Lawsuit Targets Mobile Real Estate Apps

Mobile real estate applications company Smarter Agent has filed a federal class-action lawsuit alleging patent infringement by major real estate companies including Move, Zillow and Trulia, among others.

In the complaint, filed in the U.S. District Court for the District of Delaware, Smarter Agent alleges that the companies named in the suit violated three of its technology patents, all of which allow users to access real estate information via a mobile device. The suit alleges infringement by "making, using, importing, providing, offering to sell, and selling (directly or through intermediaries), infringing products and/or services."

The suit names the following companies as defendants: Boopsie Inc., Classified Ventures LLC, HotPads Inc., IDX Inc., Move Inc. and subsidiary RealSelect Inc., Multifamily Technology Solutions Inc. (owner of MyNewPlace.com), Primedia Inc. and subsidiary Consumer Source Inc., TRSoft Inc. (owner of PlanetRE.com), Trulia Inc., Zillow Inc. and ZipRealty Inc. The complaint was filed March 26.

The Dearth of Move Up Buyers

The lack of move up buyers is starting to get attention ...

From David Streitfeld at the NY Times: Home Prices Decline Again in March

In many urban areas, including those tracked by Case-Shiller, the residential real estate market is essentially cleaved in two. The top half of the market is largely stagnant, with owners unwilling to sell and buyers unable to buy. “Move-up” families seeking another bedroom or a better kitchen are an endangered species.
And from Carolyn Said at the San Francisco Chronicle: Signs of more trouble ahead for housing market

No "move-up" buyers. In a normal real estate market, about 80 percent of buyers are "moving up" or "moving across" - people who sell one home before buying another, said Mark Hanson, principal of Walnut Creek's the Field Check Group, a mortgage consultant. Remaining purchasers are split between first-time buyers and investors.

In today's market, about half of buyers are first-timers and a third are investors, leaving just 15 percent of what he calls "organic" buyers. Those first-timers and investors all troll for bargain-basement foreclosures - leaving few buyers who are interested in the homes being sold by "Ma and Pa Homeowner." That, in turn, leaves Ma and Pa unable to move up to a nicer home. "The organic seller is left out in the cold," he said.
This is going to be a serious problem for the mid-to-high end home sellers. Just wait ...

Note: Carolyn Said lists a number of additional problems ...

Apartment rents fall in Southern California

L.A. County rents sank almost 4% in 2008, and job losses continue to hurt demand as new construction inflates supply.

Apartment rents are falling across most of Southern California as unemployed tenants double up with friends or family and the affordability of foreclosed homes makes some renters into buyers, a new survey has found.

The average rent in Los Angeles County fell almost 4% in 2008 as apartment occupancy rates dropped and new units came online. The decline should continue this year as more renters lose their jobs, according to the annual USC Casden Forecast expected to be released by the university today.

"In L.A. County alone, 41,000 people moved out of apartments last year compared to the 29,000 people who moved in during the last five years," said forecast director Delores Conway.

To keep their units occupied, some landlords are lowering rents or offering concessions for signing a lease, such as a month of free rent or a reduced deposit, she said.

More Stories of Falling Apartment Rents

New York
Declining Manhattan rents are taking a toll on Equity Residential, a large real estate investment trust that owns 47 apartment buildings in the New York metropolitan area.
...
Since February alone, Equity Residential has lowered its Manhattan asking rents by an average of 13%, said Michael Levy, an analyst at Macquarie. That reduction came on top of a 15% cut over the previous year.

San Diego
Tradition, an apartment complex near the Aviara Golf Course in Carlsbad, has cut its asking rent for a three-bedroom apartment from $2,015 to $1,799 per month, said Kris Nelson, business manager for the complex.

Tradition has seen its vacancy rate rise from a fairly consistent 3 percent to 8 percent recently, Nelson said.
...
In Temecula, Somerset Apartments has seen its vacancy rate shoot up from 3 percent to 20 percent. Managers responded by slashing rents by 25 percent for two bedroom, two bath apartments ---- from $1,200 to $900 per month.

Why Are These N.Y. Renters Smiling?

Rents are down throughout New York. According to the February Manhattan Rental Market Report produced by the Real Estate Group, a New York brokerage firm, rents in the borough have fallen “across the board.”

The biggest drop was in studio apartments in doorman buildings, which have fallen 8.33 percent from the same time last year.

In February, the average rent for a one-bedroom apartment in a nondoorman building was $2,632, according to the Real Estate Group. It was $3,395 for a one-bedroom in a doorman building.

Another bonus for New Yorkers concerns the broker fee, which has usually been paid by the renter and can add 15 percent of a year’s rent to the initial cost of leasing an apartment. These days, as attracting good tenants has become more difficult, owners have started paying the broker fees themselves.

According to Halstead Properties, out of 4,230 open and exclusive listings for apartments between Feb. 15 and March 15, 30 percent offered owner payment of the broker fee. Over the same period in 2008, only 8 percent of Halstead’s apartments offered that incentive.

Housing downturn hits L.A.-area rents

After rising for several years, rents in the Los Angeles area are declining because of the economic recession and depressed home prices, researchers, real estate agents and property managers say.

The lower local rents match a national trend, according to a report released Wednesday showing apartment rents fell in 54 out of 79 U.S. metropolitan areas in the fourth quarter of 2008. Softening rents add another obstacle to a housing market recovery, economists say, because tenants with low rent payments feel less urgency to buy a home.

Nationwide, apartment rents eased 0.1% in the fourth quarter, the first drop since 2002, according to the analysis by research firm Reis Inc.

Los Angeles apartment rents fell 0.7% in the fourth quarter, the first decline since 2001, although overall rents for the year were up slightly over 2007.

Property owners and real estate agents say the supply of rental units has climbed in the last year. Overbuilding during the real estate boom added vacant units to the rental pool, and some home sellers discouraged by the moribund real estate market are renting their houses or condominium units rather than trying to sell. Foreclosures add both supply and demand to the rental market, as foreclosed homes become rentals and former owners seek places to rent.

Declining incomes and rising unemployment also mean people have less to spend on rent.

Mark Verge, owner of the property listings service Westside Rentals, said he'd seen rents fall faster in the last three months than at any time since he founded the company 13 years ago.

"I used to have to beg owners to lower rents. Now they ask me, 'What do you think I should lower it to?' " Verge said.

Verge said his service had 24,000 units listed for rent -- a 33% increase from the 18,000 he had at this time last year.

Finally, Renters Have Some Pull (WSJ 1/20/09)

Now it's a renter's market, too.

As the housing downturn deepens, rental rates are falling in many major U.S. cities, including New York and Los Angeles, and tenants are finding they have greater leeway to renegotiate their leases.

Apartment rents nationwide fell 0.4% in the fourth quarter from the third quarter -- the first drop since 2003, according to Reis Inc., a New York City-based real-estate research company. Apartment vacancies rose to 6.6% in the quarter from 5.7% a year earlier.

According to a report released Tuesday by the Real Estate Group of New York, a Manhattan-based brokerage firm 45% of rents in Los Angeles declined.

In some California cities, vacancy rates are being boosted by the conversion of new condo projects into rentals, says Patrick S. Duffy, principal of MetroIntelligence Real Estate Advisors, a real-estate consulting firm based in Los Angeles. In downtown L.A., where there are a lot of new condos, the vacancy rate was almost 10% in the fourth quarter, compared with an L.A.-wide vacancy rate of 4.5%.

Building owners fear that this summer's crop of college grads will move back home with their parents rather than renting apartments, says Jessica Scully, vice president of Scully Company, a property-management company with units in Pennsylvania, Florida, New Jersey and Connecticut.

The company is offering up to two months of free rent to new tenants at some locations,