Multifamily Late Mortgage Funds Uncharacteristically Spike in Sept.

Apartments in Lower-Cost Areas Set to Thrive

Cracks continue to emerge in the housing sector.

Moody & # 39; s Analytics REIS recently reported an increase in late payments in the multi-family sector for both agency and non-agency loans.

In September, late payments for agency loans increased from 0.46% in August to 1.4%. Late payments outside the agency increased from 1.83% in August to 2.78% in September.

“30 days of performance is not a trend, but the magnitude of the change is remarkable. Even so, the amount of change is tiny compared to the changes we saw in retail and tourist property loans, ”REIS said. "We'll be watching this closely when the assignments come in this month and beyond."

While Moody & # 39; s Analytics Reis tracks the market, it not only monitors arrears but also changes in occupancy. However, observing the occupancy can be difficult. Not all apartment buildings report quarterly and reporting may be delayed. While knowing the occupancy is helpful, some properties can withstand displacements better if they have less leverage or higher rents.

Moody & # 39; s Analytics Reis monitors loans with open positions reported as of June 30th. The pool has a pool that is about a third of the balance outstanding. In this pool, which includes agency and non-agency loans, around 3% show a decrease in occupancy of at least 10% compared to their vacancy, as reported for the last full year, mostly on December 31, 2019.

Moody & # 39; s Analytics Reis didn't know when the occupancy drop occurred. If this happened at the beginning of the quarter, it would be reflected in the quarterly financials. Otherwise it wouldn't be reported until next year.

In the case of commercial real estate, landlords were asked to make rent payments. The The special maintenance rate reached the highest mark According to Trepp, the value has increased by 44 basis points since May 2013 to 10.48% in September. In August the rate was 10.04%.

While retail and accommodation drove the increases, the multi-family special maintenance rates rose by 10 basis points to 2.66%.

Michael T. Fay, Principal, Managing Director and Global Head of Avison Young's Asset Resolution Team, expects more problems with apartment buildings. "What will be interesting is what happens to multiple families when the unemployment benefits that came from the stimulus packages expire," he says.


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