For the last four years inventory of available homes for sale has consistently dropped, oftentimes in the double digits from year to year and even quarter-to-quarter.
As this has taken place, concurrently housing prices have risen, which makes the affordability for a home higher and higher.
As homes become more unaffordable for many first-time buyers especially, the demand for rentals has increased. Currently the average rent paid nationwide is at $1,453 a month.
With inventory shortages and rental prices going higher, it is no surprise that mortgage originations of commercial and multifamily properties have surged by 10% on a year-to-year basis.
What was even more startling was that originations increased by 29% from the first quarter of 2019 to the second quarter of 2019.
The increase in multifamily and commercial properties originations is in part due to the shortage of affordable housing and the high price of homes. Multifamily originations are probably being fueled by the lower interest rates and the higher demand for rental
According to the Mortgage Bankers Association, 2019 is shaping up to be another record year for commercial mortgage lending.
“A rise in originations for health care, office, industrial and multifamily properties led the overall second quarter increase in commercial/multifamily lending volumes when compared to the second quarter of 2018. The second quarter saw a 151% year-over-year increase in the dollar volume of loans for health care properties, a 23% increase for office properties, a 16% increase for industrial properties and a 15% increase for multifamily properties. Retail property loan originations fell 32%, and hotel property lending decreased 28%.”
Quick Stats for the 2nd Quarter vs 1st Quarter
■ Second quarter originations for office properties increased 66% vs. first quarter 2019
■ Health care property originations increased 62%
■ Multifamily properties increased 32%
■ Hotel properties increased 18%
■ Retail properties increased 15%
■ Industrial buildings declined 27%