Real Estate Journal — 2017 Forecast — January 27 - February 9, 2017 — 15C
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M ortgage B anking
By Mark M. Scott, Commercial Mortgage Capital Keep in touch with your mortgage banker in 2017
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017 promises to be an exciting year of change. We have already seen
many builders. No longer can a developer who has owned property for a long period secured approvals and cre- ated tremendous value use such land as all or most of their equity. Many agree in finance legal circles that HVCR is broken. We will likely see changes to these rules this year. The tax code – The new administration is already proposing changes to tax free exchanges, 1031’s and certain tax exemptions we have become used to. The potential for these changes is unclear.
peaking, as evidenced by the January 2, 2017 WSJ article noting the increase in conces-
trend may be slowing. Increased spending and easing of regulations will
The above changes are cross currents in the market right now. Lenders, develop- ers, owners are all watching to see what the new Trump administration will propose in the year ahead. Certainly the year of 2017 is one to keep your eyes on. Read and learn as much as you can about the changes and prepare for the world, not only the real estate world, to change in a big way. And of course, keep in touch with your mortgage banker. Mark M. Scott is princi- pal of Commercial Mort- gage Capital. n
a quick 75 basis point rise in rates and a subse- quent slide of 25 basis points for a net increase of 50 basis points in the
“Certainly the year of 2017 is one to keep your eyes on. Read and learn as much as you can about the changes and prepare for the world, not only the real estate world, to change in a big way.”
sions and reductions in rents as a glut of supply continues to hit the market specifically in the New York Metro area. Whereas industry experts be- lieved there was an endless supply of millennials ready to move into apartments, this
spur business growth and continue to put upward pres- sure on rates. HVCRE BASEL III – The requirement for developers to bring at least 15% of the “completed value” of a devel- opment has greatly stressed
Mark Scott
10 Year Treasury. We have seen the mood of bankers who thought they were in the eighth inning of a recovery prior to the election, now see the game as a double header. Calls by our President-elect Donald Trump, who has real estate in his blood, to spend billions on infrastructure, cut taxes on the wealthy, roll back regulations such as Dodd- Frank all portend to make 2017 an interesting year. In the face of this growth there are still many chal- lenges in the economy and the real estate industry. “The delinquency rate for U.S. Commercial Real Es- tate Loans in CMBS is now 5.23%. The delinquency rate has moved higher than in 9 of the last 10 months.”- Trep- pWire, 1/3/17 The multifamily market, the best performing sector in the last 6 years may be significant number of posi- tive factors. On the positive side let us hope that the stock market, which has moved up significantly since the election, and now stands at an all-time high, is in fact a predictor of the future health of both the business and the general economy. For all of our sakes we should hope that the strength in the stock market it is not what Alan Greenspan once described as irrational exuberance. Time will tell. “It is also true that it has historically taken the real es- tate market eight years after a significant recession to com- pletely rebound. In this case, let us hope that holds true, since 2017 will be the ninth year since the last recession. We could use a boost in the office real estate market,” concluded Davisson. n What’s ahead for the Wilmington real estate market. . . continued from page 14C
2016 was a solid year but...Q1 is always the best time to be a borrower. Tight spreads, availability of money & eager lenders!
Mark M. Scott Principal
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