There’s also the de-valuation of the dollar—a recent phenomenon that has opened the door for greater competition from foreign investors. Influenced by the deficit (now at more than $13 trillion) and U.S. treasury rates, the dollar’s value declined 22 percent in 2009, which opened the door for monies from Asia, Europe, and South America to enter the real estate investment market. Simultaneously, those investors in the United States who had money to invest could not compete on a dollar-to-Yen (or Euro) basis.
2. The Long Arm of the Law
Local, state, and federal governments and regulatory bodies also can create unexpected challenges for multihousing owners and operators. “A big unknown for anyone is the courts and legislatures,” says Patrick Siconolfi, executive director of the Community Housing Improvement Program. The trade group represents owners of more than 250,000 subsidized housing units in New York City.
Everything from eviction requirements to immigration laws to fire codes can be handed down by local, state, and federal legislative, judicial, and regulatory entities. Membership in trade associations such as the National Multi Housing Council and the National Apartment Association can help, as most groups monitor state and federal legislative and regulatory bodies and alert their members of upcoming decisions that can impact operations, as well as organize lobbying and other outreach efforts. Sometimes, even decisions that seem to have nothing to do with housing can, in fact, impact multifamily owners and operators. Consider California’s Proposition 19, on the ballot in November, which would allow the state’s residents to grow up to 1 ounce of marijuana in their place of residence.
“The proposition states that cultivation on leased or rental property may be subject to the approval of the owner of the property,” explains Debra Carlton, senior vice president of public affairs for the California Apartment Association in Sacramento. “We’re not sure the language is strong enough to enable property owners to disallow it.”