Redfish Mark

Multi-Family Real Estate: Fannie and Freddie's Next Headache?

One of the biggest upcoming risks to the multifamily sector will be declining occupancy rates over the next year (national forecast in the range of -1%) which will impact NOI negatively. That said, we’d agree with the IRET comment above that in many markets around the country (we track over 220) multifamily fundamentals are as strong as they’ve been in years, and Fannie and Freddie are backing good projects (with rock solid ops numbers) in strong markets.

No Real Estate Bubble in Central U.S.

If it were only as simple as Dr. Perry suggests. We’d heartily agree that the media has blown aspects of the housing bust far out of proportion, but there are indeed “central US” housing markets that look terrible.

Our team analyzes markets for residential (multifamily, single family) real estate investors, and while there are some markets with surprisingly good metrics in the central US, there are some real dogs too. In this day and age, you have to delve into the details of a unique market to really see what’s happening.

Another key – housing market health is about much more than price - key demographics, job growth and unemployment, economic development activity and efforts, rental market health and the typical housing metrics (valuation, affordability, inventory and supply, etc.) all play a role in determining the vitality and status of a community’s housing market.

Caveat emptor.

Regional Economic Outlook: Texas

Eric, things have slowed a bit in Texas, though as we track single family and multifamily real estate markets for investors around the country, many Texas communities are fundamentally very strong. They're still encouraging business investment and growth in Texas more agressively than most places, and that certainly drives housing demand. The food's not too bad down there either.

Housing: No Bottom Yet in Sight

Solid article, JD. We’re increasingly convinced as we research markets across the country for real estate investors that there will in all probability not be a notable “bottom” in the national market any time soon. The worst (and majority of) markets are languishing – inventories are blossoming, local economies are highly stressed, sentiment is lousy, and many are not experiencing sufficient price corrections to stimulate market activity.

What’s confounding, and very interesting, is the fact that there are however many local real estate markets across the nation with very sound fundamentals – including balanced for sale inventories, relatively stable prices, robust transaction rates, as well as solid demand driven by surprisingly vibrant supporting economies and impressive, sustainable population growth rates.

We further agree that the housing rescue bill will transfer excessive to the taxpayer, and likely have little meaningful near term benefit for housing’s travails overall.

Unfortunately the drag of the “disaster” real estate markets far overshadows the contribution of the healthier markets to the national housing picture.

June Existing Home Sales Dip While Supply Rises

Don w. - right on the mark about the misleading leading metric of month to month sales changes. Rising inventory (during what should be a seasonally busy sales month) still portends pain in the single family housing sector.

The Dead Cat Returns to Earth

David, housing's turn will be market by market - fundamentals are so far off the mark in so many real estate markets that years will pass before sanity is restored. There are other real estate markets that are in pretty good shape today, attracting real estate investors hungry for sane values. The housing rescue legislation has more probability of prolonging real estate's pain than precipitating it's turn. The legislation may impact sentiment in the short haul, but it's ability to change housing fundamentals looks anemic.

8 Lessons From Sir John Templeton

John, great post about an intelligent and gifted man. We run a data service for real estate investors, and it's astounding how accurately Templeton's axioms you've cited apply to the realm of real estate investing today. Fundamentals are the absolute bedrock, and the contrarian view is essential. One of my mentors met him years ago, and was deeply impressed with his insight and humility. Well done.

The FHA’s Risky Zero Down Payment Loan Program

Markham, very nice article, particularly your closing paragraph. We agree, and find that restoration of affordability will likely be one of the most important aspects of restoring order in housing. In our research the correlates between affordability and overall single family market health are pretty astounding.

Has A Global Housing Slowdown Begun? [Housing Tracker]

The virus is much more widespread than the myopic US media coverage would suggest. 21 nations experienced price declines, some much more impressive than here at home. Ouch.

10 Notes on Residential Housing

Sadly, the data would suggest you're correct about the Alt-A issue in particular; there is likely another tidal wave of defaults on the horizon. Like everything else in real estate, there are markets that have not suffered the bloody losses that carry the media day, but they're few and far between.

Commercial RE To Follow "Jingle Mail" Trend? [Housing Tracker]

The CMSA study data is encouraging, but until spreads drop more the playing field still looks more like frozen tundra.

Supply-Side Fairy Tales

Brian27 - the top 25% of income earners pay 85.99% of income taxes. Here's a link to the IRS website that reports the data - the table starts on line 155 - www.irs.gov/pub/irs-so.... We agree that despite the spin, Laffer's simple theory has been supported by the data over the past couple of decades.

NCC: Housing Affordability Is Back [Housing Tracker]

I'd quibble with NCC's economist DeKaser regarding his characterization of restoration of affordability in housing markets today. His view that valuations ("the difference between what a house should cost and its actual price) are a sound measure of affordability seems a bit tenuous, as defining what a house "should cost" today seems to be a bit of a challenge in most markets today.

Measures indexing home prices to median income measures in a market (Housing Affordability Index, Housing Opportunity Index) are better measures of true affordability. There are yet quite a few markets out there with affordability issues; for the most part they're easy to spot - high unsold inventories and declining sales.

Mark McGlothlin, CEO
Redfish Emerging Markets

Utah Feeling Nevada, Arizona House Price Pain [Housing Tracker]

St. George had an incredible run up in single family home valuations, dropping their affordability ratios into the basement. Maybe Cyril Moulle-Berteaux is on to something with his views on housing affordability being a viable indicator for looking at the status of local real estate markets. Valuations are taking impressive hits in most of the least affordable markets around the country.

Homes: Buy One, Get One Free!

There's a GM pickup and SUV in the garage too.