Strong multifamily performance

STRONG MULTIFAMILY PERFORMANCE Investor returns on rental properties continued to climb last year. The National Council of Real Estate Investment Fiduciaries reports that net operating income for commercial-grade apart-

ments increased for the fifth consecutive year in 2015, up nearly 11 percent from 2014. The annual rate of return on rental prop- erty investments rose to 12 percent, driven in large part by price appreciation. This strong performance has attracted investor demand, pushing capitalization rates for apartment properties down to 4.8 percent by year-end—the lowest level since the third quarter of 2008.

According to Moody’s/RCA Commercial Property Price Index, prices for apartment properties rose 13 percent in 2015, mark- ing the sixth consecutive year of double-digit growth. As of March 2016, apartment property prices stood 39 percent above their previous peak in late 2007. By comparison, the CoreLogic index indicated that single-family prices remained 5 percent below their pre-recession high. Prices for apartment properties in highly walkable central business districts increased the most last year (19 percent), while those in car-dependent suburbs rose somewhat more slowly (13 percent).

While strong nearly everywhere, apartment property prices in certain markets have skyrocketed. As of the fourth quarter of 2015, prices in the New York metro area stood 93 percent above their previous peak, while those in San Francisco were up 85 percent (Figure 31). Apartment prices in Boston, Denver, and Washington, DC, also topped previous peaks by more than 50 percent. In contrast, property prices in Las Vegas and Phoenix were up more modestly, likely because of the large oversupply of single-family homes available to meet rental demand.

With rental property prices on the rise, delinquency rates for most types of multifamily loans fell in 2015. The share of mul- tifamily loans held by FDIC-insured institutions that were at least 90 days past due or in non-accrual status dipped to just 0.28 percent in the fourth quarter, down from 0.44 percent a year earlier. In addition, the Mortgage Bankers Association indi- cates that 60-day delinquency rates for commercial/multifamily loans held by life insurance companies were at 0.04 percent, comparable to rates for loans held by Fannie Mae (0.07 percent) and Freddie Mac (0.02 percent).

Multifamily loans held in commercial mortgage-backed secu- rities (CMBS) posted a sharp drop in what had previously been relatively high delinquency rates. According to Moody’s Delinquency Tracker, the share of CMBS loans that were 60 or more days past due, in foreclosure, or in the lender’s possession peaked at nearly 16 percent in early 2011 before steadily retreat- ing to about half that share at the end of 2015. The share then fell to 2.1 percent in early 2016, but still more than double the 0.9 percent average in 2001–2007.

Unusually strong market conditions and historically low inter- est rates helped to propel a sharp rise in multifamily loan origi- nations last year. The MBA Originations Index indicates that the dollar volume of multifamily loans originated increased 31 percent in 2015. Meanwhile, total loans outstanding (including

Source: Moody’s Investors Service and Real Capital Analytics, Commercial Property Price Index for Apartments.

● New York ● San Francisco ● US ● Phoenix ● Las Vegas

550 500 450 400 350 300 250 200 150 100 50 0

2003 2005 2007 2009 2011 2013 20152001

Apartment Property Prices in Hot Markets Have Surged Well Above Previous Peaks Apartment Price Index

FIGURE 31

 

 

THE STATE OF THE NATION’S HOUSING 201630

both originations and repayments/write-offs) shot up by nearly $100 billion, to more than $1 trillion.

Bank and thrift balances rose by $47 billion (16 percent) in nomi- nal terms over the past year, while debt backed by federal sourc- es increased by $48 billion (11 percent). The federal government held or guaranteed 45 percent of all outstanding multifamily mortgage debt in 2015, a large share by historical standards. With Fannie Mae and Freddie Mac still in conservatorship after nearly eight years, the government’s future footprint in the multifamily lending market remains an open question.

THE OUTLOOK Rental demand is expected to remain robust over the next decade as the youngest members of the millennial genera- tion reach their 20s and begin to form their own households. Moreover, if homeownership rates for households in their 30s and 40s continue to slide, rental demand will be stronger still. For their part, the aging baby-boom generation will boost the

number of older renters, ultimately pushing up demand for accessible units.

It is unknown whether high-income households will continue to fill the growing inventory of higher-end rentals or make the transition to homeownership. Regardless, expanding the rental supply through new market-rate construction should provide some slack to tight markets as older units slowly filter down from higher to lower rents. Once high-end demand is sated, developers in some areas may turn their attention to middle- market rentals, although high development costs mean that building new units affordable to even moderate-income house- holds is difficult without government subsidies.

And without public subsidies, the cost of a typical market-rate rental unit will remain out of reach for the nation’s lowest- income households. Indeed, with housing assistance insufficient to help most of those in need, the limited supply of low-cost units promises to keep the pressure on all renters at the lower end of the income scale.

Get professional assignment help cheaply

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason may is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Our essay writers are graduates with diplomas, bachelor, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college diploma. When assigning your order, we match the paper subject with the area of specialization of the writer.

Why choose our academic writing service?

  • Plagiarism free papers
  • Timely delivery
  • Any deadline
  • Skilled, Experienced Native English Writers
  • Subject-relevant academic writer
  • Adherence to paper instructions
  • Ability to tackle bulk assignments
  • Reasonable prices
  • 24/7 Customer Support
  • Get superb grades consistently

 

 

 

 

 

 

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
1
You can contact our live agent via WhatsApp! Via +1 817 953 0426

Feel free to ask questions, clarifications, or discounts available when placing an order.
  +1 (301) 710 0002           + 44 161 818 7126           [email protected]
  + 44 161 818 7126         [email protected]