HUD: Recent RAD Evaluation Report Shows Program is Working Well

Research conducted by Econometrica Inc. was released today in HUD’s interim report on the Rental Assistance Demonstration program. The report, as well as a summary, press release, and other resources have been made available on HUD’s website.

The independent assessment examines data up through October 2015. During that time, $2.5B was secured by 185 projects – the report concludes that RAD appears to create a stronger long-term financial trajectory for converting properties and that the program is “on track to accomplish its primary goal of attracting substantial new capital and stabilizing the physical and financial condition of federally assisted housing properties.”


Hillary Clinton Speaks on Expanding LIHTC

Presidential candidate Hillary Clinton published an op-ed in the New York Times recently on her plan for dealing with the poverty in America. Clinton cites the need for a "national commitment to create more affordable housing", speaking of increasing the LIHTC in high-cost areas as well as directing 10% of federal investments to low-income communities. 


Senator Wyden Introduces Middle-Income Tax Credit Act of 2016

The bill, introduced by Senator Ron Wyden (D-Ore.) on September 22, 2016, models after the Low-Income Housing Tax Credit with one key difference being income restrictions, which are set at 100 percent or less of area median income. The credit would provide 50% of qualified basis.

The bill is currently without co-sponsors, although this is not surprising considering it was recently introduced and the fact that the Senate has been consumed with passing a continuing resolution to avoid a government shutdown after September 30. Furthermore, it is unlikely the bill would become law during the current session of Congress – as there is a chance tax reform generally may be dealt with after the elections.

The bill has received both support and opposition from the housing world.


Secondary Apartment Markets Show Largest Gains with Occupancy Above 95%

Year-over-year apartment rent declines in some of the nation's highest-priced markets continued to affect the overall national market, as performance moderated in the third quarter of 2016, according to early figures from Axiometrics, a provider of apartment and student housing market intelligence.

The average effective rent nationwide was $1,289 per unit per month compared to $1,251 in the third quarter of 2015.

That marked a year-over-year increase of 3.0% for the third quarter of 2016, more than 2 percentage points below the robust 5.2% rent growth of one year ago. This marked the fourth straight quarter in which the annual rent-growth rate decreased.

"While the national apartment market is still performing above the long-term average, the moderation from the unsustainable levels of 2014 and 2015 has come, as Axiometrics predicted," said Jay Denton, Axiometrics’ Senior Vice President of Analytics. "In particular, rent growth has declined precipitously in markets with the highest rents in the country such as New York and the San Francisco Bay Area."

Rent levels declined year over year in the three major markets with the highest rents -- San Francisco, New York and San Jose -- and increased by less than 2% in the fourth highest rent-growth metro -- Oakland.

Although Houston isn't a high-rent market, its -2.8% rent growth in the third quarter also helped weigh down the national rate.

Hartford, Birmingham and Oklahoma City also experienced negative annual rent growth.

"Job growth isn't bad in the Bay Area and New York, though the rate has slowed over the past year; so demand for apartments is still relatively strong," Denton said. "However, the amount of new supply that has been and will be delivered to these markets is extremely large and is forcing owners and developers to keep rents lower than they would like so they can remain competitive."

San Francisco, though, may be showing some signs of recovery. Though year-over-year rent growth was negative, the average third-quarter rent was 2.6% higher than the average second-quarter payment.

"What that tells us is that the metro's decline came last fall and winter," Denton said. "If job growth picks up, the apartment market will gain strength."

Houston is being affected by job losses in the energy sector as well as a glut of supply in the urban core Montrose/River Oaks submarket.

"Urban cores in general are showing slowing performance," Denton said. "The market is feeling the effects of the concentrated new supply in these submarkets. Nationwide, however, supply is just keeping up with the demand."

The slower performance of high-priced markets is somewhat counteracted by robust fundamentals in secondary markets. For example, annual effective rent growth in Sacramento; Riverside, CA; Salt Lake City; Las Vegas; Fort Worth; Tampa-St. Petersburg; and Nashville are among the 10 highest in major markets.

Effective rents increased 1.2% in the third quarter over the second quarter. The rent-growth rates for the past four quarters have been lower than the previous corresponding quarters. Occupancy was 95.1% in the third quarter compared to 95.2% in the second quarter and 95.4% in the third quarter of 2015.


Mortgage Rates Fall to Nearly 3-Month Lows

Mortgage rates pulled back this week to levels not seen since early July, with the benchmark 30-year fixed mortgage rate falling to 3.54 percent, according to's weekly national survey. The 30-year fixed mortgage has an average of 0.22 discount and origination points.

The larger jumbo 30-year fixed tied a record low at 3.54 percent, while the average 15-year fixed mortgage rate fell to the lowest level since May 2013, at 2.82 percent. Adjustable mortgage rates were lower as well, with the 5-year ARM sinking to 3.04 percent and the 7-year ARM dropping to 3.21 percent.    

Mortgage rates staged the sharpest pullback since early July following last week's meeting of the Federal Open Market Committee. The Fed did not raise interest rates and in addition to pointing out that inflation remains below their intended target, economic projections released following the meeting revealed that they aren't expecting core inflation to hit 2 percent until 2018. The combination of no rate hike now, low inflation with very modest increases and a possible short-term rate hike later this year is good news for long-term bonds, and by extension, mortgage rates. Higher inflation erodes the value of the fixed payments bondholders receive, but projections of low inflation and measures to keep it in check tend to push yields lower. Mortgage rates, which are closely related to yields on long-term government bonds, have directly benefited from this.

At the current average 30-year fixed mortgage rate of 3.54 percent, the monthly payment for a $200,000 loan is $902.56.


30-year fixed: 3.54% -- down from 3.62% last week (avg. points: 0.22)

15-year fixed: 2.82% -- down from 2.91% last week (avg. points: 0.18)

5/1 ARM: 3.04% -- down from 3.09% last week (avg. points: 0.26)


Outstanding CRE Debt Keeps Growing, Expected to Surpass Pre-Recession Peak

Commercial nonresidential real estate debt outstanding increased 5.4% in the past year and is just $14.4 billion shy of the last peak in 2008, according to the latest data from the Federal Reserve for the second quarter. 

Commercial nonresidential debt grew by $34.6 billion last quarter. At that pace, it is likely to surpass its pre-recession peak this quarter. 

Multifamily residential debt has never really stopped growing -- surpassing each previous year's volume in seven of the last eight years. And it continues to rise at a double-digit pace, up 10.15% in the past year, according to the Fed. 

Total commercial and multifamily debt outstanding rose 6.8% year over year to $3.707 trillion. Multifamily debt outstanding rose to $1.137 trillion, making up 31% of the total volume. Nonresidential debt outstanding rose to $2.571 trillion. 

At its peak in 2008, the multifamily portion made up just 25% of outstanding CRE debt. 

Government-sponsored enterprises Fannie Mae and Freddie Mac account for a huge amount of that growth. GSE-backed mortgage pools are now the third-largest holders of multifamily debt, growing their holdings 22.7% in the past year. They have more than doubled their holdings since 2008, surpassing private multifamily mortgage securities issuers. 

"The amount of commercial and multifamily mortgage debt outstanding grew to a new record during the second quarter, despite a record drop in the balance of CMBS loans outstanding," Jamie Woodwell, MBA's vice president of commercial real estate research, reported in MBA’s analysis of outstanding debt. "The CMBS market is seeing far more loans paying off and paying down than new loans being originated.” 

Private CMBS issuers continue to see their share of outstanding CRE debt shrink. Their total volume of multifamily debt shrunk 16.5% in the past year and now is 49% below their peak volume in 2008. The nonresidential debt outstanding shrunk 7% in the past year and total volume is 54% less. 

U.S. REITs have also been shrinking their overall outstanding debt with one distinction: nonresidential debt is down 8.8% from a year ago but multifamily debt is up 4.3% from a year ago. 

Government and private pension funds, too, have been avoiding debt investments with their combined holdings down 8.8% from a year ago. 

U.S. banks and life insurance companies, the first and second-largest holders of CRE debt, continue to increase their holdings of both and more than make up for the declines of CMBS issuers, REITs and pension funds. 

Banks surpassed their 2008 peak in 2015 and have grown their multifamily holdings 15.8% in the past year and their nonresidential assets 9.5%. 

Life insurance companies have been growing their portfolios a little more evenly. Multifamily is up 10.1% in the past year and nonresidential is up 9.7%.



Events (2016)

  • Gill Group plans to attend NAHRO’s National Conference and Exhibition October 14th – 16th in New Orleans, LA.
  • Gill Group plans to attend Mississippi Home Corporation’s QAP Meeting October 5th in Jackson, MS.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting September 13th – 14th in Jefferson City, MO.
  • Gill Group attended THDA’s Annual QAP Meeting August 9th in Austin, TX.
  • Gill Group attended AHAIN’s Buyer/Seller Conference August 1st – 2nd in French Lick, IN.
    • Cash Gill spoke on two panels: “Appraisals and CNAs” and “Pulling it All Together”
  • Gill Group attended NH&RA’s Summer Institute July 20th in Martha’s Vineyard, MA.
  • Gill Group attended NCSHA’s Housing Credit Connect Conference June 13th – 16th in Seattle, WA.
    • Cash Gill spoke on a panel entitled “Rural and Native American Development Strategies” with Bryan Hooper (Deputy Administrator of Multifamily Housing at Rural Development), Joline Kline (Executive Director of the North Dakota Housing Finance Agency), Don Beaty (The Summit Group), and Elizabeth Glynn (CEO of Travois).
  • Gill Group attended CARH’s Mid-Year Meeting and Conference June 12th – 13th in Washington, DC.
  • Gill Group attended NH&RA’s Spring Developer’s Conference May 16th – 18th in Marina del Ray, CA.
  • Gill Group attended PHADA Annual Conference and Exhibition May 22nd – 24th in Las Vegas, NV.
  • Gill Group attended Texas NAHRO’s 40th Annual Conference and Tradeshow April 19th – 21st in Houston, TX.
  • Cash Gill attended the Missouri Real Estate Appraisers Commission Quarterly Commission Meeting March 22nd in Jefferson City, MO.
  • Gill Group attended Bank of Advance’s Annual Meeting March 17th – 20th in Norfork, AR.
  • Gill Group attended the Maco Companies’ Annual Meeting March 10th – 13th in Biloxi, MS.
  • Gill Group attended the Council for Affordable Rural Housing’s Quarterly Board Meeting March 4th – 5th in Washington, DC.
  • Gill Group attended the National Housing and Rehabilitation Association’s Annual Meeting February 24th – 27th in West Palm Beach, Florida.
  • Gill Group attended the Council for Affordable Rural Housing’s Midyear Meeting January 25th – 27th in San Antonio, Texas.

Events (2015)

  • In 2015, Gill Group attended over 50 meetings and conferences from California to New York, and just about everyone in between.

GROWTH (2015 - Highlights):

  • Gill Group added two offices in Michigan and one in Wisconsin, further expanding our staff of architects and engineers.
  • Gill Group and Greystone formed a Joint Venture to provide a full line of consulting and development services for Rental Assistance Demonstration (RAD) transactions. Gill Group and Greystone are utilizing each of our areas of expertise in a collaborative effort, with a mission to partner with PHAs across the nation in preserving and expanding the affordable housing inventory under the HUD RAD program. Our team fully understands the intricacies of the real estate and affordable housing industries, and our services are provided by professionals who are fully immersed in LIHTC executions, construction management, project accounting, regulatory compliance, real estate transactions, and opportunity development. We sit on national and state boards and have in-depth knowledge of industry trends and best practices. As a developer team, we operate as three individual entities, each with a unique set of previous transaction experiences that add value to the project at hand. As a collaborative unit, we draw upon those experiences to bring to the table creativity, fresh ideas and unsurpassable development advisory services.
  • Gill Group’s subsidiary, National Title & Escrow, added two new offices in Missouri and Arkansas, further expanding our ability to service our nationwide base of customers.

Events (2014)

  • Gill Group attended 40+ meetings and conferences throughout the United States in 2014.

GROWTH (2014 - Highlights):

  • Gill Group began the process of working with owners of affordable housing to develop a web-based program that will work hand-in-hand with our services. It will give the users of our appraisals, market studies, capital needs assessments and many other services easy access and real time usage.
  • Gill Group added 2 offices with appraisers, market analysts, engineers and architects.
    • Within the offices are 11 architects, one MAI appraiser, one general certified appraiser, four market analysts and 12 additional support staff. 

Events (2013)

  • Gill Group attended 22 conferences and meetings throughout the United States in 2013

GROWTH (2013 - Highlights):

  • Gill Group expanded our cutting-edge market analysis software and added our own in-house developed needs assessment software for CNAs, PNAs, PCNAs, PCAs, RPCAs, and every other acronym for this type of service. 
  • Gill Group added 4 offices with appraisers, market analysts, engineers and architects.
    • Within the offices are three architects, one MAI appraiser, two general certified appraisers, five market analysts and 10 additional support staff. 
  • Gill Group expanded the footprint of its subsidiary, National Title & Escrow, to cover the entire United States with a local presence.

Events (2012)

  • Gill Group attended 20 conferences and meetings throughout the United States in 2012

GROWTH (2012 - Highlights):

  • Gill Group developed cutting-edge market analysis software that will allow us to do preliminary analysis that is subject-specific in any market in the United States within minutes. 
  • Gill Group added 11 offices with appraisers, market analysts, engineers and architects.
    • The offices now employ an additional 34 people.
  • Gill Group expanded coverage of its subsidiary, National Title & Escrow, to cover the entire United States.
  • Gill Group expanded coverage of its subsidiary, Gill Insurance Group, to cover the entire United States.

  Gill Group has published the following:

  • New York Real Estate Journal - How can low-income housing facilities translate into high profits?
  • New York Real Estate Journal - Up, up and away: Home mortgage interest rates and gasoline prices continue ascending.
  • Tax Credit Advisor - Boston MSA Market Snapshot
  • Tax Credit Advisor - Seattle MSA Market Snapshot
  • Northeast Industrial Development Resource Guide - What Appraisers Know About Investing.
  • Affordable Housing Finance – Urban and Rural Market Studies.
  • Tax Credit Advisor – LIHTC Appraisals 101

Cash Gill, MAI has had the opportunity to speak on the following topics:

  • (Indianapolis, IN) National Council of Affordable Housing Market Analysts - Maximize Your Market: Understanding the Methodology Behind Market Studies.
  • (Reno, NV) Nevada Council of Affordable and Rural Housing - Don't Get Caught in the Red. New Guidelines for Audits and Inspections.
  • (Washington, DC) The Institute for Professional and Executive Development - Nonrecourse HUD Deals - So You Closed Your Nonrecourse HUD Deal. Now What? And Is It Really Nonrecourse?
  • (Arlington, VA) Council for Affordable and Rural Housing - Property Valuation: The Correct Way to Value Properties.
  • (New Orleans, LA) National Council of Affordable Housing Market Analysts - Affordable Housing Site Analysis
  • (Las Vegas, NV) Nevada Council of Affordable and Rural Housing - Auditing and Accounting Guidelines for Section 42 Low Income Housing Tax Credits.
  • (Washington, DC) Council for Affordable and Rural Housing - Rural Development Appraisals and Market Studies
  • (Miami, FL) Council for Affordable and Rural Housing - The Equity Market - Impact on Rural Housing
  • (Washington, DC) Council for Affordable and Rural Housing - How