What Am I Missing Here: Multifamily Loans Down 63%?
From National Real Estate Investor comes news that loans for commercial multifamily projects have dropped 63% year over year:
Commercial and multifamily mortgage loan originations continued to fall on a year-over-year basis in the second quarter, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. Second quarter originations were 63% lower than during the same period last year. Conduits for commercial mortgage-backed securities (CMBS) registered a 98% drop compared with the same period last year.
“The slowdown in originations has come from both a decrease in the supply of capital available and a decrease in the demand for new mortgages,” says Jamie Woodwell, MBA’s vice president of commercial/multifamily real estate research. “It is likely volumes will remain muted until buyers, sellers, borrowers, lenders and their expectations of rates and terms match closely enough for transaction activity to pick back up.”
I don’t quite get this. There has to be more to this story.
We’re in the midst of a severe downturn in the housing market. The people who are in a position to know are saying they don’t know when things will turn around, as transaction sides and home values are both down in the pits.
This should be absolute boom times for multifamily, no?
I mean, people may no longer be able to get a mortgage to buy a house. People might be losing their homes to foreclosure. But they have to live somewhere, don’t they? I suppose it’s possible that all those unsold homes are now being rented out, but that doesn’t make a lot of sense. Someone who wants to sell a house doesn’t necessarily want to take on tenants who may stick around for a year at least.
I would think that demand for rental multifamily would be enormous. So what gives?
/scratch head in puzzlement.