The NFHA has been very active on the issue; earlier this summer, along with the Fair Housing Council of Central California, they sued American Classifieds, LLC for publishing housing ads that discriminate against families with children. Seemingly, they won't be able to go after ILSs until after the loophole in the aforementioned Communications Decency Act, which does not include online publications, is closed.
The NFHA press release cited these as examples of Internet housing advertisements discriminating against families with children and with other illegal preferences:

• 2BR: “Mature couple or single with no children" Brooklyn, NY
• 3BR: Duplex: “Christian atmosphere" Evansville, IN
• 2BR: “PERFECT FOR 2 ADULTS…..seeking a maximum of 2 tenants" New Haven, CT
• 2BR: “Couples preferred" Chicago, IL

A few years ago, the Chicago Lawyers' Committee for Civil Rights Under the Law Inc. sued Craigslist under the Fair Housing Act for the user generated discriminatory ads on that site. A judge granted Craigslist's motion for judgment in that case, claiming protection under the very legal loophole the NFHA now wants to rectify.
Although Craigslist won the suit and continued with their hands-off policy, leaving the flagging of inappropriate content to users, ILSs embrace the spirit of the Fair Housing and Communications Decency Act of 1996.

MyNewPlace, for example, has a system in place that monitors the descriptions that clients submit for the property descriptions. We have a program that identifies problematic phrases and words, and although most of the time the alerts are false-positive, this keeps our site in line with the letter and objectives of the Fair Housing Act.

According to the article, U.S. government officials are considering a plan to pay the mortgages on houses that would otherwise be foreclosed on and then rent those houses back to the former owners at a price they would be able to afford. The funding for the program would come from an unused portion of a $50 billion housing aid program.

This new idea comes as a response to the slow progress that February's housing rescue plan has made; apparently, constricting red tape and rising interest rates have hampered the program which was to refinance mortgages and lower payments for millions of at risk homeowners.

This could have a major effect on the apartment rental industry, as the program amounts to a government subsidy of the rental shadow market. Just today, Multi Housing News reported on a presentation entitled “U.S. Apartment Markets Outlook" by Greg Willet, VP of Research at YieldStar, which gave a comprehensive rundown of expected supply and demand for the upcoming quarters.

One observation that Mr. Willet shared with the RealPage Conference attendees was that in 2008, the shadow market absorbed a lot of renters, as homeowners attempted to recoup some of their losses by renting out their homes. This year, more and more of those rental units are being foreclosed on and driving renters back into the apartment market.

If the housing rescue plan goes through, Mr. Willet's predictions that “[rent] revenues will come down a little bit more, maybe somewhere around 2 percent…and real recovery will take place between 2011 and 2013," would certainly seem accurate.

Richmond, CA, a city of about 100,000 people located in San Francisco's East Bay, has passed a local ordinance that will ban smoking in all apartment buildings. The new law comes on the heels of another smoking ordinance passed earlier this year that prohibits smoking in public places such as parks, parades and farmer's markets.

Richmond's new ordinance, which prohibits smoking in all multi-unit housing facilities, is one of the strictest anti-smoking laws in the nation. Only two other towns, Belmont and Calabasas, both in California, have similiar types of restrictions that extend to residences. Dublin, also located in the East Bay, passed a less restrictive ban, which requires that half the units in apartment buildings with more than 16 units must be smoke-free.

Councilman Tom Butts, seemed to acknowledge that the Richmond City Council reviewed a variety of proposal's before passing the outright ban, stating “This idea that somehow you could bifurcate buildings and make portions of it smoking, portions of it nonsmoking, it just doesn't work." Indeed, we have heard how smoke travels between rental units through the smallest of channels, such as electrical sockets.

We have reported on local and state government's efforts to pass laws that protect renters from secondhand smoke in apartments for the past year or so. We have seen lawsuits, restraining orders, redundant state legislation, outright bans and owners devising policies suit their renters.

We tend to think that apartment owners should have the right to make the rules for their apartments, since they will act in a way that will please the largest amount of their tenants. If a tenant does not like a certain policy, then they can choose to move into a different apartment. If the owner enacts sweeping changes, such as a smoking ban, then a tenant should have an opportunity to break their lease without penalty.

What do you think? Does the government have a responsibility to ensure that it's citizens are not exposed to dangerous elements in their apartments? Should an apartment owner be forced to enact certain policies? Apartments must remove asbestos, but you can't exactly buy a pack of asbestos at the store.

Have you witnessed disputes amongs renters over secondhand smoke? Have you lived or worked in an apartment complex that adopted smoking policies?

San Francisco Mayor Gavin Newsom (left) and Supervisor Chris Daly (right)

Yesterday, Mayor Gavin Newsom of San Francisco announced that he plans to veto a set of renter protection laws authored by Supervisor Chris Daly and passed by the San Francisco Board of Supervisors last week. The Renters Economic Relief Package includes:

• Prohibiting rent increases that puts a tenant's rent over 33 percent if the tenant is unemployed, has had his or her wages cut or is living on a fixed income.
• Makes the San Francisco Housing Code the final authority on how many roommates may occupy a given rental property based on square footage and number of bedrooms, allowing renters to add roommates to help pay the rent.
• Limit the amount of “banked" annual rent increases that a landlord may impose to 8 percent.

These measures were offered by Supervisor Chris Daly as a way to help renters who have lost their jobs, or have had their benefits or wages cut keep their apartment homes. Mayor Newsom, however, promised to veto the measures, prompting a rally on the Capitol Steps yesterday at noon.

San Francisco has an unusual rental market. The city itself has a high rental population (about 2/3) and consistent low vacancy rates. Demand is kept high by a steady stream of new residents from around the nation who move to a city that is located at the tip of a peninsula that is only 7×7 miles. However, San Francisco also has a long history of being a very tenant-friendly city, with very strict rent-control measures and a tenant friendly rent board. Without rent control and a prominent tenant's union, the unregulated San Francisco rental market would be very different; Rents would be higher, apartments would be nicer and neighborhoods would be much more ‘economically defined.'

The Renters Economic Relief Package passed by the Board of Supervisors was watered down from its original version, which extended the 33 percent of income cap to all renters. 30 percent of income is about the recommended percentage of income that people should spend on housing. The federal Section 8 housing voucher program works on that supposition. Low income families pay 30 percent of their income toward rent and the federal government pays the difference between that and the market rate. The proposed measure would place that cost of that difference on the backs of rental property owners and landlords instead of on the entire taxpayer base (as with the Section 8 Housing Voucher Program).

The second measure allows renters to invite as many roommates as the San Francisco Housing Code will allow without allowing the landlord to raise rent. If this were enacted, landlords would lose the ability to regulate the number of tenants in their own apartments.

The third measure prohibits rental property owners from saving up their annual rent increase allowances and imposing them all in one year. This is designed to prevent landlords who have not raised rents over the past ten years to all of a sudden jack up rents on tenants (this year especially). However, rent control, which was enacted in 1979 to combat high inflation spurred especially high by the Bay area's property prices, is only about 2 percent a year and therefore would require that landlord had saved up their allowable percentage increases for many years.

All perspectives considered, the measures protect the most vulnerable renters, but does so at the expense of rental property owners and landlords, but in doing so, may be more of a band aid solution.

What do you think? Is the proposed Rental Economic Relief Package necessary? Is it fair?

Today the House will vote on HR 2454, (at press time, House Minority Leader John Boehner was filibustering the House by reading selections from a 300 page amendment, you can watch live here) the American Energy and Security Act; this bill has many implications and has been supported by liberals as a necessary measure and derided as “Cap and Tax" by conservatives and. It is the centerpiece of the Democratic environmental policy and its effects, (if passed, which looks likely) are predicted to be quite far reaching.

The goal of this omnibus energy bill is to move the entire country to more sustainable, more environmentally friendly methods of producing and consuming energy. The official statement from the Chairman of the Committee on Energy and Commerce and main co-sponsor Representative Henry Waxman (D-CA) emphasized the benefits of HR 2454, stating, “the legislation will create millions of new clean energy jobs, save consumers hundreds of billions of dollars in energy costs, promote America's energy independence and security, and cut global warming pollution."

The main provisions are include requiring utilities to generate an increasing percentage of their power from renewable sources, establishing a cap and trade system for greenhouse gas emissions for businesses, establishing a Carbon Storage Research Corporation, revamping current power grid and transmission guidelines to update infrastructure and finally–and this part majorly affects the apartment industry–establishing new energy conservation standards for buildings.

It is indeed interesting to note that a majority of funds are allocated for “Consumer Protection," which means that consumers will be provided with federal money to defray any spike in energy costs that the bill causes.

According to the analysis from the NMHC, the building code mandates that the Secretary of Energy establish a National Energy Efficiency Building Code that is 30 percent more efficient that the 2004 version of AHSRAE Standard 90.1, and by 2014 the national code is required to be 50 percent stricter than current standards (this would apply only to buildings built after the pending legislation becomes law).

The NMHC has been alerting legislators to the fact that some regions of the country, these new codes would be impossible to meet, therefore, a strict federal one size fits all policy is not a good solution. Locations with extreme temperature changes such as apartments in Minneapolis, would have a much more difficult time meeting standards than would apartments in Los Angeles.

According to Multi Housing News Online, Colorado Representative Ed Perlmutter has reintroduced legislation (H.R. 2336) that would bring energy efficiency to the single and multifamily housing markets. Mr. Perlmutter's district, located on the eastern side of the Rocky Mountains, gets about 300 days of sun every year(and a whole lot of wind), so Denver apartments are sure to be prime candidates for renewable energy sources.

From the Congressman's floor statement:

“The GREEN Act would take steps toward addressing energy consumption within housing by establishing minimum energy efficiency standards for HUD and providing incentives to the private sector to move our housing and building stock to energy efficient standards."

HUD announces Funding for Energy Efficient Projects

Additionally, it sounds as though HUD has already responded to demands for greater energy-efficiency. HUD received 4 billion in stimulus money; $2.95 billion was allocated by formula (according to state and city populations and needs) and $995 million will be distributed by a competitive grant process, whereby public housing authorities will compete for grants. (10 million goes to HUD for administrative costs, a little something for the effort)

The revised Notice of Funding Availability (NOFA), which is HUD's guidelines on how to apply for grants and summary of those projects that are eligible, includes a 4th section, for the “creation of Energy Efficient, Green Communities." (page 12 of NOFA) This will allow Public Housing Authorities to use stimulus money to make low income apartments and other public housing more energy efficient.

Even if Rep. Perlmutter's perseverance does not yield higher standards for PHA's housing (like last year's attempt) at least the government is pushing a green apartments agenda.

Sponsored by Representative Brad Miller (D-NC) with a title summary describing a reform to the Truth in Lending Act of 1968, which requires creditors to enumerate clearly all credit costs and how they were tabulated, such as risk calculations and other cost variables (attempting to legally replacing “caveat emptor" with “let the seller disclose" for credit arrangements), to provide accountability in consumer mortgage practices.

Representative Miller's chief reason for this reform was to eliminate the situation wherein mortgage brokers can profit from offering single-family home loans to people who may not be able to afford them; this contradiction has been popularly identified as one of the cornerstones to dismantling a complex capitalist system.

Here is some CSPAN footage of the Congressman speaking on behalf of his legislation:

However, as tends to happen in the halls of Congress, amendments were added during floor debate outside the scope of the original bill, and these additions may cause serious problems in the apartment sector, a forced foreclosure mechanism and an overly broad renter notification requirement.

According to the NMHC, Representative Nydia Velazquez (D-NY) successfully proposed an amendment that would allow HUD and the Treasury Department to determine if a multifamily property were “at risk" and in such cases where this classification was levied, the two agencies would foreclose on the properties and then sell them to an entity which would then convert the properties into affordable housing. This sounds a bit like giving HUD an eminent domain authority; HUD could identify a rental property as “at risk" based on indefinite criteria and then the agency itself would employ the use of that property under a given municipalities public housing administration.

The other amendment successfully added during floor debate by Representative Bob Filner (D-CA), would require that apartment owners notify current or prospective renters whenever a property is in default or foreclosure.

Now, the NMHC regards this as unnecessarily alarmist because the amendment, in its crusade to protect the renter, failed to cope adequately with the fact that multifamily foreclosures are often temporary and non-monetary; this oversight is certainly understandable, as the term “foreclosure" has been adopted into the popular parlance from the single-family cause of an owner defaulting on a loan agreement and the final result of the bank repossessing the home. The NMHC contends that this amendment is dangerous because it may put stress on otherwise soundly functioning rental property and unnecessary because state law protects renters from being evicted.

However, we have done some research on multifamily foreclosures in the past and have come across some different information that may be useful in amending amendments.

First, according to the National Law Center on Homelessness and Poverty's report, Without Just Cause: 50-State Review of the (Lack of) Rights of Tenants in Foreclosure, renters are protected by state law to varying degrees. The report's summary declares that “in a majority of states, a renter's tenancy would be automatically terminated following a foreclosure on the property. However, the circumstances that allow tenancy to be terminated vary greatly from state to state."

Second, in many cases, it is the property management staff that is affected adversely. Property managers continued to show up to work without getting paid, and not receiving any notification whatsoever. If an amendment is added, then it should extend not only to residents, but also to property staff.

The legislation is, according to MyNewPlace's Congressional sources, expected to pass through the Senate without much trouble and is currently awaiting a vote in the Senate Committee on Banking, Housing and Urban Affairs before it hits the Senate floor.

After doing some research on renters rights after the rental property is foreclosed on, we found the details of the court case that brought to light Fannie and Freddie's ‘governmental responsibilities' in the National Law Center on Homelessness and Poverty's report. It appears that the GSEs, had gotten quite used to acting as private companies even as it fell under federal control.

Evelyn Colon, who had been evicted from her apartment after Fannie Mae foreclosed on the property filed a suit which claimed that Fannie Mae became a federal agency when it came under the conservatorship of the Federal Housing Finance Agency, and therefore needed to allege a good cause for any eviction. This was dictated by the Emergency Economic Stabilization Act (through which TARP funds were authorized), which required the FHFA to coordinate with the Treasury to allow tenants to stay in their homes and apartments.

What do you think? Should Freddie and Fannie be allowed to evict tenants after a foreclosure so that they can sell the property to recoup on their own losses or should they be required to operate the facility at a loss, using taxpayer dollars?

Unfortunately, it will be more than a few seconds until the fate of the economy is apparent to anyone.

From what we can tell from yesterday morning's Congressional grandstanding, last fall's Troubled Assets Relief Program, (TARP), which injected, as of February 9, 2009 $388 billion, has been deemed by those who authorized it as an utter failure; various House members took their turns scolding the heads of the 8 largest banks in the country for their misuse of taxpayer money. This verity of this last sentence is evidence enough of the dire economic straits in which we now find ourselves.

And now the convoluted Stimulus Plan, which President Obama hoped to have on his desk before President's Day, is poised to inject around $790 Billion into the flagging economy.

Though the final language of the conference report (bicameral compromise version) has yet to be released and it is still very unclear as to how the money will actually be spent, many are cautiously optimistic that the stimulus plan, be it a nuclear option or not, will remedy the current economic crises.

The most salient and widespread result of the past years credit crisis following the housing bubble is the sharp spike in unemployment rates around the country. The stimulus plan's main focus is to create jobs, with a combination of tax cuts and increased government expenditures.

Unemployment rates have already begun to hamper the apartment rental market; we recently reported that rents decreased for the first time in 5 years, and that vacancy rates have increased.

If job losses continue to increase, vacancy rates will continue to increase, even though the introduction of new rental supply is only 14 percent of the average number of new units from the previous ten years. We expect many renters to look for better deals, search for roommates and possibly even move back home during this time of uncertainty.

For renters out there, has the recent drop in rents spurred you to look around to see what deals there are? Just today we saw one Pasadena apartment offering $1000 cash back!

For the apartment marketing professionals and managers, what types of rental trends have you seen in your area? Are there more queries for multiple bedroom apartments? Are people looking for special deals?

We concluded that the release of this report was timed to coincide with the developing economic stimulus plan, which is scheduled to be heard on the House floor tomorrow. The proposed legislation is basically a supplemental appropriations bill, which puts portions the $875 billion in federal funding up for grabs at the discretion of designated subcommittees.

The report therefore makes a case for why a large portion of this spending should be directed to metro areas (local city governments).

Some key findings from that report included:

• Unemployment rates had increased from last year in 359 of 363 metropolitan areas; only 5 metros will post employment gains this year.
• Unemployment rates in 2009 are expected to rise above 10 percent in 70 metros.

It is important here to reiterate that the 363 metropolitan areas are home to 86 percent of U.S. employment and 90 percent of wage income; this fact alone, supports the U.S. Conference of Mayor's argument for an infusion of federal programs and funding into metropolitan areas where growth has been stunted by the contraction of available credit.

Below is a chart which features the ten cities that are projected to have the highest drops in unemployed persons in 2009. 4 out of the 10 are expected to have over 8 percent unemployment by the end of the year.

This week and next, we'll be comparing these unemployment figures with Marcus and Millichap's 2009 outlook for the apartment rental market. Unemployment figures are indeed an important factor in overall market performance, but it is important to look at each city individually in order to ascertain how vacancy rates and rents will increase or decrease.

For the apartment management professionals out there, let us know the trends in your market or feel free to request information from us to help you make better decisions for marketing your apartment rentals.