Regulators Gave Room To Lend Billions Of Extra Dollars
A report from Multi-Family Biz. “Some 47,700 new beds are expected to come to market in privately-owned, purpose-built student housing properties in time for the Fall 2016 semester, with university markets in the Southeast region the primary target, according to Axiometrics, a provider of student housing and apartment market intelligence. The new supply to be delivered this year is the third highest ever for privately-owned properties, behind 2014 and 2013.”
“‘Though deliveries of new supply are not as high as they were a couple of years ago, demand remains strong, and students are generally absorbing the new beds,’ said Jay Denton, senior vice president of analytics for Axiometrics. ‘One thing that differentiates student housing from conventional apartments is that the distribution of new supply can change dramatically year to year. As construction near one school meets the demand, a building boom will begin in another university market.’”
From National Real Estate Investor. “Investors are buying more student housing properties than ever before. ‘Last year was the biggest year ever, investment sales-wise,’ says Fred Pierce, CEO of Pierce Educational Properties. But hang on tight–this year is likely to be even bigger given the pace of transactions so far in 2016. From the start of 2016 through mid-May, investors traded more than $3 billion in student housing properties, up from $2.1 billion over the same period in 2015, according to data from Real Capital Analytics (RCA). In comparison, in 2014, investors bought a total of $3.2 billion in student housing properties over the course of the whole year.”
“The same trends that made last year so busy loom even larger this year. Capital from around the world is interested in finding a home in commercial real estate properties in the U.S. At the same time, more investors see student housing as a core type of commercial real estate rather than a niche market. And a variety of financing sources are eager to provide permanent loans, equity and mezzanine financing. ‘Interest in the student housing sector is as high as it’s ever been and is increasing,’ says Doug Opalka, senior managing director for Holliday Fenoglio Fowler (HFF).”
“The largest buyers include a growing list of institutional investors. ‘Pension capital has been very interested,’ says Pierce. ‘I expect to see more and more capital allocated to student housing and more and more institutional investors enter the business.’”
“International investors are also pouring money into student housing. ‘There are billions of dollars in transactions from foreign capital sources—Canada, Asia and the Middle East,’ says Opalka. ‘The amount of foreign capital is meaningful and accelerating. Where else does it make sense to invest capital?’”
“Developers are also finding opportunities in buying and upgrading older assets. ‘The value-added deals are the ones where I see the most juice,’ says Lee Weaver, senior vice president for Northmarq Capital. Permanent loans at low interest rates are available for strong properties and sponsors. This type of loan is likely to be from one of the GSEs’ program. ‘Fannie Mae and Freddie Mac are still the best lending source for permanent debt, for both price and loan dollars,’ says Northmarq Capital’s Weaver.”
“The federal officials that have overseen Fannie Mae and Freddie Mac since they were seized in 2008 have given them a lot more room to lend. Last year, the Federal Housing Finance Agency ruled that loans to affordable housing properties are excluded from the limits on their commercial real estate lending. Student housing financing still counts under the lending limits, according to the regulators, but the change gave Fannie Mae and Freddie Mac room to lend billions of extra dollars—and they have been very busy.”
“But Fannie Mae and Freddie Mac can’t cover the permanent financing needs of all student housing properties. The agencies prefer to lend on student housing that serves large universities with more than 10,000 students enrolled in classes. Life company lenders also offer permanent financing for student housing with the best locations and amenities, often at very low interest rates.”
“As institutions commit more cash to student housing, they can buy larger properties. For example, in 2015, the Arizona State Retirement System (ASRS) increased its investment commitment for a student housing partnership with Pierce from $100 million to $300 million. Institutions like the ASRS and the Canada Pension Plan Investment Board have already acquired a total of $1.8 billion in student housing assets this year in the U.S., against just $133.3 million in dispositions. Institutions were also large net buyers in 2015.”
The Arizona Daily Star. “Tucson should see more student-housing towers rise in the coming school years as developers enjoy high occupancy rates and rental income nearly twice that of market-rate apartments. A newly completed complex, Hub At Tucson II, opens this school year and sits next to other towers. The units are leasing as fast as they’re being built — a trend that’s being seen nationwide in college cities. ‘Nationally, student housing is booming,’ said Bert Kempfert, senior vice president of investment properties and multifamily developments for CBRE. ‘In the first quarter of 2016, there was a record $2.6 billion in capital poured into this sector.’”
“The lure of the towers has already had an impact on neighborhoods surrounding the university, as students leave older rental houses for the location and amenities of the towers. Perks at the towers include things such as on-site salons, rooftop pools and party buses that rotate between the properties and North Fourth Avenue/ downtown nightlife. The exodus from surrounding neighborhoods has been so significant that the city and county are promoting a campaign to encourage landlords to sell their rental homes and return the area to homeowners.”
“Is Tucson prepared to absorb more? ‘I think we’re close to being oversaturated in student housing,’ said Hank Amos, president of Tucson Realty & Trust Co. ‘I think there’s room for somebody to fill another one, but somewhere along the food chain someone is going to feel the pain.’”
“He said the newer towers, with their proximity to campus and high-end amenities, will have an impact on the older properties farther out. ‘We’ve built so much student housing and not all students can afford it,’ Amos said. ‘I don’t know where the tipping point is.’”
The Journal Star. “By the middle of this month, two more towering student apartment complexes will open their doors, adding more than 1,200 beds in downtown Lincoln. Since 2002, student housing developments built by both the University of Nebraska-Lincoln and a slew of private companies have added 5,000 beds to the areas surrounding campus, changing the face of downtown Lincoln in the process.”
“Aspen Lincoln is also wrapping up construction on three new buildings ahead of move-in scheduled this week. Aspen operates 14 student housing complexes across the country, including the 632-bed, 182-unit complex in Lincoln. Aspen reported 60 percent of its Lincoln units were leased, and general manager Katie Sloan said community events for tenants began this summer.”
“The market is now over-saturated, one apartment manager said. ‘There’s nothing wrong with people building new operations, but I think they built too many beds,’ said Jerry Shoecraft, general manager of the 50/50. ‘There is concern — not on our part — that some buildings might not even be 50 percent leased.’”
“Shoecraft said while he believes UNL’s enrollment will eventually reach former Chancellor Harvey Perlman’s goal of 30,000 students, it won’t happen quickly enough to fill each of the student housing options for the next few years. ‘I think the market needs to settle down for a couple of years,’ he said. ‘Everyone is pulling from each other now, and no one will get 100 percent.’”
Permanent loans?
perpetual loans!
Permanently underwater borrowers
We can dig the hole faster than the taxpayers can fill it.
‘The federal officials that have overseen Fannie Mae and Freddie Mac since they were seized in 2008 have given them a lot more room to lend. Last year, the Federal Housing Finance Agency ruled that loans to affordable housing properties are excluded from the limits on their commercial real estate lending. Student housing financing still counts under the lending limits, according to the regulators, but the change gave Fannie Mae and Freddie Mac room to lend billions of extra dollars—and they have been very busy’
Yes, Mel Watt has been very busy. Home Ready, billions flowing into these (don’t forget - “luxury”) student complexes. And like regular apartments, they have to be luxury to justify the extraordinarily high rents. Paid for with student loans no doubt. Does anyone see a pattern here?
All the FHA loosening. Golly, it’s like the federal government is making a huge effort to juice the economy through every aspect of housing and real estate in general. Even farmland.
‘I think there’s room for somebody to fill another one, but somewhere along the food chain someone is going to feel the pain’…He said the newer towers, with their proximity to campus and high-end amenities, will have an impact on the older properties farther out. ‘We’ve built so much student housing and not all students can afford it.’
‘There’s nothing wrong with people building new operations, but I think they built too many beds…’There is concern — not on our part — that some buildings might not even be 50 percent leased.’
High-end amenities. There it is again. Who knew students were demanding so much luxury. Actually they aren’t. It’s the developers paying too much for land that created the luxury story. What’s the end of all this? Somebody isn’t going to retire.
Any housing aimed at college students is going to take a tremendous beating, amenities or not. There’s a reason why college dorms originally were so spartan, because spartan is sturdier and easier to maintain. Do international investors know this?
that’s exactly what I was wondering: just who are the “investors” taking advice from that ignores the destructive tendacies of teens/young adults in college?
these “beds” are going to look worse than a section-8 tenament in a few short semesters.
better get a substantial deposit on the helicopter parents AMEX
Did these developers (or Fannie Mae) even bother to look at the US demographics? The Millenial bump is done with college. There is a *substantial* drop in the number of kids in the 10-21 age range. Who’s going to fill these apartments, grad students and Chinese cheaters?
As for durability, *heh* I well remember the masonry block walls and the special poster stick-um. And I also remember that dorm residents were not nearly as destructive as those who rented off campus in order to party.
“…just who are the “investors” taking advice from…”
The “investors” are typically public retirement funds with “lofty” investment mandates, and their beneficiaries have little say in the matter since public investment fund losses are made whole by deficit spending or property tax increases.
Can a change in thinking at the Fed be a black swan?
Former Indian central bank chief (some real truthiness here - no wonder he was forced out by the oligarchs): http://www.marketwatch.com/story/in-interview-indias-rajan-says-monetary-policy-has-run-its-course-2016-04-15
“Not much,” he replied. “Except that I think there’s an accumulation of evidence that monetary policy is pretty ineffective” : https://www.thestreet.com/story/13677112/1/economist-paul-krugman-tells-bloomberg-tv-the-fed-should-raise-inflation-rates.html
By casting votes for Obama, McCain, and Romney, 95% of the ‘Murican electorate made a sacred covenant with the Wall Street-Federal Reserve Looting Syndicate: “We will bend over for you on demand.” So even though Yellen the Felon’s “No Billionaire Left Behind” monetary policy is robbing them blind, the Oligopoly has a free hand to swindle the brain-dead masses.
Is there any coincidence that after 1971 the amount of credit expanded quite rapidly?
I smell a student loan/state pension systems bailout brewing…
The stuff we really need is getting more expensive. Other stuff is getting cheaper.
By Christopher Ingraham August 17 at 11:53 AM
A holiday shopper browses the electronics section against a backdrop of televisions at a Target store in Newport, Ky., on Black Friday in 2015. (AP Photo/John Minchillo)
Sociologist Joseph Cohen of Queens University is fond of saying that “America is a place where luxuries are cheap and necessities costly.”
A recent chart from economist Mark Perry of the American Enterprise Institute, using data from the Bureau of Labor Statistics, illustrates this well. Since 1996, the prices of food and housing have increased by close to 60 percent, faster than the pace of inflation. Costs of health care and child care have more than doubled. The prices of textbooks and higher education nearly tripled.
Mark Perry/American Enterprise Institute
Mark Perry/American Enterprise Institute
On the other hand, the prices of things like mobile phone service, toys, software and televisions have plummeted over the same period.
For many Americans, in other words, that shiny new flat-screen TV is now more within reach financially than it’s ever been. But it has become harder to afford the house to put it in, food to eat in front of it, or the medical care to ensure you’ll outlive its extended warranty.
What’s going on here? Perry points out that most of the things falling in price are manufactured goods, and that prices of those goods have been falling for decades as a result of technological improvements and productivity gains.
“The ‘miracle of manufacturing’ delivers lower prices all the time, and would explain why those prices have decreased significantly over time, relative to overall price increases,” he said in an email.
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Perry also pointed to trade as a factor. Many manufactured goods — like TVs and appliances — come from overseas, where labor costs are cheaper. “International, global competition lowers prices directly from lower-cost imported goods, and indirectly by forcing U.S. manufacturers to behave more competitively, with lower prices, higher quality, better service, et cetera,” Perry said.
On the flip side, things like education and medical care can’t be produced in a factory, so those pressures do not apply. Compounding it, many Americans are insulated from the full costs of these services. Private and public insurance companies pay most medical costs, so there tends to be little incentive for individuals to shop around for cheaper medical care.
In the case of higher education, the nation’s massive student loan industry bears much of the upfront burden of rising prices. To the typical 18-year-old, a $120,000 tuition bill may seem like an abstraction when you don’t have to start paying it off until your mid-20s or later. As a result, the nation’s college students and graduates now collectively owe upward of $1.3 trillion in student loan debt.
“Prices rise when [health care and college] markets are not competitive and not exposed to global competition,” Perry said, “and prices rise when easy credit is available.”
Hence, our current predicament. We can afford the things we don’t need, but we need the things we can’t afford. Whether the 20-year trajectory in the chart above is sustainable is another question entirely.
“…and prices rise when easy credit is available…”
Credit junkies setting the prices for the rest of us.
What government takes over:
Healthcare
Higher education
Housing
It destroys.
If government took over the TV industry we would see the exact same problems.
The GI Bill had a great effect on education and American success.
Three out of five Texans do not want to live in the same country with amoral, stupid people who wish to be ruled over by a corrupt collectivist sociopath.
http://www.zerohedge.com/news/2016-08-17/3-out-5-texans-support-secession-if-hillary-wins-presidency
“Three out of five Texans do not want to live in the same country with amoral, stupid people who wish to be ruled over by a corrupt collectivist sociopath.”
Then why are they voting for Trump?
Trump is a deeply flawed candidate and human being. People are voting for him because he’s not Hillary, the embodiment of the corrupt, crony capitalist status quo, and the entire Oligopoly is arrayed against him. Not great reasons, but reason enough.
Have we ever had a candidate who wasn’t “deeply flawed”? To be deeply flawed is to be human. The founders were deeply flawed.
I would rather have a deeply flawed candidate who at least tries to accomplish something decent, and who is willing to acknowledge the problems faced by the country, than a “saint” like Obama.
Anyway, Ray, you don’t have to apologize for Trump. He just cleaned house, thank jeebus. And had the stones to call out the CIA.
Exactly
Nine out of ten dentists and Californians do not want to live in the same country with amoral, stupid people who wish to be ruled over by a corrupt collectivist sociopath.
Texas is a moocher state, too many illegals to pay for.
That’s funny coming from the poorest state in the union, which is crawling with illegals. Oh but the feds shut down your border so they could pour through Arizona on their way up north. And why don’t the feds do something about illegal immigration in the first place? They tell us they make the policy.
the third rail of this blog is criticizing Texas.
I love Texas, I think everyone should move there.
+320,000,000🗽🇱🇷
President Ulysses S. Grant signed the 1872 Mining Law to help settle the West. And even though the West has surely been settled, this law is still on the books — unchanged. It allows corporations, foreign and domestic, to take public minerals, owned by us, the taxpayers, for free. It contains no environmental provisions, requires no cleanup after mining is over, and unlike the law governing coal mining, does not require hardrock mining companies to pay a fee to clean up the legacy of pollution.
Here is something Congress can do if they are bored.
lol@lola
Let’s pretend resource extraction companies don’t hire lobbyists and bribe congress-critters. Let’s pretend any member of the Republicrat duopoly gives a damn about the public interest instead of enriching themselves while in “public service.”
Too bad obama with a super majority in the house and a filibuster proof senate gave us obamacare instead.
Too bad obama with a super majority in the house and a filibuster proof senate gave us obamacare instead.
Ultimate Hillary Supporter Found
The elusive HillaryPuff has been found in Wisconsin being triggered by white males
August 17, 2016
Like Pokemon Go the elusive HillaryPuff must be stalked carefully she is very camera shy until in the presence of a white male, her mortal enemy.
It is at that time she will unleash a torrent of anti-white male 3rd wave feminism.
http://www.infowars.com/ultimate-hillary-supporter-found/ - 182k - Cached - Similar pages
6 hours ago ..
Did anyone notice the MSM spent the entire day yesterday going on and on about a couple of staffing changes in Trumps campaign? This with 80 something days left before the election and the day after a significant speech. Does anyone recall what that speech was about?
“Does anyone recall what that speech was about?”
I do. Using Milwaukee as an example, it was about the breakdown of law and order, attacks on police, how African Americans have been played and largely been affected by the plantation policies of Democratic regimes, spikes in crime, people being less safe domestically, crushing of hope for the poorest citizens, hollowing out of the economy, etc. He hung a lot of that stuff around the necks of Hillary and Obama.
Afterwards, there was a spike in support for Trump among African-Americans, according to a LA Times poll.
http://graphics.latimes.com/usc-presidential-poll-dashboard/
I read part of the transcript of that speech. It reads as if the Breitbart guy helped write it. He used the word “narrative” a few times and accused Hillary of bigotry towards “communities of color”. So the focus on the Breitbart guy makes sense. Trump’s going to go down in a blaze of glory. Then Breitbart.com will have another great four years under President Hillary Clinton.
Is that a prediction Mike? I’m sure we’ll all be pleased to see a mass murderer like Clinton run this country - again. Of course the Clinton’s innocent victims are mostly brown. In the case of Waco, brown after they gassed and burned them.
Like Albright said, killing half a million children was “worth it”. Are we up to a million now with Iraq, Libya and Syria? Two? What number of innocent deaths would bother you?
Yes, it’s a prediction, though I wouldn’t bet a lot of money on it. There are still 12 weeks to go.
Also, I’ve read that every president since Truman has committed acts that are violations of international law. Crucially, that has included supporting and arming thugs around the world. It’s unlikely that Trump will end that record.
The staffing change made a lot of news because it is drastic enough to affect downticket races. Steven Bannon of Breitbart is inflammatory, which makes it clear that Trump is reverting to the original inflammatory campaign tactics which won over his primary base. Problem is, his primary base is not big enough to win a general election. He needs more voters.
For mainstream voters, and for women (yeah yeah I know
), this election is more about tone and personality than it is about policy. The inflammatory tone of the primaries will not only *not* attract new voters outside the base, he’s more likely to turn them off to where they don’t vote at all. A no-show is actually worse than a vote for Clinton. Hillary doesn’t need those votes, but the downticket Republicans need them desperately.
Hey Donk.
The wheels are coming off the bus.
They never let it correct fully all the way back from the late 90’s, and arguably well before that.
“The wheels on the bus go round and round, round and round.”
Yep. But the same people who will cause our financial collapse have plans for everyone, post-collapse.
http://www.alt-market.com/articles/2988-how-the-globalists-will-attempt-to-control-populations-post-collapse
To the guy who was wondering about the property market and buyers agents and specifically, “How did we get here?”
I was curious too and didn’t have an answer. I tried searching for history of real estate and read a lot about how in the USA, it was the USA government that sold land to people directly. Whether that is good or bad I have no idea.
Prior to that, you had kings and other people owning the land but then selling the right of a house to other people.
It seems like, “Home/Land ownership” is a fairly new thing in the evolution of our societies, and it has been corrupted very badly.
But if you are looking for a distinct point in time where it went from, “A Buyer Agent is your friend” to “A Buyer Agent is your non-friend”. I have no idea.
I think it is a very interesting question.
Maybe the incorporation of the NAR? But something tells me the specific point happened way back, way back in old times.
Basically, as you know already, YOU are your buyer agent.
Nobody is looking out for you.
Which poster repeatedly and repetitiously claimed over and over again that it was either Trump or Goldman Sachs (but presumably not both)?
Leadership Donald Trump
Another Goldman Sachs Alum Joins Donald Trump’s Campaign
by Dan Primack
August 17, 2016, 1:40 PM EDT
…
Gold Star Muslim family runs fetish sex club. It’s amazing what you can do when you have a “foundation”.
http://gotnews.com/breaking-khizr-khan-family-aka-kinky-lick-ashley-madison-using-dead-sons-foundation-building-fetish-sex-club/
Khan-man. This was the guy who piously hid behind Gold Star status and called out Trump at the DNC. And there he is, in all his (ahem) glory.
What a bunch of twisted freaks. I wonder if Debbie Wasserman Schultz signed up?
“The family of Khizr Khan, the anti-Trump Muslim who spoke at the DNC, was found using cheating site Ashley Madison, as well as found apparently using the building for Khan’s deceased son’s foundation as a private fetish sex club.”
That would have gotten a bigger ovation at the Democratic convention in Philadelphia than when he pulled out his pocket Constitution during his speech.
How did the subject change from Trump’s ties to Goldman Sachs?
The Muslim family isn’t running for office. Who gives a rat’s ass what they do?
It’s part of the right wing mentality. Of course, they would try to dig up something on those grieving parents. It’s probably a load of BS. Tens of millions will believe it anyway, because it gives them pleasure.
You mean, the left-wing tactic of changing the subject when the discussion gets uncomfortable?
I doubt that it was left wingers who put out this story about Khizr Khan.
“It’s part of the right wing mentality. Of course, they would try to dig up something on those grieving parents.”
Which brings up the question…
Is it possible to be a grieving parent and use the building for your deceased son’s foundation as a private fetish sex club at the same time?
Or by the time one uses the building for their deceased son’s foundation as a private fetish sex club can it be assumed that the grieving process is over?
Either way, probably something the DNC should have looked into besides their racist antisemitic conspiring against Bernie in the Primary and putting this husband and wife on the National stage to grab the moral high ground.
Would Khizr Khan fit in these lyrics?
https://www.youtube.com/watch?v=hX9E44mClKs - 175k -
If so, he could play it at his private fetish sex club.
Look who’s changing the topic now.
Irrelevant.
Could you please answer the question.
Crushin’ Russian says that the question is irrelevant.
Everyone knew something wasn’t quite right about KinkyKhan.
Let me guess….. The LeeringLewd Bill Clinton is a patron.
When the banks engaged in subprime auto lending need to be bailed out, will 95% of ‘Muricans bend over with the same alacrity they showed in 2008?
http://www.zerohedge.com/news/2016-08-17/subprime-auto-loans-go-mainstream-exposing-shady-practices-everyday-americans
But…but…all the Oligopoly-globalist mouthpieces said the sky would fall if Britain voted for BREXIT.
http://www.businessinsider.com/sterling-price-movement-on-thursday-august-18-2016-8
Milwaukee is a microcosm for the ills afflicting every urban center maladministered by corrupt, venal, incompetent Democrat grifters.
http://www.frontpagemag.com/fpm/263881/how-democrats-turned-milwaukee-cesspool-john-perazzo
We need to bypass the 23 primary dealers and just have the FED by treasuries so we can save taxpayers the cut from the middlemen!
LOL, that is a very good idea!
Flip that house Charlie Crist! Loving the explanation, too.
“The beach house of former Florida governor and current congressional candidate Charlie Crist is on the market for $1.29 million. That’s nearly $400,000 more than Crist and his wife, Carole, paid a year ago.
…
Since the listing went up, Dishy said she has received calls from potential buyers around the country as well as from England, Italy, France and South America.
The Crists, who also own a million-dollar condo in downtown St. Petersburg, bought the house last year as a safeguard when it was still unclear where new congressional boundaries would be drawn. Both the condo and Crist’s longtime rental apartment wound up in a predominantly Democratic district, as Crist, a Republican-turned-independent-turned Democrat, had hoped.”
http://www.tampabay.com/news/business/realestate/charlie-crist-house-on-st-pete-beach-on-the-market-for-129-million/2289819
Brady Bunch actress Eve Plumb sells the $3.9m Malibu home she bought for $55,000 when she was just 11-years-old
Brady Bunch actress Eve Plumb sold Malibu home she bought when she was 11 years old for $3.9 million
She bought property for 55,300 in 1969, which is equivalent to around $360,000 in today’s economy
By Valerie Edwards For Dailymail.com
Published: 23:29 EST, 16 August 2016 | Updated: 10:10 EST, 17 August 2016
Read more: http://www.dailymail.co.uk/news/article-3744553/Brady-Bunch-actress-Eve-Plumb-sells-Malibu-home-bought-11-years-old-3-9million.html#ixzz4Hgy9t3iI
Follow us: @MailOnline on Twitter | DailyMail on Facebook
The article says that a design firm is going to totally re-do the house, quadrupling its size. Is that included in the 3.9M?
I guess some houses do appreciate.
Are you sure?
Robert Shiller: Housing Depreciates
http://www.pragcap.com/robert-shiller-dont-invest-in-housing/
The house didn’t appreciate in value; the land did.
Incorrect.
Remember….. Land is highly speculative resulting in massive price swings entirely unfounded on fundamentals. If you’re paying more than $500-$1000/acre, you’re paying too much. That’s why land is referred to as worthless dirt. Besides, there is a globe full of land and roughly 95% of it goes undeveloped.
9.5% annualized ROI over 47 years. Location, location, location!
The article says she dumped $5million into it.
crushing.housing.losses.
crushing.housing.losses.