On Real Estate
June 14, 2013
ATLANTA — Real estate experts and journalists from around the country gathered here recently to discuss such weighty matters as the perceived rosiness of the housing market and trends in green building. But perhaps the most arresting takeaway had to do with that 20-something son of yours who has moved back into your house: Brace yourself — he's probably not going anywhere any time soon.
A notebook of insights off the beaten housing path, based on presentations at the annual meeting of the National Association of Real Estate Editors:
Goodbye, old crash pad. If there's any such thing as a real estate play that's recession-proof, it may be student housing. That's according to a group of experts on the latest in campus apartments who see colleges' preponderance of dated dormitories as one factor driving their business. Colleges see the need to respond with a better place to bunk, and apartment developers see a market in catering to fun-seekers.
There are plenty of customers for student housing — 5.2 million to 5.5 million students live off campus and 3.2 million live on campus, according to Miles Orth, chief operating officer of Campus Apartments in Philadelphia, a developer and manager of student housing.
At many colleges, dormitories are "functionally obsolete, built in the 1950s, '60s and '70s," Orth said.
The pressure on colleges to recruit and retain students is significant, and quality on-campus housing has become viewed as an important tool, according to Doug Brown, president of Capstone On-Campus Management, which provides residential services on 23 U.S. campuses.
At the same time, off-campus housing developers see an opportunity to build amenity-rich student-oriented communities that are almost resortlike in feel, according to Wes Rogers, president and CEO of Landmark Properties, which specializes in building amenity-rich communities of student housing.
Most subdivisions should be this fun: It's not unusual, he said, for his company to construct huge "clubhouses" where the goodies might include a golf simulator, cardio and weight rooms, Zumba studios, 24-hour study lounges, social gaming areas, cybercafes, swimming pools with cabanas, putting greens, tennis and basketball courts, party pavilions and decks with grilling areas.
The cost of such a lifestyle? "It depends on the market," he said. "We price our rents comparable to what they pay on campus, with a slight premium. We can get a 25 to 30 percent premium, compared to some other purpose-built (specifically student-oriented) housing."
On the other hand, sticker shock over the cost of higher education is renewing parental interest in any way of reducing price tags, according to Brown.
"One thing that's becoming more important is that (students and their parents) need to see value in living on campus," he said. "We're getting more people interested in not taking out student loans. Our challenge is, how do we make living on campus more affordable?" while still satisfying demand for modernized housing.
Got moat? The Federal Reserve is reporting that Americans have largely regained the wealth that went pfft in the 2008 downturn, and that money seems to be reasserting itself in the luxury home market, according to a panel of agents who specialize in blue-chip properties around the country.
California, as usual, is a surreal example unto itself.
"We have homes flying off the market in the $1 million to $1.5 million range, and none of these would be considered luxury homes," said Kofi Natei Nartey, broker and director of the sports and entertainment division at The Agency in Beverly Hills, Calif. He said "luxury" in LA usually commences in the $3 million range and climbs to nosebleed levels.
Nartey and other agents said at the conference that upper-upper-end buyers today are motivated by attractive borrowing rates, and they perceive real estate — once again — as a comfortable place to park their money.
Lest one wonder who in the world buys a multimillion-dollar estate with borrowed money, the agents, on a panel discussing the luxury market, said that cash has been so cheaply priced that their clients' financial advisers are urging them to go out and buy houses. Their banks and investment brokerages are even reaching out to them with unsolicited mortgage offers, according to Jack Cotton, of Cotton Real Estate in Cape Cod, Mass.
What's hot? The usual prestige items — acreage in places where it's usually scarce, houses with interesting backstories (particularly for international buyers) and anything that could be construed as a wow factor.
"Wow" Exhibit A: "We have a client who's building a house with a moat on a promontory in Beverly Hills," Nartey said.
The boomerang report. It has been well-documented, in research and in parental anecdotes, that young adult children have moved back in with their parents in droves. But it's bigger than you probably think.
"The number of young adults, up to 34 years old, living at home with their parents, is higher than it's ever been, in absolute terms and as a percentage of the generation," Mark Obrinsky, chief economist for the National Multi-Housing Council, a trade group for major landlords, said in a panel discussion on the future of the apartment industry.
But some boomerangs, as the phenomenon of the returning offspring is known, will be back home longer than others, according to Greg Willett, vice president of research and analysis at MPF Research, which tracks trends in the rental industry.
"There are different patterns to look at, of male versus female," Willett said. "You do have (boomerang) females who have come home to live, but females are better-educated, better able to get jobs and be on their own. They end up with mom and dad for a short time period."
The young women are going to be in the apartment market sooner, he said. "But the guys are going to be (back at home) longer. They kind of like living with mom and dad."
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