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GROWING SINGLE-FAMILY RENTAL MARKET ATTRACTING INVESTMENT Single-family rentals appear poised to become a significant class of long-term investment asset, according to a new report by the financial services firm Keefe, Bruyette, and Woods (KBW). The general increase in the rental market brought on by the recession, coupled with elements of recovery such as low inventory and strong resales suggest broad institutional investment in single-family rental properties could emerge as an appealing market, KBW contends. "While the single-family rental market has historically been fragmented, institutional interest has increased sharply," said Jade Rahmani, KBW VP and the report's author. "The large foreclosure inventory and drop in home prices have created the possibility for institutions to generate attractive cash returns of 5-7 percent and total returns including home price appreciation of over 15 percent annually." Rahmani expects large single-family rental companies to experience growth during the next 12-24 months driven by the introduction of leverage and the consolidation of smaller players. "We believe the sector has the potential to emerge as a long-term institutional asset class. We expect ramping lease-up capacity to drive improved occupancy, leading to positive operating income," he added. Eight publiclyheld companies currently focus on the single-family rental market, and Rahmani expects that number to increase. He points out that following the initial public offering (IPO) of Silver Bay (SBY) in December 2012, three more real estate investment trusts (REITs) focused solely on single-family rentals went public—American Residential Properties (ARPI), American Homes 4 Rent (AMH), and Altisource Residential (RESI). In addition, three other public companies—Colony Financial (CLNY), Starwood Property Trust (STWD), and Tricon Capital (TCN-TSX)—have made significant investments in the single-family space. "We expect more public companies in the space over time," Rahmani said. "We believe that securitization could eventually offer an attractive source of leverage and we would view single-family REO securitization as a potential catalyst for the sector," he continued. "While several ratings agencies have released comments regarding potential challenges and risks to rental securitizations . . . [w]e believe more operating data is needed to support the development of formal methodologies for analyzing these transactions," Rahmani said, adding that KBW believes securitization of pools of blanket mortgages is an additional possibility. NAR ANNOUNCES MILITARY RELOCATION CERTIFICATION The National Association of Realtors (NAR) announced a new certification standard for Realtors who wish to specialize in working with members of the military. The Military Relocation Professional (MRP) certification is offered as an elective for NAR's Accredited Buyers Representative designation. The certification aims to help Realtors work with the specific needs, timetables, and benefits related to military personnel and their transfers. "Homeownership is an important part of the fabric of America, and having a stable home environment is vital when men and women of the military are called away to serve their country," said Gary Thomas NAR president. "The Military Relocation Professional 30 certification will help Realtors hone their knowledge and skills for working with veterans and active duty military buyers and sellers to ensure that homeownership remains affordable and accessible to them." In order to qualify for an MRP certification, Realtors must be in good standing with NAR, complete a one-day MRP certification course, complete readings to learn about military background information and culture, and complete two one-hour webinars. Realtors can apply for the certification at a discounted rate through December 31, 2013. A portion of the application fee will be donated to an organization that helps homeless veterans find housing. CLEAR CAPITAL REPORT SHOWS NEW TOP MARKETS San Francisco and Detroit led the housing market rebound according to the September Home Data Index by Clear Capital. San Francisco led metro price performance in September, with 4.4 percent quarterly growth and 28.3 percent yearly growth. Detroit home prices saw 4.3 percent and 23.3 percent in quarterly and yearly growth, respectively. National home price gains in September picked up to 10.9 percent year-over-year, which Clear Capital attributed to residual summer buying activity. "While national and regional rates showed more of the same in September, an interesting dichotomy is unfolding beneath the surface," said Dr. Alex Villacorta, VP of research and analytics at Clear Capital. "Strong performances in San Francisco and Detroit remind us that in a dynamic market, the only constant is change. For about a year and a half now, we've been focused on First-In, First-Out recoveries characterized by hard hit markets attracting investor interest, like Miami, Phoenix, and Las Vegas. Now as the recovery matures, we see homebuyers re-engaging in markets that haven't fit the typical investor profile." San Francisco median home prices stood at $600,000 in September according to the report, while the median price in Detroit was $107,500. The national median home price was $215,000. "San Francisco REO saturation remains low, at 6.3 percent, yet Detroit REO saturation remains relatively high and much improved, at 31.7 percent," the report noted. "Yet over the last four years, REO saturation in Detroit has been cut in half. Just over the last six months, REO saturation fell by 11.5 percentage points." "Detroit was arguably one of the hardest hit in the country and is finally seeing a recovery with 23.3 percent growth over the year. Detroit's struggle with relatively high REO saturation over the last several years delayed recovery," Villacorta said. "Now, low price points and recent improvements in REO saturation, a key precursor to recovery, are driving gains. On the other hand, San Francisco's median home price at $600,000 suggests non-investor home buyer demand is materializing, supported by its relatively strong local economy."

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