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"2012 will give us the tightest year of apartment vacancies in recorded history," writes Karl...

"2012 will give us the tightest year of apartment vacancies in recorded history," writes Karl Smith. The ensuing higher rents are obviously a boon to single-family housing as buying becomes cheaper than renting, but Smith sees the chance of a "transformative boom" in multifamily building that will not only charge the economic recovery, but alter the look of our cities.
Comments (36)
  • That makes sense, kind of like parking places, when it gets so crowded the only direction to go is up. Those who've held onto their homes may ultimately have the last laugh.
    8 Jan 2012, 08:55 AM Reply Like
  • More like people can't afford the parking space so they jam both cars in the same spot and split the fee
    8 Jan 2012, 06:23 PM Reply Like
  • Couldn't agree more, seeing multifam infill projects (albeit small) starting to emerge, single fams being razed for duplexes, 3 fams etc. conversions with "inlaw suites" (read rental unit.)
    8 Jan 2012, 09:19 AM Reply Like
  • Apartments have been going up in the Tulsa area big time. Our economy remains relatively strong, but people still can't get mortgages so this all makes sense.
    8 Jan 2012, 03:42 PM Reply Like
  • While it is true that buying may be cheaper than renting, we need to examine what percentage of the population actually has the requisite down payment, FICO score and stable employment that will qualify for a mortgage. In these times, the number may be far less than most believe.
    8 Jan 2012, 09:30 AM Reply Like
  • I agree. I own rental property in Il and Ca. I find most renters have terrible credit and can't even come up with first months rent and deposit. Which usually amounts to about 2500.00. So unless the banks drop the down payment to about 3% or less a lot will not qualify. And we know how those lending standards end up. The government will probably get involved through Freddy and Fanny.
    8 Jan 2012, 11:36 AM Reply Like
  • It has the feel of a bad horror movie that just keeps getting worse and worse. It hurts my sense of humanity and morality, and I feel for our nation.
    8 Jan 2012, 09:42 AM Reply Like
  • I would be thinking to build small.. Levittown type developments.. and ultra efficient apartment buildings.
    8 Jan 2012, 09:59 AM Reply Like
  • I keep thinking the same thing:
    Entry level at 25-40K.
    Clean, happy shelter.
    Opportunity to maintain/build equity.
    Like dorm rooms, but a mortgage contract.
    Perhaps convert all the old bricks and mortar schools, libraries and hospitals that are quickly in obsolesce.
    8 Jan 2012, 05:57 PM Reply Like
  • Consolidation of living, shopping, and entertainment will be the boom - the younger folks are moving to the city - who really wants to cut grass anymore.


    Integrated retirement living with extended services is taking off.
    8 Jan 2012, 10:39 AM Reply Like
  • We have not seen the entire "vacant or no mortgage payment for the last X months" houses on the market yet. It is not clear if the high paying jobs lost will come back or the days of making big salary with useless degrees accompanied by the dream house, 2 kids and a dog or cat are completely gone. It is not certain if we will ever have the salary / buying power advantage that we had with our foreigners continuously or if we will become their slaves (make things and sell them for almost nothing to take care of our debt). It is not clear if we will end with multi-generation families in the same house (like the mother-in-law suites or renting part of the house to generate some extra cash flow) as the norm. It is not clear if we have downsized enough in our expectations in terms of the houses (after, all we went from 1100 sq.ft and 1 1/2 car garage of the 1970's to present 2500+ sq. ft and 3 car garages and it might take some extra time to realize we don't or can't afford that extra space). Add to it the baby boomers stock of houses (and not enough money in the real stock pot to keep their borrow and live big mentality going). So, there is lots of ifs. The only thing clear is that we are living in a dynamic (fast changing) world and we are not fully caught up with the effect of it. It will be interesting how we are going to react for all these changes (riots, race wars?).
    8 Jan 2012, 10:43 AM Reply Like
  • In my city, the Federal government has built hundreds of "affordable housing" complexes that are more high end than the fancy apartment complexes in the suburbs. The Feds have added such necessary amenities as swimming pools and sports fields. Meanwhile the few remaining middle class suckers who labor all day and night at two jobs are subsidizing the parasites in their garden apartments. It will take a revolution but all forms of transfer payments must stop before we'll all be living in dumpsters. Just consider this: the food stamp program is more a subsidy to the agriculture industry than it is to the poor. 
    8 Jan 2012, 11:12 AM Reply Like
  • Those who cannot find jobs which provide the needed funds for a down-payment on a home are forced to rent. Under a weak economy, renting becomes one of few options. Buying is not an option.
    8 Jan 2012, 11:43 AM Reply Like
  • Soon they will be living in cardboard boxes under crumbling bridges - if that's what it takes to make you happy.
    8 Jan 2012, 06:17 PM Reply Like
  • "charge the economic recovery"....hmmmm....


    The Fed Chairman Ben Bernanke himself has said this is an uneven recovery. I agree with the banking oligarchs key servant. While we all can say that things are getting marginally better, the income inequality is widening to historic proportions. High wages jobs are being changed for minimum wages in the service sector. Just look at the BLS data, the retail trade is leading the "recovery".


    These structural changes are impacting the root of our system and our society as a whole. You see young people living with their parents well beyond their college years. I have seen the frustration of people wanting to work, and can't find anything. These are incalculable costs......
    8 Jan 2012, 12:39 PM Reply Like
  • The mobile home park I live in here in Grand Prairie, Texas, is now owned by its 3rd company since I moved here in 2002. It is now owned by American Manufactured Communities (, and their first task upon purchase December 1, 2011, was to raise the water/sewer rates 9% effective March 1, 2012. I currently pay $402.27 for my house (through Green Tree Servicing) and a base rent of $426 for the lot I live on (when I first moved in, lot rent was $350). (My January rent w/water, sewer, and trash was $469.33).


    Living in my mobile home seemed like a good idea in 2002, now I wish I had the luxury of shopping around for apartment rents.


    Before the sale, the 2nd owner, Hometown America, was trying to increase revenue by selling or renting to own mobile homes with the lot. Even among us poor people (I make $13.94 an hour in a cushy government job), owning our own homes has been more difficult since the summer of 2007 (when I had to choose between gas for my car to get to work and the other bills). Hometown America even accepted T.I.N.'s and that didn't help them.


    Since the AMC Reit was only incorporated June 7, 2011 (in Maryland but company headquarters based in Addison, Texas), I imagine their first order of business will be to increase the rent as soon as possible and to take anybody who will pay regardless of history. We will then become a real trailer park, but as long as the reit is returning money, the company won't care.


    Not sure why an Reit would buy this park, this and most of the property around it (that's been for sale since I moved in in 2002) is zoned light industrial, and, because the guy upstairs has a sense of humor about these things, we are a stones throw from a toll way, which has increased our flooding during the winter and spring storms (on the flood map we are next door as it were to the official FEMA flood plain).


    *all the info listed may be googled or binged for accuracy.
    8 Jan 2012, 12:54 PM Reply Like
  • Karen, just curious, but if you owned the trailer park where you live would you provide sub market rates to all the tenants there?
    8 Jan 2012, 02:07 PM Reply Like
  • Could you rent it out for what you are paying or a touch more?


    Could you take in a boarder?


    My wife and I faced our reality a year ago, and now live in a space 1/3 of the size of where we lived in 2010. I am now framing out the basement to add a "mother in law" apartment as I get the funds to do it (nearly every construction technique I need to know is on YouTube).


    And the fun part is that in all of this "downsizing" I have never awakened and said "....poor me, my life sucks, I am miserable because I can't live in my fancy old house....."


    I'm happy as a summer clam.
    8 Jan 2012, 06:09 PM Reply Like
  • Oh, but think how much happier you'll be in the cardboard box under the crumbling bridge!
    8 Jan 2012, 06:19 PM Reply Like
  • The property is exactly that, property. There are no concrete pads for homes. The tennis court was torn down (by kids) in 2007. The piping was constantly being repaired before the sale to Hometown America, then the repairs stopped. From the information I've been able to obtain from the office people here at the property, there will be no rush to repair anything by the new owners.


    I can't figure out what the true valuation of the property is, even looking at the Dallas County tax appraisal website, but from what little i can find through other sites ( market price has been increased not through improvements, but through increased valuation {by Dallas County, who is desperate for revenue?} even though the property itself has not been improved, but by sales of the property alone; and this property is surrounded by property that has been for sale (through various REIT's) since I moved here in 2002.


    I would question whether this property value is being manipulated in a similar fashion to what caused the original financial mess: one entity flipping to another on the promise that 'some day' something will happen here.


    In the mean time, the tenants who live here continue to pay more for less. It is possible to price a mobile home tenant off a lot, all I have to do is let my credit go just as a brick-and-mortar home owner does and mail the keys for my mobile home back to Green Tree Servicing. I declared bankruptcy for my two lone credit cards (both acquired by Chase beforehand), and I'm still young, I can rebuild.
    9 Jan 2012, 07:55 PM Reply Like
  • According to my lease, home owners are not allowed to rent out any part of the home (not even for a boarder). I'm living in a 16x76, 2002 Entertainer model home (built by Fleetwood). I never thought of it as being too much space, but I haven't lived in an efficiency since 1994. I can live in a one bedroom apartment for as little as $500 a month (all bills paid) if I'm willing to drop my standard of living that much. I haven't had to do that since 1994 either. But if I have to drop my standard of living that much, what exactly is the point of working this hard for a living? Why bother to try to keep the house?
    9 Jan 2012, 08:00 PM Reply Like
  • You need a new tag line. Also, there is too much competition under the bridges here, and the homeless people live in tents nowadays, not cardboard boxes (cardboard has to be recycled).
    9 Jan 2012, 08:01 PM Reply Like
  • Karen, there are two sides to the money equation:


    1) Expenses - you are clearly focused on spending less that is good.
    2) Income - if the expense side of the equation is no longer working then you have to increase your income. If you are young then learn a trade or do something that will increase your value in the marketplace.


    Everyone I know that is successful works a lot more than 40 hours a week.
    9 Jan 2012, 09:49 PM Reply Like
  • I  truly am not trying to be glib, but given that your living quarters are less than posh, there's no reason to spend any more time there than you have to.


    Use the place only for shelter, shower and a stove. Determine to work 80 hours a week. Make it your passion for the next three years to make more money and save every nickel until you can change your life circumstances.


    Clearly you are smart, literary and circumspect enough to find this blog and write on it...It may take a little time to get your head around beating back your circumstances, but once you do, nothing can stop you.
    10 Jan 2012, 10:26 PM Reply Like
  • Upward pressure on rents will only build this year and next because very few apartments have been built in the last three years.


    Also old buildings and flood/storm/fire damaged buildings will be torn down at a faster rate to capitalize on the cheap land/ rents phenomenon.


    Since it takes about 18 months for a blueprint to be turned into rentable units and with our semi-legal "open border" policy the demand will only build faster.


    Buy anything related to apartment construction and conversion in 2012.


    That would be $REM (mortgages), $XHB and $GE (financing).


    This is a no-lose situation for those who keep their eyes open!
    8 Jan 2012, 03:08 PM Reply Like
  • What does this mean for REIT's? Good or bad?


    Disclosure: I am long in CIM.
    8 Jan 2012, 03:18 PM Reply Like
  • Would this not tend to put a floor under housing prices as investors (perhaps large REITs) pick up cheap single-family homes with an eye to rent them into this surging rental market?
    8 Jan 2012, 04:20 PM Reply Like
  • I believe you are right on this. I have seen a lot of investors buying distressed properties for that reason. I have purchased a couple for my self. They are cash flow positive. But the properties have gone done in price since I purchased them. So you do have to be careful.
    8 Jan 2012, 05:01 PM Reply Like
  • Will the local city governments ALLOW the dense development necessary for a growing population?


    Check out Ryan Avent's "The Gated City" which describes all the zoning regulations and land use laws that essentially make dense development impossible in many of American cities.
    8 Jan 2012, 04:44 PM Reply Like
  • In Seattle, I doubt they'll allow anything other than dense development.
    8 Jan 2012, 06:20 PM Reply Like
  • How did you guys like the Obama campaign commercials, aka Republican Primary debates, shown last night and in the morning on the TV?


    Who let the clowns out?
    8 Jan 2012, 05:13 PM Reply Like
  • Ah politics! The harlequin show for the gullible masses...


    Varan, please keep to the topic. Take your partisan crap to a political forum. I thought you were more intelligent than that.
    8 Jan 2012, 06:38 PM Reply Like
  • i don't worry about BHO.
    Think he's going to win Indiana again?
    Think he's going to win Virginia again?
    Think he's going to win Nevada?
    The real question is how many libs in congress and senate the conservatives can bring down.
    Then, what conservatives do when they do get power...that's the real challenge.
    8 Jan 2012, 06:22 PM Reply Like
  • Didn't we see that in 2001-2008? 4000 American soldiers dead. SP500 down by 36%.


    The people who get your vote by pretending to be conservatives are neither conservative nor liberal, just run of the mill wannabe plutocrats worshiping at the altar of wealth.
    8 Jan 2012, 06:29 PM Reply Like
  • Can't say that I disagree, partner, though I wish it weren't so.


    Perhaps we should just let the clowns enjoy their circus and stick to making money...
    10 Jan 2012, 10:32 PM Reply Like
  • The problem is that down payments are high. I still think housing is still looking for a bottom.
    9 Jan 2012, 12:19 AM Reply Like
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