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New Data on Apartment Development Lending, Single-Family Investors

Apartment Development

Digested from “Multifamily Lending Soars, Single Family Rental Market Frays” in National Mortgage Professional Magazine (10/20/16) by Hall, Phil

Total mortgages for apartment communities of five or more units increased to $249.8 billion in 2015, a 28 percent increase from the 2014 total, according to data from the Mortgage Bankers Association (MBA).

“Multifamily mortgage borrowing and lending set a new record in 2015,” says Jamie Woodwell, MBA’s vice president of commercial real estate research, in an article in National Mortgage Professional Magazine. “Demand for mortgages was driven by strong property fundamentals, increasing property values, a robust transaction market and low interest rates.” He expects 2016 and 2017 mortgage totals to also be strong because these factors have continued. 

In addition, data from ATTOM Data Solutions show the average return for single-family rentals has dropped slightly in the first seven months of the year to 8.7 percent, from 8.8 percent over the same period in 2015. However, so far this year investors are buying single-family homes at a faster rate than last year. From January through July, 2.7 percent of single-family home sales were to institutional investors, up from 2.1 percent during the same period last year.

“After a drop-off in single-family purchases by both individual and institutional investors over the past two years, we’re starting to see investor acquisition activity pick up again,” says Daren Blomquist, senior vice president at ATTOM Data Solutions, in the article.

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