COVID-19 Multifamily Roundup (March 20, 2020)
Multifamily Remains Remote to Immediate Impacts
The Mortgage Bankers Association’s Market Intelligence Blog published an article, “CRE Finance in a World of Uncertainty—Where Are We Now.” It stated, “The multifamily market remains among the most remote to the immediate impacts of the virus. The number of households tends to be more resilient during a recession than the number of jobs.” However, the association also pointed out that the pandemic presents unique circumstances. As of March 16, the state of New York suspended evictions. The FHA and FHFA, the agencies overseeing Fannie Mae and Freddie Mac, are following similar policies. In addition, the federal government is looking to provide funding to support tenants who are unable to pay rent. The article noted, “Across all property types, the impacts will depend on the length and severity of the economic slowdown.”
Crisis Arrived Amidst Robust U.S. Housing Market
Redfin posted a recent article, “Going into the Coronavirus Crisis, the U.S. Housing Market Was Stronger Than Ever.” It noted that in February, domestic home sale prices increased 6.6% compared to the prior year. In that month, across the country, home prices had risen 2.8% compared to January. February’s home price median reached $293,700. Taylor Marr, RedFin’s lead economist, stated facing uncertain times, many buyers are putting their home-buying plans on hold. However, he opined, “once the virus subsides, the housing market has the potential to rebound relatively quickly given how strong it looked going into this crisis.”
Rental Market Slowdown for 3 to 6 Months
Multifamily Executive posted an article, “COVID-19 Expected to Slow Rental Market for 3 to 6 Months.” The piece noted that RENTCafé observed a 25% decline in search traffic of its internet rental listings, from March 11 to March 17. The article referenced Yardi Matrix, which stated it anticipates the leisure, hospitality and trade sectors will take longer to recover. It noted, “In the short term, owners and operators can expect some rent collection issues from tenants who are ill or have lost their jobs.” Treasury bills are at historic lows and institutions are well-capitalized. The article concluded, “As the situation passes, the recovery is expected to take hold again, providing ‘an investment opportunity’ for owners with cash on hand.”
FHFA Suspends GSE Foreclosures and Evictions
The Federal Housing Finance Agency (FHFA) announced it is directing Fannie Mae and Freddie Mac to suspend foreclosures and evictions for 60 days in response to the COVID-19 pandemic. The suspension applies to homeowners with government-sponsored, enterprise-backed single-family mortgages. FHFA has directed borrowers affected by the coronavirus who are experiencing difficulty in paying their mortgage to contact their mortgage servicers as soon as possible.
Empty Dorms Could Convert to Hospitals
Multi-Housing News published an article, “Those Empty Dorms? They Could Soon Be Hospitals.” The trade publication reported that New York City is looking to adapt existing properties into medical facilities to address the spreading of the coronavirus. Governor Andrew Cuomo has stated that the city will need to identify an additional 5,000 beds. Mayor Bill de Blasio said that the city will add 8,200 hospital beds to the current inventory. Plans include converting privately owned and unused city property into medical facilities and expanding the capacity of existing hospitals, according to MHN.
You can find all of Arbor Chatter’s coronavirus coverage, including its ongoing COVID-19 Multifamily Roundup here. For a list of industry resources that offer helpful information related to the virus outbreak, please see our Coronavirus CRE Resource Guide.