A year ago, the folks who worked in Freddie Mac's multifamily section were sitting around waiting for the phones to ring. Now they cannot keep up.
"It's remarkable how quickly things changed," said Kimball Griffith of the government-sponsored enterprise. "We're now the 'P' in the P&L [profit and loss] at Freddie Mac."
Patrick Fitzgerald, an Orlando, Fla.-based vice president at BankUnited, is seeing the same activity. "Multifamily is in a full-fledged healing mode," he said Monday at the American Bankers Association's annual real estate lending conference in Baltimore.
Griffith, who is vice president of affordable sales and investments at Freddie Mac, pointed out that vacancy rates and rental rates have improved markedly over the past 12 months. Vacancies are running at 6.6% nationally, down from 8.1% a year earlier, and rents rose in last year's fourth quarter for the third quarter in a row. But even better is that the long-term outlook for the apartment market — from a demographic as well as a public policy point of view — is extremely good, Griffith told a conference session Monday. "The trends favor lending and owning multifamily."
Noting that "a segment of the population was pushed into homeownership when they just weren't ready," he said that there is now a "broad realization" that ownership isn't for everyone. Moreover, he said, multifamily is important to urban revitalization.
The demographics also favor apartments, Griffith said. Forget that echo boomers, the generation born in the 1980s and 1990s, many of whom are children of baby boomers, and immigrants who are entering the housing market for the first time tend to choose renting. Just the decline in ownership — from 69% at the peak of the housing boom to 65% now and perhaps 62% by the time all is said and done — could produce nearly 8 million more renters.
