Post on 14-Aug-2020
Get SmartMarket Insights from Our Research Team
2017 Customer Conference
Presenters
Steve
Guggenmos
Vice President
Research &
Modeling
Sara
Hoffman
Manager
Investments &
Portfolio
Management
Amanda
Nunnink
Senior Director
Production &
Sales
Steve
Griffin
Director
Production &
Sales
Senior Director
Production &
Sales
Amanda
Nunnink
Steve
Guggenmos
Vice President
Research &
Modeling
Director
Production &
Sales
Steve
Griffin
Sara
Hoffmann
Manager
Investments & Portfolio
Management
60% said
grow slightly
or significantly
25% said
stabilize
15% said
slow down
How did respondents anticipate the multifamily market
to grow over the next 3 to 5 years?
Industry Survey
Industry Survey
Reasons why multifamily market will grow
32% demand/supply
17% growing population
12% how it’s been trending
Reasons why multifamily market will slow down
42% saturation or oversupply
60%
Grow slightly
or significantly
more
How will the rental market grow compared to the
homeownership market?
37% say
homeownership
will grow
26% say
markets will
remain same
38% say rental
market will
grow
Industry Survey
Rent vs. Own
• 21% say more people choose to rent
• 11% say it’s too expensive to buy
• 5% say it’s hard to qualify for a mortgage
• 8% say more people choose to buy
• 5% say people want to own a home
• 3% say rent is too expensive
Rental Demand Keeps Rising
Increasing number of renter households – by necessity and choice
Sources: U.S. Census Bureau, Current Population Survey/Housing Vacancy Survey, Freddie Mac
58%
60%
62%
64%
66%
68%
70%
25
35
45
55
65
75
85
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 20162017 (Q2)
Su
pp
ly
M
Owner Households Renter Households Homeownership RateTotal Households
Growth 2005-2017:
9.4 million
Renter Household Growth 2005-2017:
9.2 million
Owner Household Growth 2005-2017:
262,250
Homeownership Rate
down 5.3%
-6
-3
0
3
6
9
Historic (REIS) Average (1990-2016) REIS RealPage Axiometrics Freddie Mac
Rent Growth
Long-run rent growth of 3.3% going back to 1990
Sources: REIS, RealPage, Axiometrics, Freddie Mac
’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 2020 ’212000 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 2010
Rent Growth
Long-run rent growth of 3.3% going back to 1990
2.0
2.5
3.0
3.5
4.0
4.5
2016 2017 2018 2019 2020 2021
Average (1990-2016) REIS RealPage Axiometrics Freddie Mac
Sources: REIS, RealPage, Axiometrics, Freddie Mac
Vacancy Rates
Long-run vacancy rate 5.3% going back to 1990
0
1
2
3
4
5
6
7
8
9
Historical (REIS) Average (1990-2016) REIS RealPage Axiometrics Freddie Mac
’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 2020 ’212000 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 2010
Sources: REIS, RealPage, Axiometrics, Freddie Mac
Vacancy Rates
Long-run vacancy rate 5.3% going back to 1990
4.0
4.5
5.0
5.5
6.0
6.5
2016 2017 2018 2019 2020 2021
Average (1990-2016) REIS RealPage Axiometrics Freddie Mac
Sources: REIS, RealPage, Axiometrics, Freddie Mac
-6
-4
-2
0
2
4
6
8
10
12
Historic (REIS) Average (1990-2016) REIS RealPage Axiometrics Freddie Mac Inflation
’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 2020 ’212000 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 2010
Gross Income Growth
Long-run gross income growth of 3.4% going back to 1990
Sources: REIS, RealPage, Axiometrics, U.S. Bureau of Labor Statistics (BLS), Moody’s Analytics Forecasted, Freddie Mac
Gross Income Growth
Long-run gross income growth of 3.4% going back to 1990
Sources: REIS, RealPage, Axiometrics, U.S. Bureau of Labor Statistics (BLS), Moody’s Analytics Forecasted, Freddie Mac
0
1
2
3
4
5
2016 2017 2018 2019 2020 2021
Average (1990-2016) REIS RealPage Axiometrics Freddie Mac Inflation
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Mu
ltifam
ily P
rice
Inde
x
Tre
asu
ry, S
pre
ad
and
Ca
p R
ate
10-year Treasury Rate Cap Rate Spread CPPI (RHS)
Multifamily Cap Rates & U.S. Treasuries
Current risk premium demanded to hold real estate is above average levels
Sources: Real Capital Analytics (RCA) Commercial Property Price Index (CPPI), U.S. Board of Governors of the Federal Reserve System
Multifamily Origination Volume
As a result of strong fundamentals, origination volume continues to set record years
Sources: MBA, Fannie Mae, ACLI, Wells Fargo Securities, and Freddie Mac
$0
$50
$100
$150
$200
$250
$300
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016* 2017*
B
Freddie Mac Multifamily Fannie Mae Multifamily Life Insurance Companies
CMBS, Multifamily Only Other (Banks, S&Ls, Mortgage Co., etc) Freddie 2017 Forecast
Multifamily Supply
Annual completions in 2017 reached 350,000 –
expected to go higher but new construction continues to abate
Sources: U.S. Census Bureau, Moody’s Analytics
0
5
10
15
20
25
30
35
40
45
50
0
100
200
300
400
500
600
700
Ren
ter
Oc
cu
pie
d H
ou
se
ho
lds
(M
illi
on
s)
MF
Pe
rmit
s, S
tart
s a
nd
Co
mp
leti
on
s (
Th
ou
sa
nd
s)
MF Permits MF Starts MF Completions Renter Occupied
Demand vs. Supply
Demand remains just as strong but supply increasing compared to prior few years
Sources: RealPage, Freddie Mac
0
50
100
150
200
250
300
350
400
450
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions 2014-2016 Avg Absorptions
Markets with Highest New Supply 2017-2018
0
5
10
15
20
25
30
35
New
Yo
rk
Dalla
s
Ho
us
ton
Wa
sh
ing
ton
, D
C
Atl
an
ta
Sea
ttle
Lo
s A
ng
ele
s
Den
ver
Au
sti
n
Ch
icag
o
Bo
sto
n
Na
sh
vil
le
Ch
arl
ott
e
Orl
an
do
Ph
oen
ix
Ora
ng
e C
o
San
An
ton
io
Po
rtla
nd
Mia
mi
Salt
La
ke C
ity
Rale
igh
Min
ne
ap
olis
San
Fra
nc
isc
o
Ph
ila
de
lph
ia
Ta
mp
a B
ay
No
rth
ern
NJ
San
Jo
se
San
Die
go
Ft.
Wo
rth
Kan
sas
Cit
y
Co
lum
bu
s
Ft.
La
ud
erd
ale
Mil
wau
ke
e
Balt
imo
re
La
s V
eg
as
Oak
lan
d
Palm
Beac
h
Su
pp
ly
K
Sources: RealPage, Freddie Mac
New Supply & Inventory Change
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0
5
10
15
20
25
30
35
Ne
w Y
ork
Dalla
s
Ho
us
ton
Wa
sh
ing
ton
, D
C
Atl
an
ta
Sea
ttle
Lo
s A
ng
ele
s
De
nv
er
Au
sti
n
Ch
icag
o
Bo
sto
n
Nash
vil
le
Ch
arl
ott
e
Orl
an
do
Ph
oen
ix
Ora
ng
e C
o
San
An
ton
io
Po
rtla
nd
Mia
mi
Salt
La
ke C
ity
Ra
leig
h
Min
ne
ap
olis
San
Fra
nc
isc
o
Ph
ila
de
lph
ia
Ta
mp
a B
ay
No
rth
ern
NJ
San
Jo
se
San
Die
go
Ft.
Wo
rth
Kan
sas
Cit
y
Co
lum
bu
s
Ft.
La
ud
erd
ale
Mil
wau
ke
e
Balt
imo
re
La
s V
eg
as
Oak
lan
d
Palm
Beac
h
Su
pp
ly
K 2017-2018 Avg Supply 2017-2018 Inventory Change
Sources: RealPage, Freddie Mac
0
5
10
15
20
25
30
35
New
Yo
rk
Dalla
s
Ho
us
ton
Wa
sh
ing
ton
, D
C
Atl
an
ta
Sea
ttle
Lo
s A
ng
ele
s
Den
ver
Au
sti
n
Ch
icag
o
Bo
sto
n
Na
sh
vil
le
Ch
arl
ott
e
Orl
an
do
Ph
oen
ix
Ora
ng
e C
o
San
An
ton
io
Po
rtla
nd
Mia
mi
Salt
La
ke C
ity
Rale
igh
Min
ne
ap
olis
San
Fra
nc
isc
o
Ph
ila
de
lph
ia
Ta
mp
a B
ay
No
rth
ern
NJ
San
Jo
se
San
Die
go
Ft.
Wo
rth
Kan
sas
Cit
y
Co
lum
bu
s
Ft.
La
ud
erd
ale
Mil
wau
ke
e
Balt
imo
re
La
s V
eg
as
Oak
lan
d
Palm
Beac
h
Su
pp
ly
K
Supply & Absorptions 2017-2018
Sources: RealPage, Freddie Mac
2017-2018 Avg Supply 2017-2018 Avg Absorptions 2015-2016 Avg Absorptions
Annual Average New Supply 2019-2021
0
5
10
15
20
25
30
35
Ne
w Y
ork
Dalla
s
Ho
us
ton
Wa
sh
ing
ton
, D
C
Atl
an
ta
Sea
ttle
Lo
s A
ng
ele
s
De
nv
er
Au
sti
n
Ch
icag
o
Bo
sto
n
Nash
vil
le
Ch
arl
ott
e
Orl
an
do
Ph
oen
ix
Ora
ng
e C
o
San
An
ton
io
Po
rtla
nd
Mia
mi
Salt
La
ke C
ity
Ra
leig
h
Min
ne
ap
olis
San
Fra
nc
isc
o
Ph
ila
de
lph
ia
Ta
mp
a B
ay
No
rth
ern
NJ
San
Jo
se
San
Die
go
Ft.
Wo
rth
Kan
sas
Cit
y
Co
lum
bu
s
Ft.
La
ud
erd
ale
Mil
wau
ke
e
Balt
imo
re
La
s V
eg
as
Oak
lan
d
Palm
Beac
h
Su
pp
ly
K
Sources: RealPage, Freddie Mac
Annual Average New Supply & Absorption 2019-2021
0
5
10
15
20
25
30
35
Ne
w Y
ork
Dalla
s
Ho
us
ton
Wa
sh
ing
ton
, D
C
Atl
an
ta
Sea
ttle
Lo
s A
ng
ele
s
De
nv
er
Au
sti
n
Ch
icag
o
Bo
sto
n
Nash
vil
le
Ch
arl
ott
e
Orl
an
do
Ph
oen
ix
Ora
ng
e C
o
San
An
ton
io
Po
rtla
nd
Mia
mi
Salt
La
ke C
ity
Ra
leig
h
Min
ne
ap
olis
San
Fra
nc
isc
o
Ph
ila
de
lph
ia
Ta
mp
a B
ay
No
rth
ern
NJ
San
Jo
se
San
Die
go
Ft.
Wo
rth
Kan
sas
Cit
y
Co
lum
bu
s
Ft.
La
ud
erd
ale
Mil
wau
ke
e
Balt
imo
re
La
s V
eg
as
Oak
lan
d
Palm
Beac
h
Su
pp
ly
K 2019-2021 Avg New Supply 2019-2021 Avg Absorptions
Sources: RealPage, Freddie Mac
New York City
-10
-5
0
5
10
15
20
25
30
35
40
45
50
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
New York City
-1%
0%
1%
2%
3%
4%
5%
-10
-5
0
5
10
15
20
25
30
35
40
45
50
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Employment
Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
New York City
-1%
0%
1%
2%
3%
4%
5%
-10
-5
0
5
10
15
20
25
30
35
40
45
50
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Rent Growth Vacancy
Sources: RealPage, Freddie Mac
Los Angeles
0
2
4
6
8
10
12
14
16
18
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
Los Angeles
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
0
2
4
6
8
10
12
14
16
18
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Employment
Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Los Angeles
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
2
4
6
8
10
12
14
16
18
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Rent Growth Vacancy Rate
Sources: RealPage, Freddie Mac
San Francisco
-2
-1
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
San Francisco
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
-2
-1
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Employment
Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
San Francisco
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
-2
-1
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Rent Growth Vacancy
Sources: RealPage, Freddie Mac
Nashville
0
1
2
3
4
5
6
7
8
9
10
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
Nashville
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
0
1
2
3
4
5
6
7
8
9
10
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Employment
Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Nashville
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
1
2
3
4
5
6
7
8
9
10
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Rent Growth Vacancy
Sources: RealPage, Freddie Mac
Fort Lauderdale
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
Fort Lauderdale
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Employment
Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Fort Lauderdale
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
1
2
3
4
5
6
7
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
Phoenix
0
1
2
3
4
5
6
7
8
9
10
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions
Sources: RealPage, Freddie Mac
Phoenix
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
0
1
2
3
4
5
6
7
8
9
10
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Employment
Sources: RealPage, Bureau of Labor Statistics, Freddie Mac
Phoenix
0%
1%
2%
3%
4%
5%
6%
7%
8%
0
1
2
3
4
5
6
7
8
9
10
2013 2014 2015 2016 2017 2018 2019 2020 2021
K
New Supply Absorptions Rent Growth Vacancy
Sources: RealPage, Freddie Mac
Source: Freddie Mac
2017 2018
Metro
Gross
Income
Vacancy
Rate Metro
Gross
Income
Vacancy
Rate
Seattle 6.6% 5.0% Sacramento 4.8% 3.3%
Tacoma 5.9% 3.1% Portland 4.7% 5.4%
Sacramento 5.7% 2.9% Tacoma 4.5% 3.5%
Portland 5.3% 5.2% Seattle 4.4% 5.6%
Colorado Springs 5.2% 3.7% Ft. Lauderdale 4.3% 4.5%
Nashville 4.6% 5.8% Cleveland 4.3% 3.2%
Los Angeles 4.4% 3.6% Tampa 4.2% 5.6%
Oakland 4.2% 3.5% West Palm Beach 4.2% 4.8%
Ft. Worth 4.1% 4.2% Oakland 4.0% 3.7%
Riverside 4.1% 3.0% Jacksonville 3.9% 6.2%
Top 10 Markets with Highest Income Growth in 2017 & 2018
AffordabilityGrowing Affordability Problem
55.5% 54.0% 52.5% 47.3% 43.7% 43.2%
32.0% 32.7% 33.1%36.3%
37.0% 36.8%
5.9% 6.3% 6.7% 7.5% 8.8% 9.4%
6.6% 7.0% 7.6% 8.9% 10.4% 10.5%
2010 2011 2012 2013 2014 2015
AMI: Under 50% AMI: 50%-80% AMI: 80%-100% AMI: 100%+
Sources: Freddie Mac tabulations of American Community Survey microdata. Affordability thresholds are based on the AMI of all MSAs in the United States
Affordability
Multifamily very low-income (VLI) population is shrinking as rent
growth outpaces income growth
Source: Freddie Mac
First Financing Second Financing
Units VLI LI Median None VLI LI Median None
Total 97,061 11.2% 71.3% 13.3% 4.2% 4.3% 65.2% 21.0% 9.4%
TX 28,533 10.2% 74.0% 13.6% 2.2% 3.2% 69.0% 23.1% 4.8%
FL 13,197 1.5% 60.2% 34.1% 4.0% 1.6% 38.7% 39.6% 20.2%
GA 9,766 11.8% 75.9% 8.7% 3.6% 2.1% 77.7% 14.8% 5.4%
CO 5,128 32.4% 67.6% 0.0% 0.0% 7.5% 82.6% 9.5% 0.4%
NC 5,061 9.8% 88.2% 2.0% 0.0% 0.3% 83.9% 15.6% 0.3%
CA 4,776 2.3% 55.6% 15.6% 26.6% 2.5% 9.8% 27.1% 60.6%
AZ 4,154 34.0% 65.5% 0.7% 0.0% 21.8% 74.5% 3.3% 0.0%
NV 3,564 15.8% 67.6% 16.4% 0.3% 4.0% 75.4% 20.1% 0.5%
WA 3,262 4.0% 86.1% 1.6% 8.3% 1.1% 81.6% 11.0% 6.3%
Repeat financing of VLI affordability analysis (2010 – 2016)