Developing Expertise

IBS 2019 session
At 2019 IBS, panelists take part in one of the more than 130 educational sessions offered that year. For 2020, in addition to a multifamily track, tracks are available on design and community planning, project management, business management, industry trends and emerging issues and others. Photo credit: Nick Hagen Photography

Multifamily professionals who are interested in keeping up with the latest trends in the industry are undoubtedly familiar with NAA’s Apartmentalize and NMHC’s OPTECH shows. However, they may not be aware of another event that is worthy of their attention, particularly if they work in the development side of the industry. That event is NAHB’s International Builders’ Show (IBS).

From Jan. 21-23, the 2020 IBS will bring together more than 1,400 top manufacturers and suppliers from around the globe in 600,000 net square feet of exhibit space at the Las Vegas Convention Center. As the largest annual, light-construction trade show in the world, the show highlights the latest and most in-demand products and services, and brings together nearly 70,000 show attendees from across the residential construction industry. In addition to showcasing great new products, the show will feature a new project management track, and will also reveal cutting-edge information and trends in more than 150 education sessions throughout the week.

Education Track for Multifamily Pros

Many of the IBS education and information sessions are targeted specifically at the multifamily market segment, including numerous education sessions available directly through the Multifamily Central—the hub for all things multifamily during IBS. Popular sessions include:

Controlling Multifamily Construction Costs—Completing a project on time and on budget is critical to a successful multifamily development. Presenter Tom Tomaszewski of The Annex Group will share his insight on how to control construction costs while constructing multifamily projects, including information on the latest building technologies and tools.

Multifamily Modular vs. Site-Built: One Design Plan for Comparing Both Options— Modular has been popular topic as a potential solution for quicker development of multifamily properties. But how you know when it’s right for you to tackle your first multifamily project? Learn how to develop a single bid set of plans so you can get pricing and schedules for both site-built and modular from presenter Troy Tiddens of Neudesignarch.

This year also brings new multifamily sessions, such as:

Gen Z: End of the Alphabet and Beginning of an Era—During the next decade, Gen Z will grow from 8 million to over 55 million in the workplace, apartments and homes. This represents a huge opportunity and a challenge. Discover what Gen Z wants in their home, what they are willing to pay for and their approach to money and spending to help connect and engage with this growing demographic.

Tips on Entering the LIHTC/Affordable Housing Sector—Affordable housing projects can be a great investment for multifamily developers, as long as you’re aware of the many federal and state rules you must comply with in developing and managing such properties. Presenter Sean Kelly of Leon Weiner & Associates addresses both the opportunities and obstacles for entering the world of affordable housing and using the Low-Income Housing Tax Credit (LIHTC).

Developing a Mixed-Income Apartment Community: A Case Study—Mixed-income apartment communities can add layers of complexities through financing, investors, syndicators and more. Learn firsthand from presenter Chris Parker at GIV Development about the tips and best practices he utilized to help create Project One, a 112-unit, net-zero project with 70 percent affordable units in Salt Lake City.

The show boasts myriad general building sessions devoted to trending topics for home builders as well, including:

Best in Show: The Latest Trends in Housing from the Consumer Electronics Show—Technology is a key design area of interest for Gen Z and millennials, and the Consumer Electronics Show (CES) offers a unique perspective into upcoming trends. Panelists will share the latest trends fresh off the 2020 CES floor and how they will impact the home building industry.

Protect Your Assets: 10 Best Practices to Manage Risk & Reduce Liability in 2020— Save time and money by incorporating these best practices for risk management into your business operations. Attendees will learn to identify key contract provisions to help reduce liability and alternatives for dispute resolution, as well as updates from recent court cases to understand the latest issues leading to disputes.

Separate registration is also available for in-depth education prior to the show through master workshops which will be held Monday, Jan. 20.

IBS 2019 show floor
Attendees at 2019 IBS in Las Vegas, Nevada view some of the more than 1400 exhibits of the latest products for the light construction industry. Photo credit: Nick Hagen Photography
Hot Spots at IBS

In addition to informative educational seminars, IBS also offers a host of other opportunities to learn and network with industry professionals. A full registration also includes access to:

Education on the show floor through construction demos at the High-Performance Building Zone, as well as an insider-look at the products and techniques discussed in the zone through the Builder Performance Lab

Opportunities to make new business connections, including IBS Centrals dedicated to topics such as multifamily housing, as well as 55+ housing, custom building, design, remodeling and sales

Networking opportunities included dedicated receptions and mixers in the Multifamily Central in addition to events such as the IBS Young Pro Party and IBS House Party.

Recognizing the Best

The Multifamily Pillars of the Industry Awards luncheon on Tuesday, Jan. 21, at 12-2 p.m. will also honor the best in the multifamily housing industry, including top developments, affordable housing projects, firms, marketing efforts and industry professionals. Tickets to this event are available through buildershow.com.

As part of the seventh annual Design and Construction Week®, IBS attendees will also have exhibit floor access to the National Kitchen & Bath Association’s Kitchen & Bath Industry Show. This co-location offers attendees the opportunity to explore a combined total of 2,000 exhibitors covering more than 1 million square feet of exhibit space at the Las Vegas Convention Center. Design and Construction Week will kick off Tuesday, Jan. 21, with keynote Earvin “Magic” Johnson.

“It’s our goal for the NAHB International Builders’ Show to be the event of the year for our members and industry professionals,” said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. “Nowhere else will you find top-level education sessions, a variety of networking opportunities, special events and an exhibit hall full of innovative products all in one place. This is truly an event you can’t miss.”

To register or to obtain more information, visit buildershow.com.

As economists forecast for 2020, some are already thinking past next recession

“Economists generally expect [the United States] will experience a downturn… over the course of 2020 or early 2021,” says Sam Chandan, a trained economist, an associate dean of New York University’s Schack Institute of Real Estate, and a host of the Real Estate Hour on SiriusXM Radio. Chandan presented his “2020 Economic Forecast” at a ULI New York event in November.

But Chandan expects a recession, when it comes, to be relatively brief. “Any recession in modern economic history has been relatively short-lived compared to the period of growth to follow,” he said.

Given the length of the current economic expansion, Chandan is among those who are already focused on where opportunities to invest in real estate might appear after it is over. Data and in-depth analysis will help investors make the best decisions. And collaboration and cooperation will help lawmakers and local officials create the best policies to encourage growth.

Chandan himself is not predicting a recession in the near term. “No economist wants to go on record as saying that the downturn will be in 2020,” he says. “If it isn’t… then they will be remembered for that.”

Instead, Chandan is taking a close look at forecasts made by other economists. In October 2019, nearly 50 economists surveyed by the Wall Street Journal revised their estimates of how much the U.S. economy is likely to grow in 2020 to 1.6 percent. That is not a recession, though it is down from their average forecast of 2.0 percent growth the year before, according to the Journal’s Economic Forecasting Survey.

That is exactly what economists would do if they believed that a recession was likely: Forecast growth that did not stop but instead slowed significantly below the capacity of the economy. “They are hedging their reputational bets, saying: ‘You know what? I think the downturn is going to be in 2020. I just don’t want to go on record as saying so,’” says Chandan.

Bond investors also are sending a clear signal that a recession might be coming, Chandan says. For several months now, investors have been willing to buy long-term government bonds at a lower yield they get from short-term government bonds. These bond investors are effectively betting that Federal Reserve officials will soon be forced to announce more interest rate cuts to support a faltering economy.

Economists and investors have wondered for years how much longer the United States can expand. As of November, it had been growing consistently for 125 months—since the end of the Great Recession in 2009. “This is the longest expansion in modern U.S. economic history,” says Chandan. “In theory, the expansion could continue.” However, clues like the inverted yield curve and forecasting survey point to a slowdown.

Investors look for opportunities

If the U.S. economy does fall into recession in 2020, it is unlikely to shrink for more than a few months before beginning to grow again for several years, judging from the recent past, says Chandan.

Real estate investments are also likely to be less damaged by the next downturn than in past cycles. “Real estate doesn’t appear to be the sector where we are taking risks that won’t pay off,” says Chandan. “By and large, we have been fairly reserved in our development activity, in our investment activity.”

That said, Chandan does worry about some loans made to apartment properties. “Commercial real estate has been much more reserved in the expansion of its debt with the exception of multifamily,” he says. Lenders had $1.4 billion in loans outstanding to apartment properties. That’s twice the volume of apartment loans outstanding just before the financial crisis, he says.

In the rush to make those loans, some lenders may have lent too much. The average apartment borrower carried $13.95 of debt for every $1 of net operating income in the second quarter of 2019, up from an average of less than $10 of debt in 2010, according to Chandan.

“Not all of that debt is going to have been structured in a way that is going to survive maturing in a downturn,” says Chandan.

Real estate investors who have not overextended themselves are likely to survive a recession without much damage. “Those who are positioned defensively… are positioned to succeed when growth does return to the market,” says Chandan.

These investors will also have new tools to find opportunities in a recovery. That includes extremely granular data that is less fragmented that in the past—and a new generation of analysts and associates who can mine that data so that investors can make better decisions, says Chandan.

That will help companies navigate the changing demand for real estate. “The way in which we want to use space is changing on a more fundamental level than we have seen in economic history,” says Chandan. “Obvious examples include the way we choose to shop.”

Investors will also need strong data to navigate slower economic growth over the long term. The United States used to grow at a rate of roughly 3 percent a year, or even more than 4 percent during expansions. During the last decade, however, the usual rate of growth has hung closer to 2 percent.

“Over the last 10 or 20 years, the rate at which our economy grows has slowed,” says Chandan. The United States has chronically failed to invest enough money on infrastructure in the United States. “That ultimately exerts significant drags on how productive we can be as individual economic agents,” he says.

The growing inefficiency of the labor market has also made it tougher for people to get back to work, becoming a drag on the economy. “The necessary skills that make you relevant have never changed more rapidly,” says Chandan. “We have more jobs open and available today than we have ever had. The difficulty firms report is they cannot find the people with the right skills to fill those positions.”

Chandan also sees a mismatch in the housing markets: “The bulk of development that we have seen has been that class A, urban, high-rise building that is well amenitized and is in the top decile of the asking-rent distribution, if not even higher.”

That creates a glut of housing for upper-income people, and an expensive shortage for everyone else. “There have been eight years in a row where the median American renter has seen his or her rent increase faster than his or her income,” he says. “If teachers, firemen, policemen, and other people who serve community do not have the opportunity to reside within the communities that they serve, then the long-term economic outcomes that we see for the city are impaired.”

The solutions to these problems will require cooperation and collaboration, he says. For example, the cities best positioned to grow have the ability to invest in regional transportation infrastructure that helps people get from where they live to job opportunities—and paves the way for dense, new, relatively affordable transit-oriented developments that relieve stress on the housing markets.

In localities where stakeholders fail to cooperate, and housing costs continue to rise, the pressure will also rise on lawmakers to pass rigid, new rent-control laws.

“No one is winning with some of the outcomes that we are seeing and how we are going about trying to solve the housing affordability crisis,” says Chandan.


Author Bendix Anderson for Urban Land Institute

Why business leaders need to understand their algorithms

One of the biggest sources of anxiety about AI is not that it will turn against us, but that we simply cannot understand how it works. The solution to rogue systems that discriminate against women in credit applications or that make racist recommendations in criminal sentencing, or that reduce the number of black patients identified as needing extra medical care, might seem to be “explainable AI.” But sometimes, what’s just as important as knowing “why” an algorithm made a decision, is being able to ask “what” it was being optimized for in the first place?

Machine-learning algorithms are often called a black box because they resemble a closed system that takes an input and produces an output, without any explanation as to why. Knowing “why” is important for many industries, particularly those with fiduciary obligations like consumer finance, or in healthcare and education, where vulnerable lives are involved, or in military or government applications, where you need to be able to justify your decisions to the electorate.

Unfortunately, when it comes to deep-learning platforms, explainability is problematic. In many cases, the appeal of machine learning lies in its ability to find patterns that defy logic or intuition.

If you could map a relationship simply enough between inputs and outputs to explain it, you probably wouldn’t need machine learning in that context at all. Unlike a hand-coded system, you can’t just look inside a neural network and see how it works.

A neural network is composed of thousands of simulated neurons, arranged in interconnected layers that each receive input and output signals that are then fed into the next layer, and so on until a final output is reached. Even if you can interpret how a model is technically working in terms that an AI scientist could comprehend, explaining that to a “civilian decision-maker” is another problem altogether.

Deep Patient, for example, is a deep-learning platform at Mount Sinai Hospital in New York. It was trained using electronic health records from 700,000 individuals, and became adept at predicting disease, discovering patterns hidden in the hospital data that provided early warnings for patients at risk of developing a wide variety of ailments, including liver cancer, without human guidance.

Then, much to everyone’s surprise, Deep Patient also demonstrated an ability to predict the onset of certain psychiatric disorders like schizophrenia, which are notoriously difficult even for doctors to predict.

The challenge for medical professionals in such a scenario is to balance acknowledging the efficacy and value of the system with knowing how much to trust it, given that they don’t fully understand it or how it works.

Some organizations and industries are investing in the capability to audit and explain machine learning systems. The Defense Advanced Research Projects Agency (DARPA) is currently funding a program called Explainable AI, whose goal is to interpret the deep learning that powers drones and intelligence-mining operations.

Capital One, which has had its own serious issues with data breaches, created a research team dedicated to finding ways to make deep learning more explainable, as U.S. regulations require this type of company to explain decisions such as why they denied a credit card to a prospective customer.

Algorithmic regulation is likely to become more sophisticated over the next few years, as the public starts to become more openly concerned about the impact of AI on their lives. For example, under the General Data Protection Regulation (GDPR), which came into effect in 2018, the European Union requires companies to be able to explain a decision made by one of its algorithms.

Arguably in the near future, you won’t be able to design any kind of AI without both a team of top scientists, and also an equally capable team of privacy engineers and lawyers.

The rationale behind algorithmic regulation is accountability. Making AI more explainable is not just about reassuring leaders that they can trust algorithmic decisions; it is also about providing recourse for people to challenge AI-based decisions.

In fact, the issue of algorithmic transparency applies not only to machine learning, but also to any algorithm whose inner workings are kept hidden.

Algorithms that either appear to be biased or are obscure in the way they work have already been challenged in the courts.

For example, in 2014, the Houston Federation of Teachers brought a lawsuit against the Houston school district, arguing that the district’s use of a secret algorithm to determine how teachers were evaluated, fired, and given bonuses was unfair. The system was developed by a private company, which classified its algorithm as a trade secret and refused to share it with teachers.

Without knowing how they were being scored, teachers said, they were denied the right to challenge their terminations or evaluations. A circuit court found that the unexplainable software violated the teachers’ 14th Amendment right to due process, and the case was ultimately settled in 2016, with use of the algorithm being discontinued. In the next few years, the number of such challenges is likely to rise.

However, for leaders, the most important question to ask the teams designing and building automated solutions may be not why they reached a particular decision, but rather what are they being optimized for? Optimums are important.

There’s a classic thought experiment proposed by Swedish philosopher Nick Bostrom called the Paperclip Maximizer. It describes how an AI could end up destroying the world after being given the goal to manufacture paperclips as efficiently as possible, “with the consequence that it starts transforming first all of earth and then increasing portions of space into paperclip manufacturing facilities.”

The AI in Bostrom’s paper is not intrinsically evil. It was simply, in his view, given the wrong goal and no constraints. Wrong goals or optimums can cause a lot of unintended harm. For example, an AI program that set school schedules and bus schedules in Boston was scrapped after an outcry from working parents and others who objected that it did not take into account their schedules, and that it seemed to be focused on efficiency at the expense of education.

But was it the program’s fault? It was, after all, coded to look for ways to save money. However, unlike the complexities of building and interpreting an AI model—debating and deciding on what a system is optimized for is absolutely within the capability set of business leaders and boards, and so it should be.

AI is a tool that reflects our priorities, as organizations and governments. It might seem cold to discuss human fatalities in automotive or workplace accidents in terms of statistics, but if we decide that an algorithmic system should be designed to minimize accidents as a whole, we have to also judge any resulting harm in the context of the system it replaces. But in doing so, we will also have to be ready to be judged ourselves, and ready to justify our decisions and design principles.

Leaders will be challenged by shareholders, customers, and regulators on what they optimize for. There will be lawsuits that require you to reveal the human decisions behind the design of your AI systems, what ethical and social concerns you took into account, the origins and methods by which you procured your training data, and how well you monitored the results of those systems for traces of bias or discrimination.

Document your decisions carefully and make sure you understand, or at the very least trust, the algorithmic processes at the heart of your business.

Simply arguing that your AI platform was a black box that no one understood is unlikely to be a successful legal defense in the 21st century. It will be about as convincing as “the algorithm made me do it.”


Author Mike Walsh is the author of The Algorithmic Leader: How to Be Smart When Machines Are Smarter Than You. Walsh is the CEO of Tomorrow, a global consultancy on designing companies for the 21st century.

OK Boomer is just the first salvo of a larger generational showdown

According to Smithsonian Magazine, an Assyrian clay tablet from 2800 B.C. bears a gloomy inscription describing how the Assyrian youth were ruining civilization. “Our Earth is degenerate in these later days; there are signs that the world is speedily coming to an end; bribery and corruption are common; children no longer obey their parents,” the tablet supposedly reads.

The inscription (above) is reminiscent of another that, according to Newsweek, was unearthed in the Sumerian city of Ur (located in modern-day Iraq and founded in 3800 B.C.), which says, “If the unheard-of actions of today’s youth are allowed to continue, then we are doomed.”

Whether these tablets actually exist is unclear. (Snopes, where are you when we need you?) What matters is that variations of these quotes have been circulating for at least a century, and there’s a reason for that.

OK Boomer and generational discord

Few will disagree that there is a tendency for generations to caricaturize one another. The young tend to see the old as fuddy-duds and scolds, while the old tend to view the young as disrespectful, lazy, and rebellious.

Nowhere is this more evident than in the current OK Boomer movement. If you’re not familiar, OK Boomer is an internet meme and catchphrase that went viral in 2019. It’s used by Gen Z and millennials to mock baby boomers grousing about their work ethic and attitudes.

To be fair, young people have something to grump about. (I say this as a Gen Xer who has no skin in the game.) They’ve been accused of being emotionally fragile, sexless, lazy, ingrates who are going to die faster than everyone else (so there!)

The extent to which any of these characterizations are true is open to debate, as is the extent to which baby boomers and Gen Xers actually believe these things. (One could argue that much of the discontent is driven by weak social science and media who fan outrage to gin up clicks.)

What matters is that young people are getting a little tired of the caricatures, evidenced by the commercial success of OK Boomer merchandise. In turn, baby boomers appear to be irritated by the young upstarts who are clapping back.

“OK, millennials,” Myrna Blyth, senior vice president and editorial director at AARP, told Axios. “But we’re the people that actually have the money.”

The internet exploded over Blyth’s comment, of course, and the AARP quickly disavowed her words. While the (over)reaction to Blyth’s comment is much ado about nothing, it foreshadows a greater conflict ahead.

OK Boomer is part of a larger showdown

The baby boomers might “have the money,” as Blyth put it, but they’re also leaning on millennials and Gen Z to collect more of their paychecks.

About 44 million Americans received Social Security benefits in 2018, and about 34 million of those were baby boomers, who continue to retire at a clip of roughly 10,000 per day. That’s a lot of retirees to support.

Before you begrudge boomers too much, consider a few things. First, boomers contributed lots of money to Social Security over the years themselves. Second, most of them are banking on that Social Security income, one of the proverbial “three legs” of the retirement stool, along with pensions/ employer-sponsored accounts and personal savings. Third, boomers haven’t done a great job building out the other two legs—45 percent say they have zero retirement savings!—so many of them really need those Social Security checks, even if they have less debt and more equity than any other generation.

Nevertheless, Gen Z and millennials have some legit gripes. Baby boomers might have paid into Social Security, but millennials and Gen Z are being asked to pay a lot more—for a program that will likely offer them less return.

Social Security will begin drawing down its assets to pay retirees their promised benefits. Without program changes, the trust will be depleted within 15 years.

In 1960, when the oldest boomers started paying Social Security, they paid 3 percent on income up to $4,800 ($41,000 in 2018 dollars). By 1970 they were paying 4.8 percent on the first $7,800 ($51,000 in 2018 dollars). By 1980, when the youngest boomers were hitting the workforce, they were paying 6.13 percent on the first $25,900 of income ($80,000 in 2018).

Workers today, on the other hand, are paying 6.2 percent on income up to $132,900. That’s a far greater contribution (if you can call it that) by a long shot. The problem is it’s nowhere near enough.

Next year, The New York Times reports, for the first time in nearly 40 years, Social Security will begin drawing down its assets to pay retirees their promised benefits. Without program changes, the trust will be depleted within 15 years.

“Then, something that has been unimaginable for decades would be required under current law,” says the Times. “Benefit checks for retirees would be cut by about 20 percent across the board.”

Does anyone think retirees will sit back and take a 20 percent shave on their retirement?

Me neither. So what happens? It’s hard to say, but we should first recognize that this is no easy fix.

Who’s going to budge?

One of the problems with Social Security is that as the program has aged, fewer and fewer workers are supporting more and more retirees. In 1945, there were 42 workers per beneficiary. By 1960, there were just over five workers per beneficiary. From 1970 through the 2000s, there were between three and four workers for every retiree.

Today, 2.8 workers cover each retiree’s benefits, according to the Social Security Administration. By 2030 there will be just 2.4 workers supporting each retiree. (In Europe, the worker-retiree ratio is even lower.) However you slice the data, it’s clear that to sustain its growing population Social Security will require much bigger, ahem, contributions.

Okay, call them taxes, FICA. Whatever. The point is, the coming generations will be asked to pony up a lot more. How much? Well, the trustees of the Social Security program project the cash-flow deficit over the next 80 years to reach a staggering $44.2 trillion, says economist Veronique de Rugy.

That’s trillion, with a t. To put that figure into perspective, total federal revenues in 2019 amounted to $3.46 trillion.

There are pathways to making Social Security solvent, of course. Most of them involve young people paying more in taxes and retiring later. To fund Social Security for a generation 12 times wealthier than they are.

The irony of it all is almost too much. The “lazy” Millennials and “self-absorbed” Gen Zers will soon be asked to cough up trillions to cover the retirements of the boomers who mercilessly mock them, all to fund a program most millennials worry will not even exist by the time they reach retirement.

One cannot help but wonder if, when called upon to pay these obligations, millennials and Gen Z will just cock their heads and reply, OK Boomer.


Author Jonathan Miltimore, fee.org

Rental prospects rank top amenities they want in a multifamily property

The option of in-unit laundry left other amenities out to dry—cleaning up as the most in-demand apartment feature that renters seek, with 3 out of 4 prospects preferring a unit with a washer and dryer, according to the 2019 PERQ Multifamily Field Guide.

The renter insight report analyzes national and regional data collected from 193,000 consumers on 320 property websites that use AI-driven marketing cloud and web conversion technology to collect valuable prospect data in real time. Read on to see what else the industry data revealed and how apartment communities use those analytics to gain an advantage.

Top 5 apartment amenities renters seek

Modern appliances and walk-in closets tied for the second-most wanted apartment amenity for the 50,505 prospects who ranked their favorite amenities while researching apartment communities online. Rounding out the list of Top 5 Amenities: Balconies, followed closely by wood flooring. While the top amenities remained roughly the same throughout the country, some regions showed preference to certain amenities over others.

In the Northwest, prospects chose open floor plans and didn’t rank modern appliances. Renters living there are 40 percent more interested in balconies than the national average, and showed the least interest in luxury appliances compared to other regions. Balconies also made the Top 5 in the Southwest with 11 percent of prospects picking it, putting it fourth in that regional list. Midwesterners preferred patios and dishwashers more often than other areas of the country. Dishwashers ranked in the West as a top priority as well.

“We’re definitely seeing the same dynamics as what was found in the PERQ prospect survey,” says Lisa Harris, regional manager at Texas-based W3 Luxury Living. “Of course, prospects have to find a place that fits into their budget, but we’ve found they are looking for good locations and spaces that are a reflection of who they are and they want the social aspect of what that brings.”

Additional perks include parking, pet amenities and internet access

The number of people using online streaming services to binge watch the latest TV series or tune in to cheer on their favorite sports team continues to rapidly rise, so it’s not too surprising fewer renters require cable access. Sixty-six percent said they do not need cable service, yet 88 percent do want internet as part of the apartment amenities package.

As any property manager knows, bad parking situations can invite ruthless online reviews and resident dissatisfaction, with paying renters battling visitors for preferred spots in overcrowded parking lots. When given an option, a quarter of prospects surveyed nationwide preferred covered parking or a garage and 34 percent would like an additional parking space.

Pets also placed high on the list of prospects’ priorities with 33 percent indicating they own at least one. Twice as many pet owners have a dog versus other types of animals. To serve those furry family members, many properties offer amenities like dog-wash stations, conveniently placed poop bag disposal, and even doggie spas.

At W3 Luxury Living properties, where the majority of residents own a pet, the on-site staff hosts special pet socials such as Yappy Hour and adoption events to entice new animal lovers to live there. They stock dog treats in all of the offices and regularly hire photographers to come take pictures of residents with their four-legged roommates.

“I’d estimate up to 65 percent of our residents have pets,” Harris says. “Dog parks/runs and spaws are really standard for W3.”

Use amenity data to improve lead follow-up

More than 80 percent of renters begin their apartment search online. Give them what they want and make it as convenient as possible to do research and gather information about the apartment community without having to contact someone in a leasing office. As they’re researching your property online, utilize technology to capture as much data as possible on the prospect so you can personalize the process and provide superior customer service—both online and in person.

Lead data empowers leasing specialists to connect with prospects on a personal level and helps them stand out during the lead follow-up process by highlighting their preferred amenities in the pitch. Be sure your leasing staff points out a prospect’s favorite amenities and focuses on popular community features when giving a tour.

Take full advantage of prospect data

In addition to learning about the individual needs of prospects, collecting online consumer data on a property website also helps a multifamily company improve its digital marketing success and attract ideal renters looking online to find the few communities they’ll actually visit in person.

Mission Rock Residential, a Denver-based multifamily property company managing 107 apartment communities across the country, uses the prospect data collected online to increase effectiveness of digital advertising campaigns and boost search engine optimization (SEO).

According to Vice President of Marketing Marcella Eppsteiner, that data-based approach is critical in highly competitive markets like the Dallas-Fort Worth area, where the cost of Google PPC and social ads is getting more expensive as the competition and population numbers continue to increase. She says in markets where her assets utilize AI website software to collect prospect data, the properties enjoy a lower cost per lease because of the detailed consumer journeys they receive on each website visitor who engages with the content.

“We can gather some psychographic information from the engagement pieces on our website, and then use that dynamically on a monthly basis,” Eppsteiner says. “We evaluate those insights and then tweak and optimize our SEO strategy, and maybe even change the content within different advertising sources.”

Eppsteiner explains other ways they use the amenity data to get a property noticed. If prospects in a certain market prioritize upgraded amenities over another location, the company rearranges the website photo gallery and adjusts social media accounts to highlight the stainless steel appliances and granite countertops before other community amenity photos.

Don’t miss the mark when promoting your property amenities

Ultimately, your leasing consultants may be missing the point if they only promote an apartment community’s luxury, high-end features to a prospect who prioritizes budget and simplicity over pretty things. Consider this: 48 percent of prospects across the U.S. described their ideal apartment as “comfortable, yet economic,” while 35 percent chose the words “simple and budget friendly.” Only 17 percent of those surveyed by PERQ picked luxury features as their priority.

Chris Berry, senior regional manager at First Communities, tells this warning tale to illustrate how off the mark some leasing agents can land when they ignore the consumer data at their disposal. Responsible for the Southeast region of the Atlanta-based multifamily company’s portfolio, Berry once visited a competitor’s property and pretended to be an interested prospect wanting a tour. He says he was mortified when the agent continuously suggested he give away his beloved dog because he was such a great match for the property—aside from the no-pet policy.

“She said it four different times during the tour, too. I was like, ‘Oh, my gosh!’” Berry says. “Be helpful and pay attention. The data we gather on our website helps us be more personable and tailor our responses in email or on the phone. Don’t just send a cookie-cutter response telling the prospect something they already know. They’ve already been to our website.”


Author Kristy Esch, PERQ

The regulation burden

The Mercatus Center’s RegData project has recently extended its methodology for quantifying the number of regulations and other restrictions imposed by U.S. government agencies down to the state level, where they have data for 46 states. The map ranks the states according to the number of restrictions they impose on people and businesses within their borders.

It is probably no surprise that California ranks as having the heaviest regulatory burden, with no fewer than 395,503 instances where the state government either compels or forbids a given activity. New York ranks second with 307,636, followed by Illinois with 259,832, Ohio with 245,865, and Texas with 245,865.

At the opposite end of the spectrum, South Dakota is the state with the fewest state government-mandated restrictions, with just 43,940. Data is not yet available for Arkansas, Hawaii, New Jersey, and Vermont.

For the most part, bigger, more populated states have more regulation. For example, many are surprised to learn that Texas is one of the most regulated states. Predictably, health and environmental regulations are among the dominant forms of state regulation—but in some cases, they’re joined by things like occupational-licensing regulations. And there is less regulation in some areas than one might expect. For example, non-health care-related insurance-industry regulation, which is primarily a state responsibility, seems to be relatively light.

With all this regulation on the books, it’s not surprising that many states are taking decisive action to streamline their codes. In Missouri, former governor Eric Greitens set a one-third reduction target for agencies and used restriction counts to measure progress. Most recently, Idaho leaders claim to have cut more than 19,000 restrictions when the state’s old regulatory code expired on July 1. Expiration dates can be powerful tools for reducing regulatory burdens. Indeed, one of Trump’s executive orders last week gives agencies 120 days to review all guidance documents and policy memoranda they issue. Any mandates they want to keep will have to move into a new online database; everything else will expire.

When you consider that most regulations are harmful, taking steps to reduce the regulatory burden of Americans and businesses at all levels of governments is a very desirable pursuit that more elected officials, whether at the national, state, county, city, or other local level ought to devote their own time and effort toward addressing.


Excerpt Craig Eyermann is a research fellow at the Independent Institute and the creator of the government cost calculator at mygovcost.org. Regdata project provides an interactive map.

Who will buy 21 million homes? Not I, said gen X.

Who’s going to buy all the boomer’s homes?

A recent story in the Wall Street Journal asked who would buy all the baby boomers’ retirement homes as they begin to age into assisted living, move in with family or die. Author Laura Kusisto suggests that the greatest impact will be felt in mostly senior-only communities located in sun-belt parts of the country like Arizona and Florida, places that the next generation—gen X—neither desire or can afford to live. (see “OK Boomer, Who’s Going to Buy Your 21 Million Homes?”—Read more on the less-than-affable expression, OK Boomer). These highly-senior dominated areas could, in fact, turn into Rust Belts of their own, where populations and their home values fall, and where younger people simply won’t come in to save the local economy.

“One in eight owner-occupied homes in the U.S., or roughly nine million residences, are set to hit the market from 2017 through 2027 as the baby boomers start to die in larger numbers, according to an analysis by Issi Romem conducted while he was a senior director of housing and urban economics at Zillow. That is up from roughly 7 million homes in the prior decade,” she writes.

“By 2037, one quarter of the U.S. for-sale housing stock, or roughly 21 million homes will be vacated by seniors. That is more than twice the number of new properties built during a 10-year period that spanned the last housing bubble,” writes Kusisto.

“Most of these homes will be concentrated in traditional retirement communities in Arizona and Florida, according to Zillow, or parts of the Rust Belt that have been losing population for decades. A more modest infusion of new housing is expected in pricey coastal neighborhoods of New York or San Francisco where younger Americans are still flocking in large numbers, “she writes.

Perhaps one of the biggest fails of the article is the absence of one of the country’s fastest and largest growing populations. One that is obvious to those who live in border states like—Arizona and Florida.

Pew: The immigrant impact

The U.S. has more immigrants than any other country in the world. Today, more than 40 million people living in the U.S. were born in another country, accounting for about one-fifth of the world’s migrants in 2017. The population of immigrants is also diverse, with just about every country in the world represented among U.S. immigrants.

The U.S. foreign-born population reached a record 44.4 million in 2017 according to Pew Research. Since 1965, when U.S. immigration laws replaced a national quota system, the number of immigrants living in the U.S. has more than quadrupled. Immigrants today account for 13.6 percent of the U.S. population, nearly triple the share (4.7 percent) in 1970. However, today’s immigrant share remains below the record 14.8 percent share in 1890, when 9.2 million immigrants lived in the U.S according to Pew.

Most immigrants (77 percent) are in the country legally, while almost a quarter are unauthorized, according to new Pew Research Center estimates based on census data adjusted for undercount.

Yale: The undocumented impact

Generally accepted estimates put the population of undocumented immigrants in the U.S. at approximately 11.3 million.

But a paper by three Yale-affiliated researchers suggests all the perceptions and arguments based on that number may have a faulty foundation; the actual population of undocumented immigrants residing in the country is much larger than that, perhaps twice as high, and has been underestimated for decades.

Using mathematical modeling on a range of demographic and immigration operations data, the researchers estimate there are 22.1 million undocumented immigrants in the U.S. Even using parameters intentionally aimed at producing an extremely conservative estimate, they found a population of 16.7 million undocumented immigrants.

A country made of more than organic generations

While many argue the fiscal burden of illegal immigrants on the nation, others like Council of the Americas, funded by the Rockefeller Brothers Fund have concluded: “The most pronounced impact of immigration on housing values is in thriving Sun Belt cities that remain affordable and in declining Rust Belt cities where immigration acts as a barrier against even greater declines in home values. The data concludes that while immigration increases home values in many areas, it is not adding to the affordability crisis plaguing some of America’s most expensive cities, or pricing people out of expensive, highly desirable communities.”


Sources Wall Street Journal; Pew Research; Yale: Mohammad Fazel Zarandi, senior lecturer, MIT Sloan School of Management, Jonathan S. Feinstein, John G. Searle professor of economics and management, Edward H. Kaplan, William N. and Marie A. Beach Professor of Operations Research, Professor of Public Health & Professor of Engineering; Jacob Vigdor, professor of public policy and economics at Duke University; Council of the Americas; U.S. Census and American Community Survey.

Blackstone moves out of rental-homes

In 2019, Invitation Homes enlisted six designers to create the first Invitation Homes “Make it Home” Show House in Atlanta. Each member of the design team decorated a room of the home (above), providing budget-friendly designs that transformed this rental home into a dream home.

Blackstone Group Inc. sold the last of its stake in Invitation Homes Inc., the company it created after the housing crisis to scoop up tens of thousands of foreclosed single-family properties from the courthouse steps, spruce them up and rent them out.

Blackstone began whittling its position in March through a series of bulky stock offerings. Blackstone reaped about $7 billion in all, according to securities filings. That’s better than twice what the firm invested.

Blackstone’s wager was that last decade’s historic collapse in home prices and advances in cloud computing and mobile technology would enable it to buy enough suburban houses to achieve economies of scale and then to efficiently manage tens of thousands of far-flung rental properties thereafter. To do so would be to tame the final frontier in real estate for institutional investors and gain a toehold in the largest asset class in the world: the U.S. single-family home.

“The hardest part wasn’t buying the homes, it was building the business,” Blackstone President Jonathan Gray, who headed the firm’s real-estate business when it launched Invitation, said in an interview. “We created a company from scratch. It was created on a yellow pad. It was an idea. Now it’s a real business.”

As the number of foreclosed homes swelled and home prices hit bottom eight years ago, Blackstone and other big real-estate investors pounced. Blackstone, hotelier Barry Sternlicht and Donald Trump confidante Tom Barrack sent buyers to auctions with duffel bags of cashier’s checks and instructions to buy anything that was cheaper than it cost to build new, not too old, big enough for a family and in a good school district.

Blackstone formed Invitation with a group of Phoenix investors who were buying trailer parks before the crash. They were led by Dallas Tanner, Invitation’s 39-year-old chief executive, who at the time was fresh out of graduate school. Starting with a three-bedroom stucco house on the outskirts of Phoenix that it bought at auction for $100,700, Invitation went on a $10-billion homebuying spree.

Its buyers streamed into foreclosure auctions across the Sunbelt spending at a clip of more than $100 million a week. In about 18 months, it had bought 30,000 homes one by one and spent another $2 billion or so fixing them up.

When the flood of foreclosures subsided, the investors hit the open market looking for houses. They employed sophisticated house-hunting algorithms and increasingly built homes expressly to rent.

Invitation eventually absorbed the rental empires of Sternlicht and Barrack. The two companies compete at the high end of the rental market. Their typical tenants aren’t quite 40 and have a child or two and a household income of about $100,000.

The landlords have capitalized on both the willingness of relatively high earners to rent the suburban lifestyle they can no longer afford, and disinterest in homeownership from younger Americans who lack confidence in their employment and the housing market.

Though homeownership has bounced back from the 50-year lows reached in 2016, it remains well below last decade’s rates.


Excerpt Ryan Dezember, wsj.com

Record-breaker for multifamily sales volume

In the first nine months of 2019, multifamily sales volume has been higher than during any other comparable period in the past 10 years.

Despite concerns about potentially slowing economic growth and new rent control laws around the country, investors continue to go after apartment properties.

The volume of U.S. multifamily acquisitions in the first nine months of 2019 was higher than during any other comparable period since this expansion cycle began a decade ago. In fact, this year might set a record for multifamily sales volume, says Alexis Maltin, manager of analytics with New York City-based research firm Real Capital Analytics (RCA). Investors spent $130.6 billion on multifamily acquisitions in the first three quarters of 2019, according to RCA.

Investors continue to be drawn to multifamily properties because of strong demand that has kept rents growing and occupancy levels well above 90 percent.

“From a fundamentals demand perspective… there is still a lot of race left in the apartment markets,” says Chicago-based Brian McAuliffe, president of CBRE Capital Markets.

Developers have been unable to build enough new units of housing to match the growing number of new households. “The reason why fundamentals are so strong is that we have a housing crisis,” says John Sebree, director of the national multi housing group with brokerage firm Marcus & Millichap.

This has attracted not only experienced multifamily players, but also investors who are new to the sector, according to McAuliffe. “We get more buyers who are showing up on bid lists that are new names,” he says. But the amount of money chasing multifamily properties and the new, inexperienced investors entering the market are causing sector experts like Sebree to wonder if they are overpaying for assets.

Cap rates on sales of apartment properties averaged 5.1 percent nationally as of November, according to Marcus & Millichap data. That’s much higher than the yield on other relatively safe investments, like government bonds or dividends on S&P 500 stocks. It’s also very low compared to cap rates on other types of commercial real estate, such as single-tenant retail (6.1 percent) or multi-tenant retail (7.1 percent).

The cap rates on apartment properties are low even though the properties are now more likely to be located in riskier, smaller apartment markets. In 2010, slightly more than one-third (38 percent) of all multifamily sales valued at more than $15 million involved buildings in secondary or tertiary markets. “In 2019, that’s likely to be 60 percent,” says Sebree. “Investors are pushing farther and farther away from the urban core looking for yield… The New York investor looks in Pittsburgh and then outside of that.”

In addition, in several primary markets, including New York City and California, new rent control laws have complicated the math for apartment investors.

However, lenders have kept their standards high for how much leverage they will allow on multifamily deals, say Sebree. “A typical loan requires a 30 percent to 40 percent down payment in many parts of the country,” he says. So even an improbably steep fall in prices would not leave many loans underwater.


Author Bendix Anderson, NREI Online

Making Disparate Impact deliver fairness

HUD’s proposed revisions to our disparate-impact rule enhance our commitment to fairness for everyone.

Everyone agrees that discrimination has no place in society. But everyone also agrees that a city should be able to require that landlords kill rats without facing a lawsuit. The current “disparate impact” rule under the Fair Housing Act (FHA) does not reflect this common sense. But the Supreme Court has ruled that it does not have to be this way, and the Department of Housing and Urban Development (HUD) is proposing a revised rule that both fights discrimination and stops courts from second-guessing reasonable requirements (such as rat removal). It is good for housing and for the people protected by the FHA.

Long before becoming a pediatric neurosurgeon and later HUD secretary, I grew up in tenement housing where there were rats the size of cats. I did not know much about the world at the time, but one thing was self-evident: Nothing good comes from rats.

But in Gallagher v. Magner (2010), a federal appeals court allowed a lawsuit to proceed in Saint Paul, Minn., where the city was sued for aggressively enforcing its housing-code policy on rat removal. Landlords argued that the city’s enforcement efforts had an illegal disparate impact because they would drive up rents, disproportionately affecting minorities. The city withdrew its appeal of this case, which had reached the Supreme Court, bowing to significant pressure from the Obama-era Department of Justice.

Many Americans without law degrees may wonder how such a case could arise. The FHA prohibits discrimination in the sale, rent, or financing of housing-related activities based on protected classes such as race, sex, or religion. Traditionally, this has meant treating people from different groups differently, or “disparate treatment.” However, under “disparate impact,” businesses and towns can also be liable for policies and ordinances that are neutral on their face, neutral in intent, and neutrally applied but under which a protected minority group is disproportionately affected.

Disparate-impact litigation is hotly contested. Proponents argue that expansive disparate-impact liability helps overcome the country’s history of racism. They emphasize its use for targeting hidden or unconscious biases or remedying past wrongs. Critics argue that the FHA did not expressly authorize disparate-impact liability, that virtually every policy causes some statistical imbalance, and that it is unfair to hold governments and businesses liable for otherwise legal and even necessary actions—such as killing rats—because it was discovered after the fact to have a disproportionate effect.

The Supreme Court resolved some of this debate in 2015 under Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. There, it upheld the existence of disparate-impact liability under the FHA but outlined some prudential and constitutional limits. These limits, to quote the Supreme Court, help avoid setting “our Nation back in its quest to reduce the salience of race in our social and economic system.”

The proposed new rule better reflects the Supreme Court’s ruling in Inclusive Communities Project and provides everyone with better guidance on what constitutes unintentional but unlawful discrimination. Under HUD’s proposed revisions, plaintiffs must demonstrate that the challenged practice is arbitrary, artificial, and unnecessary. Plaintiffs must also show a robust causal link between the challenged policy and the disparity that is not established by statistical imbalances alone. Defendants would also be able to assert as a complete defense that the actions they took were required by other state, local, or federal laws. It is only fair that a party should not be found to violate one law for following another.

Our proposed rule revisions, if finalized, would make disparate-impact liability work better and more fairly. This will provide plaintiffs with a roadmap for pleading stronger cases (evidence shows only about 20 percent of claims are successful on appeal) while empowering defendants to assert effective defenses earlier in the process—saving them and their customers time and money. Ultimately, these changes will lead to more innovation and an increase of lower-cost housing and related services.

I understand that people may have differing opinions about the proposal. We welcome and encourage comment letters on any issues raised by the proposed rule and will consider all of them seriously to make sure the disparate impact regulation is as effective as it can be.

As numerous recent actions taken by HUD, such as our anti-discrimination lawsuits against Facebook and the city of Los Angeles and our investigation into San Francisco’s housing policies, demonstrate HUD remains vigilant in our mission of pursuing justice on behalf of Americans who are victims of housing discrimination. HUD’s proposed revisions to our disparate-impact rule enhance our commitment to fairness for everyone.


Author Ben Carson is secretary of the Department of Housing and Urban Development.