Fannie Mae Affordable Lender Meeting · While vacancies for subsidized properties are just 1.7%...

Fannie Mae Affordable Lender MeetingMAH Madness

November 13, 2017

© 2017 Fannie Mae. Trademarks of Fannie Mae.

Our Stat Sheet

$2,300 $2,590

$3,000

$4,300

$3,901

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

Mil

lio

ns

2013 2014 2015 2016

Through 3Q 2017

Q3 2017 Book Size: $32.7B

Team Name: Multifamily Affordable Housing (MAH)

Fannie Mae Affordable Lender Meeting | November 2017

Q3 2017 SDQ: 0.02%Q3 2017 Credit Losses: $1M

87% Growth!

Full-court “press”


Widescreen Sized PowerPoint Template | October 2017 4

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Healthy Housing Rewards

“When we strengthen the connection between affordable housing and the long-term health and stability of the people and families who live there, we help create more sustainable communities across the country.”

Jeffery Hayward, Executive Vice President, Multifamily, Fannie Mae

“

“ Replace this square with your photo.


© 2017 Fannie Mae. Trademarks of Fannie Mae. | 9

Rewards for Healthy Design

Fannie Mae affordable borrowers benefit from a pricing incentive &reimbursement of the cost of certification.

Rewards multifamily affordable

borrowers whose properties

incorporate health-

promoting design elements.

Multifamily Affordable Housing properties where at least 60% of the units are serving tenants at 60% of AMI or less are eligible.


• For more information visit the Fannie Mae website https://www.fanniemae.com/multifamily/healthy-housing-rewards

• Download the Fitwel℠ Residential Scorecard @ www.fitwel.org

• Mark your calendars for Lender Training on December 11th


https://www.fanniemae.com/multifamily/healthy-housing-rewards

http://www.fitwel.org/

Top Ten Trends Affecting Multifamily Affordable

Housing

Tanya ZahalakMultifamily Economist


3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

$925

$975

$1,025

$1,075

$1,125

$1,175

$1,225

$1,275

Rent Level

Vacancy Rate

5.25%

$1,230

Estimated National Rent Level and Vacancy Rate

Source: Fannie Mae Multifamily Economics and Market Research Estimates

Multifamily vacancy remains at historic lows, coupled with 30 quarters of stable or growing rents…

Trend 1: The Conventional Market Remains Tight


Source: Axiometrics

National Concession Rate

…and concessions have returned to the lowest rates seen in a decade.

0%

1%

2%

3%

4%

5%

6%

7%

8%


-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

% I

ncre

ase

fro

m P

rio

r Y

ea

r

A B C

While rent growth is slowing, class B/C rent growth remains at or above levels seen for Class A rent growth…

National Effective Rent Growth by Class

Source: Axiometrics

Trend 2: Class B/C Remains At Least As Strong As Class A


14%

28%

10.0% 15.0% 20.0% 25.0% 30.0%

Total Renter

Married couple

Male headed household

Female headed household

Nonfamily: Householder living alone

Nonfamily: Roommates

Multifamily Single Family

Change in Renter Households by Type 2006-2015 (%)

Source: American Community Survey

…supported by rapidly growing roommate renter households. Roommate households grew at the fastest pace over the last decade supporting occupancy and rent growth.

Trend 3: Roommates Doubling Up to Afford Rents


Trends in Subsidized Affordable Multifamily (MF)


$155.0

$160.0

$165.0

$170.0

$175.0

$180.0

$185.0

$190.0

$195.0

$9.0

$9.5

$10.0

$10.5

$11.0

$11.5

$12.0

2013 2014 2015 2016 2017

Total Cost Average Cost Per Square Foot

National Apartment Construction Costs for a 4-7 story building

Source: RSMeans

Construction costs keep rising making preservation of existing affordable apartments even more important.

Trend 4: Construction Costs Keep Rising


0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

Fort Lauderdale - Palm Beach, FL

Tampa-St. Petersburg, FL

Seattle, WA

Los Angeles, CA

Denver

Oakland-East Bay

Boston

Phoenix

Philadelphia

Austin

Charlotte

Baltimore

District of Columbia

Jacksonville

National

Q2 2016

Q2 2017

Trends in Median Vacancy Rates for Largest Metropolitan Areas (%)

Source: Reis, Inc.

While vacancies for subsidized properties are just 1.7% nationally, major metro areas have much tighter vacancies which also continue to decline…

Trend 5: Vacancies Fell or Remained Unchanged in 65 Metros


1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

Odessa-Midland TX

Tulsa OK

Little Rock AR

Oklahoma City OK

Columbia SC

St. Louis MO

El Paso TX

Lexington KY

Albuquerque NM

Las Vegas NV

Savannah GA

Wichita KS

National

Q2 2016

Q2 2017

Select Metros with the Highest Median Vacancy Rate as of Q2 2017 (%)

Source: Reis, Inc.

…only a handful of metros now have vacancy rates above 3.5% and they are the smaller metros. Oil and gas metros showed some of the biggest increases in vacancy.


0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Metro Areas with the Fastest Growing Rents (%)(year over year as Q2 2017)

Source: Reis, Inc.

Rents grew by 3.0 percent or more in 13 metros...


Trend 6: Rents At Subsidized Affordable MF Properties Rose by a Healthy 1.9%

$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

Q2 2016 Q2 2017

Median Asking Rents for LIHTC & Section 8 Units – Largest Metros ($)

Source: Reis, Inc. ; metros ranked from greatest percentage increase in rent to smallest.

… and large metros in the south and west showed even stronger rent growth.


5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

8.5%

2009 2010 2011 2012 2013 2014 2015 2016 2017

LIHTC Properties Market Rate Properties

Median Cap Rates for LIHTC and Conventional Properties 2009 – YTD 2017

Source: CoStar Group, YTD 2017 represents transactions through October 23, 2017

Note: Cap rates for LIHTC properties approximated by Affordable Rent-Restricted Category; Cap rates for market rate properties exclude any properties identified as having an affordable

component.

Cap rates for investment-grade properties subsidized with LIHTC fell to 6.4%, just above the 5.6% rate for conventional properties.

Trend 7: Cap Rates for Subsidized Affordable MF Properties Continue to Fall


Keep in Mind…


Source: Fannie Mae, American Community Survey (ACS)

Breakout of Multifamily Rental Housing Supply by Affordability Category

54.7% 53.9%48.7% 44.6% 43.9%

40.1% 40.4%44.6%

47.6% 47.7%

5.2% 5.7% 6.7% 7.8% 8.3%

2011 2012 2013 2014 2015

Low Income (AMI: 0%-60%) Workforce Housing (AMI: 60%-120%) Higher Income (AMI: 120+)

Trend 8: There has been a substantial decline in affordability of MF rental housing…


Florida Economic Impact by CountyTexas Economic Impact by County

…and Hurricanes Harvey, Irma and Maria affected the housing stock in some of the most affordable areas of the country.


3.0

3.5

4.0

4.5

5.0

5.5

6.0

2014 2015 2016

Mill

ions

Class A Class B/C Subsidized Affordable MF

Change in Stock by Segment

Source: REIS, Inc.; Class B/C based on investment grade properties. National Low Income Housing Preservation Database for Subsidized Affordable Properties, excludes public housing.

Note that the Preservation Database presents a snapshot in time. 2015 Data is an average of the data presented in 2014 and 2016. Subsidized Affordable MF excludes public housing and units where there are tenant-based vouchers.

The majority of investment grade rental stock continues to fall in the Class B/C segment.

Trend 9: There is Still More Naturally Occurring Affordable MF Than Subsidized Affordable MF


Number of City, State and Local Housing Trust Funds

The number of City, State and Local Housing Trust Funds has been rising since the end of the recession and now totals about 770 funds, many of which provide gap financing.

Source: The 2016 Housing Trust Fund Report

Trend 10: The Number of Funds Able to Provide Gap Financing Has Been Rising.


Fannie Mae Affordable Lender Meeting · While vacancies for subsidized properties are just 1.7%...

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