IRVINE, CA–ATTOM Data Solutions reports that more than 1.9 million loans secured by residential property were originated in the fourth quarter of 2017 — down 20% from the previous quarter and down 19% from a year ago. Of the loans originated in the fourth quarter 818,158 were refinance loans, down 17% from the previous quarter and down 34% from a year ago.
The dataset ATTOM looked at included small multifamily properties that had between two to four units. But when SVP Daren Blomquist separated out these loans for GlobeSt.com, the picture suddenly changed: there was an increase of 8% in purchase originations of small multifamily loans in the fourth quarter compared to a year ago. Refis also fared poorly wth in the small multifamily category although the drop wasn't as sharp: there was a 26% decline year over year.
Eight percent is a statistically significant increase, Blomquist tells GlobeSt.com. “It shows there is growth in the market as well as strong demand for this product.”
There are several reasons to account for the divergence in loan originations between small multifamily and the residential market. This has been a rent-dominated housing market recovery, prices in the residential market have been rising and lifestyles have changed to de-emphasized home ownership. Also the multifamily market is less sensitive to interest rate increases, Blomquist says. The exception to that are refi loans, which may explain the drop in small multifamily originations. “For a property owner they are going to refi strategically when it makes the most sense — when they can get the lowest interest rate.”
In general, small multifamily has held up very well, he adds. “We've seen the multifamily trend as very strong and even stronger than single-family in this housing recovery.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
