trends | Ashworth Partners

FHFA’s DeMarco re-affirms cutting Fannie and Freddie apartment building loan volume.

As reported by CoStar: “Given that the multifamily market’s reliance on the enterprises has moved to a more normal range, to move forward with the contract goal, we are setting a target of a 10% reduction in multifamily business new acquisitions from 2012 levels,” Edward DeMarco, acting director of the Federal Housing Finance Agency (FHFA) said. “We expect that this reduction will be achieved through some combination of increased pricing, more limited product offerings and tighter overall underwriting standards.”

Fannie and Freddie Apartment Building Loans as percent of multifamily originations — Source: www.multifamilyexecutive.com/

While 10 percent doesn’t sound like much, Fannie Mae and Freddie Mac combined to finance about $62.8 billion in multifamily deals last year, meaning about $6 billion in liquidity will Continue reading FHFA’s DeMarco re-affirms cutting Fannie and Freddie apartment building loan volume.

CoreLogic Map: Almost 23 Million Zombie Homeowners Still Underwater.

CoreLogic is out with their quarterly report and map of underwater homeowners. Their analysis is “showing approximately 200,000 more residential properties returned to a state of positive equity during the fourth quarter of 2012. This brings the total number of properties that moved from negative to positive equity in 2012 to 1.7 million and the number of mortgaged residential properties with equity to 38.1 million. The analysis also shows that 10.4 million, or 21.5 percent of all residential properties with a mortgage, were still in negative equity at the end of the fourth quarter of 2012. This figure is down from 10.6 million* properties, or 22 percent, at the end of the third quarter of 2012.

Negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both.

Of the 38.1 million residential properties with positive equity, 11.3 million have less than 20 percent equity. Borrowers with less than 20 percent equity Continue reading CoreLogic Map: Almost 23 Million Zombie Homeowners Still Underwater.

New Stats from HUD/Census apartment building finance survey

HUD and the Census Bureau released the latest version of the Rental Housing Finance Survey. The “Survey fills an important gap in our understanding of who owns multifamily rental housing – mostly individuals, not large companies — and how multifamily rental housing is financed, especially as the structure of finance is changing. In light of recent changes in the availability of capital for rental housing, the Rental Housing Finance Survey also provides important insight about the financial health and stability of multifamily housing properties.” said Erika Poethig, HUD’s Deputy Assistant Secretary for Policy Development.

This is one table from the xls on the Census Bureau’s site here. Note the tabs on the bottom which have the data broken out by different types.

A few bullet points from HUD’s release linked at the top of the post:

Approximately 20 percent of American households live in multifamily rental buildings.
There are 2.3 million such properties in the United States.
73 percent are just one Continue reading New Stats from HUD/Census apartment building finance survey

Back To The Future: A Brief History of Apartment Building Design

Mike Scott of Dupre+Scott Apartment Advisors gives a tour through the last hundred years or so of apartment building design. Plus ça change….

In the accompanying article (here) Mike talks with builders and developers about current trends in apartment design and amenities. Interestingly many of these changes provide a competitive advantage to Continue reading Back To The Future: A Brief History of Apartment Building Design

Single-Family Rentals Only Marginally Impact Apartment Building Investments PNC EVP says. Video via Globe St.

Scott Bassin, EVP and head of multifamily for PNC Real Estate says single family rentals will only marginally impact apartment building investment because there is a certain group of people who want or need single family homes, and everyone else. See his comments in the Globe St. video from the NMHC Apartment Strategies Conference in Palm Springs.

Single Family Rentals only have small impact on Apartment Building Investment — Scott Bassin, EVP at PNC with Globe St. in Palm Springs

MBA: GSEs vital in Ensuring Liquidity and Stability in apartment building investment finance.

The Mortgage Bankers Association is out today with a white paper “Ensuring Liquidity And Stability: The Future Of Multifamily Housing Finance And The Government-Sponsored Enterprises“. (or see the MHN exec sum here) The paper highlights the role of the GSEs (Government Sponsored Enterprises, i.e. FNMA ‘Fannie Mae’ and FHLMC ‘Freddie Mac’) in today’s multifamily finance market and presents five recommendations for the future making their points with a set of charts that demonstrate the size of their role in multifamily as well as the very low amount of bad loans they’ve made in the sector.

Our nation’s housing policies should reflect the importance of multifamily rental housing, the range of capital sources that support this market, and the need for liquidity and stability in all market cycles.

Continue reading MBA: GSEs vital in Ensuring Liquidity and Stability in apartment building investment finance.

Apartment Building Investment Cycle Analysis via Dividend Capital. Can this be right?

Dividend Capital’s Q3 Market Cycle Monitor Report is out and naturally I looked at the apartment building investment cycle chart first. Specifically these days I’m looking to see where the author, Glenn R. Mueller Ph.D. has placed the Seattle market in the cycle.

In this latest report you can see that it is listed at position 2 with only Norfolk listed lower at position 1. What does position 2 signify? According to the good Doctor, position 2 lies in the Phase 1 – Recovery Quadrant defined as having “No New Construction” and position 2 specifically having “Negative Rental Growth”. But how can this be? Continue reading Apartment Building Investment Cycle Analysis via Dividend Capital. Can this be right?

ULI: Seattle most attractive market for Apartment Building Investment but there are 36,000 units just completed, under way or in the pipeline.

Two quick links- you decide. From the Seattle Times: Urban Land Institute finds Seattle among most attractive real-estate markets and from Dupre + Scott ( The leading Seattle area apartment market research firm): Apartment development pipeline (video)

When I see this:

And then I see this: Continue reading ULI: Seattle most attractive market for Apartment Building Investment but there are 36,000 units just completed, under way or in the pipeline.

Good News and News: Apartment Q3 update web conference replay now posted from Marcus & Millichap

Good presentation on the current national apartment building investment sector from Marcus & Millichap. New supply remains constricted except for a few cities, they didn’t mention any names *cough Seattle cough* but if you’re in one of them and tracking the pipeline it’s easy to read between the lines.

Another interesting trend is that Continue reading Good News and News: Apartment Q3 update web conference replay now posted from Marcus & Millichap

Rent Vs. Buy And The Great Myth of Homeownership as an ‘Investment’

Renting vs. Buying debunks the myth of home ownership as an investment

There have been a number of reports recently claiming that renting is more expensive than buying a house. This is a great thing as everyone involved in selling, building and financing houses would tell you, especially if it were true. Unfortunately it is not for a variety of reasons, one of them being that owning the home you live in just isn’t that good of an investment, but we’ll get to that in a moment.

The first hurdle is the challenge of amassing the 20% down payment. On the average US home price of $242,300 the downpayment would be $48,460. That is essentially one whole year’s worth of the US median income of $51,413, so the question is how long would it take someone to save that much? This question is nearly always ignored in these comparisons. But say we all have a rich relative who leaves us the downpayment in their will, it’s all good after that right?

Some of these type of reports simply compare the average local rent to the mortgage payment for the area’s average home and therefore can be discounted out of hand. Others include taxes and insurance which is slightly better but they are still missing a very big piece of the cost of owning and operating a home; repairs and maintenance. Continue reading Rent Vs. Buy And The Great Myth of Homeownership as an ‘Investment’