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Ten years ago, Jay Shafer downsized to an 89-square-foot house and reinvented both his lifestyle and career in the process.
Apartment vacancies are rising nationwide, driven by job losses.
Housing experts expect the multifamily vacancy rates will soon be at 8 percent nationwide, higher in some areas.
“Apartment vacancies in the fourth quarter went from around 6 percent to 6.7 percent so it was a very quick reaction,” says Hessam Nadji, managing director of research for real estate brokerage Marcus & Millichap.
Top-of-the-line properties are having the greatest difficulty finding tenants, while Class B and C buildings are holding up better.
“People are dialing down their residential expenses,” says Richard Anderson, BMO Capital Markets analyst.
The downturn is pushing down sales prices for apartment buildings, and construction was off 35 percent in 2008. Marcus & Millichap predicts it will decline another 40 percent to 50 percent in 2009.
In the long run, though, this could be good news for landlords. “If you fast-forward to 2011 and 2012, you will see very little new supply and favorable renter demographics in the number of 18- to-34-year-olds,” Nadji says.
Source: Investor’s Business Daily, Marilyn Alva 02/05/09
I was hoping this might happen. FHA may be coming to the rescue. There is a big void out there now for customers with sub-standard credit scores that cannot qualify for conventional loans. There are others that already own a home and have a loan but need help with the type of mortgage they used to purchase their current home. They may have one of those infamous conventional 2/28 loan programs where the rate can jump up to 12% after the first two years of the loan. The “2” represented the time bomb period and the “28” is the number of days they have until they lose their home.
Seriously, I would like to meet the person that invented the 2/28. I’m sure it was a Wall Street type, probably someone in their late 20s or early 30s that may have even originated loans for a few months before moving over to the investment world. Can you imagine maxing out your mortgage payment on an adjustable rate mortgage for $200,000 at 7.5% only to see your rate increase to 12.25% after two years. “But you can refinance the house after a year or so.” You have to wonder how many times some loan officer or real estate agent said that to the homebuyer.
But let’s move forward. The Senate passed an FHA modernization bill by a 93-1 vote today that will raise the FHA loan limit to $417,000 in high-cost areas and lowers the minimum down payment requirement to 1.5% from 3.0%. The House passed its version of the bill in September. So it could be law in early 2008. So help is on the way, along with Santa….
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