FINfacts™ XXIV – No. 43 | October 26, 2016

MARKET RATES
Prime Rate 3.50
1 Month LIBOR 0.53
6 Month LIBOR 1.26
5 Yr Swap 1.30
10 Yr Swap 1.62
5 Yr US Treasury 1.30
10 Yr US Treasury 1.79
30 Yr US Treasury 2.54

RealShare Apartment Conference: Bullish 2017 Outlook for Multifamily

GSP was in force at the 2016 RealShare Apartment Conference in Downtown Los Angeles last week along with 1,500 industry members. The outlook for multifamily investments and capital markets appeared bullish, as many predict strong economic fundamentals including: favorable demographic trends, resilient employment figures and reduced home ownership affordability to round out 2016, and continue into 2017. Evidence of healthy market demand led many to predict 2017 rent growth levels to float between 2% and 3%. Although pockets of oversupply in select core submarkets have the potential to increase vacancy rates, many project overall average vacancy rates to remain near historic lows.
On the capital markets front, the Agencies are projected to purchase $100 billion of apartment loans from lenders by year end 2016, significantly upending the $89.6 billion record set in 2015. Banks accounted for 36% for all multifamily permanent loans in the first half of 2016, the highest level in years and a trend that is expected to continue well into 2017. Despite the banks’ tightening of construction lending due to High Volatility Commercial Real Estate (HVCRE) regulation, appetite for bridge and construction loans remains robust. However, greater regulatory scrutiny and capital constraints mean that traditional lenders are placing premiums on loan requests that are not HVCRE compliant.   Zach Streit. 


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