6 Takeaways from the 2020 NMHC Virtual Fall Meeting
Last week, more than 400 NMHC members tuned in to our virtual Fall Meeting. Spanning four days, the event featured a wide variety of programs, including interviews with high-profile keynoters, presentations from leading lawmakers and administration officials and a number of peer-to-peer sessions on major industry issues.
While there was a lot of fantastic discussion had, here is our take on the biggest takeaways of the week. Please be sure to check out the meeting archive, as many of the presentations and discussions are available on replay.
NMHC thanks all attendees for tuning in to our program. We are also grateful to our sponsors and speakers for their contributions to a successful virtual Fall Meeting. We look forward to seeing you all next year—hopefully in person—at the InterContinental at The Wharf in Washington, D.C., September 22-24, 2021.
Policymakers Stress that the Pandemic Has Brought Housing Issues to the Forefront
NMHC was pleased to have House Majority Whip James Clyburn (D-S.C.), Senate Minority Leader Chuck Schumer (D-N.Y.) and Senator Mark Warner (D-Va.) join members for remarks and discussion. All three lawmakers discussed the importance of housing during this time of uncertainty.
With Congress and the Administration still at odds regarding the next COVID-19 relief package, each lawmaker expressed the critical need for additional relief. “Just an extension of the [eviction] moratorium is not good enough,” said Senate Minority Leader Schumer during his remarks. “Assistance is vital… vital for the tenants, and vital for the landlords.”
FHFA Director Mark Calabria was able to join us to close out the meeting. During his remarks, he discussed the Agency’s response to the COVID-19 pandemic, the proposed GSE Capital Rule and the future of the GSEs.
To Address Racial Inequity, We’re Committed to Diversity, Equity & Inclusion
As part of NMHC’s continued commitment to advance diversity, equity and inclusion in multifamily, NMHC Secretary and Diversity and Inclusion Committee Chair Julie Smith of The Bozzuto Group led an important conversation with journalist and Pulitzer Prize-winning author Isabel Wilkerson about the research and insights behind her New York Times best-selling book, Caste: The Origins of Our Discontents. Wilkerson’s findings advance the notion that American society has a persistent, unwritten caste system, and many of our struggles around race and class trace back to hierarchies we have inherited from our colonial history.
While understanding how we got here is important, it’s critical to focus on where we want to be. Former NMHC Chair Daryl Carter of Avanath Capital Management moderated a panel with Basis Investment Group’s Tammy Jones, Comunidad Realty Partners’ Antonio Marquez and Wells Fargo Multifamily Capital’s Vincent Toye on creating equitable access to capital and credit in multifamily. The panel called on larger companies to partner with minority-owned firms, and highlighted the importance of considering qualified minority-owned firms with unconventional niche strategies. The importance of relationships and communication was discussed, and the panel emphasized the need for industry stakeholders representing public and private firms, finance, debt platforms, banks and the agencies to convene with emerging managers. The group noted that equitable representation for real estate professionals of color will not happen organically, and the industry must be intentional about setting goals and measuring progress.
We’re Looking at a Fragile Recovery Amid Lots of Uncertainty
Oxford Economics Chief Economist Gregory Daco kicked off the Fall Meeting with a thorough documentation of the unprecedented speed and force with which the pandemic hit the economy, as well as the marks of a strong first phase of economic recovery. However, he noted that the recovery has been spotty, as some geographies continue to suffer more markedly. Additionally, an uneven labor market recovery and slow consumer spending continue to be a drag on recovery. The big unknowns are largely epidemiological and political in nature, as the virus spread has stabilized, albeit at concerning levels, and there’s so much uncertainty related to potential policy interventions and the outcome of the elections. (Click here for a replay of Daco’s presentation and his slides.)
On that note, NMHC Vice Chair and NMHC PAC Chair Ken Valach of Trammell Crow Residential hosted an NMHC PAC-sponsored political update with Cook Political Report’s National Editor Amy Walter. Walter discussed the current state of play as well as what expectations are as Election Day draws near. Walter's recorded session is available on our website until Thursday, October 15.
Her read on the presidential election was that, even pre-pandemic, President Trump had a narrow pathway for a reelection bid that rested on a number of assumptions, not the least of which is the strength of the economy. Many of those assumptions have been completely undone in the wake of COVID-19. Today, the President is buffeted by a number of headwinds—notably a still-recovering economy and social unrest sparked by the killing of George Floyd. Accordingly, he struggles with low approval ratings and trails significantly in the polls. However, Walter noted that a lesson learned from the last election is that “the normal rules of political gravity don’t apply to him.” Therefore, uncertainty surrounding potential results persist.
We Need to Prepare to All Be COVID Long Haulers
Former FDA Commissioner Dr. Scott Gottlieb provided timely remarks regarding the current state of our nation as it relates to COVID-19. He not only addressed the reality of our “new normal”—including how to stay safe during air travel and best practices for mask usage—but he also provided future-looking insight. Most notably, he commented that we may not return to pre-COVID normalcy until potentially next summer or even the following fall.
With the outlook for a post-pandemic return stretching much further into 2021 than anyone might have guessed, many of the leadership and operational issues currently affecting apartment firms come into high relief.
Many of these issues were touched on during two lunch-and-learn sessions centered around leadership in a time of disruption and the changing risk landscape. In the former, Equity Residential’s Christa Sorenson and BH Companies’ Joanna Zabriskie discussed lessons learned and opportunities uncovered by the pandemic, overdue conversations on racial equity and the new work environment. Highlighting the importance of organizational culture, they made note of the ongoing strain as employees remain remote, struggle with burnout and balance home and professional obligations.
In the latter, Lockton Companies’ Kyle Herren led a conversation about protecting portfolios, avoiding negative impacts to valuations and lessening financial exposure to a volatile cycle in insurance markets.
99 Problems and Rent Control Is Definitely One
One of the big takeaways from one of three lunch-and-learn sessions last week was that tenant groups are, without a doubt, professionalizing, becoming much more organized, coordinated and deeper pocketed. As an example, Right to the City, which has been active in the #cancelrent movement, had spending power of roughly $490,000 in 2015; by 2018, that had grown to $2.3 million. In addition, the number of federal lawmakers endorsing rent control since 2018 has grown significantly, underscoring that threat levels are rising in more states and localities than ever.
The most obvious example is in California, where Prop 21 will be on the ballot this November. The measure significantly expands rent control beyond the statewide “anti-gouging” cap of CPI plus 5% and allows cities to cap the price of vacant units, known as vacancy control, reverting back to a 1970’s era version of rent control. Catch the replay or download the slides to get up to speed.
Multifamily Construction Activity Rebounds, But Challenges Remain
One of the hallmarks of the COVID-19 pandemic has been the widespread disruption of just about everything—and the multifamily construction industry was no different. Permits and starts plunged in the spring, but much of that activity has rebounded since, proving to be a “COVID-driven hiccup,” as RealPage’s Carl Whitaker described it during a panel discussion with Gables Residential’s Matt Bearden, Continental Properties’ Kim Grimm and Camden’s Steve Hefner. (Catch the replay here.)
As permits have bounced back and roughly 600,000 market-rate apartments remain in some stage of construction, the apartment production outlook looks pretty good. However, apartment firms are pointing to a new slate of challenges as threats to the pipeline continue. While labor costs and tariffs were top of mind pre-pandemic, construction firms are now seeing supply chain disruptions as major hurdles to reining in costs amid slow rent growth.
In many cases, COVID-related safety protocols are slowing down the production and distribution of product; severe weather events such as hurricanes are also wreaking havoc. As a result, everything from timber to resin for PVC piping to appliances is becoming more difficult and more expensive to procure. In response, apartment firms are focused on diversifying their sourcing, procuring product earlier, finding ways to stockpile and store product, if necessary, and finding alternative solutions to getting product where they need it when it’s needed.