Tom Bannon, CEO of the
California Apartment Association. This tech-heavy
region, he notes, may even
see employment numbers
that are higher than anyone had anticipated. And
like his co-panelist Willett,
Bannon believes San Jose
is improving as well, with
strong occupancies and
3% to 6% rent growth.
The rest of the state,
however, remains flat. Part
of the reason, says Bannon,
is because of the shadow
market, which could be as
high as 25% of the overall rental stock in California. “Those are obvi-
ously concerns for the apartment industry,” he relates. “Everybody is
doing everything they can to hold their residents.”
During the Apartments 2010 session, Bannon admitted that Cali-
fornia is in a less favorable position than the rest of the country. The
state’s major problem, he said, was the lack of confidence, particu-
larly with the state deficit, the problems in the government and the
uncertainty over the outcome of certain propositions that were on
the ballot this election season.
Even with the elections behind us, that situation hasn’t changed
much, says Bannon. “While the rest of the country went more Republican, California did not,” he explains. “But Republicans now
control 15 more state houses than they controlled prior to the election. States will be looking at ways to entice businesses from high-cost
and high-tax areas, such as California, to come and invigorate their
own economies. That will put pressure on California to keep businesses in this state. That’s a difficult task with a $25-billion deficit.”
Legislative issues were also top-of-mind for Sharon Dworkin
Bell, senior staff vice president for multifamily and 50+ housing
for the National Association of Home Builders, who also participated in the “Bird’s Eye View” panel. Noting that the uncertainty
on Capitol Hill—especially over GSE reform, major tax reform
and the outcome of the midterm elections—was causing uncertainty in the business community, she doubted any major resolution until the next presidential election.
Today, she notes, the issues are still there and the timing is prob-
ably still the same. “The plans for GSE and tax reform will take
shape over the next few
years, so you know what
the components will be,
but they probably won’t
be finalized until the next
election,” says Dworkin
Bell. “The difference this
election has had is just a
different perspective. Re-
publicans, less supportive
of a government back-
stop for the GSEs, will be
much more interested in
finding a private-market
solution.”
The Republicans also
have a different view about
tax reform, which they call
fiscal reform, since it not
only involves the tax code
but also spending cuts.
The multifamily industry is in the fourth or fifth inning of the distress cycle, according
to the speakers on the “Distress Chess Match: Whose Move?” panel.
