Wednesday, March 21, 2012

Apartment Loans by Agencies Creating Bubble, Chandan Says via Bloomberg

Low-cost financing backed by the U.S. government is inflating the values of apartment buildings and threatening to create a bubble, according to a report by Sam Chandan, a real estate economist.

Multifamily loans issued by government-sponsored agencies Fannie Mae and Freddie Mac are buoying the price of apartment buildings to the point that buyers may not be able to refinance once interest rates rise, according to the report by New York- based Chandan Economics LLC, released today.

Getting a new, pricier loan for an apartment property bought at today’s prices would require an income increase “stronger than what we think of as a sustainable level of rent growth,” Chandan said in an interview. “Are we making loans today that we are not able to easily finance when they mature? The finding is yes.”

Read more...Apartment Loans by Agencies Creating Bubble, Chandan Says - Bloomberg

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