The drop in interest rates has been great news for borrowers, with low cost of capital that is effectively giving them more buying power. Yet, for the most part, lenders are keeping borrowers in check on leverage and structuring deals with an eye on an easy exit at maturity.
Lenders learned some hard lessons in the last recession that are now being put to work to mitigate future refinancing risk. “We’re nowhere near the same place that we were back before the Great Financial Crisis,” says Tom Genetti, a managing director at capital services provider Berkadia. “I think the discipline being shown in the marketplace today is substantially higher. There is real equity in these deals, and no one is allowed to put in fluff or big fees to make their (equity) look bigger than it should be.”
There’s a lot of data that goes into refinance tests, and that data definitely helps the lender get comfortable with the refi risk coming out in the future, adds Jeffrey Erxleben, executive vice president, regional managing director with NorthMarq Capital in Dallas.
Rarely has the phrase “push comes to shove” been more appropriate. Steady population growth in America’s most attractive metro areas is starting to push aside long-held notions in some cities about the sanctity of single-family homes. But so far that movement hasn’t been wide or deep enough. A necessary shoving phase could come soon.
Multifamily developers can welcome zoning changes in Minnesota, Oregon, and other places that make it possible to put multiple dwelling units in neighborhoods previously designated solely for single-family homes. Those benefits are limited mainly to the creation of duplexes and triplexes, however. For developers who think bigger, it’s going to take a lot of creative thinking and patient adjustments by all involved before they can fully do their part to lessen the affordable housing crisis.
Take California, for instance. According to Forest Economic Advisors, California accounts for 17% of all new jobs created in the past five years but only 6.8% of the single-family housing starts and 11.8% of the nation’s multifamily starts. With numbers like that, it’s no wonder that the Golden State has sky-high housing costs that are forcing people onto the streets: According to Rolling Stone magazine, California’s homeless rate has increased to the point where 25% of the nation’s homeless live in the state, even though it accounts for only 12% of the U.S. population.
(Bloomberg)—How do you make rental housing more affordable?
As policy makers nationwide search for an answer — tinkering with proposals ranging from comprehensive rent control to rezoning — one start-up has put to work an idea that makes things cheaper immediately: eliminate the security deposit.
Entrepreneur Ankur Jain, a millennial whose venture capital firm aims to alleviate the financial crunches saddling his generation, is the co-founder of Rhino, a company that allows renters to pay as little as $2 a month for an insurance policy that can be used in lieu of a security deposit.
Landlords including Starwood Capital Group, UDR Inc. and Moinian Group have already signed on to use the insurance, offering the option to tenants in major metros such as New York City. Nationwide, about 300,000 tenants are currently using a Rhino policy instead of a deposit, Jain said.
Beginning Oct. 9, 2019, certain home sales of $400,000 and under will no longer require an appraisal.
Under previous rules that have been in place since 1994, appraisals were not required on all home sales of $250,000 and below, but last year, federal regulators proposed increasing the appraisal threshold for the first time in 25 years.
Last November, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve released a proposal to increase the appraisal requirement from $250,000 to $400,000, citing the home price appreciation that’s taken place since the threshold was last increased in 1994.
Last month, the agencies all approved the rule. And Tuesday, the rule was published in the Federal Register, making the appraisal threshold increase effective the following day, Oct. 9, 2019.
That means that certain home sales of $400,000 and below will no longer require an appraisal as of Oct. 9, 2019.
The hospitality sector is notoriously the most volatile of real estate asset classes. Business and leisure travel trends are highly correlated to broader economic conditions. And the sector does not have the benefit of long-term leases to help soften the blow of cyclical swings.
The effects of that fundamental nature of the sector are evident in our first exclusive research examining hotel investment. As a result, while the numbers are bullish and generally consistent with what NREI has found for other property types, that level of optimism is more muted. Moreover, the rise of third-party room and home sharing apps like Airbnb and VRBO is a growing concern for the sector and its outlook.
Overall, 76.9 percent of respondents pointed to those services as having an impact on the sector. Respondents had a lot of thoughts on these services in open-ended responses as well.
“There will be continued pressure on occupancy for extended stay and all-suite hotels from Airbnb, etc.,” one respondent wrote. Another added that a challenge for hotels is that owners will “have to differentiate from what can be found on Airbnb and VRBO.”
The Low-Income Housing Tax Credit (LIHTC) is a federal tax credit created through the Tax Reform Act of 1986, and administered by the IRS, to encourage private equity investment in affordable and public housing by commercial real estate stakeholders.
Tax incentives are provided in exchange for capital for development and/or financing costs directly used to create and preserve affordable housing, including new construction, acquisition, or rehabilitation of existing properties. These tax credits are proportionally set aside for each state based on population and are distributed to the state’s designated tax credit allocating agency. These state agencies then distribute the tax credits based on the state’s affordable housing needs and federal and state-specific program requirements. This is known as the Qualified Allocation Plan (QAP) process. The Federal Housing Finance Agency also recently increased the lending caps for Fannie Mae and Freddie Mac, which have been putting more capital into LIHTCs since 2018, to $100 billion per agency for five quarters. The FHFA will also require that 37.5 percent of agency lending be “mission-driven, affordable-housing” loans. Earlier this year, The Department of Housing and Urban Development (HUD) announced the start of a LIHTC Pilot Program, including an expedited review process for loan approvals for new construction or rehab tax credit projects.
But what about the most expensive ZIP codes to rent in?
Well, a new report from Yardi Matrix looks at the most expensive rents in more than 130 major U.S. rental markets.
Overall, 28 of the 50 ZIP codes with the highest rents are located in New York City. There are 12 located in the San Francisco Bay Area, six in Southern California and four in Boston.
ZIP code 10282 in Manhattan, New York is No. 1 for most expensive apartment rent, with the average price per month $6,211. This is the third year this ZIP code has been in the No. 1. RENTCafe says it is most likely due to the increase in demand after high-end restaurants and big-name luxury dealers have made that ZIP their home, too.
No matter the type of multifamily you own, from luxury units to Class B multifamily, you’ve likely heard the term “corporate housing” or “temporary housing.” This refers to fully furnished and fully serviced temporary housing units available for short-lease terms. A few years ago, we saw this trend take the industry by storm, with employees on out-of-town business topping the list of reasons for high demand. Since then, its popularity has only risen. Corporate housing is now considered a viable option for many renters, including millennials and Generation Z looking to hold off on buying a home, empty nesters, seasonal travelers and expatriates, military and government personnel, and many more.
From 2014 to 2018 alone, corporate housing experienced a 12% combined annual growth rate from $64 billion to $101 billion, in comparison to the 3% hotels experienced in the same timeframe. With growth like this, many apartment owners are eager to expand as major players for corporate relocations—resulting in healthy competition within this market. However, in today’s climate owners are wise to take a deeper look at the trend to not only reap success but enhance its value for renters, major employers, and the general community.
Blackstone Group Inc. has acquired more than 1 billion square feet of logistics space since 2010 as part of the firm’s global bet that the rise of e-commerce is driving demand for last-mile real estate.
The private equity giant is extending that effort, agreeing to acquire Colony Industrial, the warehouse arm of Colony Capital Inc., for $5.9 billion. The deal includes about 60 million square feet of warehouse space across 465 light industrial buildings in 26 U.S. markets, as well as an affiliated operating platform, according to a statement Monday. The unit’s properties mostly serve as the last mile of the logistics chain and are crucial for companies seeking to make speedy deliveries to consumers.
The agreement follows Blackstone’s acquisition of $18.7 billion of warehouses from Singapore’s GLP Pte. earlier this year.
“We’ve been the big buyer of warehouses around the world, probably bought $70 billion, on the simple premise that goods are moving from physical retail to online retail,” Blackstone President Jonathan Gray said in a Sept. 25 interview at the Bloomberg Global Business Forum.
In a paper released at the beginning of this year, the Federal Reserve estimated that about 20% of the decline in homeownership among young adults could be attributed to increased student loan debts since 2005.
Based on the 2019 Zillow Group Report on Consumer Housing Trends released on Monday, that percentage may be a little low.
The report surveyed 13,000 U.S. household decision-makers about their homes, including how they search for them, pay for them and what challenges they encounter along the way. Among these findings, there was a recurrent topic of debt holding back potential buyers. From medical and credit card debt to student loans, an increasing amount of Americans are putting off buying a home.
“More than two-thirds of renters have debt, and about a quarter of renters and homebuyers said their debt caused them to be denied either a rental agreement or a mortgage at some point. That impact was most commonly reported by those with medical debt, which has a unique capacity to bust budgets,” the report stated.