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Demand for multi-family nationwide rescues holders of defaulted mortgages

March 07, 2012 02:15PM

Multi-family housing

Demand for multi-family properties nationwide is surging, due to a lack of inventory in the pipeline in combination with the lowest homeownership rate in more than a decade, Bloomberg News reported.

Investors’ desire for multi-family properties has allowed lenders to recover an average of 75 percent of the value of defaulted mortgages tied to multifamily housing — the highest recovery rate among all commercial property types, Bloomberg said. Some buyers are even paying full price for distressed properties, forgoing the foreclosure procedure entirely, in an effort to snap up the assets before other buyers.

“Multifamily was not hit hard from a capitalization standpoint,” said Ryan Millsap, managing principal at Los Angeles-based Arenda Capital Management, which recently bought a distressed building before it was foreclosed on. “Everybody overpaid — but there was nothing wrong with the actual properties, and today’s market recognizes that. The property itself doesn’t know the difference — it just keeps operating.”

Sales of U.S. apartment properties totaled $3.8 billion in January of 2012, a 53 percent increase year-over-year, according to data from Real Capital Analytics. [Bloomberg]