Multifamily Investment Opportunities Slipping As Property Prices, Rates Rise

Investment opportunities in multifamily housing slipped in Q1 2022, with the Freddie Mac Multifamily Apartment Investment Market Index (AIMI) falling by 4.8% from Q4 2021 and 2.4% year-over-year. AIMI analyzes multifamily rental income growth, property price growth, and mortgage rates to measure multifamily market investment conditions. A decline such as this indicates that attractive investment opportunities are becoming more difficult to find. For the second quarter in a row, increases in net operating income (NOI) were overwhelmed by property price growth and rising interest rates.  AIMI fell nationally and in 18 of the 25 individual markets analyzed by Freddie Mac. Only seven markets experienced growth. Quarter-over-quarter NOI grew 2.5% and was up in every metro. Miami saw the fastest increase…

Commercial/Multifamily Delinquencies Still Low

Commercial and multifamily delinquencies fell in Q1 2022, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. MBA looked at commercial/multifamily delinquency rates for five of the largest investor groups: commercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. These groups hold more than 80% of outstanding debt in these categories. The number of banks and thrifts overdue by 90 or more days fell to 0.56% from Q4 2021. The number of life company portfolios 60 or more days late rose slightly to 0.05%, while Fannie Mae fell to 0.38%. Freddie Mac remained unchanged at 0.08%. CMBS that were 30 or more days delinquent or in REO dropped to 3.36%. “Commercial…

Commercial/Multifamily Originations Up YOY But Decline From Q4

Commercial and multifamily mortgage loan originations rose 72% YOY in Q1 2022, though they were down 39% from Q4 2021 due to seasonality trends, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. “The strong momentum in commercial and multifamily borrowing and lending at the end of 2021 carried into the first quarter,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “The continued growth in lending activity is the result of the ongoing strong demand for certain property types like industrial and multifamily, as well as renewed interest in other property types that saw more dramatic declines during the early stages of the pandemic, such as hotel and retail.” Demand for hotel…

Finding Multifamily Investment Opportunities Is Getting Harder

Investment opportunities in multifamily housing lost some steam in Q4 2021, with the Freddie Mac Multifamily Apartment Investment Market Index (AIMI) falling by 4.8% from Q3 and 2.4% year-over-year. AIMI analyzes multifamily rental income growth, property price growth, and mortgage rates to measure multifamily market investment conditions. A decline such as this indicates that attractive investment opportunities are becoming more difficult to find. The report suggests that record multifamily price appreciation and rising mortgage rates offset net operating incomes (NOI), despite “unprecedented” income growth for multifamily investors. Property prices grew by 19.6% YOY, while NOI grew by only 17.7%. “The year-over-year AIMI decline shows us that it may be more difficult now to find attractive multifamily investment opportunities in some…

Commercial/Multifamily Originations Booming And Expected To Grow In 2022

Commercial and multifamily mortgage loan originations jumped in 2021 and are expected to continue booming in 2022, the Mortgage Bankers Association (MBA) reported at its 2022 Commercial/Multifamily Finance Convention and Expo. Originations rose 79% YOY in Q4 2021 and 44% from Q3. A preliminary measure of commercial and multifamily mortgage bankers’ originations volumes found 2021 activity to be 67% higher than 2020’s. “The fourth quarter of 2021 was a record end to a record year of borrowing and lending backed by commercial and multifamily properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research.  “Part of the growth from 2020 was a bounce-back from the worst of the recession. However, rebounding property fundamentals and strong valuations, record sales…

Commercial And Multifamily Delinquencies Fell In Q4 2021

Delinquencies on commercial and multifamily mortgages fell in Q4 2021, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. Outstanding loan balances that were current on their payments rose from 96.7% to 97%, with only 1.9% 90 or more days delinquent or in REO, down from 2.2%. Loans 60-90 and 30-60 days delinquent saw no change, at 0.2% and 0.3% respectively. Loans that were less than 30 days delinquent fell 0.1% to 0.7%. Lodging and retail properties continued to be the most delinquent but saw improvement in Q4. For lodging loans, delinquencies fell 3.5% to 10.5%, while delinquent retail loans fell from 8.2% to 7.6%. CMBS loans also saw improvement, with 5.7% of balances non-current, down from 7.2% in…

Multifamily To Remain Strong In 2022

Freddie Mac’s annual multifamily outlook projects another strong year, with rents continuing to increase despite an overall moderating market. The report projects that the Sun Belt will outperform slow-growing smaller markets in the Northeast and Midwest. “We believe the market will continue to grow in 2022, reflecting the strong multifamily fundamentals that drove the market to a record-breaking year in 2021,” said Steve Guggenmos, vice president of Multifamily Research & Modeling at Freddie Mac. “We anticipate rent growth in all markets in 2022 due to strong demand driven by improving economic conditions.” Growth broke records in 2021 thanks to changing migration patterns and strong economic conditions. Multifamily demand reached its highest ever levels during Q2 and Q3 of 2021, and…

Commercial, Multifamily Delinquencies Fell In Q3

Delinquencies on commercial and multifamily mortgages fell in Q3 2021, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report. Loans delinquent by more than 90 days or in non-accrual fell by 0.06 points in Q2 to 0.69% for banks and thrifts. Life company portfolios saw a decrease of 0.01 to 0.04% for loans 60 or more days late. Fannie Mae and Freddie Mac delinquencies of 60 or more days fell to 0.42% and 0.12%, respectively. For CMBS, the delinquency rate for 30 or more days or in REO fell 0.82 percentage points to 4.86%. “Commercial mortgage delinquency rates for every major capital source have come down since the early months of the pandemic,” said Jamie Woodwell, MBA’s Vice President…

Commercial, Multifamily Delinquencies Drop

In a sign of a strengthening economy, delinquency rates for mortgages backed by commercial and multifamily properties decreased again in April, according to the Mortgage Bankers Association’s (MBA) latest monthly CREF Loan Performance Survey released Monday. Commercial and multifamily delinquency rates reached their lowest level since the start of the Covid-19 pandemic more than a year ago. The survey found: 95.1 percent of outstanding loan balances were current, up from 95 percent in March.3.2 percent were 90+ days delinquent or in REO, unchanged from a month earlier.0.3 percent were 60-90 days delinquent, unchanged from a month earlier.0.4 percent were 30-60 days delinquent, down from 0.5 percent a month earlier.1.1 percent were less than 30 days delinquent, up from 0.9 percent.…

Commercial, Multifamily Loans Recover Some In Q4

Commercial and multifamily mortgage loan originations were 76 percent higher in the fourth quarter than the quarter before – but remained 18 percent lower than the same period in 2020, according to a report released Monday by the Mortgage Bankers Association. For the year, preliminary MBA numbers show commercial and multifamily borrowing was 30 percent lower than in 2019. The report found: A 79 percent year-over-year decrease in the dollar volume of loans for hotel properties in the fourth quarter.A 72 percent decrease for retail properties.A 56 percent decrease for office properties.A 12 percent decrease for health care properties.Industrial property loan originations increased 15 percent.Multifamily property lending rose 14 percent.    “The last three months of 2020 were stronger than earlier…