After a long and robust period of growth for lending in the US multifamily property market, there are some signs that growth is flattening
After a long and robust period of growth for lending in the US multifamily property market, there are some signs that growth is flattening.
Ratings agency Fitch says that it expects vacancy rates to stabilize as supply and demand reaches balance in many markets, although there will be some clear regional differences.
Luxury homes could be at greater risk due to a surge in supply compared to B/C class properties while those cities where there is historically less volatility in non-luxury multifamily housing should perform better.
New York and Los Angeles for example, have lower than national average vacancy rates with rent controls
limiting volatility through economic cycles. However, markets in the South and Midwest traditionally have greater vacancy rate volatility.
Fitch says that mortgage lenders with greater exposure to class B/C properties should outperform from a credit standpoint but notes that the majority of banks which concentrate on multifamily mortgages tend to focus on the less volatile markets.
Although there has been increased activity in the multifamily sector as underwriting conditions have tightened for single-family lending and consumer choices have changed, Fitch says that fundamentals remain stable despite rising prices.
Risk exists from oversupply of the multifamily market in some metros though and this could increase if demand softens.
Ratings agency Fitch says that it expects vacancy rates to stabilize as supply and demand reaches balance in many markets, although there will be some clear regional differences.
Luxury homes could be at greater risk due to a surge in supply compared to B/C class properties while those cities where there is historically less volatility in non-luxury multifamily housing should perform better.
New York and Los Angeles for example, have lower than national average vacancy rates with rent controls
limiting volatility through economic cycles. However, markets in the South and Midwest traditionally have greater vacancy rate volatility.
Fitch says that mortgage lenders with greater exposure to class B/C properties should outperform from a credit standpoint but notes that the majority of banks which concentrate on multifamily mortgages tend to focus on the less volatile markets.
Although there has been increased activity in the multifamily sector as underwriting conditions have tightened for single-family lending and consumer choices have changed, Fitch says that fundamentals remain stable despite rising prices.
Risk exists from oversupply of the multifamily market in some metros though and this could increase if demand softens.
