Borrowing and lending backed by commercial real estate is starting 2018 at roughly the same pace at which it started 2017. The property types drawing the most attention of late continued to follow different paths, with retail originations declining while multifamily and industrial increased. It was the strongest first quarter on record for originations of loans for life insurance companies and the GSEs, Fannie Mae and Freddie Mac.
Over the long-term, housing costs tend to grow more quickly than either the prices of other consumer goods or typical household incomes. The chart above shows how shelter (housing) costs, other consumer prices and median household incomes have changed over the prior ten years, reported as an average annual rate of change.
This week's chart shows annual private-label CMBS issuance volumes over the last 12 years, where CMBS AAA spreads to swaps are averaged for the year. The clear take-away is that when spreads are tighter (and investor demand higher) issuance volume is higher.