Multifamily News and Insights

Here’s a quick look at the small balance multifamily finance and investment benchmarks for Q4 2017.

Los Angeles remained one of the more sought-after multifamily markets in the U.S. during 2017, as rent growth and investment volume ranked near the top nationally. The vacancy rate also remained low, despite an influx of new supply, and demand for additional housing remains high. The local economy has recovered from the recession, although high housing costs and restricted in-migration may slow expansion.

The Dallas multifamily market posted strong results in 2017 as rent growth continued and investment activity was high. Vacancy — driven by an influx of new supply — increased,  though levels remained well below previous highs.

With a lower share of inventory located in flood-prone areas, small buildings are more conservative in their risk profile and offer value for investment across the apartment market. Resiliency and Risk Landscape for Small Buildings Recent reports point to a counter-intuitive trend of how home prices and apartment rents are growing faster in flood prone areas. This trend is explained by the premium associated with scenic locations such as beach fronts and waterways, since they are also the most-prone to flooding. This varies across metro areas and asset class. As shown below, based on data obtained from the American Housing Survey (AHS) 2015, around 8% of all small apartment building units in the United States were located within areas assessed with a high risk of flooding. In large buildings the share was slightly larger at 10%. The risk assessment for apartment buildings and their units varies greatly across metro areas. The data indicates that small buildings displayed a tighter spread around the national average compared to large buildings. An indication of the preference for scenic, albeit riskier, locations characterize the Read the full article…

Aided by growth in agency lending and refinancing activity, the volume of new multifamily loans with balances between $1 million and $5 million reached $49.8 billion during 2017

For their relatively lower rent levels, small apartment properties are surprisingly well-rated by their occupants, both in terms of unit quality and the neighborhoods in which they are located.

The U.S. multifamily market continued to post strong results during 2017. Rent growth slowed, although remained healthy, and appears to have peaked in 2015.

Increased life expectancy, aging baby boomers and the skyrocketing costs of hospital stays have created demand for a broader, more comprehensive set of seniors housing options. An expert panel met at the Mortgage Bankers Association’s (MBA) 2018 CREF conference in San Diego to expound on trends in the ever-evolving sector.

While a majority of apartment renters continue to live in small properties, renter growth in this property class is facing headwinds from large asset oversupply and rental incentives.

While apartment renting remains a predominantly urban affair across both the downtown and suburban areas of large US metros, renting activity is expanding into smaller cities and new property types.