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Morgan Stanley Predicts REO Rental Program Will Create 1.8 Million Jobs

Published Tuesday, February 21, 2012
by Justin T. Hilley


One of the greatest effects of it, the bank's analysts say, is job creation, with the possibility of creating more than 1 million jobs in the hard-hit construction and real estate industries. The jobs could be created by private capital without the use of taxpayer dollars.

The program's purpose is to clear the national backlog of distressed housing.

"On a macro level, (the REO rental program) could not have come at a better time," the analysts say.

According to the Bureau of Labor Statistics, the economy lost 2.5 million housing-related jobs over the past five years. Of those, 2.16 million were in construction and 240,000 were in real estate.

Employment in construction increased by 21,000 in January, following a gain of 31,000 in the previous month.

Analysts estimate about eight million properties will be sold in some form of distressed sale over the next five years.

"Even if only half can be turned into rentals, which would represent only a 20% increase in the total number of single-family rental properties available today, that could result in the creation of one million one-time construction-oriented jobs plus a possible additional 800,000 in permanent jobs, mostly in some of the hardest-hit sectors and the hardest-hit economic areas of the country," they say.

The 800,000 jobs would comprise the cottage industry for servicing REO rental units, from cleaning properties to collecting the rent.

The chart below shows Morgan Stanley's full-time job-creation numbers per distressed property turned into rental by each category and for total jobs. The calculation is based on anecdotal labor-usage feedback the firm received from current single-family operators.

Capital Economics called the program to move REO properties to rentals the “best housing fix so far” and “possibly more significant” than President Brack Obama’s refinancing proposals announced late last month.

Support for a government-led program was the most popular disposition strategy among panelists at January's American Securitization Forum.

But when Federal Reserve Chairman Ben Bernanke sent a letter in January to Congress proposing the REO rental program, it highlighted the deep political divide on how to repair housing.

Private investors, with the government's support, are gearing up for what they perceived as a massive and long-term investment opportunity

"With the added benefit of the potential for significant private sector-led job creation, potentially in the hardest-hit sectors in the hardest-hit regions, we are increasingly confident that (the program) can have a positive impact on housing and the macro economy as a whole," the analysts say.


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Latest News

Published Tuesday, September 1, 2015

Exciting Times for NVSAA! 
Introducing Our New Billing Structure


This is a very exciting time for us! We are offering more opportunities for our members than ever in key areas: Education, Legislative, Networking.

We are also creating ways to do business better. This allows us to build upon our foundation, and facilitate future growth.

The Nevada State Apartment Association is pleased to announce a streamlined billing structure for our membership. We are moving to a calendar year membership cycle where all members will pay their dues in January and enjoy membership benefits through December of that year.

The goal is to shift our entire membership to this more efficient billing cycle by January 1, 2017.

As such, it’s important to begin the process now. Handling membership in this manner is in line with many other Associations across the country and is design designed to minimize confusion on expiration dates and make the budgeting process easier.

Our goal is to make the transition as easy as possible:

If your membership renewal falls due between September 1, 2015 and December 31, 2015. You will receive an invoice that includes the remaining months of 2015 and all of 2016. Conveniently, your membership will be paid through the end of 2016. The remaining association members expiring in 2016 will receive prorated invoices to finish out next year’s membership. This process puts us on track to begin annual billing for the association, as a whole, in 2017.

Thank you for your cooperation as we make these changes! YOU are what makes the NVSAA the premier multi-family housing association in the region. Let’s keep going and growing!

If you have questions, you can reach me at 702.862.0165

My best to you,

Shelly A. Cochran

Executive Director


Published Friday, April 17, 2015

Record-setting tourism and the strongest convention attendance in several years are driving employment growth and creating apartment demand Las Vegas. Job growth is well above the national average, spurring developers to complete projects that were mothballed since the recession. In addition, multifamily permitting is trending more than 60 percent higher as builders rush to keep up with demand for rental space. While more than 1,400 apartments have been completed during the past year, vacancy fell sharply and concession activity nearly halted on well-located properties near employment hubs. The leisure and hospitality sector is providing the biggest job gains in the economy, although more corporations are relocating to the metro due to its position as a travel destination and the lack of a state income tax. The new workers hired by these companies are choosing to rent in prime areas to the southwest of the city, close to shopping centers, freeways and the Strip. Single-family housing costs in these areas are above the metro average, spurring strong rental growth and pushing vacancy down. Tightening operations will lift rents up 3.4 percent this year, more than 100 basis points above inflation.

Published Wednesday, February 25, 2015

You can be THE FIRST to know what's happening in the Las Vegas housing market each and every month. FastFacts is the e-newsletter that tells you exactly what's going on in both the new and existing home market in terms of volume, prices, and trends.

Published Tuesday, February 24, 2015

I think it's fascinating how consumer-to-business connections change over time ... and I'm always paying attention.

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