Communities are desperate for more affordable housing, but the cost for developers is just too high. Land, labor and materials were pricey before the coronavirus pandemic, and they are even more so now.
That is why some creative developers are now turning to hotels – and it appears to be a match made in real estate heaven.
The stay-at-home culture of the pandemic has hit the hotel sector hard. The share of hotels behind on their mortgages rose to just over 18% in December, up from less than 2% a year ago, according to Fitch Ratings. Hotels are suffering even more than retail real estate.
But that creates an opportunity for investors, like David Peters in Minneapolis, who is buying distressed hotels at bargain basement prices, and converting them to affordable apartments.
“Apartments around here, you might pay $120,000 a door, and we can purchase these hotels probably $30,000 to $40,000 a door, and maybe put $10,000 a door into the renovations,” said Peters.
JACKSONVILLE, Fla. – Feb. 1, 2021 – Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. As the final, 12-month expiration point for many forbearance plans quickly approaches, this month’s report looks at how the slowdown in improvement in recent months may present new challenges to recovery for seriously delinquent homeowners. According to Black Knight Data & Analytics President Ben Graboske, the end of March 2021 is shaping up to be an inflection point for the industry.
“For the roughly 6.7 million Americans who have been in COVID-19 related mortgage forbearance at some point since the onset of the pandemic, the programs have represented an essential lifeline,” said Graboske. “The vast majority of plans have a 12-month cap on payment forbearance, though. And the various moratoriums which have kept foreclosure actions at bay over the past 10 months may be lulling us into a false sense of security about the scope of the post-forbearance problem we will need to confront come the end of March. Last year saw the largest number of homeowners – nearly 3.6 million – become 90 or more days past due since 2009, and as of the end of December, 2.1 million remained so.
“When nearly a quarter of all forbearance plans come to an end on March 31, at the current rate of improvement there would still be approximately 1.5 million more such serious delinquencies than before the pandemic. With that rate of improvement slowing in recent weeks, current trends suggest more than 2.5 million homeowners would still in forbearance at that point. While early in the pandemic roughly half of homeowners in forbearance continued to make their monthly mortgage payments, that number has steadily declined. Today, it’s about 12%, which suggests the people who are taking the full forbearance period afforded to them may well be experiencing prolonged financial distress, and face extended challenges as they return to making payments.”
The pandemic continues to burden multifamily rental housing as rents continue to fall and more pain is coming, Yardi Matrix says in their U.S. Multifamily Outlook for winter 2021.
‘After a year ravaged by a global pandemic and political division, nothing would be more satisfying in 2021 than a return to normal” … but “it will take some months to get most of the country vaccinated and get businesses operating as normal,” the report says.
“Despite the COVID-19 pandemic, national rent growth remained relatively flat on a year-over-year basis, ending the year at -0.8 percent. There was a large divergence in performance between markets, though. High-cost gateway markets struggled the most, while many tech hub and tertiary markets thrived,” the Yardi Matrix report says. Some highlights of the report:
WASHINGTON, D.C. (February 2, 2021) – Delinquency rates for mortgages backed by commercial and multifamily properties decreased in January, according to the Mortgage Bankers Association’s (MBA) latest monthly MBA CREF Loan Performance Survey. The survey was developed to better understand the ways the COVID-19 pandemic is impacting commercial mortgage loan performance.
“The stress in commercial mortgages continues to be concentrated among the property types that have been most directly and immediately impacted by the pandemic, most notably lodging and retail properties,” said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “Among some other property types, including office and multifamily, overall delinquency rates remain lower, but have climbed slightly in recent months. While MBA is forecasting for a strong economic rebound in the second half of this year, as a rapid roll-out of vaccines and continued government fiscal assistance to households and businesses provide support for the market, there still remains a heightened sense of uncertainty about the months ahead.”
Two attorneys last year joined the National Real Estate Investors Association for an online discussion to help landlords and property managers understand how best to deal with the federal eviction moratorium.
The nationwide federal eviction moratorium has been ordered through the Centers for Disease Control (CDC) to halt residential evictions through the end of March 2021 for non-payment of rent due to Covid-19.
Both lawyers discussed the issues, the affidavits that tenants must provide to show how they have been affected by COVID-19 in order to qualify under the federal eviction moratorium, and how attorneys could challenge the affidavits in court when necessary.
You can hear the full discussion here on YouTube.
Attorneys Jeff Watson, in Cleveland, and Jeffrey Greenberger, in Cincinnati, gave their thoughts – not legal advice – on how landlords could best react to the moratorium. They were introduced by Charles Tassell, chief operating officer of the National Real Estate Investors Association.
“We have gone from unprecedented to crazy,” Watson said. “What concerns me the most is that this is now creating precedent for future administrations, future agencies, to use this as a rationale, to stop all sorts of economic commerce across the United States of America, any particular form of commerce, any type of interaction, any type of business agreement, (or) consumer agreement that they don’t like.”
About 18% renters in America, or around 10 million people, were behind in their rent payments as of the beginning of the month.
It is far more than the approximately 7 million homeowners who lost their properties to foreclosure during the subprime mortgage crisis and the ensuing Great Recession. And that happened over a five-year period.
In one of his first executive orders, President Joe Biden extended the Centers for Disease Control and Prevention’s current eviction moratorium through the end of March, but that is unlikely to be long enough.
A new analysis from Mark Zandi, chief economist at Moody’s Analytics, and Jim Parrott, a fellow at the Urban Institute, shows the typical delinquent renter now owes $5,600, being nearly four months behind on their monthly payment. This also includes utilities and late fees. In total, an astounding $57.3 billion is owed. This includes all delinquent renters, not just those suffering financially due to the Covid pandemic.
“Compared to renters that are making their rent payments on time, currently delinquent renters are more likely to be lower income, less educated, black and with children,” noted the authors of the analysis.
By Steven Caligor, BHI
In these early days of 2021, there appears to be some cautious prospects of hope.
A COVID-19 resurgence both internationally and domestically, further lockdowns, and even a new variant of the virus create uncertainty. However, the vaccine rollout has sparked market rallies, along with hopes of returning to a degree of normalcy toward the end of the year. We now have a stimulus package and a new presidential administration. Yet this scenario is tempered by a focus on the predicted winter COVID activity, thus creating further question marks.
Even the economic forecasts present a mixed picture. The base case from the Conference Board calls for a 3.4 percent annual expansion of the U.S. economy in 2021. Yet the Congressional Budget Office (CBO) projects that GDP will increase 4.2 percent in 2021, and the CBRE Real Estate Market Outlook forecasts 4.5 percent GDP growth this year.
The ambiguity of where we are in the COVID crisis — whether there is an end in sight and when — will determine prospects for the real estate sector. In 2021, the real estate story will be all about asset class, density and geography. For each of these aspects, to paraphrase Charles Dickens, it could be the best of times or the worst of times, depending on multiple variables.
Procrastinating shoppers found they couldn’t avoid the mall during the holidays.
A data analysis released this week by Placer.ai shows how shopper visits to malls have ebbed and flowed amid the Covid pandemic. The research firm, which uses cellphone data to track consumer behavior, studied foot traffic at more than two dozen “top-tier” malls across the country over the span of the year.
Visits to the malls tracked, which Placer.ai declined to name, peaked before the pandemic, in February, climbing 10.7% from 2019 levels. In March — when retail stores and malls began to shut down to try to slow the spread of Covid — visits tumbled 59.5%. That was followed by a 95.9% year-over-year decline, marking a bottom, in April.
During the summer months, as Americans felt a bit more comfortable getting out of the house, visits to these malls steadily rebounded, month by month into the fall. But a resurgence in Covid cases hit traffic in November and led some to believe that U.S. malls would be especially bleak in the final weeks of the year.
By Justin Becker
How do you get more rental applications? This is the cornerstone question for any property manager. Quite simply, to draw in new business and ensure you have the tenants that are right for you, you need to have good strategies to increase the number of rental applications you take in. However, the ways that we garner new tenants are constantly evolving.
Property managers must consider that what has worked in the past now has to be shifted for the future. What are the new solutions to get more rental applications by increasing innovation and strategy?
Here are six ways you get can get more rental applications:
The rental-screening process is imperative to ensure that the right people move into our apartments and rental houses.
By looking at the prospective tenant’s household information, income, and longevity of employment, as well as general background information, we can vet an applicant before they even set foot on our property. For this reason, rental applications are paid for by the renter to recover the cost incurred and so that potential tenants are well-informed of the requirements of renting the property.