In the barrage of often bleak housing news, a bright spot has emerged: apartment complex construction.
Demand for multi-family building permits in the Omaha area is up
nearly 160 percent since 2009, according to the latest figures from
metro-area cities and counties.
"Of all the pieces of the real estate industry, apartments are the superstar," said Jerry Slusky, an Omaha development lawyer.
Driving the surge, say Slusky and housing experts, are people who
have lost their homes to foreclosure or who are unable to get a
mortgage under more restrictive conditions that have been set. Still
others, particularly younger people who may have resources to buy but
are low on consumer confidence, are choosing the shorter-term option of
an apartment lease until the economy improves.
Lenders have observed the shift and have been more willing to deal with builders whose product is hot.
"Apartments at this stage are a preferred property type," said Luke Traynowicz,
vice president of Pinnacle Bank. "Occupancies overall are in pretty
good shape. People have been able to increase rents. They haven't been
able to do that the past several years."
The good news about apartments comes as the demand for
single-family housing permits has been not so good, sliding 65 percent
over the past six years. In 2005, nine in 10 residential dwellings being
built was a house. That fell to seven of 10 in 2011.
The 981 building permits issused last year for apartment units was up
from 383 in 2009, according to records compiled by Bob Siegel, a New
Orleans-based housing analyst who has clients in and studies the local
market. Experts said a healthy Omaha-area market can absorb 1,200
annually, but the area also has absorbed 2,000 in a year.
While the metro area hasn't seen apartment building permits surpass
the 2,000 mark since the late 1990s, historical trends and current
conditions suggest the metro area is climbing to that point again, said
Siegel.
"We're now coming out of a bottom of the cycle and rising toward the peak," he said.
Ed Fleming of Colliers International said he also has seen more
interest in the buying and selling of existing apartment complexes,
which he said bodes well for the economy.
He is in the process of selling the 180-unit Hearthside Apartments near 84th and Harrison Streets, for example.
"We had gotten to a point several years ago where everything was
just put on hold; there was very little (sales) activity," Fleming said.
Many residents were doubling up with roommates rather than
forming their own household, he said. "Now we have a lower unemployment
rate, jobs being created, people are feeling better about their future.
Developers are more likely to build. Renters are more likely to rent."
While renting is the preferred option for some, for many others who have fallen on tough financial times, it is the only option.
"Three or four years ago, Mickey Mouse could sign for a loan and
get a house," said Fleming. "People didn't have to have a down payment.
Now it's harder to qualify."
Banks often were downright "foolish" in offering loan terms that
led to an overbuilding of single-family homes nationally and to a lesser
extent locally, Siegel said.
"A lot of people who bought during those years came out of apartments," he said. "The reverse is happening now."
Randy Lenhoff, president of Omaha-based Seldin Co., which manages
9,500 apartments, said that in the housing boom - when property values
were rising 5 percent to 8 percent a year - many "nontraditional" buyers
scooped up houses with the expectation they would reap big returns.
Today's circumstances, he said, could signal a return to the days
when people bought homes for stability - a place to grow a family -
rather than a return on an investment.
Another population cranking up apartment living, Lenhoff said,
are baby boomers who want to shed the responsibility of a house so they
can pick up and travel more easily or simply unload the hassle of
maintenance.
Senior citizen complexes like two new ones near 78th and Harrison
Streets are attracting the over 50-crowd that wants to live around
people with like interests, maybe catch an afternoon bingo game or
coffee with neighbors.
Experts say it is difficult to predict when the current rise in apartment building and demand might level off.
Interest rates are favorable, making building attractive to apartment developers, said Traynowicz.
"Where it tops out ... that depends on how many will be built,
how fast they'll be built, how fast they'll be absorbed," he said.
"Future demand is always hard to predict."
For now, apartment managers are enjoying the swing.
Broadmoor Development, for example, is in the midst of
constructing its second phase of apartments at Aksarben Village near
64th Avenue and Frances Street. The 148 new one- and two-bedroom units,
set to open in the summer, will add to the 258 that opened in 2009 at
the site.
Seldin is opening a 134-apartment complex near 131st Street and
West Center Road. It's also starting to lease at Montclair Village and
an additional 270 units in a complex near the new Ralston arena.