Get Smart Market Insights from Our Research Team 217 Customer Conference
Presenters Amanda Nunnink Amanda Nunnink Steve Steve Guggenmos Guggenmos Sara Steve Hoffman Griffin Steve Sara Griffin Hoffmann Senior Director Senior Director Production & Sales Production & Sales Vice President Vice President Research & Research & Modeling Modeling Director Manager Investments Production & Portfolio Management Sales Manager Director Production & Sales Investments & Portfolio Management
Industry Survey How did respondents anticipate the multifamily market to grow over the next 3 to years? 1% said slow down 2% said stabilize 6% said grow slightly or significantly
Industry Survey Reasons why multifamily market will grow Reasons why multifamily market will slow down 32% demand/supply 17% growing population 42% saturation or oversupply 12% how it s been trending
Industry Survey How will the rental market grow compared to the homeownership market? 26% say markets will remain same 38% say rental market will grow 37% say 6% homeownership Grow slightly will grow or significantly more
Rent vs. Own 21% say more people choose to rent 11% say it s too expensive to buy % say it s hard to qualify for a mortgage 8% say more people choose to buy % say people want to own a home 3% say rent is too expensive
Supply Rental Demand Keeps Rising Increasing number of renter households by necessity and choice 8 M Owner Households Renter Households Homeownership Rate 7% Total Households Growth 2-217: 9.4 million 7 6 68% 66% Renter Household Growth 2-217: 9.2 million 64% 4 62% Owner Household Growth 2-217: 3 6% 262,2 2 8% 2 26 27 28 29 21 211 212 213 214 21 216217 (Q2) Sources: U.S. Census Bureau, Current Population Survey/Housing Vacancy Survey, Freddie Mac Homeownership Rate down.3%
Rent Growth Long-run rent growth of 3.3% going back to 199 Historic (REIS) Average (199-216) REIS RealPage Axiometrics Freddie Mac 9 6 3 2 1 2 3 4 6 7 8 9 21 11 12 13 14 1 16 17 18 19 22 21-3 -6 Sources: REIS, RealPage, Axiometrics, Freddie Mac
Rent Growth Long-run rent growth of 3.3% going back to 199 4. 4. 3. 3. 2. 2. 216 217 218 219 22 221 Average (199-216) REIS RealPage Axiometrics Freddie Mac Sources: REIS, RealPage, Axiometrics, Freddie Mac
Vacancy Rates Long-run vacancy rate.3% going back to 199 Historical (REIS) Average (199-216) REIS RealPage Axiometrics Freddie Mac 9 8 7 6 4 3 2 1 2 1 2 3 4 6 7 8 9 21 Sources: REIS, RealPage, Axiometrics, Freddie Mac 11 12 13 14 1 16 17 18 19 22 21
Vacancy Rates Long-run vacancy rate.3% going back to 199 6. 6... 4. 4. 216 217 218 219 22 221 Average (199-216) REIS RealPage Axiometrics Freddie Mac Sources: REIS, RealPage, Axiometrics, Freddie Mac
Gross Income Growth Long-run gross income growth of 3.4% going back to 199 Historic (REIS) Average (199-216) REIS RealPage Axiometrics Freddie Mac Inflation 12 1 8 6 4 2-2 -4-6 2 1 2 3 4 6 7 8 9 21 11 12 13 14 1 16 17 18 19 22 21 Sources: REIS, RealPage, Axiometrics, U.S. Bureau of Labor Statistics (BLS), Moody s Analytics Forecasted, Freddie Mac
Gross Income Growth Long-run gross income growth of 3.4% going back to 199 4 3 2 1 216 217 218 219 22 221 Average (199-216) REIS RealPage Axiometrics Freddie Mac Inflation Sources: REIS, RealPage, Axiometrics, U.S. Bureau of Labor Statistics (BLS), Moody s Analytics Forecasted, Freddie Mac
Treasury, Spread and Cap Rate Multifamily Cap Rates & U.S. Treasuries Current risk premium demanded to hold real estate is above average levels 1% 9% 8% 1-year Treasury Rate Cap Rate Spread CPPI (RHS) 3. 2. 7% 6% % 4% 3% 2% 1% % 2. 1. 1... Multifamily Price Index Sources: Real Capital Analytics (RCA) Commercial Property Price Index (CPPI), U.S. Board of Governors of the Federal Reserve System
Multifamily Origination Volume As a result of strong fundamentals, origination volume continues to set record years $3B $2 $2 $1 $1 $ $ 2 21 22 23 24 2 26 27 28 29 21 211 212 213 214 21 216* 217* Freddie Mac Multifamily Fannie Mae Multifamily Life Insurance Companies CMBS, Multifamily Only Other (Banks, S&Ls, Mortgage Co., etc) Freddie 217 Forecast Sources: MBA, Fannie Mae, ACLI, Wells Fargo Securities, and Freddie Mac
MF Permits, Starts and Completions (Thousands) Renter Occupied Households (Millions) Multifamily Supply Annual completions in 217 reached 3, expected to go higher but new construction continues to abate 7 6 4 3 2 1 4 4 3 3 2 2 1 1 MF Permits MF Starts MF Completions Renter Occupied Sources: U.S. Census Bureau, Moody s Analytics
Demand vs. Supply Demand remains just as strong but supply increasing compared to prior few years 4 4 3 3 2 2 1 1 K New Supply Absorptions 214-216 Avg Absorptions 213 214 21 216 217 218 219 22 221 Sources: RealPage, Freddie Mac
New York Dallas Houston Washington, DC Atlanta Seattle Los Angeles Denver Austin Chicago Boston Nashville Charlotte Orlando Phoenix Orange Co San Antonio Portland Miami Salt Lake City Raleigh Minneapolis San Francisco Philadelphia Tampa Bay Northern NJ San Jose San Diego Ft. Worth Kansas City Columbus Ft. Lauderdale Milwaukee Baltimore Las Vegas Oakland Palm Beach Supply Markets with Highest New Supply 217-218 3 K 3 2 2 1 1 Sources: RealPage, Freddie Mac
New York Dallas Houston Washington, DC Atlanta Seattle Los Angeles Denver Austin Chicago Boston Nashville Charlotte Orlando Phoenix Orange Co San Antonio Portland Miami Salt Lake City Raleigh Minneapolis San Francisco Philadelphia Tampa Bay Northern NJ San Jose San Diego Ft. Worth Kansas City Columbus Ft. Lauderdale Milwaukee Baltimore Las Vegas Oakland Palm Beach Supply New Supply & Inventory Change 3 K 217-218 Avg Supply 217-218 Inventory Change 3 2 2 1 1 1% 9% 8% 7% 6% % 4% 3% 2% 1% % Sources: RealPage, Freddie Mac
New York Dallas Houston Washington, DC Atlanta Seattle Los Angeles Denver Austin Chicago Boston Nashville Charlotte Orlando Phoenix Orange Co San Antonio Portland Miami Salt Lake City Raleigh Minneapolis San Francisco Philadelphia Tampa Bay Northern NJ San Jose San Diego Ft. Worth Kansas City Columbus Ft. Lauderdale Milwaukee Baltimore Las Vegas Oakland Palm Beach Supply Supply & Absorptions 217-218 3 K 217-218 Avg Supply 217-218 Avg Absorptions 21-216 Avg Absorptions 3 2 2 1 1 Sources: RealPage, Freddie Mac
New York Dallas Houston Washington, DC Atlanta Seattle Los Angeles Denver Austin Chicago Boston Nashville Charlotte Orlando Phoenix Orange Co San Antonio Portland Miami Salt Lake City Raleigh Minneapolis San Francisco Philadelphia Tampa Bay Northern NJ San Jose San Diego Ft. Worth Kansas City Columbus Ft. Lauderdale Milwaukee Baltimore Las Vegas Oakland Palm Beach Supply Annual Average New Supply 219-221 3 K 3 2 2 1 1 Sources: RealPage, Freddie Mac
New York Dallas Houston Washington, DC Atlanta Seattle Los Angeles Denver Austin Chicago Boston Nashville Charlotte Orlando Phoenix Orange Co San Antonio Portland Miami Salt Lake City Raleigh Minneapolis San Francisco Philadelphia Tampa Bay Northern NJ San Jose San Diego Ft. Worth Kansas City Columbus Ft. Lauderdale Milwaukee Baltimore Las Vegas Oakland Palm Beach Supply Annual Average New Supply & Absorption 219-221 3K 219-221 Avg New Supply 219-221 Avg Absorptions 3 2 2 1 1 Sources: RealPage, Freddie Mac
New York City New Supply Absorptions 4 4 3 3 2 2 1 1 K - 213 214 21 216 217 218 219 22 221-1 Sources: RealPage, Freddie Mac
New York City New Supply Absorptions Employment K % 4 4 4% 3 3 3% 2 2 2% 1 1 1% - -1 213 214 21 216 217 218 219 22 221 % -1% Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
New York City New Supply Absorptions Rent Growth Vacancy K % 4 4 4% 3 3 3% 2 2 2% 1 1 1% - -1 213 214 21 216 217 218 219 22 221 % -1% Sources: RealPage, Freddie Mac
Los Angeles New Supply Absorptions 18 16 14 12 1 8 6 4 2 K 213 214 21 216 217 218 219 22 221 Sources: RealPage, Freddie Mac
Los Angeles New Supply Absorptions Employment 18 16 14 12 1 8 6 4 2 K 213 214 21 216 217 218 219 22 221 3.% 2.% 2.% 1.% 1.%.%.% Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Los Angeles New Supply Absorptions Rent Growth Vacancy Rate 18 16 14 12 1 8 6 4 2 K 213 214 21 216 217 218 219 22 221 9% 8% 7% 6% % 4% 3% 2% 1% % Sources: RealPage, Freddie Mac
San Francisco New Supply Absorptions 7 6 4 3 2 1 K -1 213 214 21 216 217 218 219 22 221-2 Sources: RealPage, Freddie Mac
San Francisco New Supply Absorptions Employment 7 K 6 4 3 2 1-1 -2 213 214 21 216 217 218 219 22 221 7% 6% % 4% 3% 2% 1% % -1% -2% Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
San Francisco New Supply Absorptions Rent Growth Vacancy 7 6 4 3 2 1-1 -2 K 213 214 21 216 217 218 219 22 221 14% 12% 1% 8% 6% 4% 2% % -2% -4% Sources: RealPage, Freddie Mac
Nashville New Supply Absorptions 1 9 8 7 6 4 3 2 1 K 213 214 21 216 217 218 219 22 221 Sources: RealPage, Freddie Mac
Nashville New Supply Absorptions Employment 1 9 8 7 6 4 3 2 1 K 213 214 21 216 217 218 219 22 221 4.% 4.% 3.% 3.% 2.% 2.% 1.% 1.%.%.% Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Nashville New Supply Absorptions Rent Growth Vacancy 1 9 8 7 6 4 3 2 1 K 213 214 21 216 217 218 219 22 221 8% 7% 6% % 4% 3% 2% 1% % Sources: RealPage, Freddie Mac
Fort Lauderdale New Supply Absorptions 7 K 6 4 3 2 1 213 214 21 216 217 218 219 22 221 Sources: RealPage, Freddie Mac
Fort Lauderdale New Supply Absorptions Employment 7 K 3.% 6 3.% 2.% 4 2.% 3 1.% 2 1.% 1.% 213 214 21 216 217 218 219 22 221.% Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Fort Lauderdale New Supply Absorptions 7 K 8% 6 4 3 2 1 7% 6% % 4% 3% 2% 1% 213 214 21 216 217 218 219 22 221 % Sources: RealPage, Freddie Mac
Phoenix New Supply Absorptions 1 9 8 7 6 4 3 2 1 K 213 214 21 216 217 218 219 22 221 Sources: RealPage, Freddie Mac
Phoenix New Supply Absorptions Employment 1 9 8 7 6 4 3 2 1 K 213 214 21 216 217 218 219 22 221 3.% 3.% 2.% 2.% 1.% 1.%.%.% Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Phoenix New Supply Absorptions Rent Growth Vacancy 1 9 8 7 6 4 3 2 1 K 213 214 21 216 217 218 219 22 221 8% 7% 6% % 4% 3% 2% 1% % Sources: RealPage, Freddie Mac
Top 1 Markets with Highest Income Growth in 217 & 218 Metro 217 218 Gross Income Vacancy Rate Metro Gross Income Vacancy Rate Seattle 6.6%.% Sacramento 4.8% 3.3% Tacoma.9% 3.1% Portland 4.7%.4% Sacramento.7% 2.9% Tacoma 4.% 3.% Portland.3%.2% Seattle 4.4%.6% Colorado Springs.2% 3.7% Ft. Lauderdale 4.3% 4.% Nashville 4.6%.8% Cleveland 4.3% 3.2% Los Angeles 4.4% 3.6% Tampa 4.2%.6% Oakland 4.2% 3.% West Palm Beach 4.2% 4.8% Ft. Worth 4.1% 4.2% Oakland 4.% 3.7% Riverside 4.1% 3.% Jacksonville 3.9% 6.2% Source: Freddie Mac
Affordability Growing Affordability Problem AMI: Under % AMI: %-8% AMI: 8%-1% AMI: 1%+ 6.6% 7.% 7.6% 8.9% 1.4% 1.%.9% 6.3% 6.7% 7.% 8.8% 9.4% 32.% 32.7% 33.1% 36.3% 37.% 36.8%.% 4.% 2.% 47.3% 43.7% 43.2% 21 211 212 213 214 21 Sources: Freddie Mac tabulations of American Community Survey microdata. Affordability thresholds are based on the AMI of all MSAs in the United States
Affordability Multifamily very low-income (VLI) population is shrinking as rent growth outpaces income growth First Financing Second Financing Units VLI LI Median None VLI LI Median None Total 97,61 11.2% 71.3% 13.3% 4.2% 4.3% 6.2% 21.% 9.4% TX 28,33 1.2% 74.% 13.6% 2.2% 3.2% 69.% 23.1% 4.8% FL 13,197 1.% 6.2% 34.1% 4.% 1.6% 38.7% 39.6% 2.2% GA 9,766 11.8% 7.9% 8.7% 3.6% 2.1% 77.7% 14.8%.4% CO,128 32.4% 67.6%.%.% 7.% 82.6% 9.%.4% NC,61 9.8% 88.2% 2.%.%.3% 83.9% 1.6%.3% CA 4,776 2.3%.6% 1.6% 26.6% 2.% 9.8% 27.1% 6.6% AZ 4,14 34.% 6.%.7%.% 21.8% 74.% 3.3%.% NV 3,64 1.8% 67.6% 16.4%.3% 4.% 7.4% 2.1%.% WA 3,262 4.% 86.1% 1.6% 8.3% 1.1% 81.6% 11.% 6.3% Repeat financing of VLI affordability analysis (21 216) Source: Freddie Mac