Our goal at Stelvio Equity Group is to empower investors to create passive income by offering stable investment opportunities through the acquisition and management of multifamily apartment properties.
Lending volume is down for the start of 2023, many lenders remain committed.
Despite the shifting market dynamics, we remain actively searching for viable deals. Securing financing for each deal has become a significant challenge, given the numerous changes in the lending landscape for multifamily projects.
Multifamily mortgage borrowing and lending are expected to decline by 14% this year to reach $375 billion, compared to last year’s estimated total of $437 billion, according to the Mortgage Bankers Association (MBA). However, there’s optimism for a rebound in 2024, with the MBA predicting multifamily lending to reach $456 billion. Fannie Mae shares a similar outlook, expecting multifamily originations for 2023 to fall between $385 billion and $400 billion. The decrease in originations during the first quarter of 2023 was significant, with a 55% year-over-year drop and a 44% quarter-over-quarter decrease, largely attributed to uncertainty and volatility in interest rates, property values, and supply and demand imbalances.
Various agencies, including Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA), have seen the market conditions impact lending volume in the first half of the year. However, they remain committed to providing liquidity for the multifamily market and are ready to serve the needs as they arise. While the overall volume of FHA loans has decreased compared to previous years, there are signs of applications picking up, indicating a potential recovery.
Amid the unpredictable market, agencies like Freddie Mac remain focused on their affordable and equitable housing goals, as well as optimizing their loan purchase caps. In addition, HUD has announced significant funding and loan authority for the Green and Resilient Retrofit Program to improve energy efficiency and housing quality. Fannie Mae is offering a new option for borrowers to convert existing adjustable-rate mortgage loans to a fixed-rate execution to address rising interest rates.
Despite the challenges in the market, there are still opportunities for developers and lenders. While higher interest rates have made deals harder to justify, historical standards suggest that there are still sources to work with and opportunities to be found.