A common question to be placed in today's financial climate, "Are apartment financing, refinancing multifamily property or apartment construction loans still available?" The answer to this question is a resounding YES. I still see loans for apartment purchases, refinancing and construction of apartment loans. This is a very good news, instead of a prolonged credit crunch, a global credit crunch, which is now in its scope.
A source close to my business with a tie for the top boards of Fannie Mae and Freddie Mac, recently confided that Fannie and Freddie have been making money only in the apartment and Mobile Home Lending sectors.
The result is this: These two venerable institutions of probity are to improve liquidity and strengthen apartment lending programs. The Fed needs to hang it hat on something, then why not build a stable platform for existing loans to promote future growth in an industry already doing well: Apartments.
This prolonged credit crunch began as a virus. This virus started with the housing industry and contaminated the commercial property market, with almost all the stock, financial instrument, business man, woman or line of credit in the country. Apartments were the least affected of the credit crunch, but sales volume was also recorded significant decline.
What has become a mess. The cold in the credit markets began in October 2006. In October 2007, this had become a chill deep freeze.
To understand the sharp decline in commercial real estate,
only needs a look at the numbers: total trade volume for October 2008 was almost one quarter of its October 2007 and just over 20% of the levels achieved in 2006. Now that is a drop!
The total deal volume and sales volumes to commercial real estate as a whole is down 75% from October 2007 to 2008.
For apartments, the fall in deal volume was strong and constant: the number of properties trading hands fell 60% from October 2006 to October 2007 and fell another 75% this last 12 months.
There are several explanations for this number, but maybe the price is a matter of risk, measured between the rates of spread of the cover and the 10 year Treasury. In the apartment sector, this spread has more than tripled (not
Good) to a spread of 263 bps from its point more closely, in July 2006 when was 81 bps.
Between 2000 and 2004, the total number of renter households fell by 1.9 million as home ownership increased from 66.9 percent to 69 percent.
In 2005, this house of detention, the rental of living began to reverse the trend itself. Since the beginning of 2007, the home ownership rate fell from 110 basis points, resulting in additional 1.5 million renter households. This shift is more pronounced in the younger age segment, but it crosses all age lines. The trend is for the life-rent units.
In the end, Apartments are holding well. The funding is available and more people than ever need of rental housing.