Brexit Vote Drops Rates to a 3-Year Low

Mortgage rates fell to a fresh 3-year low following the Brexit vote, with the benchmark 30-year fixed mortgage rate sinking to 3.61 percent, according to's weekly national survey. The 30-year fixed mortgage has an average of 0.24 discount and origination points.

The larger jumbo 30-year fixed didn't fall as far, dipped to 3.67 percent, and is higher than the average conforming rate for just the fourth time in the past year. The average 15-year fixed mortgage rate dropped to a 3-year low as well, 2.89 percent. Adjustable mortgage rates were down more modestly but enough to reach 3-year lows as well with the 5-year ARM retreating to 3.01 percent and the 7-year ARM settling at 3.22 percent.

Mortgage shoppers are one of the beneficiaries of the recent market upheaval over the Brexit vote. The stock market staged a relief rally in the days ahead of the Brexit vote in anticipation of a 'Stay' vote, so the 'Leave' outcome threw global markets into a tailspin. If there is one thing investors hate it is uncertainty and there is plenty of that which only enhances the lure of safe haven U.S. Treasuries. Mortgage rates are closely related to the yields on long-term Treasuries. The uncertainty about the global economy is even higher now; so bond yields and mortgage rates are lower. With that landscape unlikely to change, this will help to keep mortgage rates at attractive levels for the foreseeable future.

At the current average 30-year fixed mortgage rate of 3.61 percent, the monthly payment for a $200,000 loan is $910.41.


30-year fixed: 3.61% -- down from 3.73% last week (avg. points: 0.24)

15-year fixed: 2.89% -- down from 2.97% last week (avg. points: 0.19)

5/1 ARM: 3.01% -- down from 3.06% last week (avg. points: 0.25)*


House Releases Tax Reform Blueprint, Where is LIHTC?

This past Friday, the House Tax Reform Task Force, led by House Ways and Means Chairman Kevin Brady, released its tax reform blueprint. The blueprint contains no legislative language, but is an outline for how the House of Representatives plans to continue working on tax reform into 2017.

The stated goals are to fuel job creation, make the tax code simpler and fairer and improve IRS’ customer service. The blueprint also outlines the desire to lower the top corporate tax rate from 35 to 20 percent. In order to do this, the plan would eliminate many corporate tax expenditures. The Research and Development credit is the only expressly retained credit, while several credits are expressly offered for repeal. The plan is silent on the LIHTC as well as all tax exempt bonds (including multifamily housing bonds). The Ways and Means Committee website provides further information.

“It is very concerning that this blueprint does not express the need to maintain economic and community development initiatives like the Low-Income Housing Tax Credit, Historic Rehabilitation Tax Credit, and New Markets Tax Credit,” said Thom Amdur, Executive Director of NH&RA. “We encourage our members to reach out to their elected officials to show them how important these programs are to communities across the country.”

Click here to find the contact information for your representatives.

“Without the Housing Credit, there would be virtually no new affordable housing development at a time when our nation’s affordable housing needs have reached an all-time high,” The ACTION Campaign wrote in an email. “[We] intend to submit comments to the Ways and Means Committee to express this position.”

Led by Ways & Means Committee Chairman Kevin Brady (R-TX), the House Tax Reform Task Force is one of six tax forces enlisted in developing the House Republican’s policy agenda under House Speaker Paul Ryan’s leadership. The House Ways & Means Committee intends to develop legislative language within the framework before January 20, 2017, when the next president will be inaugurated.


Maximizing Value for Senior Housing

Class B seniors housing properties tend to sell for lower amounts per unit than Class A senior housing properties which, by definition, have a higher asset quality, better operational performance and are in a more desirable physical location.

Class A properties, in fact, sold for about $248,500 per assisted living unit and $243,300 per independent living unit in 2015, according to Irving Levin’s SeniorCare Investor annual report. Class B properties, meanwhile, garnered only $138,300 per unit for assisted living and $72,900 per unit for independent living that same year.

But there are ways to minimize the pricing differences between the two classes of properties claims a new report from Greystone Real Estate Advisors, a New York-based real estate lending, investment and advisory firm that specializes in the sales and acquisitions of senior housing properties.

As it turns out, owners of Class B seniors housing properties can position their assets for pricing success—and they shouldn’t have to worry too much about finding a buyer.

Maximizing pricing potential

By analyzing the strengths and weakness of a Class B property—whether they be in asset quality, physical location or operational performance—owners can take steps to minimize those weaknesses or boost those strengths and edge closer to their pricing goals, Greystone’s June 2016 Seniors Housing Market Trend Report says.

For instance, the report says that if a Class B property is in an undesirable physical location, its owner can add care services to capture additional market share and boost revenue. This can involve adding memory care units to an independent living or assisted living community or building independent living cottages on campuses that were previously exclusively assisted living and memory care.

The owner of a Class B property in an undesirable location can also group the property in a portfolio of other properties that are for sale and are in more attractive locations.

“Buyers will often overlook the location challenges of one property in a portfolio if the remaining properties are situated in strong areas,” the report says.

If a Class B property is an older asset, or of low-quality, its owner can revamp its common areas, renovate individual units or refresh the building’s exterior, the report suggests. The owner should also focus on making sure the property is stabilized—as stabilized properties draw more institutional buyers.

In 2015, stabilized communities–which have an occupancy of 85% or more–garnered a higher price per unit than un-stabilized properties, the report notes.

Still, there is a larger number of overall buyers seeking value-add opportunities, Greystone says. Public REITs are beginning to be more picky, and have recently been more drawn to stabilized properties, which are easier to sell at a higher price—but not all buyers can be competitive at such a high price.

“This migration of the buyer pool has opened the door for groups who have historically missed out on buying opportunities to get into the game,” the report says.

Value-add properties, meanwhile, generate higher returns; often, a new buyer is confident that they can control expenses and increase census. These buyers see different opportunities to better the community, or may see an opportunity to buy a property below replacement cost.

Additionally, it’s always a good idea to make sure Class B properties on the market have a strong operator, as well as a dedicated and experienced staff with low turnover, the report adds. These factors serve as differentiators for older Class B properties, or for those in bad locations.

A buyer for every seller

For the most part, public and non-traded real estate investment trusts (REITs), as well as large institutional private equity firms, act as the buyers for Class A properties.

“This type of buyer is typically interested in assets of this caliber due to the higher certainty of transaction execution,” the report explains.

The buyers of Class B properties, meanwhile, are typically regional owner/operators, family-owned companies, smaller private equity firms and non-traded REITs.

No matter what you’re selling, someone will bite, Greystone concludes.

“Regardless of what type of property a seller wants to market, there is typically at least one type of buyer looking to acquire your asset,” the report says.


Multifamily Housing Construction on the Rise

At a seasonally adjusted annual rate of $636.7 billion, new construction starts in May increased 5% from April, according to Dodge Data & Analytics.  Much of the growth came from the non-building construction sector (public works and electric utilities), which was lifted by a $3.8 billion oil pipeline in the upper Midwest as well as by seven power plant projects with a combined cost of $4.3 billion. Residential building edged up slightly in May, as multifamily housing bounced back from its subdued April performance.  However, non-residential building in May retreated, sliding for the second month in a row after the elevated activity reported in March.  During the first five months of 2016, total construction starts on an unadjusted basis were $256.7 billion, down 12% from the same period a year ago.  Last year's January-May period featured 12 exceptionally large projects valued each at $1 billion or more, including a $9.0 billion liquefied natural gas export terminal in Texas, an $8.5 billion petrochemical plant in Louisiana, the $2.5 billion 30 Hudson Yards office tower in New York NY, and the $2.3 billion Interstate 4 Ultimate Project in Orlando FL.  In contrast, the January-May period of 2016 included only four projects valued at $1 billion or more.  If these exceptionally large projects are excluded from the comparison, total construction starts during the first five months of 2016 would be down 0.3%, or essentially even, with last year.

The May statistics raised the Dodge Index to 135 (2000=100), up from 129 in April.  The Dodge Index had shown moderate improvement during February and March, averaging 141, before slipping back in April. "The construction start statistics have shown annual increases since 2010, including a 10% gain in 2015, although the month-to-month pattern has been frequently uneven," stated Robert A. Murray, chief economist for Dodge Data & Analytics.  "This up-and-down behavior continues to be present in 2016, with May seeing a partial rebound after the setback in April.  In addition, the year-to-date comparisons in early 2016 relative to last year have been complicated by the fact that the first half of 2015 witnessed elevated levels arising from a number of exceptionally large projects (defined as projects valued at $1 billion or more).  There were considerably fewer such projects during the second half of 2015, and this lower base should enable the year-to-date comparisons to improve as 2016 proceeds.  The environment for construction still carries a number of positives – long term interest rates remain low, commercial development is being financed from multiple sources, construction bond measures are being passed at the state level and the new multiyear federal transportation bill is in place. On the cautionary side, bank lending standards for commercial real estate loans began to tighten during the second half of 2015, and this trend has continued into 2016."

Non-building construction in May jumped 24% to $193.0 billion (annual rate).  The public works categories as a group increased 15%, helped especially by a 47% hike for miscellaneous public works which includes such diverse project types as pipelines, rail and airport runway projects, and site work.  May's data included the start of the Dakota Access Pipeline, with an estimated construction start cost of $3.8 billion, located in the states of North Dakota, South Dakota, Iowa and Illinois.  This oil pipeline will connect the Bakken and Three Forks production areas in North Dakota to existing pipelines in Illinois.  The river/harbor development category in May climbed 81%, rebounding after a weak April.  Sewer construction in May advanced 42%, helped by the start of a $149 million sewage pumping station in Kailua HI and a $130 million sewage treatment plant upgrade in the Binghamton NY area.  Water supply construction was the one environmental public works category that declined in May, falling 40%.  Highway and bridge construction edged up 1% in May, advancing for the second month in a row following the lackluster amount reported in March.  The electric power and gas plant portion of non-building construction soared 57% in May.  There were four large natural gas-fired power plants included as construction starts, located in Pennsylvania ($1.2 billion), Ohio ($890 million), Florida ($750 million), and Texas ($575 million).  There were also three large wind farms that reached groundbreaking in May, located in Kansas (two projects valued at $400 million and $220 million, respectively) and North Dakota ($249 million).  Murray noted, "Last December Congress approved an extension to the wind-energy production tax credit through 2019 which is contributing to the healthy pace for new wind power projects so far in 2016."

Residential building, at $272.5 billion (annual rate), improved 1% in May.  The multifamily side of the housing market provided the upward push, increasing 15%.  There were eight multifamily projects valued at $100 million or more that reached groundbreaking in May compared to five such projects in April.  The May large projects were led by a $500 million apartment tower in Chicago IL, followed by a $453 million apartment tower in Jersey City NJ and the $345 million apartment portion of a $500 million mixed-use high-rise in New York NY.  Through the first five months of 2016, New York NY continued to be the leading metropolitan area in terms of the dollar amount of multifamily starts followed by Miami FL, Chicago IL, Boston MA and Los Angeles CA.  Metropolitan areas ranked 6 through 10 during this period were San Francisco CA, Washington DC, Denver CO, Atlanta GA and Dallas-Ft. Worth TX.  Of these ten metropolitan areas, eight showed double-digit gains compared to a year ago while two showed declines – New York NY, down 16%; and Washington DC, down 25%. Single family housing in May slipped 4%, not yet able to re-establish an upward trend in a sustainable manner despite continued low mortgage rates.  By major region, single family housing in May showed this pattern compared to April – the Midwest down 7%; the South Atlantic down 6%; the West down 4%; the South Central with no change and the Northeast up 3%.

Non-residential building in May decreased 6% to $171.2 billion (annual rate), marking the second straight monthly decline after the heightened activity in March.  The commercial building categories as a group experienced a 9% shortfall in May.  Hotel construction, which had been particularly strong during the initial months of 2016, fell 22%.  Large projects that reached groundbreaking in May included the $97 million hotel portion of the $500 million mixed-use high-rise in New York NY and a $75 million Marriott hotel in Menlo Park CA.  While noteworthy projects by themselves, they were smaller in scale than the substantial hotel and casino projects that reached groundbreaking in February and March. Office construction in May dropped 11%, despite the start of a $191 million office building in Brooklyn NY, a $139 million renovation of a federal government office building in Washington DC and a $95 million renovation of an office campus in Akron OH.  Both stores and warehouses stayed close to their April levels, posting small declines of 1% and 3% respectively.  The manufacturing plant category in May retreated 37%, following April's 38% hike that included the $717 million expansion to an alpha olefins plant in Louisiana.

The institutional side of the non-residential building market held steady in May.  The educational facilities category rose a moderate 4%, lifted by the start of a $111 million science and technology center at Chapman University in Orange CA, an $80 million renovation of a high school in Hartford CT and a $77 million engineering building at San Diego State University in San Diego CA.  Healthcare facilities increased 7%, boosted by groundbreaking for a $230 million hospital in Baton Rouge LA and a $177 million hospital in Fulton MO.  Moderate growth was also reported for church construction, up 6%; and public buildings (courthouses and detention facilities), up 9%.  On the negative side, transportation terminal work slipped 9% in May and amusement-related construction fell 13%.  Even with its May decline, the amusement category did include the start of the $129 million renovation of the Target Center Arena in Minneapolis MN and a $98 million "convening" center at Harvard Business School in Allston MA.

The 12% decline for total construction starts on an unadjusted basis during the first five months of 2016 was due to diminished activity for both non-building construction and non-residential building, compared to their brisk pace of a year ago.  Non-building construction dropped 24% year-to-date, with public works down 13% and electric utilities/gas plants down 39%.  Non-residential building fell 21% year-to-date, with commercial building down 7%, institutional building down 12% and manufacturing building down 70%.  Residential building continues to be the one major sector that's showing year-to-date growth, climbing 6% with single family housing up 9% and multifamily housing holding steady with the prior year.  By geography, total construction starts during the first five months of 2016 revealed a mixed pattern – the South Central, down 36%; the Northeast, down 8%; the West, down 2%; the South Atlantic, no change; and the Midwest, up 7%.*



Events (2016)

  • Gill Group plans to attend 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 PHADA Annual Conference and Exhibition May 22nd – 24th in Las Vegas, NV.
  • Gill Group attended NH&RA’s Spring Developer’s Conference May 16th – 18th in Marina del Ray, CA.
  • 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 to Foster Affordable Green and Rural Housing Needs Assessments
  • (Indianapolis, IN) Affordable Housing Association of Indiana - Market Analysis – Best Ways Use Market Studies to Ensure Application Points
  • (Portland, ME) Enterprise Buyer/Seller Conference for RRH 515 Properties – Valuing the Product. What Is My Development Worth?
  • (Washington, DC) National Housing and Rehabilitation Association – Financing and Underwriting Special Needs Housing.
  • (Atlanta, GA) National Council of State Housing Agencies – Comprehensive Market Analysis.
  • (Chicago, IL) AHF Live – Strategies for Rural Deals.
  • (Dallas, TX) Crittenden Multifamily – Financing Special Use Properties.
  • (Washington, DC) Council for Affordable Rural Housing – Rural Housing Preservation
  • (Denver, CO) National Council of State Housing Agencies – Rural Housing Strategies
  • (Denver, CO) National Council of State Housing Agencies – Y15: Preservation and Disposition Seminar
  • (San Antonio, TX) Rural Rental Housing Association – LIHTC Legislative Update
  • (Key Largo, FL) Council for Affordable Rural Housing – How National Appraisal Practices Impact USDA Assisted Properties
  • (San Francisco, CA) National Council of State Housing Agencies – Changes and Challenges in Rural Housing Development
  • (Chicago, IL) AHF Live – Preservation of Older LIHTC Deals
  • (Franklin, TN) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Columbus, OH) Council for Rural Housing & Development of Ohio – Rural Housing Market Research
  •  (South Bend, IN) Great Lakes Capital Fund’s University of Affordable Housing – Valuation Risks Using Financing for RAD Deals
  • (Chicago, IL) National Council of State Housing Agencies – Rural Development Opportunities
  • (Orlando, FL) National Association of Housing and Redevelopment Officials – Affordable Housing Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies
  • (Alexandria, LA) Regional Affordable Housing and RAD Training – Valuation, Feasibility and Capital Needs Assessments
  • (Ft. Lauderdale, FL) Southeastern Affordable Housing Management Association (SAHMA) – Rent Comparability Studies 101
  • (Indianapolis, IN) Midwest Buyer/Seller Conference – CNAs and Appraisals
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities (2014)
  • (St. Pete Beach, FL) CARH – Preservation Challenges and Opportunities
  • (Nashville, TN) TAHRA – Appraisals, Market Studies, Rent Comparability Studies and Rent Reasonableness Studies for LIHTC and RAD Transactions
  • (Los Angeles, CA) NCSHA – Successful Development in Challenging Markets
  • (Chicago, IL) AHF Live – Acquisition Challenges and Opportunities
  • (Seattle, WA) NCSHA – Rural and Native American Development Strategies





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