What's the current state of the development pipeline slated for this year?

What's the current state of the development pipeline slated for this year?

Good news, bad news. The bad news is that capital is still tough to acquire. The good news is that over the last two years the pipeline has come to a halt. Prior to the crash, we were seeing an overactive pipeline that was heading for trouble. Now, as a result of the lack of capital, the pipeline is low and inventories are burning off. Couple that with the change in renter makeup (more home owners unable to qualify,thus increasing the rental ranks). Apartments over the next 12 to 18 months should see strong gains. As a result, we are starting to see pre activity again in the pipeline. This time that pipeline should follow a more balanced supply and demand model.
Bill Watts
MRC
www.mrcteam.com
Leaders in Multifamily Market Research and Feasibility

Jerry,


Development is slow and will be until at least next year. Unless you have a significant down payment and plenty of reserves you wont get financing. New construction is mostly financed through Fannie Mae and they take 9 to 12 months to get a loan done.

Good news is if you already own property rent will start to go up as more people rent instead of buying. Home ownership declined from 69% to 66%. For every 1% drop add 1 million renters. With no increasing inventory rents have to increase.

I do have some sources for development loans for strong buyers. Need details let me know.


Sean Watson
Managing Partner
Watson & Donohue Capital
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I agree financing is the key and is still tight, so I do not see a lot of new construction on the horizon for this year. It does make sense that a larger pool of renters results in an increase in rents. Just curious how communities are adjusting their qualifications to meet this demand, since many have foreclosures, bankruptcy's and lost high paying jobs.

Robert Laing
President
Accelerated Leasing Programs
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