Describing the performance of multifamily building as better than most recoveries, Fannie Mae forecasts that the sector will expand by nearly a third in 2012.
While single-family housing starts declined sharply in February, reversing gains during the previous two months, multifamily permits posted a strong increase for a second consecutive month.
Fannie expects multifamily housing starts to jump 30% from 178,000 in 2011 to 231,000 in 2012. And then to 278,000 the following year.
Consumers’ expectations of rising home prices in 2012 are gaining traction, with expectations extending for the fifth consecutive month, as indicated by a Fannie Mae housing survey in March.
And those consumers are taking on a bit more multifamily debt to satisfy those expectations.
According to recently released Federal Reserve data, the nation’s multifamily mortgage debt outstanding grew at a 1% annualized rate in the fourth quarter of 2011, increasing to $840.8 billion. The overall level of multifamily mortgage debt grew just 0.4% in 2011. Multifamily mortgage debt reached its highest level on record in the third quarter of 2009 at $853.2 billion.
For the seventh consecutive quarter, Ginnie Mae was the fastest growing market participant, increasing its balance at an 18% annualized rate to $60.5 billion. However, Ginnie Mae still accounts for just 7.2% of all multifamily mortgage debt.
Fannie Mae, life insurers, and other market investors also increased their multifamily mortgage debt market shares in the fourth quarter of 2011. Fannie Mae grew at a 4.8% annualized rate during the quarter to $178.6 billion, its fastest quarter of 2011, accounting for 21.2% of the market
Freddie Mac contracted at a 0.8% annualized rate in the fourth quarter of 2011 to a balance of $102.7 billion, accounting for 12.2% of the market.
Fannie Mae is the largest single participant in multifamily MDO, but the combined book of business held by the nation’s banks and thrifts is the largest component, comprising 29.5%, as seen in the pie chart below.
