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Freddie Mac's “New Normal” Looks Like Uncertainty

Freddie Mac's “New Normal” Looks Like Uncertainty
The Freddie Mac Multifamily Midyear Outlook for 2014 contains some points that desperately want to be positive, paired with some estimates and forecasts that paint what could be a very different picture for the multifamily housing market. The take-away seems to be that we should expect volatile market conditions to continue into the next year or so, prime time for investors to do minimal capital improvements in preparation for eventual increased market demand. The report reveals that, by all estimates, more than 3.9 million new households should have been formed during the Great Recession, weren't. Whether that's a result of the shifting cultural landscape or symptomatic of a “failure to launch” generation, prognosticators tend to assume that the trend won't continue and that Millennials will start setting up house on their own as they find jobs. Younger households are more prone to renting, especially now that housing starts are low and home loans are harder to get. Freddie Mac's Steve Guggenmoss says multifamily investors should expect to feel a pinch in the next few months as occupancy rates drop. In the face of such guarded optimism about those Millennials finally “launching” and getting their own jobs and places to live, that warning looks more like the agency is taking a “wait and see” approach to what's coming down the pike for multifamily housing. Basically, there are two possibilities for the market: Scenario 1: Steady Economic Recovery Millennials currently living with their parents get jobs, keeping a 13-year-low occupancy rate near 4.1 percent or ......
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Are Local Banks Cutting into Fannie Mae’s Multifamily Loan Business?

Are Local Banks Cutting into Fannie Mae’s Multifamily Loan Business?
While both Fannie Mae and Freddie Mac are still the big dogs in multifamily lending, their biggest competitors have begun doing what they must to win over new market share–and with everyone from the House of Representatives to the President of the United States looking to phase out Fannie and Freddie all together, it looks like the competition is heating up as the local banks have begun chomping at old Fannie and Freddie’s heels.  After the market crashed, accessing capital via traditional lenders and banks was nearly impossible and Fannie Mae and Freddie Mac were there to lend for multifamily. Unfortunately, in recent years, the amount of multifamily financing available has been stretched thin because of the increase in competition. How is the impact is being felt? In 2014, Fannie Mae’s overall multifamily lending business has totaled a mere $6 billion or less than half the $13.6 billion in multifamily loans they did during this same time last year. Aside from lowering interest rates, this drop-off in volume has had a surprising side effect in that there are fewer loans to turn into bonds. Which translates into potential bond investors being forced to compete for a limited supply of bonds, paying more, and reducing their overall yields by more than 20 basis points just in the last eight months. Is phasing out Fannie and Freddie the solution? As a result of the collapse of the mortgage market, many feel that replacing Fannie Mae and Freddie Mac is a necessity, but, according to an article recen......
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