Multi-Housing News - June 2009 - (Page 7)

MHN ONLINE Construction Conundrum By Anuradha Kher, Online News Editor Since the credit markets froze last year, the multifamily sector has suffered great pains. While financing for acquisitions and refinancing loans has been far easier in the apartment sector with Fannie Mae and Freddie Mac stepping in, the story of construction financing has mirrored that of the other commercial real estate sectors. New construction has all but halted nationwide, primarily due to lack of credit sources. Also, a drop in demand—and the resulting increase in vacancy rates—have put a damper on the entire sector. With the fundamentals of multifamily heavily dependent on job growth, this year is proving to be far worse for the sector than last year. The starts figures, for example, have been consistently falling. After a slight uptick seen in February, multifamily starts were down to 78,000 units in April, according to the latest report released by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD). On a yearover-year basis, this is a 74 percent drop. With conventional financing or “balance sheet financing” dead, small community banks, some private equity players and most importantly, HUD are filling the big gap in new construction financing left behind. In particular, the FHA 221(d)(4) program provides fixed-rate, up-to-40-years-amortizing, financing for the construction/substantial rehab of market-rate (non-rent-regulated) multifamily housing. The biggest competition to FHA financing comes from small community banks in the case of local projects. Since HUD likes to do deals in smaller markets as well, this can happen often. Meanwhile, the question of when conventional financing will return lingers on. Read the story at www.multi-housingnews.com/ Finance_June09 For more information, visit www.multi-housingnews.com/productinfo www.multi-housingnews.com | June 2009 7 http://www.use-group.com http://www.use-group.com http://www.multi-housingnews.com/Finance_June09 http://www.multi-housingnews.com/productinfo http://www.multi-housingnews.com

Table of Contents for the Digital Edition of Multi-Housing News - June 2009

Multi-Housing News - June 2009
Contents
From the Editor
Executive Insight: Acquisition Strategy
Investment: Construction Conundrum
Property Management: Tech Tools
Strategy: Property Management
Case Study: TOD
Technology: Resident Payments
Turning Over Apartments

Multi-Housing News - June 2009