Will 2010 bring more pain than we’re ready for?

So Moody’s Investors Service reported late last week that multifamily delinquencies rose by nearly a full percentage point between October and November 2009, to 7.4%.

That figure is up from 5.51% at midyear, and from 1.85% in November 2008.

There’s no question things are getting worse for apartments.

In fact, multifamily came second only to hotels in terms of the month-to-month increase in the amount of delinquent loans.

Multifamily also has a greater share of delinquencies—26.9% of all delinquent loans—as compared to its share of all outstanding loans, 16.3%

Around the same time, multifamily firm Fairfield Residential announced it was filing Chapter 11 bankruptcy protection.

Most in the industry know 2010 is not going to be painless, but are these signs that things are going to get worse than we anticipate?

5 Responses to “Will 2010 bring more pain than we’re ready for?”

  1. 1 Daniel Gehman 12/28/2009 at 12:05 pm

    You make an interesting observation. What I’ve been hearing repeatedly over the last couple of months from my developer clients, who are mostly large nationals, is that it is cheaper to buy an existing assest than to develop one. This outlook doesn’t seem likely to change for the next couple of years. So, in light of the pending foreclosures, there are companies with large portfolios and war chests who will step in to snap up these properties when the value looks too good to pass up. This will create a small wave of activity that will re-set values everywhere. Then, finally, if employment starts to pick up by Q3 of 2010, ground-up development may start to look interesting again.

  2. 2 Jodi Summers 12/30/2009 at 2:08 pm

    It is not all doom and gloom for the multiunit market – there are pockets of light.

    In Los Angeles, new construction is way down, and gross rent multipliers have dropped considerably. Savvy investors know that we are at the bottom of the marketplace….and statistics will prove this. According to Clarus Market Metrics, from November 2007 – November 2009, the number of for sale properties is down 49% and the number of sold properties is up 45%. To augment this dynamic multiunit market statistic, note that the median price of properties for sale is down 11% and the median price of sold properties is down 69%. Very appealing statistics for investors.

  3. 3 Charles H 12/30/2009 at 6:13 pm

    I believe housing has a long way to go before things get better . Gen x and y are moving back in with their parents , even if they are married . Tenants , unbeknownst to managers , are taking friends , relatives in with them and splitting rents . Where is the growth going to come from ? the people losing houses are probably not going to save the day . There is a shadow market out there that is hard to measure but it does exist . I think we will see tenants moved into vacant units and consolidate them in full buildings , and then mothball the empty buildings , stop the expenses associated with 50% full buildings . The airlines pack us in , time for the housing industry to wake up and do the same thing .

  4. 4 Dickie Snyder 01/06/2010 at 1:10 pm

    The problem is the result of apartment loss factors.

  1. 1 Tweets that mention Will 2010 bring more pain than we’re ready for? « MultiViews -- Topsy.com Trackback on 12/18/2009 at 4:22 pm

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