The Closing: A Monthly Summary with Ideas to Get Your Deals Closed

As I look at my calendar today, I cannot believe we are already halfway through 2023. Time flies when you’re having tons of fun and getting deals done!

This month’s main focus is on income limit growth. Last month, HUD issued their fiscal year 2023 income limits. CBRE projects annual income growth each year. We can confirm that actual income growth was right in line with our forecast prior to the application of the national cap. For 2023, HUD changed its calculation for the national cap on income (and thus restricted rent) increases, resulting in a 2023 cap of 5.92% whereas the previous methodology would have restricted it at approximately 12%.

HUD has not disclosed its reason for changing how it calculates the annual cap. As providers of affordable housing, however, a 12% rent increase may not have been budgeted in most areas, nor would many markets (or households!) have been able to bear it. It should also be noted that the growth cap does not apply to properties placed-in service prior to 2009 in HERA (Housing and Economic Recovery Act) special areas.

Please click here to access the link to an article on income growth in HERA special areas by our resident expert on income growth, Eric Huff. As noted above, CBRE tracks income growth carefully and makes annual growth forecasts. Should you have questions about income growth in your market, please contact me and I will connect you to our expects.

Noteworthy CBRE Research

Multifamily Vacancy Poised to Rise in All Major Markets

Key Takeaway: Multifamily vacancy rates, currently hovering near pre-COVID levels, are poised to increase. A moderate recession—which we believe will begin later this year—will temper household formation and lead to higher vacancy in every major market.
READ MORE

The Build-to-Rent (BTR) Overview

Key Takeaway: Amid a challenging for-sale housing market, build-to-rent (BTR) communities have emerged as an opportunity for multifamily investors. The report delves into BTR market fundamentals and assesses the current landscape, active markets and go-forward opportunities.
READ MORE

The Office Debt-Funding Gap is Likely to Increase

Key Takeaway: CBRE Econometric Advisors first analyzed the burgeoning Office Sector Debt Funding Gap in December 2022. This was a highly technical piece about the United States office sector facing a large aggregate funding gap in the near-term. Since December, the gap has widened substantially (by billions of dollars) due to lower LTVs and asset value erosion.
READ MORE

Upcoming Events

Texas Housing Conference
Austin, TX | July 24 -26, 2023
I won't be attending this one, but our team members will. Ping me for an intro.
NH&RA Summer Institute
Laguna Beach, CA | Jul 31 - Aug 3, 2023
Looking forward to seeing you there! Ping me for a meeting.

Notice Board

Rates

Raising the debt ceiling has brought with it more stability to rates in the past 30 days, but contrary to (at least my) expectation, treasuries have not come down much off their high leading up to the deadline.

Questions?

Click here to schedule a debt discussion or deal brainstorming session

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Other Interesting Items

2023 State of the Nation's Housing Report

The Joint Center for Housing Studies (JCHS) of Harvard University released the 2023 edition of its annual State of the Nation’s Housing Report. Click below to view the full report. This annual report looks at housing from multiple perspectives: markets, demographics, homeownership, rental housing, and all the inherent challenges therein, through the lens of housing affordability.

See the Full Report