It’s a new year and change is in the air. With financial regulation changes sure to come and the recently announced Federal interest rate increases, it’s no wonder mortgage banking and real estate lending is hot on investors’ minds.
Listeners will remember Livingston from episode 70, in which he gave us a recap on multifamily mortgage banking and real estate lending from the 2016 conference. Livingston is Vice President of Walker & Dunlop‘s Tampa office. Livingston brings over 12 years of experience in real estate lending and finance solutions to Walker & Dunlop, which just celebrated it’s 80th anniversary.
Livingston offers up a recap of the 2017 CREF/Multifamily MBA Conference and discusses key themes from the past year and the current state of mortgage banking and real estate lending.
What’s In Store for Mortgage Banking and Lending
Agency Annual Caps
Fannie Mae & Freddie Mac each allocated $36.5 billion for 2017 (same as 2016)
Certain loans and portions of loans are excluded from the cap (i.e. affordable and green/energy efficient)
Fannie Mae & Freddie Mac multifamily production totaled over $110 billion in 2016.
Fannie up 30%, Freddie up 20% from 2015
Expected to capture 40% of total multifamily volume for 2017 ($50-55 billion each)
Risk-retention regulations put in place in 2016, narrowing amount of CMBS lenders
Post-election stability, but more selective lending market
CMBS lenders ramping up bridge-lending
Life-insurance (50% leverage and under): 125-135 range
CMBS (75% leverage): 250-280 range
Agency (80% leverage): Low 200s range
Federal interest rate sees .25% increase
Expected to increase to 2.75-3% by end of year
Publix most active retail buyer in FL
Grocery chains are buying out plazas after lease terms or taking right of first refusal on new lease terms
Reduced supply of grocery-anchored retail
Strong retail appetite for real estate lenders
In addition to his V.P. role at Walker & Dunlop, Livingston is President of the Society of Real Estate Professionals (SOREP). Formerly the Tampa chapter of University of Florida’s Bergstrom Council, SOREP hosts networking events and seminars to professionals and gives back to Florida universities. SOREP focuses on all aspects of the real estate industry and is open to all. Click here for more info.
Walker & Dunlop offers comprehensive real estate financial solutions for all income-producing properties. For more info, visit Walker & Dunlop website.
Successful investing needs capital. For real estate investors, that often means mortgaging existing properties as a source of attaining capital. Traditional lending through banks and other financial institutions is often the method of acquiring hard-money loans. Sometimes though, the loan approval process may be too time-consuming or their lending practices may be too restrictive for investors.
Keyur Patel (top, left) and Naim Hamdar (top, right) of Synergistic Fundingshare three types of creative mortgages that are available to real estate investors as an alternative to traditional institutional lending.
The Federal Reserve is institution many are aware of. As the central bank of the United States, it serves as the standard for banking as well as regulates and moderates national interest rates. What many don’t know is that the Federal Reserve also has many other responsibilities.
Carl D. Hudson, Ph.D. is the Director of the Center for Real Estate Analytics at the Federal Reserve Bank Atlanta. The Atlanta division of the Fed (1 of 12) oversees much of the Southeast U.S., including Florida. Dr. Hudson is responsible for identifying and analyzing systemic impacts in real estate, economy, financial institutions and consumers. This week he shares his insights on the post-recession rates of Florida’s real estate market and its relation to the rest of the nation.
Florida is real estate market economy
Immigration major factor in FL real estate market
2000-2007 – >300k/ year in population growth
2008-2009 – <100k/ year
Economy is improving slowly
FL employment growth rates – 3.4% annually, highest in Southeast U.S.
Only .2% growth from pre-recession peak
Interest Rates may see increase over time
Short-term rate increases likely
Indicative of returning economy
No dramatic increases
Multi-Family markets in FL
40% year-after-year construction growth rates
Major Markets: Tampa, Ft. Lauderdale, Miami, Jacksonville, Orlando seeing positive trends in construction
Largely driven by foreign market
July 2012: 4200 units under construction; June 2015 20,000 units under construction
Strengthening of U.S. dollar may inhibit foreign investment
Lower rates than pre-recession, but functioning at rates equivalent to early 2000s
Changes to investing
Prior to recession – financing investment involved a deposit
Post-recession – “pay as you go” financing on the rise
Greater commitment to investment, not easy to walk away
Growth trends for Florida?
Panama Canal reopening could mean major impacts on East Coast port cities
In FL – Jacksonville, Tampa, Miami, Ft. Lauderdale
To find out more from Dr. Hudson’s department, visit The Federal Reserve Bank of Atlanta’swebsite and click the Center for Real Estate Analyticslink
Click here to read the President of the Atlanta Federal Reserve, Dennis Lockhart‘s speech on the national economy
The recovery from the 2008 economic recession has been a slow one with real estate being perhaps one of the hardest hit industries during the recession. In Florida, investors in all asset classes are feeling uncertain about rising costs of rental rates and projected interest rates adversely affecting cap (capitalization) rates.
Ryan Severino joins us this week to discuss the recovery from the recession and its effect on real estate investment. As a senior economist and Director of Research at REIS, one of the nation’s leading real estate data providors, Ryan can provide expert insight on national recovery and how it translates to a state level. He also clears up the uncertainty over cap rates, interest rates & asset classes in Florida real estate.
In 2008, U.S. experienced deep balance sheet recession
Excess debt built up in national economy
Flow of credit ceased
Slow recovery period
2-2.5% GDP growth rate annually(next several years)
Class A inventories on rise, B & C inventories diminishing
Results in top-of-market rental rates in all asset classes
Southeast FL markets experienced above average recovery
Supported by foreign investment
Rents rising quicker than income recovery
Miami, Ft. Lauderdale becoming unaffordable markets
Central, Northeast FL markets still generally affordable
Multi-Family properties becoming much more competitive