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Multifamily Lending Expected to Hold Firm or Rise in ’18

Posted on Feb 7 2018 - 7:50pm by Lance Edwards
Berkadia’s first Powerhouse Poll indicates the market is on stable footing
 

cdnassets.hw.net111By Brian Croce (MultiFamilyExecutive.com Article —  Nearly three-quarters (74%) of mortgage bankers expect to see no downturn in the multifamily lending space this year, saying deal volume will either increase from or remain the same as in 2017. That’s according to Berkadia’s first Powerhouse Poll, which surveyed nearly 150 of the firm’s investment sales brokers and mortgage bankers across 60 offices to assess 2018 opportunities in the multifamily space.

Berkadia, a joint venture of Berkshire Hathaway and Leucadia National Corp., offers mortgage banking, investment sales, and servicing platforms.

When it comes to deal value, 81% of mortgage bankers say it will either increase or remain the same as it was in 2017. Expectations are also high on the investment sales side, with 72% of brokers saying they expect the number of transactions to either increase or stay the same over the course of the year.

Forty percent of investment sales brokers expect that multifamily assets will see increased activity in 2018. Senior housing, in particular, is expected to be driven by the aging baby boomer population—nearly four in 10 investment sales brokers (38%) said that senior housing will see more activity this year than last. Another area that will likely experience a boon is affordable housing, with 34% of investment sales brokers expecting an uptick in activity in the sector.

“As the American population continues to age, we’re seeing a heightened demand for independent and assisted living and skilled nursing facilities throughout the country,” said Ernie Katai, executive vice president, head of production, at Berkadia, in a statement. “Additional sectors are expected to grow in response to the continued growth of ecommerce and the need for modern distribution space, which will bolster the industrial market.”

Survey respondents were bullish on investment and lending activity in the Southeast, Southwest, and West in 2018, with 84% of them identifying these three regions as where they anticipate the most deal activity. More than a third (36%) of mortgage bankers said the Southeast is where they expect to see the most deals take place.

“Population influx, continued job growth, and significant development stabilization will make the Southeast a destination for commercial real estate growth and investor appetite in the coming months,” said Katai. “Younger generations who are looking to take advantage of low costs of living and increased opportunity to build their careers are turning to the Southeast to serve these needs. As this renter activity spikes, investment opportunities will follow and investors will seek financing in the growing region.”

When it comes to investors financing their purchases, 90% of mortgage bankers said government-sponsored enterprises will see the most activity this year.

“Understanding how to work with GSEs to source financing will be critical to success this year, as we anticipate the majority of activity will come from these funding sources,” said Katai. “Mortgage bankers should be prepared to deal with a rising–interest-rate environment.”