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CRE/Multifamily Finance Picture Improves Despite "August to Forget."

by devteam October 5th, 2011 | Share

The Mortgage Bankers Association (MBA)rnreleased its report on the commercial/multi-family finance picture for thernsecond quarter on Tuesday, saying that the markets had gained a “not-inconsiderablernmomentum.”  What the data does not show,rnthe report says, is any of the impacts that will result from “an August tornforget” which saw a debilitating debate over the debt limits, a downgrade ofrnthe country’s credit worthiness, and the focus on an uncertain European economy.rn “For all these reasons,” the MBA says, “therninformation presented here is best viewed as prologue.”</p

The Commercial/Multifamily MBA OriginationsrnIndex rose from 83 in the first quarter of 2011 to 126, more than double thernindex of 61 one year earlier.  The index,rnwhich reached an all time low of 40 during the first quarter of 2009, reflectsrnthe quarterly average in 2001 of 100.   CRE/Multifamily Originations for Fannie Maernand Freddie Mac rose 58 percent, 87 percent for life insurance companies (tornthe highest level ever), and 150 percent for commercial banks.  Originations for CMBS conduits rose 638rnpercent for the market’s highest quarterly issuance volume since 2007 of $12.4rnbillion.</p

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The increased demand for rental housingrnwas reflected in apartment fundamentals; vacancy rates fell to 5.9 percent inrnthe second quarter and average asking rents rose two percent from the secondrnquarter of 2010 to an average of $1,053 a month.  These increases were not seen in office orrnretail vacancies; the former held steady at 17.5 percent and the later rose 0.1rnpercent to 11.0 percent and rents were essentially unchanged.</p

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During the second quarter constructionrnwas begun on 163,000 housing units, 123,000 of which were single family units.  These figures are an increase from thern126,000 units started in Quarter 1, 90,000 of which were single family.  Of the 40,000 units in buildings with two orrnmore housing units, 93 percent were being constructed for rent.</p

Outstanding multifamily mortgage debt isrnat $802 billion, up 0.5 percent from the first quarter.  The largest increase by sector is in Agencyrnand GSE portfolios and MBS, now at 331.75 billion, or 41 percent of the totalrnmultifamily debt, an increase of 1.3 percent from Q1.  Banks and Thrifts increased their holdings byrn0.6 percent to a 26.9 percent share and CMBS, CDO, and other ABS issues fell 1.6rnpercent to a 12.3 percent share of multifamily debt.  Private pension funds and finance companies,rnalready small players, fell even further, losing 5.3 percent and 4.6 percentrnrespectively of their holdings. </p

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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