COVID-19 Multifamily Roundup (March 18, 2020)
CRE Advisors Expect Fairly Quick Rebound
The National Real Estate Investor article, “In the Short Term, CRE Will Take a Hit. But Real Estate Economists Advise Investors Not to Panic,” noted economists are revisiting CRE 2020 predictions. With the coronavirus threat, real estate professionals anticipate the job market will soften. This can affect household formation, consumer spending and business growth. Policies of “social distancing” will immediately impact hospitality, retail and offices. They stressed the importance of access to capital.
Mortgage Rates to Stay Low
The New York Times opined for the time being that mortgage rates will probably remain low. The newspaper reported there was an overabundance of customers seeking to refinance their loans at the historically low interest rates. As a result, lenders actually had to raise their rates to curtail some of the demand. Freddie Mac’s chief economist, Sam Khater, pointed out that mortgage rates remain at “extraordinary levels.” The associate vice president of economic and industry at the Mortgage Bankers Association, Joel Kan, forecasted rates would “likely stabilize and remain low for now.”
Multifamily Increases Attention to Building Operations
A Multi-Housing News article, “What Property Managers Should Be Doing Right Now,” reviewed how building operators are responding to the coronavirus outbreak. The dean at New York University’s Schack Institute of Real Estate, Sam Chandan, said the most significant impact in response to the virus has been in building operations. Multifamily managers have focused on communications, cleaning premises, canceling events and preparing business continuity plans.
REIT Returns Reflect Coronavirus Effect
Nareit reported that different property sectors will have varying exposures, responding to the coronavirus. Based on REIT returns, the article looked at property returns. Some of the sectors immediately affected include lodging and resorts, retail, healthcare, timber, and specialty and commercial financing mREITs. The article stated office, industrial, residential, diversified and home financing mREITS will face fewer direct effects. Long-term leases, higher quality property and high credit quality provide some protection to property owners. Nareit noted self-storage, infrastructure and data centers are expected to be the least negatively affected by COVID-19.
You can find all of Arbor Chatter’s coronavirus coverage, including its ongoing COVID-19 Multifamily Roundup by clicking on this link. For a list of industry resources that offer helpful information related to the virus outbreak, please see our Coronavirus CRE Resource Guide.