Commercial originations up in 2010
The residential real estate market was still in recovery mode last year, but the national Mortgage Bankers Association reports that commercial real estate showed signs of improvement in 2010.
Actually, commercial markets improved quite a bit, according to the Association. In 2010, bankers reported $118.8 billion in closed commercial loans – up 44 percent from 2009. Multifamily accounted for the largest volume at $48.9 billion while offices were the next highest at $22.6 billion in originations.
In short, it appears there is a significant increase in demand for apartments. That should come as no surprise, given the high foreclosure rate as of late. According to RealtyTrac.com, one in every 542 homes in the nation was in one stage of foreclosure in March – things were a bit better in Arkansas with one in every 673 houses associated with a foreclosure filing.
In addition to the high foreclosure rate, lending requirements have gotten tighter over the past few years out of necessity. Few will argue that overly relaxed lending requirements resulted in the so-called subprime mortgage crisis that hit the nation hard in 2007 and led to the high foreclosure rate that’s still with us.
Fewer people will argue that we want to return to those days of easy credit, but tougher lending requirements coupled with a high foreclosure rate creates a great atmosphere for people looking to rent homes and apartments. While people are getting their financial affairs in order and improving their credit scores to a point where they can take out a mortgage, they’ve got to live somewhere and it appears a good number of them are renting their residences.
Jackie Twillie – a Realtor with Twillie Real Estate in Little Rock and president of the Little Rock Landlord Association – expanded into the business of property management in 2006. She said her company primarily deals with renting single-family residences, duplexes and fourplexes and has seen a significant increase in demand for those properties over the past few years.
She said that, quite often, people are looking at rental properties as a way to generate income from homes that have been taken in foreclosure, picked up by investors during short sales or people who simply want to generate income from houses they own.
Sally Goss of Goss Management & Realty in Little Rock is the communications chairman for the National Association of Residential Property Managers. She said there is certainly demand for apartments in central Arkansas, but the bulk of her business lately has come from upscale, executive homes.
Quite often, people moving into the area feel more comfortable renting a home until they get established. Goss said there are still a lot of questions about the economy and that means some people are hesitant to buy homes until they’re more confident about their jobs and financial situation.
Meanwhile, real estate offices and local Realtors associations around the state have reported an increase in calls from people wanting to rent homes.
In other words, the demand for rental properties is out there and the Mortgage Bankers Association’s report shows that people are building facilities to meet that demand.
Is that bad news for people dealing with single-family homes? Not really. Bear in mind the Mortgage Bankers Association reported late last year that it expects mortgage originations to increase this year compared to 2010.
In short, there is an increased demand for rental properties, but the Association has projected an increase in the number of people wanting to buy homes, too. Hopefully, we’re seeing the beginnings of the improved real estate markets that are early indicators of improvement in the overall economy.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.