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Pacific Urban Investors Acquires La Jolla International Gardens

July 7, 2023 by Realty411 Team

PALO ALTO, Calif., July 06, 2023 — Multifamily owner-operator and investment manager Pacific Urban Investors acquired La Jolla International Gardens, a 400-unit apartment community in the La Jolla / University Town Center (UTC) submarket of San Diego, CA, on April 27, 2023. The property was renamed Allina La Jolla (the “Property”) and marks Pacific’s 21st acquisition in the San Diego Market.

Allina La Jolla is a 100% market rate property built in 1986. La Jolla / UTC is known as a regional employment driver in multiple science and technology fields due to its business connectivity to the University of California at San Diego (UCSD) research ecosystem. Proximity to downtown La Jolla, job centers up and down the I-5/I-15 corridors, and some of southern California’s best beaches make La Jolla / UTC a highly sought-after locale offering convenient coastal access and short commute times. The Property offers semi-urban, walkable living 10 minutes from the ocean, a job-dense micro location with abundant neighboring retail, and spacious amenities. Community offerings on the meticulously crafted, 7-acre asset include a resort-style pool and spa, sprawling clubhouse, fully-equipped business center, modern fitness center, sand volleyball court, and bar-be-que area.

Pacific Urban Investors is committed to preserving the distinctive character and identity of Allina La Jolla while introducing new initiatives aimed at further enhancing the resident experience. The company plans to invest in modernizing the community’s amenities, including expanded communal areas for residents to connect and engage, and upgrading resident unit interiors.

“Allina La Jolla gives Pacific the opportunity to own a high quality, well-kept vintage asset that offers residents a pleasant living experience with proximate access to La Jolla beaches only a short drive away. Exceptional demographics, award-winning schools, world-class outdoor amenities, and expansive retail offerings make La Jolla / UTC as desired a coastal community as any in San Diego County. The Property’s premium location, access to multiple employment nodes, ample amenities, and well-designed floor plans, all serve as differentiating features in the marketplace,” said Grant Geisen, Senior Vice President of Investments at Pacific.

Pacific’s President Rory Gardner commented, “We are excited to obtain a position in this coveted coastal San Diego submarket where opportunities are so difficult to come by. Allina La Jolla is a welcome complement to our growing Southern California portfolio, and we are actively seeking additional San Diego investments across all our strategies; including both direct acquisitions, as well as joint venture and preferred equity opportunities.”

About Pacific Urban Investors: The Palo Alto, CA-based company has over $8.6 billion in assets under management and owns and manages a national portfolio of more than 20,000 units. The firm and its partners have decades of experience in apartment investments, both repositioning and ‘re-manufacturing’ multifamily assets and their income streams to their optimal, core potential. Pacific has progressed over time to become a best-in-class owner, operator and asset manager in the multifamily space, serving as a fiduciary for its own partner capital as well as its strategic partnerships with institutional pension funds and other sophisticated investors. Pacific is actively acquiring multifamily assets as a principal and providing both co-investment and preferred equity for development, acquisition, and recapitalization.

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The Lock-In Effect and Keys to Success

July 3, 2023 by Realty411 Team

By Rick Tobin

There sure seems to be more bad news than good news these days about the state of real estate. During turbulent times like we’ve all seen in recent years, the most common first human reaction is usually denial or acting somewhat like a locked up “prisoner” with a frozen “deer-in-the-headlights” look in our eyes. Yet, this is exactly when we should stay focused on the potential opportunities more so than the temporary obstacles standing in our way.

As foreclosure filings continue to increase to an average near 50% higher than the pre-pandemic years (2019 and earlier), struggling homeowners and landlords will need to focus on solutions such as loan modifications, forbearance agreements, short sales, and quick sales for cash. As an investor in the near future, you will likely find more deals readily available to choose from if you know where and how to look for them.

Some metropolitan regions like Houston have 56% higher foreclosure rates. Other places like Minneapolis/St. Paul saw +106% foreclosure rates in March. Nashville was +35% higher and Phoenix + 33% higher in May; Rhode Island was up 32% in May.

During the depths of the Credit Crisis / Great Financial Recession years between 2008 and 2013, California was hit the hardest with a -41% home price drop average from peak to trough. Nevada, Arizona, and Florida weren’t too far behind.

Some California home prices have risen as much as +41% over a period of just 18 to 24 months in recent years, so an equivalent -41% price drop is easier to imagine as some values may drop back towards 2021 levels.

The typical home today is about $80,000 higher than it was just two years ago. The average monthly rent payment today is more than $1,000 higher than it was in 2020. Middle-income first-time buyers are unable to afford 70% of homes. As California unemployment rates continue to rise at a faster pace than most other states (Big Tech layoffs, especially), it will be more challenging to continue making mortgage payments.

Rental Market Trends

Today, there are 65% more active short-term rental listings on Airbnb and VRBO (965,000+) than all homes listed for sale nationally (554,000+), as per Realtor.com and other sources. At some point, the vacant short-term rentals will become listed homes for sale or distressed properties due to higher vacancy rates.

Ironically, the founders of Airbnb originally used air mattresses to cover their own San Francisco apartment unit’s rent. Eventually, air bubbles go pop one way or another.

Rent Increases

The following metro areas have experienced the greatest year-over-year rental price percentage increases through May 2023:
Providence-Warwick, RI-MA (+17.44 percent)
Kansas City, MO (+13.20 percent)
Minneapolis-St. Paul-Bloomington, MN-WI (+8.97 percent)
Raleigh-Cary, NC (+8.05 percent)
Charlotte-Concord-Gastonia, NC-SC (+7.65 percent)
San Jose-Sunnyvale-Santa Clara, CA (+7.59 percent)
Hartford-East Hartford-Middletown, CT (+7.47 percent)
Columbus, OH (+6.81 percent)
Los Angeles-Long Beach-Anaheim, CA (+6.20 percent)
Riverside-San Bernardino-Ontario, CA (+5.97 percent)

Rent Decreases

The following metro areas have experienced the largest year-over-year rental price percentage decreases through May 2023:
Austin-Round Rock-Georgetown, TX (-20.76 percent)
New Orleans-Metairie, LA (-20.42 percent)
Las Vegas-Henderson-Paradise, NV (-10.57 percent)
Houston-The Woodlands-Sugar Land, TX (-8.42 percent)
Seattle-Tacoma-Bellevue, WA (-8.28 percent)
Cincinnati, OH-KY-IN (-6.49 percent)
Phoenix-Mesa-Chandler, AZ (-6.46 percent)
Birmingham-Hoover, AL (-5.98 percent)
Memphis, TN-MS-AR (-4.85 percent)
Oklahoma City, OK (-4.44 percent)
Source: Rent.com

Multifamily Trends in Southern California

Sales and prices for multifamily apartment buildings have started to really fall in Los Angeles and other metropolitan regions across the nation. Specifically within Los Angeles, the number of units fell 11% in the first quarter of 2023 as compared with the previous fourth quarter in 2022. More shockingly, multifamily apartment building prices collapsed by -37.5% year-over-year as per a report shared by NAI Capital.

During the same first quarter time period, the average sales price per apartment unit dropped by 18.4%. One major factor for the falling price and sales volume numbers for Los Angeles County was directly related to the Measure ULA “mansion tax” that affected both luxury homes and commercial real estate properties priced above $5 million as of April 1st.

While $5 million may seem pricey for a luxury home in Los Angeles or elsewhere, the same $5 million dollar price tag for a rather small multifamily apartment building is much more common.

Strangely, both vacancy rates and apartment rents continue to rise together at the same time in many parts of Los Angeles and elsewhere. Average rents rose to $2,156 per apartment unit in Los Angeles, a +1.9% year-over-year increase.

Some regions of Los Angeles had more negative rent, sales price, and vacancy trends. For example, the first quarter numbers for these Los Angeles multifamily submarkets were more negative than positive and were as follows:

San Fernando Valley and Santa Clarita Valley: The average multifamily sale price per unit fell by -35.9% year-over-year while the vacancy rates increased by +22%.
San Gabriel Valley: The average sales price per unit decreased by -20.3% while vacancy rates skyrocketed by +32.2%.
L.A. Westside: The average sales price per unit fell by -9.5% while vacancy rates increased by +10.7%.

Historically, rising vacancy rates and rental payment trends are usually inverse to one another like a seesaw with payments falling as vacancy rates rise. We shall see how long this trend lasts.

A very high number of landlords haven’t collected a rental payment for two or three years either, especially in Los Angeles County. When will the foreclosure and tenant eviction rates really begin to accelerate and adversely impact both tenants and landlords?

The Locked-In Homeowner and Unlocked Treasures

There are upwards of 16 to 20 million vacant or distressed properties across the nation. Additionally, there are millions of distressed FHA mortgages alone. Many homeowners haven’t made a mortgage payment for more than three years just like so many tenants.

Loan modifications, forbearance, and loan forgiveness plans continue at near record paces across the nation. Lenders are not filing foreclosure as aggressively as they would have in years past, partly due to ongoing pandemic restrictions in place. This is a major reason why the national home listing inventory supply is so low.

Another reason why there are so few homes listed for sale is because upwards of 92% of homeowners with a mortgage have an existing rate at or below 6%, as per a study released by Redfin. Let’s take a quick look below at the fixed rate estimates for homeowners as of the first quarter:

91.8% of mortgaged homeowners have rates below 6%.
82.4% of homeowners have rates below 5%.
62% of homeowners have rates below 4%.
23.5% of homeowners have rates below 3%.

It can be rather challenging for a homeowner to consider losing their 6%, 5%, 4%, 3%, or even 2% fixed rate mortgage with a 30-year term and move to another home with a rate closer to 7% or 8%. As a result, it’s referred to as the “lock-in effect” because so many homeowners don’t want to lose their near record rate locks.

The market may change for the better or worse later this year depending upon a few factors such as follows:

First, will future unemployment trends improve or get worse. A loss of income is generally the #1 reason why someone loses their home to foreclosure.

Second, will lenders and loan service companies start to file foreclosure notices at a much faster pace than in recent years?

Third, will tenant protections in place be eased up or tightened? Most landlords are small investors who may be fortunate to own just one or two rental properties. After months or years of no rent collected, the landlords may be at risk of losing their rentals and primary home to foreclosure.

Your key to future success that unlocks your potential as either a homeowner, investor, or tenant is to focus on the positives and negatives while minimizing your risk and maximizing your gains. With the right mindset and guidance, it will be akin to a literal key that unlocks a treasure chest!!!

Rick Tobin

Rick Tobin has worked in the real estate, financial, investment, and writing fields for the past 30+ years. He’s held eight (8) different real estate, securities, and mortgage brokerage licenses to date and is a graduate of the University of Southern California. He provides creative residential and commercial mortgage solutions for clients across the nation. He’s also written college textbooks and real estate licensing courses in most states for the two largest real estate publishers in the nation; the oldest real estate school in California; and the first online real estate school in California. Please visit his website at Realloans.com for financing options and his new investment group at So-Cal Real Estate Investors for more details.

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Pending Home Sales Shrunk 2.7% in May

June 30, 2023 by Realty411 Team

WASHINGTON, June 29, 2023 — Key Highlights

Pending home sales dropped in May, down 2.7% from April.
Month over month, contract signings decreased in three U.S. regions but jumped in the Northeast.
Pending home sales fell in all four regions compared to one year ago.

Pending home sales shrunk 2.7% in May from the previous month, according to the National Association of Realtors®. Three U.S. regions posted monthly losses, while sales in the Northeast surged. All four regions saw year-over-year declines in transactions.

“Despite sluggish pending contract signings, the housing market is resilient with approximately three offers for each listing,” said NAR Chief Economist Lawrence Yun, “The lack of housing inventory continues to prevent housing demand from being fully realized.”

The Pending Home Sales Index (PHSI)^* – a forward-looking indicator of home sales based on contract signings – dropped 2.7% to 76.5 in May. Year over year, pending transactions fell by 22.2%. An index of 100 is equal to the level of contract activity in 2001.

“It is encouraging that homebuilders have ramped up production, but the supply from new construction takes time and remains insufficient,” added Yun. “There should be more focus on boosting existing-home inventory with temporary tax incentive measures.”

Pending Home Sales Regional Breakdown

The Northeast PHSI climbed 12.9% from last month to 66.7, a decrease of 21.9% from May 2022. The Midwest index dropped 5.3% to 74.4 in May, down 23.5% from one year ago.

The South PHSI decreased 4.4% to 94.4 in May, reducing 19.6% from the prior year. The West index lessened 6.1% in May to 58.4, falling 26.6% from May 2022.

About the National Association of Realtors^®

The National Association of Realtors^® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor^® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors^® and subscribes to its strict Code of Ethics.

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales. Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues.

The index is based on a sample that covers about 40% of multiple listing service data each month. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

Lauren Cozzi
National Association of REALTORS®
202/383-1178
[email protected]

Mortgage Rates Continue to Increase

May 26, 2023 by Realty411 Team

MCLEAN, Va., May 25, 2023 — Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey (PMMS), showing the 30-year fixed-rate mortgage (FRM) averaged 6.57 percent.

“The U.S. economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week,” said Sam Khater, Freddie Mac’s Chief Economist. “Dampened affordability remains an issue for interested homebuyers and homeowners seem unwilling to lose their low rate and put their home on the market. If this predicament continues to limit supply, it could open up an opportunity for builders to help address the country’s housing shortage.”

News Facts

30-year fixed-rate mortgage averaged 6.57 percent as of May 25, 2023, up from last week when it averaged 6.39 percent. A year ago at this time, the 30-year FRM averaged 5.10 percent.
15-year fixed-rate mortgage averaged 5.97 percent, up from last week when it averaged 5.75 percent. A year ago at this time, the 15-year FRM averaged 4.31 percent.

The PMMS is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.

For more information, view the Frequently Asked Questions on Freddie Mac’s main website.

Greystone Provides $10 Million in Fannie Mae DUS® Financing for Multifamily Property in Atlanta

May 17, 2023 by Realty411 Team

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Mortgage Rates are Rising Again

May 1, 2023 by Realty411 Team

By Stephanie Mojica

Mortgage rates are rising again, causing the average homeowner to pay $800 a month more than they would have just a year ago, according to REALTOR.com.

The interest rate for a 30-year fixed mortgage is 6.54%, while the rate for a 15-year fixed mortgage is 5.75%, per Mortgage News Daily. Even Veterans Administration (VA) loans aren’t getting much relief, with the 30-year fixed rate coming in at 5.95%.

While these numbers aren’t as high as they were in November 2022, they still present significant financial hurdles to would-be homebuyers, REALTOR.com reported.

Because prices are high, people need to borrow more money than before. Hence, people who could ordinarily buy a home are choosing to rent instead; this is good news for real estate investors.

The last time mortgage rates were this high was 2008. With housing prices 42% higher than they were before the COVID-19 pandemic, this is a serious situation for many aspiring homeowners.

Investors and traditional buyers alike are encouraged to shop around for concessions, special programs, and to explore multiple lenders. However, some investors believe that the state of the economy will once again cause mortgage rates to increase.

Stephanie Mojica

Stephanie Mojica, writer of How One Writer Shifted From Settling for $12 an Hour to Prospering at Over $90 an Hour and shorter books such as Quick Answers to Frequently Asked Credit Questions, is an award-winning journalist with publications such as USA Today, The Philadelphia Inquirer, San Francisco Chronicle, and The Virginian-Pilot, among many others. She helps executive coaches, business consultants, business owners, attorneys, and other decision makers generate more money online and become the go-to expert in their field by guiding them step by step through the process of writing and publishing a book.