California's fiscal crisis has the state in a hot mess, specifically a $42 billion hole.
That's leading to some serious and interesting moves, including the stalling of many affordable housing and infrastructure projects throughout the state.
At the end of 2008, the obscure Pooled Money Investment Board decided to shut down $3.8 billion in financing from the Pooled Money Investment Account (PMIA), which provides loans to bond-funded infrastructure projects and to the state general fund to help meet cashflow needs. Normally, the money the PMIA lends to projects is repaid when the state sells bonds.
However, the credit crunch and budget problems combined to close the bond market to California, with state Treasurer Bill Lockyer saying the state will not be able to sell bonds until the budget problems are resolved.
The board partially eased the freeze in January by approving the expenditure of $650 million on projects, but a final resolution had yet to be found as of press time.
The vacancy rate is expected to go up about 120 basis points (bps) to 6.6 percent this year in Portland, Ore., according to the latest market outlook by Marcus & Millichap Real Estate Investment Services. Vacancies rose by 120 bps in 2008 as well.
Although the metro will not be immune from the economic downturn, Portland is expected to grow by about 15,000 households this year, only a slight dip from recent years, which will help renter demand, reports Marcus & Millichap.
Salt Lake City
Apartment executives should keep an eye on job losses and the extension of the TRAX lightrail in Salt Lake City.
Like most markets, the metro is feeling the effects of the economic downturn, with employers expected to trim payrolls by 1.4 percent, or 8,800 jobs, this year, easing renter demand, says Marcus & Millichap Real Estate Investment Services' latest market research report.
The vacancy rate in Utah's largest city is projected to increase 220 basis points (bps) to 7.9 percent in 2009, following a 140-bp rise last year.
Approximately 800 apartments are on pace to come online this year, about double what was built in 2008. Almost all of the completions are in the West Jordan submarket.
The addition of new stock is driving rents higher, according to Marcus & Millichap. Asking rents are forecast to advance 2.3 percent this year to $772 per month, while effective rents rise 1.5 percent to $725.
Apartment operators in the airport submarket will likely benefit from the airport extension of the TRAX line, which broke ground in 2008, says the firm.