Ivan Kaufman’s Blog 2017-07-19T16:32:21+00:00

Ivan Kaufman’s Real Estate Blog

Weekly Roundup | October 13, 2017

In this week’s collection of top multifamily reads, we examine growth in small balance lending, construction permits and multifamily rents. First, the Mortgage Bankers Association explores the recent rise in small balance multifamily lending. Next, we turn to MPF Research, which offers new research shedding light on increased construction permits across several key major metros. Moving on to rent growths, National Real Estate Investor explores an interesting correlation between rent growth and former housing crash cities. Though rent growth has slowed down somewhat, affordability continues to be a major issue for many renters, as Chandan Economics explores in their latest article on ALEX Chatter. Rounding things off this week is a look at the top ‘hipster’ markets via Realtor.com and Yelp – surprisingly, Brooklyn is not in the Top 10.

Photo by chuttersnap on Unsplash

Photo by chuttersnap on Unsplash

Steady Rise in Small Balance Lending

Mortgage Bankers Association – October 12, 2017

“Small balance multifamily lending — including acquisition and refinancing loans with original balances between $1 million and $5 million — is rising steadily and could set a record in 2017, said Chandan Economics and Arbor.”

 

Permit Volumes Rise as Some Major Metros See Increased Activity

MPF Research – October 11, 2017

“On the metro-level leaderboard for annual authorizations, the top 10 remained largely intact, with only Phoenix replacing Miami in the #10 spot.”

Apartments Rents Are Growing the Most in Former Housing Crash Cities

National Real Estate Investor – October 10, 2017

“Apartment rents continue to grow more slowly than before. The cities where rents grew the most in 2016 are still top cities for rent growth this year, but their lead is getting smaller.”

 

What Income is Needed to Rent Affordably: A Scan Across US Metro Areas

ALEX Chatter – October 10, 2017

“Apartment affordability has acquired crisis-like status across several US metros. In this post, we examine the income needed to rent affordably in small apartment buildings across the US.”

 

Hottest Hipster Markets in America List Revealed 

MultifamilyBiz – October 10, 2017

“Released today, the realtor.com Yelp Hottest Hipster Markets in America list identifies the most in-demand housing markets in the U.S. with the highest concentrations of “hipster” businesses for home buyers looking to embrace indie culture.”

Working Seniors on the Rise: A Renter Segment to Watch

Originally posted on Arbor Loan Express

It’s clear that due to recession, the US saw an uptick in the trend of delayed retirement in seniors across the country.  Working past the age of 65 no longer was an exception as seniors continued working into their late 60s and 70s. Since the financial crisis, this trend has created a growing demand segment for small apartment building owners.

Most Senior Householders Depend on Retirement Income and Entitlements

The chart below shows how a new normal for labor participation rates among those 55 and older formed during the recessionary years.

graph of labor force rate

While this is a rising trend for apartment renters, an overwhelming majority of senior renters (age 65 years or over) do not work. Instead, they pay for their housing expenditures with income derived from retirement funds, investments, entitlements and other government assistance programs.

As shown below, only about 18% of senior householders in small apartment buildings worked in 2015. In large buildings, an even lower share of 10% of seniors worked. The large building segment has historically supported a larger share of affordable housing and rent control components.

image of seniors graph

The Financial Crisis Delayed Retirement Decisions

While retirement dominates the senior renter segment, the latest data from the Census Bureau indicates some structural shifts underway in the labor market over the post-crisis period. These changes are working to reshape demand fundamentals for this group.

As shown below, the working senior householder segment in apartments grew twice as fast as overall household growth across all apartment types between 2010 and 2015.

graph of senior households by source incomes

Households with a working senior householder grew at an annual rate of about 6% across both small and large apartment buildings. However, retiree household growth was lower compared to the overall growth.

The above bears great significance for apartment demand because retiree households make less than half of the income of their working counterparts.

graph-average-household income

 

Following this growing trend will be critical for apartment property owners. This will lead to a greater need for age-sensitive amenities that may facilitate longer-term tenancies and rent-roll stability.


For more information on demographic trends in the senior housing and healthcare market, be sure to check out our recent webinar hosted by Seniors Housing News.

The program starts off with an in-depth conversation on demographic demand drivers led by distinguished professor and economist Sam Chandan. After reviewing how this demand is impacting property fundaments within independent living, assisted living and memory care facilities, Arbor finance experts explain how a unique combination of Bridge and FHA loans can benefit senior housing operators.