Fannie Mae and Freddie Mac still have housing blood on their hands from the 2008 financial crash. However, the giant GSEs, placed in government conservatorship in September 2008, have now, virtually all by themselves, created another bubble, this time in the multifamily rental market.
Fannie and Freddie made 53% of all apartment loans in 2016, that’s down from their combined 68% market share in 2012. So, their conservator, The Federal Housing Finance Agency (FHFA), recently eased the GSE’s lending caps so they can crank out, even more, loans.
Mary Salmonsen writes for multifamilyexecutive.com, “Currently, Fannie and Freddie are particularly dominant in garden apartments [and] in student housing, with 62% and 61% shares, respectively. The two remain the largest mid-/high-rise lenders but hold only 35% of the market.”
Current Prices on popular forms of Silver Bullion
In a recent press release, Fannie Mae crowed, “Fannie Mae (FNMA/OTC) provided $55.3 billion in financing and supported 724,000 units of multifamily housing in 2016 – the highest volume in the history of its Delegated Underwriting and Servicing (DUS®) program.”
Cheap interest rates make for low Cap (capitalization) rates and nationwide, “Mid-/high-rise cap rates declined to 4.8%, and garden apartment cap rates to 5.6%, both historic lows,” writes Salmonsen. So, developers can build, lease up and flip projects at sky-high valuations.
Real estate profits are irresistible to developers and according to real estate firm Marcus & Millichap, Apartment builders “will bring 371,000 units to the market in 2017,” with project rents expected to rise 3.8% and vacancy by year-end to be 4%.
With Clark County Nevada being number three in the nation for in-migration with 46,375 people moving…