CHICAGO, IL -- The Real Estate Capital Institute's Scoreboard reports the big news, of course, is another precipitous drop of treasury rates to record-low levels at the close of the month.
The 10-year treasury plummeted by more than 40 basis points during the month, settling below 1.5%! Mortgage markets continue benefiting from a weakened stock market, a recovering housing market and improved industrial output. Also, lower energy costs this past quarter continue helping to counterbalance markets woes and the Eurozone crisis.
The residential real estate markets are rebounding. Developers started
more new home construction than expected, rising more than 2.5%.
The recovery is sporadic and directly linked to job growth in various parts of the country.
Falling to a three-year low, the jobless rate hovers at about 8% anchored by improving fundamentals of the manufacturing sector.
U.S. industrial production output in the U.S. climbed more to the highest levels since December, 2010, mostly fueled by automotive demand, according to the CensusBureau. Yet economic expansion remains fragile as fewer than expected workers were hired.
The Fed confirmed its low-rate policy, planning to hold a steady monetary policy through 2014. As a result, the benchmark 10-year treasury floated below two percent all month, helping mortgage rates stay low, accompanied by relatively tight spreads.
Multifamily spreads over comparable-term treasuries hover at approximately, about 15 basis points wider than a month ago - although absolute rates are low due to benchmark treasuries.
As for other commercial properties, retail and industrial properties are about 10 basis points wider than multifamily deals for lower leveraged transactions of 60% or less; office loans are priced about 20 basis points wider.
Generally speaking, most long-term multifamily rates are in the 4%-or-less range; commercial properties fall in the 4.25%-4.75% range. Full leverage commercial properties are priced near five percent.
Capital remains available from Wall Street, Life Insurance and Agencies for well-underwritten properties.
Jeanne Peck (top right photo) of the Real Estate Capital Institute notes, "Multifamily continues to enjoy the best of all worlds: rising rents, lower energy costs and record-low rates. But investors are concerned with new construction activity in some of the gateway markets."
She suggests, "On the other extreme, office property vacancies decreased to about fifteen percent, with inconsistent but improving results".
The Real Estate Capital Institute(r) is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates including treasuries, bank prime and LIBOR.
Furthermore, call the Real Estate Capital RateLine at
7RE-CAPITAL (773-227-4825) for hourly rate updates.
The Real Estate Capital Institute(r)
3517 West Arthington Street
Chicago, Illinois USA 60624
Contact:
Jeanne Peck, Executive Director
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