As 2019 saw historically low vacancy rates among multifamily housing, it also led to a rising cost of rent, too.
According to realtor.com, a report from Abodo said rental prices went up in 38 states, including Washington, D.C., in 2019. In the other 12 states, the cost of rent actually fell, but only slightly.
Nationally, median rents for one-bedroom units went up 4.1%, making monthly rent $1,078 at the end of 2019.
Prices for two-bedroom units went up 5.5%, making monthly rent $1,343.
In 2019, multifamily occupancy rates reached as high as 96.3%. The demand of multifamily housing keeps rising, as home prices are also continuing to climb.
As fears of a possible recession and overbuilding in the multifamily sector diminish, lenders are showing they still have an appetite for financing construction projects. The availability of mezzanine loans and lower interest rates are helping fuel this activity and helping to offset rising construction costs.
Even if the economy shrinks sometime in 2020 or 2021, multifamily pros believe demand for apartments is still strong enough to prevent major damage to apartment properties in most markets—even with the thousands of new apartments recently opened by developers across the country. “There is clear evidence that multifamily is the asset class best equipped to weather a downturn,” says David G. Shillington, president of Marcus & Millichap Capital Corp., based in Atlanta, pointing to overall fundamentals in the sector that remain healthy.
“Occupancy rates continue to stay steady in the face of new supply,” adds Bill Leffler, senior vice president of equity and structured finance for CBRE, based in based Atlanta. “The strong economic conditions, job creation and population increases (in the southeast) still fill up the new product hitting the market.”
Banks provide more than $100 billion in capital each year to low and moderate-income communities as part of their Community Reinvestment Act (CRA) investing requirements. Increasingly, they are focusing those dollars on supporting affordable housing projects.
“As a regulated institution, we are required for CRA purposes to make these types of community development investments, but we are really passionate and purposeful about impacting our communities,” says Keitt King, head of Truist Community Capital. Truist is the new entity from the recent merger of SunTrust and BB&T. “I like to think we would be doing this at Truist whether the regulators required this of us or not. We see it as good business, and an opportunity to build our communities.”
Prior to its merger with BB&T, SunTrust had announced a $60 billion community benefit plan that Truist will now be executing over the next three years. Part of that commitment includes a $3.6 billion commitment to CRA eligible investments.
New project deliveries, continued cannabis legalization, a decline in manufacturing, faster e-commerce deliveries and the upcoming presidential election will all have an impact on the U.S. industrial sector in 2020, experts say. Here are eight predictions for the industrial sector in the new year:
1. The rush to cannabis production will likely accelerate in 2020, as more states legalize marijuana for recreational use, attracting investors to the higher returns cannabis-related real estate provides compared to more traditional property types, according to Chuck Taylor, director of operations for Englewood Construction, which collaborates with cannabis firms on cultivation and dispensary projects.
2. Demand for “last mile” warehouse space will continue to grow in 2020, as consumers demand same-day and next-day delivery and retailers intensify their delivery efforts to complete with e-commerce giants like Amazon and Walmart, says Nat Kunes, senior vice president of investment management at AppFolio, a property software firm. As a result, he expects to see conversion of traditional retail space to distribution facilities.
As housing demand continues to surge across the nation, finance leaders are predicting that capital will continue to flow for both affordable and market-rate multifamily deals in 2020.
“There is a lot of capital in the multifamily lending space for both market-rate and affordable financing,” says Rich Martinez, senior vice president of multi-family production and sales at Freddie Mac. “We expect the markets to be as strong and robust as they have been in the past several years.”
Hal Collett, managing director of Federal Housing Administration and affordable lending at PGIM Real Estate Finance, agrees. “The interest rate environment has been incredible. It has played a large role in keeping us at a level to continue to spur business in a large way,” he says. “All indications are that we will continue to have a strong environment.”
The Trump Administration is expected to sign a trade deal with China on January 15, a development that is expected to help farmers, electronics producers and financial services firms. However, 25 percent tariffs will remain on $370 billion in goods, including parts used in manufacturing and construction materials.
Although the administration has repeatedly claimed the tariffs are being paid by China, a New York Federal Reserve study confirmed what many tariff-opponents have argued from the start–that the tariffs are simply being passed through by importers and costing Americans an estimated $40 billion annually.
The new trade deal will eliminate a proposed 5 percent tariff hike on $250 billion in Chinese-made cell phones, laptops and toys; will scale back tariffs from 15 percent to 7.5 percent on $120 billion in other Chinese consumer goods; and will feature China’s agreement to buy an additional $200 billion in U.S. goods over the next two years.
Foreclosure starts are now at the lowest level of the millennium, according to a new report from Black Knight.
November’s foreclosure starts marked a 26% decline from last year’s total. This is the lowest monthly volume since Black Knight began recording the metric in 2000, the company said.
Nationally, the foreclosure rate fell 3% from October, hitting its lowest level since 2005.
In November, there were 49,898 U.S. properties with foreclosure filings, ATTOM Data Solutions reported. The company also reported that foreclosure starts were up 13% in October then completely made a u-turn and went down 13% in November.
Although in November, delinquencies rose, they still remain around 5% lower than last year’s level.
Prepayment activity also fell 19% from October’s six-year high.
(Bloomberg Opinion) — Negative-yielding government bonds have been a significant force for a superb year of investment returns for both stocks and bonds, and many are welcoming their recent decline as an indicator of what will support the next leg up in valuations. Yet the evidence remains mixed, suggesting a more nuanced approach to longer-term investing.
The growth and persistence of negative-yielding debt in 2019 has done more than deliver attractive price appreciation on government bonds. It has pushed investors to take on more risk, pushing up the price of assets from investment-grade and high-yield corporate bonds to emerging markets to, of course, equities. It has also encouraged companies to intensify their financial engineering, often involving debt issuance to pay for stock buybacks. And it has supported a range of mergers and acquisitions.
Americans are cashing out home equity by refinancing their mortgages, even if it means they’re paying higher interest rates.
Nearly 60% of cash-out refinancings in 2018 came with higher interest rates, the biggest share since before the financial crisis, according to a Wall Street Journal story citing mortgage-data firm Black Knight.
“For some homeowners, the trade-off is worth it,” the Journal story said. “While mortgage rates have crept up, they are still lower than what borrowers would pay if they tapped a credit-card or home-equity line of credit.”
Boosted by refis, lenders originated $700 billion in mortgages in the third quarter, the most since before the financial crisis, according to industry research group Inside Mortgage Finance.
According to the U.S. Census Bureau, only 1 in 3 millennials own their own home. Stagnant wages, coupled with rising house prices, mean that many millennials are struggling to purchase their own property. This makes millennials one of the highest-renting demographics.
With so many millennials looking to rent out a property, several rental property websites are targeting millennials through their advertizing initiatives. As the owner of a rental website, it can be a challenge to ensure you continue to drive the most traffic to your website and guarantee that your site visitors convert successfully. Below, we explore how to target millennial renters effectively using neighborhood and property data.
Studies have shown that millennials value properties with large spaces for socializing with friends. Large kitchens and living rooms, and sizable outdoor space, are the perfect draw for millennials looking to host friends for social gatherings. As such, offering realty data on a property’s square footage, as well as details on any outdoor porches or balconies, is key for helping convert millennial house hunters who land on your rental website.