Multifamily sentiment strong entering into 2019

Multifamily sentiment strong among investors in 2019
by Team Stessa, posted in Newsletter

The Stessa Weekly Newsletter is hand-curated every week to bring you insightful accounts of new features, investing tips, business insights, and market trends from the real estate ecosystem. This week, we will cover the ongoing strong sentiment in the multifamily sector, how and why mortgage applications are on the rise, and an overdue #PropTech update.

New on Stessa: Track mortgage escrow balances with escrow categories

Keeping track of mortgage escrow balances is not exactly fun, but it’s now easier than ever with Stessa’s new escrow categories. You’ll find the new categories under “Transfers” on your Transactions page. Use Stessa’s “Split” feature to break up your mortgage payment into its component parts: principal, interest, and the various escrows. Then assign each piece to the correct category for accurate reporting. Go to your Transactions page to try it.

Multifamily sentiment strong

Erika Morphy from reported research this week arguing that the multifamily cycle still has room for growth, despite eight straight years of robust performance. This unabated demand for multifamily is fueled primarily by changing lifestyle preferences of renters, as well as “student loan debt that limits first-time homebuyers, and retirees downsizing and moving into rentals.”

Freddie Mac’s 2019 Multifamily Outlook report notes, “Demand will remain robust due to demographic and lifestyle preferences, along with the rising cost of homeownership, which may hold the market in equilibrium.” As a result, the report notes, rents and vacancies will continue to outperform historical averages into 2019. See their predictions for major urban centers:

Source: Freddie Mac

Indeed, Ben Lane of HousingWire reports on a similar rosy outlook for multifamily, citing a recent MBA study that notes that most multifamily mortgage originators expect another record year in 2019. Lane notes that “more than half of the top commercial/multifamily originators (55%, to be exact) expect originations to increase in 2019, with 13% expecting to see an overall increase of 5% percent or more across the entire market.”

Mortgage applications on the rise

In another bright spot for the housing market, Brittany De Lea of Fox Business reported this week that mortgage applications jumped in early 2019, with volume climbing 23% last week, “as the 30-year fixed mortgage rate declined to the lowest level since April.”

We’ve been following the lowering of interest rates very closely here at Stessa, and Nick Timiraos from The Wall Street Journal concurs, “Federal Reserve officials signalled they are unlikely to raise interest rates for at least a few months while they assess the impact of recent market volatility on the U.S. economy.” Data seems to support the idea of affordability in buying over renting.

ATTOM Data Solutions this week released its 2018 Rental Affordability Report, which shows that buying a “median-priced home is more affordable than renting a three-bedroom property in 240 of 447 U.S. counties analyzed for the report — 54 percent.”

Source: ATTOM Data Solutions

#PropTech update

Three very interesting #PropTech updates this week, starting with WeWork. The co-working space giant and startup darling suffered a setback withbSoftBank’s decision not to invest. Lionel Laurent and Marcus Ashworth of Bloomberg reported on SoftBank Vision Fund’s decision not to invest $15-20 billion to acquire a majority stake. According to the authors, “the Gulf investors backing the Vision Fund seem to have decided that WeWork is not a tech bet but simply an aggressive punt on real estate.”

There is continued interest from venture capital in real estate technology startups that are tackling legacy processes and systems in our industry.

Connie Loizos of TechCrunch reported this week that Bowery Valuation has raised $12 million in Series A funding for its tech-enabled real estate appraisal platform. According to The Real Deal, Masayoshi Son’s multi-billion dollar Vision Fund is preparing a significant investment in #PropTech, “with plans to lead a $700 million round of financing for Katerra, the construction startup founded by former Flextronics International CEO Michael Marks.” This round pegs Kapterra’s value at over $4 billion.

Also, Mary Ann Azevedo from CrunchBase reported today that digital home-selling platform Knock just raised $400 million in a Series B equity debt financing. Knock was formed in 2015 by Trulia founding team members Sean Black and Jamie Glenn.

And finally, Forbes contributor Amy Dobson reported yesterday that Redfin, an online real estate search and brokerage company, will be expanding its footprint beyond the U.S. into Canada by “opening up a presence in Toronto and Vancouver, two of Canada’s highest-priced real estate markets, beginning operations by March 2019 with more expansion throughout Canada expected to come.”