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Trio of Factors Impacting $400B of Multifamily CMBS Loans
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Three major factors are expected have notable effects on more than $400 billion of multifamily CMBS loans, according to research by Morningstar Credit Ratings. Regional trends tend to have the greatest influence on the U.S. multifamily sector.
Analysts at Morningstar write that:
– First, because of demographic changes, secondary markets and even suburbs are emerging as unexpected areas of growth, while major gateway markets appear to have reached their ceilings.
– Second, the Tax Cuts and Jobs Act of 2017 will have a long-term effect on the industry and some immediate effects, because changes under the new law may make homeownership less beneficial from a tax perspective, especially in certain states.
– Finally, oil prices play a key role in markets with a heavy concentration of jobs in the oil industry. Prices have climbed again after declining for several years, but that hasn’t translated into an influx of jobs in the industry.
The result is demand for multifamily housing has been slow to recover. Morningstar believes these markets will gradually improve as oil prices and employment stabilize.
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