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Erika Morphy of Globe St reports on the multifamily market, noting that the volume of multifamily loans that were at least 30 days past due or in nonaccrual status in the fourth quarter increased to $3.46 billion, up 43.1% from the previous quarter and an 81.2% increase year over year. Matt Tracy of Reuters reports on Fitch Ratings data showing that lending by banks to multifamily borrowers grew 32% since 2020 to $613 billion at the end of 2023. However, the rising supply has started to outstrip demand, leading to decreasing apartment values and downward pressure on rents. This has weighed on regional banks exposed to rent-controlled multifamily loans where landlords face a ceiling on rent increases to offset rising costs. Jake Mooney and Zain Tariq of S&P Global Market Intelligence report on the multifamily bank loan issues, highlighting that although the focus on commercial real estate has typically been in the downward trend in office assets, multifamily isn’t immune. “While demand remains much stronger in the multifamily sector, high levels of new construction in some markets — especially in the Sun Belt — have weakened landlords’ pricing power and hurt their ability to make loan payments.” |
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Source: S&P Global Market Intelligence (April 2024) Erik Sherman, also of Globe St, reports on this topic, highlighting a Trepp report showing multifamily delinquency rates rising. That said, there’s some good news: construction material prices continue to moderate. |