"A modest recession, declining home prices, tighter mortgage standards, poor buyer psychology and near-record levels of new and existing homes for sale, define the current environment for housing," he stated. "Should mortgage rates rise or credit terms tighten further, then our housing forecast could turn even more pessimistic."On the multifamily front, however, the outlook for public companies is stable. That, says Steven Marks, managing director and head of Fitch's REIT group, is "based on strong trends that have begun to moderate."
The expectation that the decline in single-family homeownership will significantly benefit multifamily owners, he said, "has thus far been exaggerated. The effects of a slowing economy are weighing more heavily on multifamily fundamentals" than expected.
For one, vacancy has gone up over the past 12 months and Fitch expects it will continue to increase over the coming year. The rise, Marks explained, has been, and will likely be, driven by a supply-demand imbalance, resulting in positive yet slowing rental income and NOI growth.
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