate Appropriations Committee has agreed to its 2013 spending bill with no plans to take it up in the full Senate before the beginning of fiscal year 2013. The bottom line is strikingly different with the House overall level below that of the Senate.

Two line items of concern: the Section 8 project-based renewal account and the Section 202 Housing for the Elderly account. The Senate has set Section 8 project-based renewals at $9.3 billion and the Section 202 account at $375 million, providing for no new development. The House provides only $8.7 billion for Section 8 project-based renewals, not enough to renew all contracts for a full 12 months, but $425 million for Section 202 which includes $50 million for new development. The two chambers started from different places with the Senate using the top line set by the Budget Control Act (BCA) and the House reflecting the House budget resolution which set a cap $19 billion below the BCA.

However, in order to limit the contentious items that the Congress will face in a lame duck session after the election, it appears that the House and Senate leadership have agreed to a continuing resolution spending deal for the first half of fiscal 2013, which begins on October 1. The agreement would fund federal programs at levels agreed to under last year’s Budget Control Act, without attempting to cut another $19 billion of domestic discretionary spending as some House members earlier insisted was necessary. The CR would be based roughly on the 2012 levels of spending and will last six months, through April 1, 2013. This allows both parties to escape the drama of a government shutdown right before the election and gives next year’s incoming Congress time to organize and get up and running before 2013 spending reaches an emergency stage.

There still will be a lame duck session after the election during which Congress will have to decide what to do about sequestration and taxes—enough contentious debate without having to deal with 2013 spending as well.
Section 202 Program: Stakeholders Provide Comments to HUD on Proposed 202 Changes

On June 1, several organizations deeply involved in the development of Section 202 housing submitted comments to the U.S. Department of Housing and Urban Development (HUD) on the future of the Section 202 program and the proposal HUD included in its 2013 budget request.

The comments praised HUD for its efforts to reinvent the 202 program in order to meet the harsh budget realities reflected in the 2013 budget. The letter applauded HUD’s request for funding for new development and its recognition of the value of the Section 202 program as the platform for the delivery of supportive services for seniors so they can age in place.

At the same time, the comments pointed out that the strength of the Section 202 program has been its focus on providing housing and services for a mix of low income seniors from those who are healthy and independent to the very frail or at high risk of frailty and that the need to maintain that focus and strength is not diminishing.

Further, the concerns raised in the letter were that:
• HUD’s proposal provided that funding be allocated to states rather than directly to not-for-profits and counted on tax credits that are so hard to come by.
• Section 202 funds be awarded as operating assistance only, acknowledging the need for capital for certain difficult to finance markets.
• Section 202 assistance be targeted to frail elders instead of available to a broad range of seniors with a broad range of support needs.

The comments were offered by Enterprise Community Partners, LeadingAge, Local Initiative Support Corporation, Lutheran Services in America, Mercy Housing, National Affordable Housing Management Association, Stewards for Affordable Housing for the Future and Volunteers of America,.

For more details, click on the link below
Section 8 Renewal Guide Changes Have Major Impacts on Option 4 Renewals

In May, HUD posted a consolidated revision to the Section 8 Renewal Guide with all its many changes to date on their website, under Section 8 contracts.

As part of the changes, HUD has moved forward with capping future Option 4 budget-based rent adjustments at comparable market rents. According to the transmittal, HUD will "permit rent adjustments in a multiyear contract using a budget basis only if the proposed rents do not exceed comparable market rents for Option 4." The new policy is detailed in Section 6-3.B and applies to those budget-based adjustment requests submitted 150 days following publication of the revised guide. According to a clarification issued by HUD on June 27, the effective date is October 15, 2012. Any budget-based rent increase postmarked October 15, 2012 or thereafter must abide by the new guidance. This new requirement applies to all Option 4 contracts, even multiyear contracts signed prior to May 18, 2012.

Starting in October 2012, any contract rent adjustment requests submitted by any owner with an Option 4 contract renewal in place will have to include a rent comparability study (RCS) demonstrating that requested budget-based rent increases will not take the property rent levels above market comps. If the RCS demonstrates that current rents are above comparable market rents, the request for a budget-based rent adjustment will be denied, and the owner will only receive an OCAF rent adjustment. For Option 4 properties which request only an OCAF increase, no RCS will be required and rent increases will be paperless and streamlined in the “auto-OCAF” submission process.

Additionally, HUD has made substantial changes to Chapter Nine, imposing new "special procedures" effective October 18, 2012 when an RCS shows that market rents exceed 110% of Small Area Fair Market Rents (SAMFR) in metropolitan areas or Fair Market Rents (FMR) in non-metropolitan areas. Detailed instructions related to Rent Comparability Studies can be found in Chapter 9.

The other changes are preservation driven and will allow for:
• Early termination of existing short-term contracts to facilitate provision of a 20-year contract in conjunction with a refinancing.
• Removing use restrictions that tie RCS market rent limits to tax credit rents (to allow additional debt for renovation purposes).
• A change requiring that owners use current debt service when submitting a budget-based rent increase for Option 4 properties that have been refinanced.
Section 202 Prepayment and Refinancing: HUD Issues New Requirements

On May 4, U.S. Department of Housing and Urban Development (HUD) issued H-Notice 2012-8, providing updated guidance for the prepayment and refinancing of Section 202 Direct Loan properties financed between 1959 and 1990.

The new requirements have been published to implement changes in the prepayment law enacted by the Section 202 Supportive Housing for the Elderly Act of 2010 (Public Law 11-372), signature legislation advocated by LeadingAge, its members and other trade associations, and passed in the 2010 lameduck session of Congress.

The legislation streamlines and clarifies the prepayment and refinancing policies governing the preservation of Section 202 properties and makes it possible to refinance and rehabilitate the oldest cohort of Section 202 properties - those with interest rates of 3% and often without rental assistance.

The notice provides procedures for the prepayment of all Section 202 direct loans, those which require the Secretary’s approval, and those which do not, procedures for those which choose to enter into a long-term use agreement (20 years), and procedures for those with Section 8 contracts which request continued renewals and exemptions from mark to market.

The notice supersedes all prior guidance on prepayment and refinancing. For a detailed explanation of the notice click below.
NAHMA Offers Green Housing Management Publication

A new publication, Green Housing: A Practical Guide to Green Real Estate Management, is now available from the National Affordable Housing Management Association (NAHMA). The 82-page spiral-bound book is an informative yet easy-to-read primer on green real estate management, and covers all of the basic concepts, such as energy efficiency, indoor environmental quality, resource efficiency, site sustainability, water efficiency, integrated pest management, tenant green education, and creating a green operation and maintenance plan.

According to a recent report by the U.S. General Services Administration, green buildings have 13% lower maintenance costs and consume 26% less energy. Though there is a common perception that “going green” can be cost-prohibitive, property management professionals and building owners and developers are discovering that greening their properties is not only cost-effective but can be truly profitable. Green Housing, by real estate professional and certified green-building expert Barry P. Weaver, is a timely manual for those who have the desire but not a great deal of capital to accomplish green upgrades.

The book may be purchased for $35 per copy, plus $5 shipping and handling, via NAHMA’s webstore via the link below.

Industry News

4 Ways to Monetize Your Green Investments
Apartment Finance Today (07/12) Mearns, Derek

To justify investments in energy efficient retrofits and construction, multifamily owners can turn to "green leasing," where an owner and tenant work together to ensure the efficient use of energy. A green lease outlines future rental increases that point out the energy savings a tenant can expect to see on their utilities. Any green lease should address rent structure and operating expenses; build out of tenant improvements; sustainable development principles and regulations; and use and disposal of hazardous materials, according to the Green Real Estate Journal. Additionally, multifamily companies are using their energy efficient certifications as a marketing tool to label their communities as eco-friendly. Companies like AMLI Residential market such green features as water efficient fixtures, specialty glass, recycled building material, and energy efficient thermostats. Owners are also seeing energy efficiency returns via utilities savings in common areas at a property, such as by using energy efficient lighting. Obtaining third-party certifications for energy upgrades from Leadership in Energy and Environmental Design, Energy Star, or Enterprise Green Communities can raise the total value of a property and make it more attractive to potential buyers. The U.S. Environmental Protection Agency is currently developing a scale to enable multifamily owners to gauge energy performance against other apartment buildings to help standardize some of the industry’s energy retrofit data and provide metrics that would be useful for lenders.

Warning: Your Assessor Doesn’t Understand Tax Credit Properties
Affordable Housing Finance (08/12) Davila, Gilbert D.

It is challenging for owners of low-income housing tax credit (LIHTC) properties to keep their property tax assessments at moderate levels. Some jurisdictions include the value of the LIHTC allocation as part of a property’s net operating income, while other jurisdictions exclude the tax credits. Tax credit owners can argue that the assessment should take into account the subject property’s illiquidity, especially with regards to the capitalization rate. The capitalization rate for a tax credit property should be higher than the rates used for conventional projects. Owners of tax credit properties should also argue for a modified income approach to account for key differences between conventional and LIHTC apartment projects. For instance, a tax credit property operates under restricted income potential due to the limitations set by the Land Use Restriction Agreement (LURA) and LIHTC regulations. Rental rate restrictions cause rents per unit to be much lower for a LIHTC project than for conventional properties. Additionally, tax credit owners should argue for the use of their actual restricted rent amounts in the income analysis to arrive at a realistic representation of the property’s income potential. LIHTC owners should provide the assessor with a copy of the LURA and point out the requirements that cause expenses to surpass conventional levels.

Smart Growth: The Economic Impact of LIHTC Development
Multi-Housing News (07/12) Harrold, Scott

According to data from the U.S. Department of Housing and Urban Development’s Low-Income Housing Tax Credit (LIHTC) Database, the one-year economic impact of 103,000 placed-into-service LIHTC units includes the creation of 125,660 jobs; $8.1 billion in income for local economies; and $1.3 billion in federal, state, and local taxes, fees and charges. Each additional year brings 30,900 jobs; $2.4 billion in income for local economies; and $454 million in taxes, fees, and charges. In Illinois alone, the state estimates that the one-year impact of its lending for new construction created 4,256 full-time jobs and $70 million in taxes and fees. LIHTC may be the most important resource for the affordable housing market today, providing nearly $8 billion per year in annual budget authority for state and local agencies to issue tax credits for acquisition, rehabilitation, and construction of housing for low-income households. In the past 15 years demand for credits has exceeded supply nearly every year, resulting in a very efficient use of tax credit dollars. Occupancy levels have consistently been about 96 percent in affordable housing units for that same period, and the foreclosure rate is much lower than other real estate classes -- just 0.08 percent on an annualized basis, compared to 0.27 percent for other sectors.

LIHTC Market Issues Raised at NCSHA Conference
Housing Finance (06/29/12) Kimura, Donna

Speakers at the National Council of State Housing Agencies conference in Denver addressed the narrow investor base in the low-income housing tax credit (LIHTC) market. Investor yields have fallen to roughly 6 percent, and interest in the market has dwindled. About 10 investors account for 60 percent of the LIHTC market, says U.S. Bancorp Community Development Corp. LIHTC Director Beth Stohr. Large banks currently account for most of the LIHTC market, because the investments help them meet their Community Reinvestment Act obligations. However, returns are starting to rise again slowly, and secondary market activity might also attract investors, experts say. Furthermore, some LIHTC deals are resulting in more equity than anticipated due to higher LIHTC prices to developers in the past year. The way this equity surplus would be used is a matter for debate, with possibilities including that the money go toward improving the project, building reserves, eliminating funding sources for development, and returning credits to the housing finance agency for use in another project.

Minimize Real Estate Transfer Taxes in Low-Income Housing Transactions
Housing Finance (07/01/12) Bruns, Norman J.

Real estate transfer taxes can create tax savings or traps for those who do not fully understand them. There are two main issues, including special exemptions that may require special planning and the potential to adjust the nominal price to account for the value of below-market financing for low-income housing programs when reporting transfer prices to tax authorities. In terms of exemptions, a bit of investigation before structuring a deal can yield significant tax savings and influence negotiations and terms. Exemptions may depend on the structure of the deal, which often cannot be altered after the agreement is executed. As an example, in Washington state, transfers are exempt if they do not involve the recognition of gain or loss for purposes of entity formation, liquidation, dissolution, or reorganization. Adjusting reported prices is the second potential opportunity or trap, as proper reporting can lower taxes and prevent over-assessments later. In many states, taxes are based on market value and not sales price, and sometimes a buyer pays a higher nominal price by using below-market financing. The concept of cash equivalence is embedded into the concept of market value, and courts have upheld this definition to separate the cost of artificially low financing from sales price. Low-income housing programs that receive mortgage subsidies should apply cash equivalent adjustments to reflect the value of the real estate as well as the valuable subsidized financing. However, tax authorities may not be familiar with cash equivalency adjustments or may refuse to accept anything but the nominal purchase price, in which case a good state tax counsel can help present the information to tax authorities.

Gasson: More Work Needed on LIHTC Advocacy Efforts
Affordable Housing Finance (08/12) Gasson, David

The future of the low-income housing tax credit (LIHTC) program is once again uncertain. U.S. House Ways and Means Committee Chairman Dave Camp (R-Mich.), a supporter of the LIHTC, believes that if fellow lawmakers can see the LIHTC in action, they would realize how the tax credit promotes economic development and community renewal. Camp notes that bipartisan support from a majority of his colleagues will be needed to successfully determine the program's outcome. LIHTC advocates are now focusing on extending and making permanent the fixed 9 percent LIHTC floor, which is set to expire for properties placed in service after Dec. 30, 2013. As of July 12, there were 67 co-sponsors for H.R. 3661 in the U.S. House and 23 co-sponsors for S. 1989 in the U.S. Senate. There is considerable work to do to convince many more of the 435 representatives and 100 senators to back the LIHTC program. It is essential that members of Congress obtain personal knowledge of what the LIHTC is accomplishing at home by visiting apartment communities and meeting the families, senior citizens, and veterans who reside in these properties. They also need to be aware of the LIHTC properties in their district; otherwise the tax credit and the critical aspects created by the program will be at risk.

Green Mortgages Are Making Headway
Apartment Finance Today (07/12) Mearns, Derek

Paula Cino at the National Multi Housing Council observes that the programs available for energy-efficient financing are not particularly geared toward the multifamily market. However, two new programs at the Department of Housing and Urban Development hope to attract private investors to energy-efficient incentives. One is the Energy Innovation Fund, which plans to award $25 million in funding through a grant process that will seed up to $200 million in revolving loan funds, loan guarantees, and green mortgages. The fund awarded $23 million to 12 organizations in March in its pilot phase. The other program is Green Refinance Plus, in which the Federal Housing Administration assumes half of the risk on a loan or acquisition on existing green projects underwritten by Fannie Mae. Owners are allowed to borrow additional money to make energy-saving improvements to their properties. Meanwhile, multifamily property developer and operator Green Campus Partners recently closed on a $50 million warehouse funding facility with Citi Public Affairs to establish capital for energy-saving upgrades. The partnership gives companies access to capital to fund energy-efficient projects in the public sector by providing a revolving line of credit.

Housing's Latest Dilemma: Affordability Worsens as the Market Mends
Builder (07/15/12) Caufield, John

The new State of the Nation’s Housing 2012 report from the Joint Center for Housing Studies finds that while the housing market has improved, the affordability of home-buying has declined for many Americans. Home prices are down 30 percent from their peak in 2006, but in 2010 there were 2.3 million more households spending more than half their monthly income on rent compared to 2007. The majority are renters, and of those, 27 percent said they are "severely burdened" by housing costs, which was twice the percentage of homeowners. And while low-income households account for an increasing number of new household formations, just 25 percent of low-income families benefit from federal rental assistance programs and 470,000 affordable rental units have disappeared in the past decade. The government may have too-aggressively cut programs and tax expenditures that help low-income households, the report says, adding that the country needs to expand "the supply of safe, decent housing that is affordable to the growing numbers of low-income Americans." Among the report's other findings include: the proportion of first-time buyers dropped to 33 percent of home sales in 2011 from 39 percent in 2010; 47 percent of the country's household growth between 2001 and 2010 came from households with less than $30,000 in pretax income; the number of renters increased by one million in 2011, the biggest increase since the 1980s; housing wealth declined by 57 percent between 2006 and 2011; and the wealth gap between blacks and whites grew from 11 times in 2005 to 20 times last year.

Assets Disposed of for Less Than Fair Market Value
Novogradac Journal of Tax Credits (07/12) Li, Grace; Kroger, Jim

Applicants for low-income housing tax credit (LIHTC) properties must provide written certification indicating whether any family member disposed of assets for less than fair market value (FMV) during the two years preceding the eligibility certification or recertification. If the net FMV of the disposed assets is more than $1,000 more than the gross amount received by the tenant, the asset has been disposed of for less than FMV, according to U.S. Department of Housing and Urban Development (HUD) guidelines. This applies to property, cash gifts, and irrevocable trusts, but excludes any assets disposed of involuntarily -- for example, in a divorce or separation agreement, foreclosure, or bankruptcy. When dispositions are involuntary, LIHTC property owners or managers should provide supporting documentation, such as foreclosure documents, from tenants. Owners are not clearly required to verify assets disposed of for less than FMV under HUD or IRS guidelines, which only require a self-declaration from households listing such asset dispositions. Some state agencies do require third-party verification of assets disposed of for less than FMV, so owners and managers should check individual state regulations.

Expiration of 9 Percent Fixed Rate Looms
Housing Finance (07/01/12) Kimura, Donna

The fixed 9 percent rate for low-income housing tax credits (LIHTCs), which has been a vital boost to the industry during the economic downturn, is about to expire unless Congress acts quickly to extend it or make it permanent. If no action is taken, the rate returns to the current rate, which right now is 7.4 percent. The fixed rate has added about 18 percent more credits to affordable housing developments, and some projects could lose $1 million in equity if it expires, according to the Ohio Housing Finance Agency. Developers, investors, and housing finance agencies also would lose the stability and certainty the fixed rate provided, especially in a tumultuous economic climate. It is not yet clear whether Congress will act, but there has been a major grassroots effort to get the industry involved in their congressional districts. "Legislators need to know what the program is and be able to relate to a development in their district or state," said David Gasson, executive director of the Housing Advisory Group and vice president of Boston Capital. "Otherwise, we've lost that vote and will potentially lose the program." However, Gasson is pessimistic about whether the issue will come to a vote before the presidential election.

Multiple Families, One Roof
Wall Street Journal (07/18/12) Kalita, S. Mitra

Nationwide, many U.S. homeowners are pressing local officials to change zoning laws to permit rentals, and builders report an increase in demand for houses with in-law suites or built-in apartments with separate entry. Economists say the tight rental market is driving many renters to consider alternatives, including renting a room in a single-family house. "In some markets, like Washington, New York, San Francisco, [people] can't rent something in the areas they want to rent and they don't want to commute two hours away," says National Multi Housing Council Chief Economist Mark Obrinsky. "This may be making some communities more open to rentals and to think about housing more broadly than they have." He says, "At some level, you're looking for additional rental housing anywhere you can find it."

Construction Financing Could Be Impacted By Libor Scandal (07/19/12) Hlavenja, Jacqueline

The impact of the Barclays Capital scandal involving alleged manipulation of the London Interbank Offer Rate (LIBOR) has not been felt by the commercial real estate sector yet. However, given that many construction, short-term, and bridge loans are priced using LIBOR, the scandal could cost borrowers more. "The manipulation hasn't been large enough to greatly impact the interest in those loans that have been based on LIBOR, but certainly if I were a client and I had a construction loan or some type of bridge product that was floating over LIBOR, I would ask my lender about how much additional interest did I have to pay because of this Barclays situation," says Marcus & Millichap Capital Senior Vice President and Managing Director Bill Hughes. Hughes says that the scandal raises questions for the industry, particularly in the multifamily sector, where most new construction is occurring.

HUD Releases Smoke-Free Housing Toolkit
Apartment Finance Today (06/12) Kimura, Donna

The U.S. Department of Housing and Urban Development (HUD) issued a smoke-free housing tool kit for property owners that includes information on how to implement no-smoking policies and provides a sample resident survey. HUD Assistant Secretary for Public and Indian Housing Sandra Henriquez says that the information can be used by any multifamily owner no matter if they operate federally assisted housing or private market-rate apartments. The toolkit indicates that smoke-free housing can help reduce operating costs by reducing apartment turnover expenses, which can be two to seven times higher when smoking is allowed in apartments. Some insurers also offer discounts when no-smoking policies are in place, and HUD notes that some surveys report that up to 78 percent of renters would choose to live in a smoke-free community. The toolkit advises apartment owners to advertise as smoke-free and inform potential renters about the policy once it is in place.

Tiny Apartments in S.F. Worth a Try
San Francisco Chronicle (07/16/12)

San Francisco is considering a plan to allow apartments as small as 220 square feet, down from the city minimum of 290 square feet. The units, about the size of a one-car garage, would feature foldaway beds, galley kitchens, and bench seating. With 41 percent of city residents living alone, observers think there is a market for mini apartments, though the appeal and convenience of the finished units, the job market, and housing politics, among other things, would determine their success. The units would be exempt from rent control, and costs -- and maybe even rents -- would be lowered because numerous apartments would occupy the same building space. The city is already nipping at conventional housing rules via building loft apartments in industrial areas and dropping parking requirements.

Investors Get Creative With Hot Rental Market
CNBC News (06/20/12) Olick, Diana

With the supply of distressed houses in the millions, investors looking to purchase these properties and turn them into rentals are seeking creative ways to raise capital, the latest of which is the proposed creation of securities backed by pools of previously foreclosed rental properties. The model would resemble the mortgage-backed securities (MBS) model, but instead of mortgage payments providing the cash flow to investors, the monthly rents would. The properties could be owned by banks, investors, or even the federal government. One of the complications of this scenario is the management of these rental properties. Unlike purchasing a security that pools mortgages, the owners of these securities would have to account for the costs of the property's maintenance and oversight of renters. Standard & Poor's has been approached to rate these potential new securities and is already running scenarios, including one in which investors would first receive rental income but then also could take a cut if the properties were sold when the overall housing market bounces back. Investors hungry for good yield are already interested, though they are far more cautious than they were years ago. "From an investor standpoint, what we're looking for is more transparency," explains Blackrock Vice-Chairman Barbara Novick. "So whether it's REO or performing loans, whatever the underlying assets are, what we really need in the new world is a better, clearer understanding of what's in that pool when it's first issued and then how is that pool performing over time." Investors would want to know if the renters were paying promptly, if there were credit issues in the prospective pool, and what will happen when the overall housing market rebounds and more renters turn into homebuyers. There also are murky questions about the government's role, especially since it could participate given the number of foreclosed properties Fannie Mae, Freddie Mac, and the FHA hold on their books.

The Multifamily Housing Opportunity
The Atlantic (06/12) Winzelberg, Dave

Return on apartment investment nationwide is almost 15 percent, according to the National Multi Housing Council, and lenders are scrambling to finance the development of rental housing, especially in denser urban areas and suburban downtowns. Rental prices are rising, and apartment community occupancy is higher than it has been in the last three years, according to analysts. In Manhattan, rental occupancy in the second quarter eclipsed 98 percent, and average asking rents jumped to more than $3,720 a month for a two-bedroom. Housing Analyst Gary Shilling says a sensibility has returned to the housing market following the burst of the real estate bubble. Since house prices will not rebound for many years, he says people can no longer depend on a house as being a solid investment, and more will begin to invest elsewhere. Shilling also notes that young families are likely to remain in apartments longer, and more empty nesters will want to stop paying the mortgage on a house that is unlikely to increase in value anytime soon.

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August 2012
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