A report from Business Insider. “Overall mortgage delinquencies rose a seasonally adjusted 8.22% in the second quarter, according to the MBA. That marked a nine-year high, and a nearly 4% increase from the previous quarter, the largest quarterly jump in the survey’s history. ‘The COVID-19 pandemic’s effects on some homeowners’ ability to make their mortgage payments could not be more apparent,’ said Marina Walsh, MBA’s vice president of industry analysis. ‘Certain homeowners, particularly those with FHA loans, will continue to be impacted by this crisis, and delinquencies are likely to stay at elevated levels for the foreseeable future.’”
From The Real Deal. “An alarming share of people holding America’s most accessible and affordable mortgages are behind on payments. Around 16 percent of Federal Housing Administration mortgages were in delinquency in the second quarter, according to Bloomberg. That’s the highest percentage in delinquency going back at least four decades to records starting in 1979.”
“FHA mortgages are generally made to first-time homebuyers and low-income borrowers with credit scores too low to qualify for traditional mortgages. They also allow borrowers to buy with a smaller down payment. Delinquency rose from 9.7 percent in the first quarter. In the second quarter, 6.7 percent of conventional mortgages are delinquent.”
From S&P Global. “The sector boomed in the years following the last financial crisis based on the proposition that some college students will pay more to live in more modern and luxurious settings than the traditional dormitories. Amid the pandemic, landlords hope they can still attract residents regardless of what happens on campus. The wave of supply sapped some landlords’ ability to raise rents. Even before the novel coronavirus affected operations, the delinquency rate for student housing loans in CMBS stood at 3.8% in April, compared to 1.6% for CMBS loans across property sectors, Morningstar said. In May, following widespread campus closures, student housing delinquencies shot up to 9.5%.”
“If smaller and financially weaker student housing owners face similar leasing challenges as the new school year progresses, they may reach out to loan servicers seeking modifications, Morningstar Senior Vice President Gwen Roush said. ‘I think the servicers are expecting that to happen,’ she added.”
From Bisnow New York City. “Columbia University’s undergraduate courses will be held entirely online for the fall semester. The residential market has been hit hard by the university’s closing. Apartment rents have dropped between 16% and 20% in the neighborhood between August 2019 and this month, MNS Senior Vice President for New Development Iliana Acevedo said.”
The Loyola Phoenix in Illinois. “Loyola officials project at least a $50 million revenue loss for the upcoming year, but will reduce this year’s costs by $44 million through staff salary cuts and hiring freezes, among other things, officials said. Revenue loss could double if enough first-years or returning students withdraw or take a gap year, according to the email, obtained by The Phoenix.”
From Yahoo Finance. “‘The rise of [building] multifamily units may lead to an oversupply of apartment buildings, especially in city centers given the evident recent shift in consumer preference for single-family homes in the suburbs,’ said a statement by Lawrence Yun, chief economist at the National Association of Realtors.”
The Denver Post in Colorado. “Developers are on track to deliver half as many apartments in metro Denver this year as they did last year, marking the second-largest drop off in new apartment construction of any major metro area, according to a report from RENTCafé and Yardi Matrix. As people try to socially distance, they are leaving more densely populated areas, contributing to higher vacancies and lower rents in places like New York City and San Francisco. The region’s apartment construction is heavily concentrated in central Denver rather than the suburbs.”
“The region had a big drop in apartment construction in 2017, only to see completions come roaring back in 2018. Earlier this summer, Apartment Insights, a local firm, counted 22,000 apartments as under construction in the Denver area with 40,000 in the planning pipeline.”
The American Statesman in Texas. “Central Texas’ apartment market is experiencing something it hasn’t seen in 10 years: a decline in rents and occupancy rates. The shift — though not dramatic — has tilted the market a bit in favor of tenants, said real estate consultant Charles Heimsath, who tracks the apartment market in the five-county Austin metro area. That shift has allowed some renters to take advantage of special rates and discounts that haven’t been seen in years in the Austin market, where rents as recently as December had soared to record highs.”
“Brian Carberry, managing editor of Apartment Guide, said this is typically the time of year when prices begin to rise due to summer demand. ‘There may be certain in-demand neighborhoods in the city where prices have remained high, however, as a whole prices are coming down,’ Carberry said of the Austin market.”
“More than 29,000 apartment units in 120 projects are under construction, with more than 14,000 units due to be completed over the next 12 months, according to Robin Davis, owner of Austin Investor Interests. In addition, there are 37,800 units in the pipeline awaiting a permit or groundbreaking, Davis reports. ‘This current and proposed flood of units has the potential for a negative impact on a market that is currently struggling to maintain the status quo,’ Davis said.”
The San Francisco Chronicle in California. “The coronavirus pandemic has ravaged San Francisco’s neighborhoods, leaving boarded-up storefronts and empty apartments. Thousands of tenants across the city are using the deteriorating rental market as an opportunity to negotiate double-digit rent reductions. A recent report from Zillow found that the inventory of available apartments is up 96% over a year ago. Some landlords are cutting rent by 10% to 20% and offering gift cards, months of free rent or cash in exchange for renters signing a yearlong lease.”
“‘You are seeing a tremendous amount of downward pressure on rents in the city due to rising vacancy,’ said Zillow economist Joshua Clark. ‘There are some scary indicators if you are a landlord. The inventory chart is astonishing — it’s a straight line up. That is a huge clue that the exodus is happening — people are actually moving out of the city.’”
“Before approaching her landlord, Hayes Valley resident L.B. Hernandez researched the market, getting a sense of how far rents had fallen and how desperate property owners were to attract or retain tenants. To her shock, her landlord offered two attractive options: an early, penalty-free lease termination or a 20% reduction in rent, from $2,000 to $1,600, for signing a new lease. She decided to stay and became the lease negotiation expert among her friends.”
“‘I was riding this high, giving everyone tips on how to approach their landlords,’ she said. ‘It’s a renters’ economy. There are so many empty units. (Landlords) need us more than we need them.’”
“The vacancy rate among Apartment Association member properties is now 11.5%, four times what it was prior to the pandemic, said Charley Goss, government affairs manager for the organization. ‘People are having a tough time renting units out,’ Goss said. ‘Our members are nervous. All eyes have been on Congress, hoping for a relief package.’”
“The situation has been a nightmare for some small landlords, said Janan New, executive director of the Apartment Association. Panzer, who manages more than 600 units across the city, said the past few months have been a rude awakening. ‘Being a landlord doesn’t mean you always win,’ he said. ‘I have to remind my clients of that. That is part of the risk of our business.’”
From Miami Today in Florida. “A non-pandemic slowdown is fewer international homebuyers, from 42% of all buyers in 2016 to 25% in 2019, as currency exchange rates made home buys here relatively more expensive. EWM’s report is clear: currency exchange rate shifts from June 2019 to June 2020 made it 65.7% more expensive for an Argentine to buy here, a Brazilian 41.1%, a Chilean 21.2%, a Mexican 20%, a Colombian 16.5%, a Russian 11.9%, and an EU resident 1.2%. These were prime buyers when local brokers organized sales missions abroad to sell condos before they were even built.”
“That shift may show why new luxury condos here, according to the report, now sell at just 84% of original price. The report says what triggers luxury condo sales today is prices cut to levels buyers find appropriate. No more bidding up the price before new condos are ever occupied.”