Banks are reporting they have around $2.4B in multifamily mortgage loans in some form of distress. This pool has shrunk slightly from the high of Q3 2021, yet far exceeds the volume of non-performing MF loans seen between 2017 and 2019.
Dive into BankProspector to find out which banks are holding the most of these non-performing debts.
In spite of all the demand for multifamily and income property assets, the most recent data shows that we still haven’t returned to pre-COVID levels. In fact, loans in the nonaccrual stage are up by more than 10% from the same period in 2020.
Almost $800M in newly defaulting, 30 to 89 day late loans, and 90 day plus late loans are still making their way through the process of default.
The volume of multifamily REOs appears to have continued to slide, now just under $43M, which is down from around $50M in Q3, and $61M in Q2.
New sales volume records in the CRE space have been heavily supported by apartment building sales. With more institutional capital trading stocks and office or retail in favor of MF, don’t expect many more REOs to pile up soon.
Although multifamily properties are in high demand, and interest rates are low for those financing them, there is still a good sized pool of distressed loans in this asset class.
This may be alleviated with more sales, as well as courts catching up with eviction cases. Though acquirers are still being selective about the assets they buy, specifically looking at performance, occupancy rates, and affordability.
On the upside, ongoing surges in rental rates and more efficiency being created by tech startups and new software in this space is also increasing profitability, despite rising asset prices.
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