Published: Sep 20, 2013
Home Affordability—Gaps Go Into Reverse. In this report, we analyze home affordability metrics in detail, including company and regional rankings based on median income/home prices, different metrics used to measure affordability and recent housing data. Recall, our quarterly MetroView analysis utilizes two housing affordability metrics: median household income / median single family home prices, and market-level apartment rents / comparable (hypothetical) mortgage payments. The methodology utilized by the National Association of Realtors (NAR) takes a third approach, by comparing qualifying income levels to market income levels. Overall, in 2Q,home affordability gaps moved substantially in favor of renters in nearly all markets, largely reflecting an increase in average home payments that out-paced rent growth.
Multifamily MetroView: Affordability Shifts Toward Renters. We introduced the latest edition of our quarterly Multifamily MetroView analysis. Based on our proprietary model, we believe that BRE Properties, Essex Property Trust, and Camden Property Trust could have the strongest 2013 regional prospects, whereas Apartment Investment & Management, AvalonBay Communities, and Home Properties could have the weakest. Metros that screen well include Fort Worth, Phoenix, and Las Vegas. Metros that screened unfavorably include Cleveland, Rochester, and Syracuse. For details on our proprietary econometric Multifamily MetroView model, inputs, sources, adjustments, and implication, please refer to our note titled “Multifamily MetroView: Affordability Shifts Toward Renters”, published on September 17, 2013.
Housing Supply: Lower Data Could Drive Multi’s Higher. The U.S. Department of Housing and Urban Development, and the U.S. Census Bureau jointly released preliminary August 2013 and revised July 2013 housing data on September 18, 2013. Seasonally adjusted permits and starts declined on a sequential basis and overall data was lower than consensus (Bloomberg), suggesting that there was a modest slowdown in the month. A jump in mortgage rates is likely to negatively impact supply longer-term, although we believe it is far too early for there to be any visible signs in the data. That said, multi data points to the ongoing surge in supply—although absolute numbers do not suggest an impending supply/demand imbalance, in our view.
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