Houston Economic Indicators April 2020 via Dallas Fed

Data for March in Houston have begun to show the effects of efforts to contain the coronavirus (COVID-19) pandemic. Employment contracted, the business-cycle index slowed, leading indicators were broadly negative, and the unemployment rate rose sharply for March. Weekly initial claims for unemployment insurance in April remained elevated. Existing-home sales contracted but remain at a healthy level. Taken together, the data paint a sobering picture of further declines ahead.

Read more... Houston Economic Indicators April 2020 via Dallas Fed

While Resilient, Multifamily is Not Immune to COVID-19 via GlobeSt

COVID-19 has wreaked havoc on many commercial real estate segments. While the multifamily sector is a resilient one, it is not immune to the wrath of this global pandemic.

But despite the many challenges, there are some positive signs that support the ongoing resilience of the multifamily sector during this health crisis, says Zain Jaffer, founder and CEO of Zain Ventures. There are opportunities facing economic subsectors and the market as a whole along with key factors that will determine the severity of the pandemic’s impact on the sector.

Read more...While Resilient, Multifamily is Not Immune to COVID-19 via GlobeSt

Dallas-Fort Worth Economic Indicators April 2020 via Dallas Fed

The Dallas–Fort Worth economy contracted in March. Payroll employment posted its largest drop since the series began in 1990, and unemployment rose as containment measures related to the COVID-19 pandemic triggered mass layoffs, particularly in the leisure and hospitality sector. The Dallas and Fort Worth business-cycle indexes fell. Home sales dipped in March, and pending home sales, a forward-looking indicator, fell as well. Office leasing activity softened in the first quarter.

Read more...Dallas-Fort Worth Economic Indicators April 2020 via Dallas Fed

DFW apartment demand bounces back via Dallas Morning News

So far, North Texas’ apartment market has shrugged off the worst impacts of the COVID-19 pandemic.

Leasing activity in the Dallas-Fort Worth area is up from a year ago, according to a survey last week by Richardson-based RealPage.

“Apartment leasing activity is suddenly back in a big way, at least for the moment,” RealPage chief economist Greg Willett said. “U.S. apartment leasing activity is roughly back to year-ago levels, after demand dropped drastically in late March to early April.”

Read more...DFW apartment demand bounces back via Dallas Morning News

More Apartment Residents Say They Can’t Pay Rent for May via GlobeSt

There is little doubt that apartment renters are hurting from the coronavirus, according to a new survey by Grace Hill, a software company that surveys the multifamily industry.

It found that Covid-19-related related income losses have impacted nearly two-thirds, or 63%, of all renters surveyed. Furthermore 52% indicated they would be able to pay the May rent in full, compared to 69% who said they paid April’s rent in full.

Read more...More Apartment Residents Say They Can’t Pay Rent for May via GlobeSt

The Outlook for Class-C Apartments Is Muddied by Tenants' Loss of Income via NREI

Class-C apartment tenants have been badly hurt by the economic shutdown precipitated by the novel coronavirus, crushing their ability to pay rents, thereby putting strain on those properties’ owners to continue to cover costs and mortgage payments.

More than 22 million Americans have filed for unemployment in recent weeks. Others are working on reduced hours. Large parts of the U.S. economy remain shut down as states have ordered non-essential businesses to keep closed.

Read more...The Outlook for Class-C Apartments Is Muddied by Tenants' Loss of Income via NREI

Rental Market Slowdown Could Hit Class A Hardest via Multi-Housing News Online

After a decade of growth in the number of high-earning renter households, the impact of the coronavirus outbreak could cause that number to stall, leaving owners of luxury rental properties struggling to lease apartments.

According to research from the Joint Center for Housing Studies at Harvard University, while the length of the pandemic is still uncertain, there are early signs that point to a slowdown in demand in the U.S. rental market. Leasing activity is down at a time when apartment completions are approaching a 30-year high and the growth of renter households has slowed.

Read more...Rental Market Slowdown Could Hit Class A Hardest via Multi-Housing News Online

Apartment Market Conditions Dramatically Weaken Amid Coronavirus via GlobeSt

Apartment market conditions significantly weakened in the National Multifamily Housing Council’s Quarterly Survey of Apartment Market Conditions for April 2020. The survey found that indexes tracking Market Tightness (12), Sales Volume (6), Equity Financing (13), and Debt Financing (20) all came in well below the breakeven level of 50.

The reason for these declines, of course, is the economic havoc brought on by the coronavirus.

Read more...Apartment Market Conditions Dramatically Weaken Amid Coronavirus via GlobeSt

Multifamily Executives Worry That Strong Rent Performance Won’t Last via Multi-Housing News Online

Apartment owners were happy with April’s rent payment results—which found that 89 percent of renters made rent payments through the 19th of the month, down only 5 percent compared to the same period a year ago, according to the National Multifamily Housing Council’s latest weekly survey. But industry leaders know that it is too soon to breathe easy.

Read more...Multifamily Executives Worry That Strong Rent Performance Won’t Last via Multi-Housing News Online

NMHC Rent Payment Tracker APRIL 1-19, 2020 via NMHC

The National Multifamily Housing Council (NMHC) found that 89 percent of apartment households made a full or partial rent payment by April 19 in its survey of 11.5 million units of professionally managed apartment units across the country, up 5 percentage points from April 12.

NMHC’s Rent Payment Tracker numbers also examined historical numbers and found that 93 percent of renters made full or partial payments from April 1-19, 2019, and 93 percent of renters in March 1-19, 2020. The latest tracker numbers reflect a payment rate of 95 percent compared to the same time last month. These data encompass a wide variety of market-rate rental properties, which can vary by size, type and average rental price.

Read more...NMHC Rent Payment Tracker APRIL 1-19, 2020 via National Multifamily Housing Council

Freddie Mac Boosts Multifamily Forbearance Program via Multi-Housing News Online

Freddie Mac has updated its Multifamily COVID-19 forbearance program to enhance protections for borrowers and renters, as widespread job losses due to the public health emergency threaten many Americans’ ability to pay their bills. The revised rules extend the duration of the program and bar multifamily landlords from evicting renters or charging late fees for nonpayment during the program’s forbearance period.

Read more...Freddie Mac Boosts Multifamily Forbearance Program via Multi-Housing News Online

April’s Apartment Rent Defaults Weren't That Bad After All via GlobeSt

When the National Multifamily Housing Council reported a drop in April rent payments last week, executives acknowledged the numbers could improve as they expected many tenants would be paying late.

Turns out, they were right.

In its weekly update to its rent tracker report, the association found that 84% of apartment households made a full or partial rent payment by April 12, up 15 percentage points from April 5.

Read more...April’s Apartment Rent Defaults Weren't That Bad After All via GlobeSt

ALN Monthly Market Stats April 2020 via ALN Apartment Data

ALN Data just released their March 2020 market stats on occupancy and rents for over 80 markets. In Texas, it includes DFW, Austin, Houston, San Antonio, Lubbock, Amarillo, Abilene, Corpus Christi and more. It is a must read from a great provider of apartment data.

Read more...ALN Monthly Market Stats April 2020 via ALN Apartment Data

Eleventh District Beige Book 4/15/2020 via Dallas Fed

There was sudden and broad-based weakening of the Eleventh District economy during the reporting period. Many firms reported a sharp reduction in activity, resulting from business disruptions and closures due to the COVID-19 pandemic. Activity in the energy, retail, and service sectors was the hardest hit. Overall factory output and new orders plunged, though production in food and printing-related manufacturing increased. Loan demand contracted broadly and credit quality eroded slightly, except in residential real estate lending. Housing demand held up through mid-March but has declined notably since then. Employment and hours worked plummeted, resulting in downward wage pressures. Input costs were flat to down, and selling prices dipped amid declining demand for many products and services. Outlooks worsened markedly and uncertainty surged, as the economic impact of the COVID-19 pandemic and related containment measures intensified.

Read more...Eleventh District Beige Book 4/15/2020 via Dallas Fed

A Look at Who Didn’t Pay Their Rent This Month via GlobeSt

In its debut rent tracker report, the National Multifamily Housing Council reported that 69% of households had paid their rent, either partially or in full, by April 5, compared to 81% that had paid by March 5, 2020. The rent tracker is based on data from 13.4 million rental apartments. The association has partnered with several firms to create this metric, including RealPage, Yardi and Entrata.

This increase in nonpayment comes as little surprise given the millions of people thrown out of work over the past month. With more layoffs and furloughs expected, the metric provides some insight into how the unfolding coronavirus crisis might affect the apartment industry on a wider scale.

Read more...A Look at Who Didn’t Pay Their Rent This Month via GlobeSt

Without Immigration, U.S. Economy Will Struggle to Grow via Dallas Fed

The coronavirus (COVID-19) pandemic has triggered dramatic, deteriorating economic conditions across the country. At some point, however, the effects of the shock will diminish. And the buffeted U.S. economy emerging from the health crisis will face some familiar structural challenges that predated the virus—among them, the slowing growth of its workforce.

Read more...Without Immigration, U.S. Economy Will Struggle to Grow via Dallas Fed

CRE’s Recovery Will Take At Least a Year, Trailing the Economic Rebound, CBRE Says via GlobeSt

In the space of just a few weeks the outlook for the US commercial real estate sector, to say nothing of the overall economy, has been utterly upended. Research firms are adjusting their initial expectations that the coronavirus would leave just a glancing blow on the industry.

A new report from CBRE finds that the US is in recession with GDP declines expected in the first and second quarter. It forecasts that the economy will stabilize in the third quarter, start to recover in the fourth, and grow at more than 5% in 2021 due to pent-up demand and major government stimulus.

Read more...CRE’s Recovery Will Take At Least a Year, Trailing the Economic Rebound, CBRE Says via GlobeSt

Building owners aren’t panicking yet about rent relief requests via Dallas Morning News

Commercial building owners are already facing a flood of pleas for rent forbearance.

Just dealing with tenants’ rent relief requests is going to be a challenge for the industry. Staggering numbers of businesses are suddenly struggling to pay their landlords as a result of the COVID-19 pandemic.

Prologis, one of the country’s largest industrial building owners, says it has gotten rent relief requests from almost one in four of its more than 5,000 nationwide tenants.

Read more...Building owners aren’t panicking yet about rent relief requests via Dallas Morning News

NMHC Rent Payment Tracker via National Multifamily Housing Council

The National Multifamily Housing Council (NMHC) found a 12-percentage point decrease in the share of apartment households that paid rent through April 5, in the first review of the effect of the COVID-19 outbreak on rent payments. The Tracker found 69 percent of households had paid their rent by April 5; this compares to 81 percent that had paid by March 5, 2020, and 82 percent that had paid by the same time last year.

Read more...NMHC Rent Payment Tracker via National Multifamily Housing Council

Multifamily Waits for Forbearance via GlobeSt

Last month Treasury Secretary Steven Mnuchin formed a task force of regulators to address how to ease the expected liquidity shortfall for mortgage firms. He asked the task force to offer recommendations by March 30. Since then little has been said about the task force other than a press release that it convened and that “Ginnie Mae and the Federal Housing Finance Agency will continue to monitor closely the markets and the condition of the nonbank entities that service Ginnie Mae, Fannie Mae and Freddie Mac MBS.”

Tired of waiting, this past weekend 15 real estate trade associations and affordable housing advocate groups called on the Federal Housing Finance Agency, the Federal Reserve and the Department of the Treasury to establish a liquidity facility for servicers that would support the foreclosure moratorium established in the CARES Act.

Read more...Multifamily Waits for Forbearance via GlobeSt

Supreme Court of Texas extends suspension on evictions until April 30 via Dallas Morning News

The Supreme Court of Texas extended its moratorium on evictions Monday, announcing that the suspension will continue until April 30.

The extension adds 11 days to its original moratorium, which began March 19.

Locally, some counties suspended evictions for a longer time period. Dallas County’s suspension of evictions runs through May 18. Tarrant County’s is indefinite, for the time being.

Read more...Supreme Court of Texas extends suspension on evictions until April 30 via Dallas Morning News

How to Price a Deal in Today’s Market via GlobeSt

Some investors have halted all acquisitions, but for those still trying to transact in this market, it can be challenging. Everything from underwriting in this uncertain market to completing due diligence with social distancing restrictions has made simply doing a deal difficult.

“This is not going to go on forever, but it is going to go on for a while,” Mark Weinstein, founder and president at MJW Investments, tells GlobeSt.com. “Now, we are just trying to figure out where the rents and occupancy will be a year from now. We are assuming that we will have to absorb everything for the next year, and we have to factor those carrying costs.

Read more...How to Price a Deal in Today’s Market via GlobeSt

Seven Rules for Lenders Navigating Workouts During Uncertain Times via NREI

It's time to go back to basics and adhere to some key guidelines to help navigate the choppy waters facing commercial real estate financing.

If the current coronavirus (COVID-19) situation persists, real estate lenders increasingly will be faced with the need to restructure loans in their portfolios. Lenders that held non-performing real estate loans during prior real estate downturns (e.g., 2008, 1990s) have no doubt embarked on the real estate workout process countless times before. However, with the passage of time, the lessons learned by real estate lenders of earlier eras may have faded from memory.

Read more...Seven Rules for Lenders Navigating Workouts During Uncertain Times via NREI

Missing: 20,000 DFW apartment renters to fill new units via Dallas Morning News

Not only home shoppers have hit the pause button. Prospective apartment renters are also sheltering in place in the face of the COVID-19 epidemic.

That’s bad news in North Texas, which has the most new apartment communities hunting for new tenants, according to a new report by RealPage.

“The drastic drop in renter mobility creates some real challenges for properties in the midst of initial lease-up - and D-FW has lots of those,” said Greg Willett chief economist at the Richardson-based apartment industry service firm.

Read more...Missing: 20,000 D-FW apartment renters to fill new units via Dallas Morning News

Multifamily market permits continue to decline via HousingWire

Prior to stay-at-home orders and businesses closing, the multifamily market was already seeing a decline in both permits and starts, a new report from RealPage said.

Permits fell to 415,000 units on a seasonally adjusted annual basis in February, marking the second-lowest annual rate in 17 months, down 20.2% from January and 5% from February 2019.

Now, due to the effects of the coronavirus, permits are more likely to decrease, although many local governments have deemed construction and real estate an essential industry.

Read more...Multifamily market permits continue to decline via HousingWire

Fannie, Freddie Raise Reserve Requirements as Loan Standards Tighten via Multi-Housing News Online

As lenders nationwide hunker down and prepare for an economic downturn, Fannie Mae and Freddie Mac are implementing stricter multifamily loan terms.

The GSEs remain open for business, but many borrowers will have to provide more equity and will be required to put 12 to 18 months of payments into a reserve account. That is a tough ask for all but the most well-capitalized borrowers.

Read more...Fannie, Freddie Raise Reserve Requirements as Loan Standards Tighten via Multi-Housing News Online

Texas reeling into recession from double blows of coronavirus and oil slump, Comptroller Glenn Hegar says via Dallas Morning News

Texas’ usually buoyant economy has just run over two sharp nails — coronavirus and low oil prices — and the resulting slowdown is dramatic, Comptroller Glenn Hegar said Wednesday.

“There’s no doubt that Texas is going to be in a recession — just like pretty much the rest of the world,” he said.

While data showing the scope of the state’s economic contraction won’t be out for another few weeks, Hegar said early signs from counties that collect sales tax on motor vehicle purchases and rentals showed significant declines for a limited part of last month — all that’s been reported so far.

Read more...Texas reeling into recession from double blows of coronavirus and oil slump, Comptroller Glenn Hegar says via Dallas Morning News

The COVID-19 Economic Shutdown is Already Hitting Multifamily Rents via NREI

The average rents on apartments are already dropping, as the U.S. economy grinds to a halt and millions of workers have lost their jobs, been furloughed or have been asked to stay home to fight the rapid spread of COVID-19.

“Job losses are already affecting demand for apartments,” says Andrew Rybczynski, managing consultant for CoStar Group. “The evidence is apparent in daily rent changes.”

Read more...The COVID-19 Economic Shutdown is Already Hitting Multifamily Rents via NREI

COVID-19: What’s the Long-Term Impact of Moratoriums on Apartment Evictions? via RealPage

On Sunday, the National Multifamily Housing Council endorsed a number of unprecedented measures in response to the COVID-19 crisis. Among them is a 90-day moratorium on most evictions, meaning apartment owners and managers effectively stripped themselves the ability to remove residents delinquent on rent. The move comes after a wave of local and state governments across the country put similar bans in place.

The timing matches an expected increase in delinquency as job losses mount (particularly in the hotel and restaurant sectors) and unemployment claims surge.

Read more...COVID-19: What’s the Long-Term Impact of Moratoriums on Apartment Evictions? via RealPage

COVID-19 Hit on Multifamily Will Be ‘Modest’ via Multi-Housing News Online

If the numbers from China are accurate—and there’s no way to be certain about that—the COVID-19-induced recession should be a rather short one, according to RCLCO, the Bethesda, Md.-based real estate advisory firm. And the apartment sector won’t feel too much of a sting.

Charles Hewlett, a managing director at the company, said during a webinar late last week that the economic turndown should last a relatively quick two months.

Read more...COVID-19 Hit on Multifamily Will Be ‘Modest’ via Multi-Housing News Online

CRE Loan Defaults Soar Under Trepp Stress Test But Won’t Be as Bad as Great Recession via GlobeSt

To gauge the impact of the COVID-19 disruption, Trepp has applied an economic and real estate forecast scenario to a portfolio of 12,500 commercial real estate loans.

The findings were perhaps to be expected: defaults are expected to increase, in some cases significantly.

Under the scenario Trepp used, the cumulative default rate across commercial mortgages overall will rise to 8%, up significantly from the current 0.4% default rate. The impact will be most immediate and severe in the lodging sector, with a cumulative default rate approaching 35%.

Read more...CRE Loan Defaults Soar Under Trepp Stress Test But Won’t Be as Bad as Great Recession via GlobeSt