2018 a record year for multifamily lending

2019 multifamily lending update
by Team Stessa, posted in Newsletter

Jann Swanson of Mortgage News Daily reported this week that multifamily lending had a record year in 2018. “Commercial and multifamily mortgage bankers closed $573.9 billion in loans during the year according to results from a Mortgage Bankers Association (MBA) survey. The total represents an 8% increase from the volume in 2017.” The largest share of this went to multifamily lending, at $266.4 billion, followed by office and retail properties coming in second and third.

Bonnie Sinnock of National Mortgage News chimed in on the news, reporting that “Solid fundamentals, growing property values, low interest rates, and strong appetites from both borrowers and lenders all helped drive an 8% increase in recorded multifamily lending from a year ago.” Here are all 2018 commercial loans closed by property type, with multifamily leading the charge at 46%:

Source: National Mortgage News

Freddie and Fannie update

Fannie Mae and Freddie Mac were back in the news this week with Katy O’Donnell from Politico reporting that the U.S. Senate confirmed Mark Calabria as the new director of the Federal Housing Finance Agency. This places a “libertarian economist” at the front of President Trump’s efforts to overhaul the housing finance system. This is a five-year term at the housing agency, which oversees Fannie Mae and Freddie Mac.

Austin Weinstein of Bloomberg joined the conversation by reporting that “The new chief regulator for Fannie Mae and Freddie Mac says he takes the role with a “great sense of urgency” to address the biggest piece of unfinished business from the 2008 financial crisis: U.S. control of the mortgage-finance giants.” This is the single biggest reform the Trump Administration wants addressed with Fannie Mae and Freddie Mac, who have returned to profitability since the 2008 credit crisis.

But the U.S. government’s conservatorship over these institutions may not be the only reform in the works—changes are coming as Andrew Ackerman and Nick Timiraos from The Wall Street Journal report. In a quote from Mr. Calabria, he notes that “The foundations of our mortgage finance system remain vulnerable, and we must not let this opportunity for reform pass.”

Short-term rental regulation

There was a flurry of activity on the short-term rental front this week, with news from across the U.S. that will be of interest to real estate investors operating in this space. To start, Todd Prince from the Las Vegas Review reported that according to a new report, hotels along the strip lost $150 million in revenue in 2018 as more Las Vegas tourists book through short-term accommodations platforms like Airbnb.

In New York, Danielle Wallace of Fox News reports that lawmakers announced a new bill that would regulate home-sharing platforms. “The proposed legislation would restrict New Yorkers from listing more than one property on home sharing sites…and all short-term rental properties would be required to be registered with the state.”

Zeninjor Enwemeka of WBUR reports that Boston municipal officials aren’t happy with the result of regulations seeking to ensure short-term rental owners register with the city. Since the Jan. 1 regulations were introduced, “Boston residents who rent out their homes through websites like Airbnb and HomeAway have been required to register with the city.” The city has only received 150 applications—Airbnb alone accounts for over 6,300 units across Boston.

Chris Otts from WDRB in Louisville reports that in the latest version of changes to that city’s regulations, that short-term rentals would have to be at least “600 feet apart in residential areas.” Current short-term rentals in that city would be grandfathered under the new rules, however new units would be required to fulfill the 600-foot requirement.

Mobile homes heating up

Finally, it was a busy week for the mobile home industry, starting with the popular HBO show, Last Week Tonight With John Oliver, publishing a segment on malpractice in the mobile home sector.

Humor aside, the mobile home industry is facing growing interest from larger players, with Champaign Williams of Bisnow reporting this week that private equity giant Blackstone Group has made its first investment in mobile homes with the purchase of 14 communities. Blackstone purchased these parks from Toronto-based Tricon Capital Group Inc at a value of $172M.

Carey L. Biron from Reuters adds to the discussion, reporting that mobile home parks are the largest unsubsidized form of affordable housing in the U.S., and that has big players—like Blackstone—interested. This has the price of mobile home communities rising, pricing out smaller investors.