February 11, 2019
By Dennis Kaiser
The small loans market overall is critical to workforce housing and to an extent affordable housing, given the typical property that fits the loan parameters. Connect Media asked Ana Ramos, head of West Coast small loans at Greystone, to share insights about the trends shaping this segment of the market. Greystone was recently named No. 1 small loans producer by Fannie Mae, and is ranked No. 3 in Freddie Mac small balance loans.
She shares insights into the opportunities ahead in 2019, as well as what Fannie Mae’s raised limits mean in our latest 3 CRE Q&A.
Q: What are some of the bigger trends you are tracking at the outset of 2019 and how do you think they will impact the West Coast lending market?
A:In the current low interest rate environment and lack of new housing supply, multifamily will continue to be in demand and on the rise. And, since there are more renters making a choice to rent a more luxury apartment in a desirable location rather than to purchase a home, rents are moving at an upward direction while vacancies remain low.
Q: What are the opportunities you see ahead for the year on the West Coast, and how can investors adjust to capture them?
A:Credit appears to be tightening a bit and may continue during 2019 with perceived volatility continuing. Banks are likely to be less aggressive, so agency (Fannie Mae, Freddie Mac) consistency in market will provide stability through volatile times should they continue. Agency pricing, interest-only, and proceeds remain very aggressive and are ready to deploy across the sector, should lack of liquidity be experienced in 2019 from banks and private capital sources.
I believe opportunities for the year ahead will fall in line with interest rates. As we ended Q4 with a 10-year Treasury well above 3.00%, the 2019 outlook was one of caution as the higher cost of debt (and consequent effect on cap rates) were seen as a braking mechanism. However, with a 10-year Treasury now below 2.70%, the market is perked up and refinance analyses are making more sense. We hope this trend continues through the year.
Q: How will Fannie Mae’s raised limits for small loans to $6 million in all markets affect this sector in 2019 and beyond?
A:This will provide more capital and liquidity to the small loan market, which will help increase Fannie Mae’s affordable workforce housing mission. As Fannie Mae’s No. 1 small loans lender in 2018, we see incredible opportunity for the affordable and workforce housing markets with this new development.
For comments, questions or concerns, please contact Dennis Kaiser