Why women are better investors: study

A woman walks on Broad St. past the New York Stock Exchange during the morning commute April 30, 2014. REUTERS/Brendan McDermid

And they would be wrong.

According to new data from financial services giant Fidelity Investments, women are actually superior investors. In sifting through more than 8 million investment accounts, Fidelity discovered that women not only save more than men, 0.4 percent, their investments earn more annually, also 0.4 percent.

“It is a double whammy,” says Alexandra Taussig, Fidelity’s senior vice president for women investors. “The myth that men are better investors is just that – a myth.”

Those differences may seem slight at first. But extrapolated over a lifetime of saving and investing, the disparity at retirement age is anything but minor. For a 22-year-old starting out with a salary of $50,000 a year, a woman investor will outpace her male counterpart by more than $250,000.

Even more revealing about general attitudes is Fidelity’s companion “Women and Money” survey, which asked participants which gender was better at investing its money. The outcome: Barely 9 percent of people said women.

What is it, exactly, that makes women better investors? One factor, Fidelity said, is that men are 35 percent more likely to make trades, which means that trading fees eat away at their portfolios more than they do women’s.

Women also save more in the first place – almost a full percentage point annually – in workplace 401(k)s and individual vehicles such as IRAs and brokerage accounts, Fidelity found.

Another advantage: Women assume less risk, such as not loading up entirely on equities. They also invest more in vehicles like target-date funds, whose automatic allocations make for smarter diversification, Fidelity said.

The resulting gender outperformance gibes with a study by academics Terrance Odean (University of California, Berkeley) and Brad Barber (University of California, Davis), who also found that women outperform men, by roughly 1 percent a year.

If you want to invest like a wonder woman, that means shifting to a long-term focus, saving more up front and giving up on trying to time the market with brilliant trades.

“Men regard their stock picks as a sport that comes with bragging rights, and that is what gets them into trouble,” said George Gagliardi, a financial planner in Lexington, Massachusetts.

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Another Decade Of Positive Rental Growth Could Be On The Horizon For Multifamily

The past 10 years have been good to multifamily developers and owners. Fueled by housing shortages and a rush of young professionals into urban cores, rents are expected to increase on average by 3.8% this year. In the post-recession market, shrinking unemployment and rising income have put further pressure on supply in major metro areas. A preference for renting over homeownership remains among millennials and baby boomers.

Yardi Matrix predicts continued moderate multifamily growth this year, which includes an anticipated delivery of 360,000 units in 2018. But concerns about overbuilding in the luxury market, insufficient affordable development and changing demographics remain on the horizon.

Positive Economic Drivers

The first apartment boom began in 2010 when millennials first started to become of renting age. Millennials quickly became the majority of the renting population, with 60% of those surveyed in a Goldman Sachs report choosing to rent.

The number of renters has grown while the percentage of homeowners has fallen. Homeownership among those 35 and younger has fallen from 43.6% to 35.9% in the last 10 years, according to a report from Mortgage Professional America.

Millennials are not the only ones choosing to rent. Since 2005, Americans in their 50s and 60s have accounted for the largest portion of the country’s increase in renters. Among existing baby boomer renters, the majority of renters said they have no plans to buy a home in the near future, including 87% of those 55 to 64 years old and 94% of those over 65 years old.

Steady job growth has helped fuel the need for housing. The economy produced 174,000 new jobs per month year-to-date through November, down slightly from the 187,000 created in 2016. Inflation also remains tame and below expectations, even though the economy has been bolstered by two consecutive quarters of over 3% GDP growth.

A strong economy has kept demand for apartments robust, and developers have responded with increased construction. Roughly 600,000 units were under construction nationwide as of Q4. But a growing shortage of construction workers could slow down the number of deliveries. The average start-to-finish time for projects increased from 16.5 months to 22 months as of Q3, according to Yardi Matrix’s database. Through 2017, about 220,000 units were delivered nationally.

The average occupancy rate of stabilized properties declined 40 basis points in 2017 to 95.3%. With the expectation of a new cycle high in deliveries this year, that rate will likely continue to drop, tempering rent growth.

Despite increased supply, rent growth continues in markets with a strong workforce and proximity to live-work-play hubs. Sacramento is projected to lead metros in rent growth in 2018, and Yardi Matrix forecasts a 7.2% increase due to low inventory growth and demand from a stable and growing job market, as well as the city’s proximity to the Bay Area. Comparable markets with growing technology-driven industries near major urban centers will experience similar growth.

Both equity and debt capital remain abundant in the market. Multifamily is still a popular investment class. Despite rising interest rates, commercial mortgage debt rose by $45B year over year, a 1.5% increase to $3.1 trillion in Q3. Multifamily mortgage debt rose even faster, up $24.9B, or 2.1%, to $1.2 trillion. Borrowers have also turned to agency lenders like Fannie Mae and Freddie Mac to lock in long-term financing rates before the Federal Reserve raises rates once more. The agencies lent to near the limit of their $36.5B caps and were active in programs for loans on small-balance properties, affordable housing and green assets.

Cause For Concern

While developers have been creating more multifamily supply, most of it has been within the luxury space. According to apartment management software and data company RealPage, upscale buildings accounted for between 75% and 80% of the new supply in the current cycle. This statistic comes as nearly half of all renter households pay more than 30% of their income on rent.

The lack of affordable inventory could create a gap between renter demand and supply. Class-B workforce housing offers continued growth potential and stable rent growth through all cycles.

This feature was produced in collaboration between Bisnow Branded Content and CohnReznick. Bisnow news staff was not involved in the production of this content.

Read the original article here.

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Yardi Matrix – 2018 US Multifamily Market Update


Are you looking over your shoulder? Much of what investors feared hasn’t materialized and now, is 2018 and 2019 going to really surprise us? This is a good time to take stock of how the commercial real estate industry is performing, talk about what you can expect, and why. The early part of the year has had some surprises and so far, we’re thinking that will continue. Looking toward the rest of 2018, the story is evolving, but the fundamental drivers of demand, supply and capital markets seem more a continuation of the trends developed in 2017 than any sort of clear break with the past. How do we make sense of reality vs. perception vs. the media cycle? You know us, and like our other web programs, we’re going to tackle the tough issues.

Can the long bull run in real estate last into 2019? Which investment strategies are best positioned for market and capital conditions now? Should you take some chips off the table or go all in? Where? How? Some of what you’ll learn during the program:

  1. U.S. and global macroeconomic forecast: The real argument
  2. Capital markets conditions and GSE outlook: Time will tell and so will we
  3. Leading demographic trends facing the apartment industry: Why it looks more positive
  4. Unit supply trends, pre-leasing absorption, and implications for new investment: Where you can put your dollars to work today and how timing will affect you
  5. Aggregated/anonymized expense data: What does it tell us about cap rates across markets and asset classes?
  6. Sophisticated selection criteria for U.S. metropolitan areas: Which ones offer opportunities today and how will they weather the next downturn?
  7. Insights from our work in office, self-storage (don’t underestimate this one), industrial and retail

Read the original article here.

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Matrix Monthly – April 2018

Multifamily rents in the U.S. performed strongly in April, rising $4 to $1,377, according to a survey of 127 markets by Yardi® Matrix. Rents have increased by $10 in the last two months, a year-over-year gain of 2.4% and the market’s best performance since last spring.

The gain conforms with the multifamily market’s historically strong springtime performance, allaying concerns that surging deliveries from summer 2017 to February 2018 would dampen growth.

Read Report Here


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How To Buy Right And Finance Appropriately

Crittenden National Real Estate conference multifamily panel.

COSTA MESA, CA—Panelists at the recent Crittenden National Real Estate conference here on Wednesday focused how to stay ahead in an ever-changing multifamily world and how to adopt new technologies in order to compete with new players in the market, among other things.  Moderator Noah Miller, VP of acquisitions and finance at Pensam Residential, first asked panelists about the most pressing issue in California today, which is housing affordability and rent control.

As mentioned in an earlier panel that day, rent control is one fear on everyone’s mind. Panelist Barry S. Altshuler, EVP of Equity Residential, said that rent control is the single most pressing issue not only in the multifamily space, but in CRE in general. And it isn’t just a California issue, he added.

“People have to be aware that what may start in California will go to other places. The measure that is likely to get on the ballot is a repeal and a very organized effort to unwind rent control protections,” he said, adding that battles are being fought as we speak.

“Rent control is permitted on pre-1995 product so there is a number of cities trying to implement rent control in those cities. Glendale, Pasadena, Long Beach to name a few. This issue is very important and there are different ways it is being addressed.”

What is happening today, he explained, that is different than in the past, is that you have very well organized tenant groups. “In the past, they were not very organized or well-funded. Now it is a machine that is very aggressively trying to implement rent control.”

He explains that “Rent control is bad policy and doesn’t do any good for anyone except for the few people who live in the units that are protected. As much as half of the rent controlled units are actually occupied by people who would never qualified …they are taking away needed housing from those who really can’t afford it.”

So, if it passes, what does that mean for the industry? It is very significant, explained Altshuler. “If it passes, each city will have the right to put rent control in any form that they want in place in their city. Vacancy decontrol is off the table. It is a very bad thing. There are a number of cities that have already said they will expand rent control aggressively.”

For the CRE industry, it will affect everyone, he added. “It will slow construction. Today, it is already hard to pencil new deals in CA and in most places around the country and if you add a rent cap on that, it will slow things dramatically. It will mean we all need less people on that. All these systems and softwares pricing units, or architects, or construction workers etc…there will not be as much of a need.”

When asked about land and the severe housing shortage in California, he explained that the state isn’t what it used to be. “The real issue in California, the state needs to accept it isn’t the place it used to be and that more dense housing is needed and if you put it by light rail and transportation quarters, you aren’t increasing traffic by adding more housing.”

When the panel changed gears to discuss what buyers are looking for in 2018, Mary Ann King, co-chairman of Moran & Co., said she has seen almost all of the capital pile on value-add. “I have never seen such a large percentage of buyers out there looking for a value-add deal and as a result cap rates on a value-add deal are coming down.”

According to King, value-add players are bidding cap rates down to the point where the other side of the market, the core market and new deals, have yields are drifting up. “We are seeing a compressed yield and that to me is so interesting. I see these compressed yields between value and core and the nimble money making the transition. “

And it isn’t just on the west coast, panelists agreed. “Very competitive people are chasing those deals. As far as velocity, we are dead on both on a national basis and here in California. Everyone is looking for value and there is a bit more core on the market.”

Matthew S. Romney, managing director of Sundance Bay, who has been heavy in value-add plays, says that he has had to go outside of their box and get creative to make those deals pencil out. “In 2012, when we were doing those deals in secondary markets, there wasn’t much competition at all. And the competition there was wasn’t as sophisticated.” Today, he said, in order to combat that, “we are having to find deals that have more hair and are more complicated and scare other groups away.”

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How to Find Continued Value in Apartment Acquisitions

The stability, durability and continued capital flows into multifamily investing permeate today’s headlines, with industry pundits believing apartments to be the most popular product type with real estate investors in 2018, second only to industrial. Mixed signals abound among varying markets, and it’s important to dissect and triangulate the real data as the analytics don’t always tell the full story.

A first quarter report from Fannie Mae cited:

  • Positive, but slowing net absorption in 2018 compared with 2017 (CoStar)
  • Surging apartment development, peaking at over 440,000 units nationwide and up 16 percent from 2017 (Dodge Data & Analytics)
  • Rising nationwide vacancy rate predicted to approach recent historical average of six percent by year-end (Fannie Mae)

With concessions ticking up and rent growth slowing, is it time to question or finetune allocation levels and strategies in multifamily investing? Two principal factors are worthy of consideration here: geography and investment horizon.

Nationally, development is projected to keep pace with net absorption, as Fannie Mae projects net rental demand of 380,000 to 460,000 units in 2018. However, parsing geographies more discerningly reveals that new multifamily construction has been heavily concentrated in America’s largest cities, where pockets of oversupply are projected. New York, Boston, Washington, D.C., Chicago, Los Angeles and San Francisco present some of the highest unit construction per capita in the country, yet are all projected by Moody’s Analytics to experience job growth in 2018 that lags the national forecast of 1.5 percent.

All markets do not bear these metrics though, especially in select secondary markets where Fannie Mae reports the ratio of projected population and employment growth to rising apartment inventory is more favorable. Cities such as Houston, Dallas, Austin, Texas, Salt Lake City and Portland, Ore., even while seeing brisk construction, are forecast to increase job growth between two to three percent amid continued rental escalation. Two markets worth investigating include Phoenix, where projected 2.6 percent employment growth forecasts the demand for 10,000 units against projected 2018 delivery of 8,000 units, and Las Vegas, where projected 2018 absorption is double the number of units under construction.

Development nationwide should peak in 2018, as planned units in comparison to those under construction taper off, even in cities with the most active pipelines. This suggests that investors with a longer hold horizon may see their patience rewarded when new supply is absorbed and vacancy rates level off. Several long-term demographic trends also bode well for multifamily absorption and rental rates:

  • Householders continue to delay marriage and childbirth, thus tending to remain in apartments
  • Population growth in many areas, particularly in the Southwest, is being fueled by immigrants who tend to be renters
  • Real household income growth is occurring only in the upper 20 percent of earners, rendering home ownership less affordable for many
  • Student loan debt, which doubled as a percentage of GDP between 2006 and 2012, stymies home ownership for younger households
  • Conversely, the 65+ baby boomer generation, America’s most rapidly growing domestic cohort, is demanding more rental housing as they age out of owned homes and reevaluate their investment and retirement options

In our view, investors who choose their geographies wisely and take a long-game approach should see their properly selected multifamily investments buoyed by these market and demographic trends, while enjoying relatively predictable cash flows in the interim.

Read the original article here.

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Prices Keep Rising for Apartment Properties, Forcing Investors into Smaller Markets

Investors keep looking for apartment buildings to buy at good prices. The search is leading them to smaller properties in smaller markets.

“Things continue to be very good in multifamily,” says John Sebree, national director of the national multi housing group with brokerage firm Marcus & Millichap.

The amount of money multifamily investors are spending has stabilized at a high level. Investors continue to accept relatively low yields on their acquisitions, even though interest rates rose substantially in 2017 and are expected to rise further. Part of the reason is that apartment rents continue to rise across the country, attracting investors to bid for new properties.

Last year, the volume of investment sales in the sector started slow and finished strong, so that the full-year was roughly equal to that achieved in 2016, with $152.7 billion in transactions, according to Real Capital Analytics (RCA), a New York City-based research firm. That was down just 4.0 percent from $159.1 billion the year before “We had about an equal volume of transactions in 2017 and 2016,” says Lee Everett, senior managing consultant for research firm CoStar.

So far, 2018 seems to be continuing at the same level. January was a busy month for the multifamily sector, with $9.9 billion in sales. February was slower, with $8.1 billion. Together they add up to roughly the same total as last year. “Volume is about the same as it was at this early point in 2017,” according to RCA.

The total dollar amount is high compared to the historic average, though it is lower than the volume achieved during the peak of the cycle in 2015. “The velocity of investment is still above 2014—and no one was complaining about low velocity of sales in 2014. We are still at a high level of velocity,” says Sebree.

Prices are high and rising for apartment properties, according to RCA’s Commercial Property Price Index (CPPI). The index rose 7.3 percent for properties in the six major metropolitan areas over the 12 months that ended in February. The index rose even more sharply—12.4 percent—in non-major metropolitan areas over the same period.

These high prices are keeping the yields produced by apartment properties very low, despite rising rents. The interest rates that investors have to pay on long-term loans have also risen, and are expected to rise more. Eventually, this should have an effect on the yields investors are willing to accept. But cap rates on deals for apartment properties remain at historic lows, averaging well under 6.0 percent, according to RCA.

“There is scant evidence of an uptick in apartment cap rates yet,” according to RCA.

Long-term interest rates are expected to rise in 2018 as raises to short-term rates by the Federal Reserve ripple through the economy, eventually pushing long-term rates higher and supporting higher cap rates. “The only variable we are monitoring right now is the 10-year Treasury. Over the next couple of years, it is going to drift up,” says Sebree.

In the meanwhile, investors are hunting for higher yields and properties that are likely to appreciate in value. The search is pushing them to smaller assets, often located in smaller markets. As a result, CoStar’s “equal-weighted” index of prices for apartment properties has risen more quickly than CoStar’s “value-weighted” index over the last two years.

“Fewer trophy assets are now trading,” says  Everett. “More investors are moving to workforce housing.”

Investors also remain enthusiastic about the apartment sector overall. The fundamental demand for rental housing continues to be strong, says Sebree. “I see absolutely nothing that changes that,” he notes. “Most owners see a pretty good runway ahead of them.”

 Construction delays have also helped protect the apartment sector from overbuilding. Mid-rise apartment buildings are now taking an extra six months, on average, to complete. That’s twice as long as the average delays experienced at the same time last year.Some of the uncertainties that hung over the sector last year have resolved. For example, the tax reform that passed recently could have removed many provisions that multifamily investors depend on. But the final version of the reform that became law turned out to be very favorable to the apartment sector.

Read the original article here.

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