Category

Multifamily housing

Third Quarter Commercial & Multifamily Mortgage Originations Up 12 Percent Year-over-Year

By | Commercial mortgages, Commercial Real Estate, Lenders, Multifamily housing

WASHINGTON, D.C. (November 10, 2015) – According to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, third quarter 2015 commercial and multifamily mortgage loan originations were 12 percent higher than during the same period last year and three percent higher than the second quarter of 2015.

“Commercial mortgage borrowing and lending continued to grow during the third quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Every major investor group and property type except one has seen increases in year-to-date lending volumes, and we expect year-end numbers to continue that trend.”

Increases in originations for retail and office properties led the overall increase in commercial/multifamily lending volumes when compared to the third quarter of 2015. The increase included a 39 percent increase in the dollar volume of loans for retail properties, a 17 percent increase for office properties, an 11 percent increase for multifamily properties, a 10 percent increase for industrial properties, a nine percent decrease in hotel property loans, and health care property loans decreased 30 percent year-over-year.

Among investor types, the dollar volume of loans originated for commercial bank portfolio loans increased by 93 percent from last year’s third quarter. There was an 18 percent increase for life insurance company loans, a three percent decrease for Government Sponsored Enterprises (GSEs – Fannie Mae and Freddie Mac) loans, and an eight percent decrease in dollar volume for Commercial Mortgage Backed Securities (CMBS) loans.

Third quarter 2015 originations for office properties increased 37 percent compared to the second quarter 2015. There was a 27 percent increase in originations for retail properties, a five percent increase for health care properties, a one percent decrease for industrial properties, an eight percent decrease for multifamily properties, and a 29 percent decrease for hotel properties from the second quarter 2015.

Among investor types, between the second and third quarter of 2015, the dollar volume of loans for CMBS increased 22 percent, loans for life insurance companies increased 13 percent, originations for commercial bank portfolios increased nine percent, and loans for GSEs decreased by 28 percent.

via (MBA)

MBA Predicts 6 percent Increase in 2016 Originations

By | Commercial mortgages, Multifamily housing

The Mortgage Bankers Association projects originations of commercial and multifamily mortgages to rise by 6 percent in 2016 to $485 billion.

Mortgage bankers’ originations of multifamily mortgages are forecast at $187 billion in 2016, while total multifamily mortgage originations project to $225 billion.

“Borrowing and lending in commercial and multifamily real estate markets is strong,” said MBA Vice President of Commercial Real Estate Research Jamie Woodwell. “Interest rates that have stayed lower longer than most anticipated, and continued growth in property incomes and values are all pushing mortgage origination levels higher.”

MBA said commercial/multifamily mortgage debt outstanding is expected to end 2016 at $2.8 trillion, 1.8 percent higher than at the end of 2015.

via (MBA)

Affordable housing targets remain little changed

By | Commercial Real Estate, Multifamily housing, Regulation

The Federal Housing Finance Agency will not push Fannie Mae and Freddie Mac to steer additional lending resources to less well-off borrowers. The regulator has announced new goals — effective from this year to 2017 — for the percentage of the mortgage companies’ business that must be reserved for low-income borrowers. Under the new targets, 24 percent of Fannie Mae and Freddie Mac’s loans to purchase homes will be expected to go to families with incomes no higher than 80 percent of their areas’ median income — an increase of one percentage point from last year. In addition, Fannie and Freddie will have the goal of directing 6 percent of their purchase mortgages to families with incomes that are no more than 50 percent of their areas’ median — a decrease of one percentage point from 2014. While affordable housing advocates view the goals as a way to ensure that Fannie and Freddie keep mortgage access available to low-income borrowers, some critics suggest that these targets are at least partially to blame for the risky lending practices that led up to the financial meltdown.

via (wsj)

HUD to Require Local Communities Address Segregation

By | Commercial Real Estate, Multifamily housing, Site selection

If you own multifamily properties, you should discuss this with your local city planners. “The Department of Housing and Urban Development on Wednesday [July 8th] laid out a rule designed to ensure communities that receive federal funds strive to buck historical patterns of housing segregation.

The rule is a response to criticisms that federal enforcement of fair-housing laws has been opaque and difficult for smaller communities to follow. But some Republican lawmakers and community leaders say it amounts to forcing communities to integrate against their will.

Under the new rule, HUD will provide communities with historical data they must use to analyze segregation patterns, areas where race and poverty are concentrated, and access to good schools and jobs. Communities now will be required to submit these analyses to HUD, set goals for reducing segregation and track the results.”

via (wsj)

Multifamily tenants want fast and reliable internet access

By | Commercial Real Estate, Multifamily housing, Property valuation

The internet is now a necessary utility. The internet is central to the way we work and live in today’s digital world. A family today uses the internet for many things, staying in touch with friends and relatives, online entertainment and streaming media, telecommuters whose career depends on it every day, or students who are required to do homework on the internet. For all of these reasons consumer and tenants want fast, reliable internet access in their home.

The value a family places on the internet was reported in the Wall Street Journal and Computerworld articles. The articles stated that researchers from the University of Colorado and Carnegie Mellon University found that fiber-optic connections (the fastest available type of high-speed internet connection) can add $5,437 to the price of a $175,000 home. More interesting is property listings that had internet availability received more calls than properties without it. If properties do not have broadband, some people choose not to even look at the property. It is more important in areas without common access to broadband, such as more rural areas.

If broadband adds $5,437 or 3% to the value of a home and is a deal killer in the search for a home, does that also apply similarly to multifamily housing? What value would tenants place on broadband? Do prospective tenants look for broadband in the properties they are considering? It would seem that the answers are yes, they do. Broadband is rapidly being adopted and consumer demand is high. In addition, this would add value to the property and possibly increase lease revenues. What would 3% increase in lease revenues do for your cash flow? Or how about the value of the property?

For example, a multifamily property with gross rents of $100,000 and a property value of $1,515,150, with an additional 3% of gross rents totaling $103,000, the property value would increase by $45,455 to $1,560,606. But again, it isn’t just the increase in property value, a fast internet connection will help attract tenants and increase the occupancy of the property.

Therefore, broadband is a very important feature to add to any multifamily property. So what can be done to get a multifamily property modernized for broadband? Here are few ideas.

First, search for a reputable internet service provider who can help you deliver their service to your property. Ask them to provide their network statistics on reliability, speed, accessibility, and area coverage. What would it cost to have it installed? Also ask what their experience has been with projects like yours and get referrals to verify their claims of service and network performance.

Second, for new construction, by all means make sure broadband is in the plans, because it will be a selling benefit for sure with new tenants. And the cost will be less than if you “upgraded” later.

Third, for existing multifamily properties, look for an IT contractor who can help you get a wired (new construction) or wireless (existing property) network installed that tenants can connect to. Be sure the contractor designs it well for security, reliability, and the network load during peak hours in the evenings. Also, be sure they offer 24/7 support. The last thing you want are tenants with connectivity issues because the network went down and there’s no one who can help them or fix the network.

Fourth, discuss internet options with local municipalities. Towns without broadband are finding out that they are falling behind economically, so it should be an easy sell. If they are convinced that enough local residents demand it and would pay for broadband, maybe they would also be convinced to raise the funds to build out their own fiber connections.

Fifth, once it is all up and running, build service charges into rent or charge it individually to units.

The fiber boom is just beginning, but will be huge! With a connected society, a fast internet connection will be more of a necessity than ever and tenants will demand and expect it to be offered.