HUD Spotlight on the Nation’s Multifamily Rental Financing

Recent housing market changes that turned many homeowners into renters brought the spotlight on real and potential multifamily property financing capital shortages.

A joint survey conducted by the Department of Housing and Urban Development and Census Bureau found that approximately 20% of American households live in multifamily rental buildings.

The fact that one-in-five families rent apartments, said Erika Poethig, HUD’s acting assistant secretary for policy development and research, shows a broader understanding of how these developments are bought and paid is critical for the industry and legislators.

New data are crucial to understanding the structure of multifamily rental housing financing and how it is changing along with post-housing-crisis homeownership trends.

The 2012 Rental Housing Finance Survey indicates most multifamily rental housing owners are individuals, not large companies.

The survey found the current stock of multifamily properties nationwide amounts to 2.3 million.

In light of recent changes in the availability of capital for rental housing, the Rental Housing Finance Survey “provides important insight about the financial health and stability of multifamily housing properties,” Poethig said, because little was known about how these larger rental properties are financed, or how multifamily housing mortgage loans are performing.

The survey includes data on property values, mortgage financing characteristics, residential structures, rental status and value of units, within the residential structures, commercial use of space, management and ownership. HUD said it recognized “a gap in knowledge about who owns multifamily rental housing, how it is financed, and the financial health of the housing.”

Households or individuals own 67% of rental housing units. Up to 73% of the nation’s multifamily properties consist of one building, only 4% have 20 or more buildings on the property. Multifamily stock is mostly new or relatively new as only 19% contain buildings built prior to 1920.

The survey also builds on past and present data to provide “a detailed assessment of mortgage financing, and benefits received from federal, state, local and non-governmental programs.”

In addition, the HUD information gathered is expected to play “an important role in enabling the Federal Housing Finance Agency to fulfill its requirements to set affordable housing goals for the government-sponsored enterprises and to develop standards for underwriting multifamily mortgages.”

The survey was conducted by the Census Bureau based on data from a nationally representative sample of 2,264 properties.