Jamie Woodwell, Vice President of Research and Economics at Mortgage Bankers Association (MBA), joined the RealCrowd Podcast to discuss a Lender's Take on the Real Estate Market 2021.
Each quarter the U.S. Census Bureau reports vacancy rates for homeownership and rental properties. Homeownership units are defined as those that are owner-occupied or are year-round units either sold and awaiting occupancy or currently for sale. Rental units are renter-occupied, or year-round units either rented and awaiting occupancy or available for rent.
Sometimes research is like putting a puzzle together - trying to fit one piece of information with another to create a full picture of what's happening. This week, we are adding a new, final piece to the puzzle of how much commercial real estate lending happens each year.
A total of $122 billion of apartment, industrial, office and retail properties (with prices above $2.5 million) traded hands in the second quarter, more than two-and-a-half times the volume a year earlier. Meanwhile, delinquency rates for mortgages backed by commercial and multifamily properties have broadly improved in recent months as the economy continues to heal from the pandemic. Performance is still property-type dependent, with the properties that saw the most immediate and dramatic impacts from the pandemic - lodging and retail - still experiencing considerably more stress than others but showing improvement. Additionally, strong appetites from all the major capital sources led to another pick-up in the amount of commercial and multifamily mortgage debt outstanding. In line with the strength of apartment fundamentals and values, there was a solid increase in the amount of multifamily mortgage debt outstanding, but in a sign of renewed interest in other property types, the increase in mortgage debt on other, non-multifamily commercial properties was the largest since 2007.
Commercial and multifamily property prices are the product of two things: a) the net operating income (NOI) a property produces and/or is expected to produce and b) the multiple of that income (the capitalization or "cap" rate) investors are willing to pay in order to own that income stream. Thus, Property Value = NOI/Cap Rate.
Last week the Research Institute for Housing America (RIHA), MBA's think tank, released updated second-quarter 2021 results that allow us to assess how renters, mortgagors and student loan borrowers fared over the first 15 months of the pandemic. The updated analysis of the Understanding America Study (UAS) panel survey data, conducted by Gary Engelhardt of Syracuse University, and Mike Eriksen of the University of Cincinnati, provides close to real-time economic data on the evolving financial consequences of the pandemic by following, on a weekly basis, the same set of households from before the outbreak.
When looking at commercial and multifamily mortgage delinquency rates, we tend to exclude loans that have been delinquent for less than 30 days, as many may be experiencing a temporary "hiccup" that will be quickly remedied before the next payment is due. But examining these rates can provide key insights into commercial and multifamily mortgage performance through the pandemic and into today.
The release last Friday of the Biden Administration's proposed Fiscal Year 2022 Budget put down in black and white - and dollars and cents - many suggestions that have been made in more general terms in the Administration's American Jobs and Family Plans, during the most recent Presidential campaigns and in some cases going back decades.
Since the onset of the coronavirus pandemic, commercial real estate practitioners have been faced with two fundamental questions: How would properties perform through the pandemic and what would conditions look like on the other side - after the pandemic?
On Wednesday, May 5, 2021, U.S. District Court Judge Dabney Friedrich issued an order vacating the U.S. Centers for Disease Control and Prevention's (CDC) national eviction moratorium, but also put a temporary pause on the order, meaning that (as of this writing) the CDC moratorium, which is scheduled to expire on June 30, 2021, remains in place. A number of state-level bans also remain.
One of the most striking aspects of the COVID-19 pandemic's impact on commercial and multifamily real estate has been the disparity in the ways different property types have been affected.
The US economy continued to rebound during the fourth quarter of 2020 but did so at a slower pace than Q3 of 2020 or what is expected to be recorded in Q1 2021.
MBA's annual Commercial Real Estate Finance/Multifamily Housing Convention & Expo (CREF) always serves as key kick-off to the year, bringing together thousands of industry professionals to learn, share and network, and to re-assess their outlooks for the markets. Although this year's conference was moved from San Diego to cyberspace, the conversations still provided essential insights about the year ahead.
When the Covid-19 pandemic hit the United States in March, it raised two fundamental questions for owners, lenders and others involved in commercial real estate: a) How would properties get through the pandemic and recession and b) What would the "new normal" be for the sector post-pandemic? One thing became crystal clear early on - the answers to those two questions would vary dramatically by property type.
One way to gauge potential commercial mortgage‐backed securities (CMBS) issuance volume is by looking at the spreads investors are willing to pay for bonds. Based on current new‐issue spreads, 2021 could line‐up to be a strong year.