Executive Perspectives Blog
Freddie Mac's latest U.S. Economic and Housing Market Outlook concludes that the nation's economy is gradually getting back to a more normal level of activity, and therefore we expect to see housing demand and supply increasingly driven by fundamentals – in fact, we've already seen this in some markets.
Last week, we announced our Second-Quarter Financial results, and it was another solid quarter for Freddie Mac – our 11th consecutive quarter of profitability.
Have you HARPed? A large number of eligible homeowners – who could save thousands of dollars a year on their mortgage payments – have yet to refinance through the federal Home Affordable Refinance Program (HARP). And the clock is gradually running out.
Given current trends in renting and multifamily rental-housing inventory, apartment demand should exceed supply for years to come. New construction by itself won't fill the gap. Additional investment needs to be made in existing units to keep them in active inventory. As part of this, there is a growing need to direct "flexible" capital into renovating, preserving, and, in some cases, transforming the nation’s aging rental-housing stock.
We, like many, expected more out of housing so far this year. Existing home sales were down 6 percent while new home sales were unchanged during the first five months of 2014 compared with the same time last year. Single-family housing construction was lackluster too with building permits slipping 2 percent and housing starts up a meager 1 percent over this same five-month window. One of the few bright spots in housing activity occurred for multifamily rentals: starts of buildings with five or more apartments jumped 16 percent during January through May compared with a year ago, and vacancy rates on rental apartments tracked by Reis dipped to 4.0 percent in the first quarter, down from 4.4 percent a year earlier, and the lowest recorded by the firm since 2000. That's great for the rental industry, but also means your rent is going up.