Between now and 2017, over $300 billion in Commercial Mortgage-Backed Security, also known as Conduit Loans (“CMBS loans”) will need to be refinanced. What does this mean and why is it important?
Many of the current CMBS loans were made at the height of the real estate bubble, around 10 years ago and now, many commercial real estate owners find themselves in a bit of a pickle. What does that mean for commercial real estate in the South Florida? All classes of commercial real estate properties experienced some measure of delinquencies throughout 2014, but now, a handful of borrowers are faced with aging assets that they are unable to reposition. The reason for this, in many cases, can be traced to the growing demand of new and renewal tenants in multifamily, office and retail properties.
What does that mean for real estate transactions in 2015? It’s simple, if CMBS loans facing maturity continue defaulting at greater levels, rather than upgrading a property, these commercial real estate owners will be forced to replace financing on older properties. This replacement financing comes at a time when most secondary markets are experiencing competitive pricing along with demand for updated space. Rather than buying new properties, these developers and owners are taking measures to refinance these CMBS loans.
For now, interest rates continue to remain historically low, but this love affair with low rates may end soon, creating a quick cool off period for the real estate market. Low rates, along with other factors, such as availability of capital and relaxed underwriting standards, are forcing developers and owners to move quickly to lock in the most favorable rates.
Moral of the story: Lock your rate before it’s too late.
Khani & Auerbach is a law firm that focuses a majority of its practice on both residential and commercial real estate transactions. Contact us for more information.
Summary of Monthly Market Detail of Single Family Homes in Broward County for January 2015, provided originally by the Greater Fort Lauderdale REALTORS®.
Recently, the attorneys at Khani & Auerbach had the privilege of attending an industry meeting where they heard a representative from the Greater Fort Lauderdale REALTORS® group provide some insight on real estate changes in the Single Family Home market in Broward County. The changes were not significant, but definitely indicate a return to a healthy real estate market in South Florida.
While closed sales, cash transactions, new pending sales, average percent of original list price received and pending inventory have decreased from January 2014, there are some great statistics for Single Family Homes in Broward County that have increased. New listings, median sales price, average sales price, active listings (inventory) and months supply of inventory have all increased. Among the good news, the bad news is that the median days on the market have also increased by 28.9% since January 2014, up from 38 days to 49 days.
So, of all these statistics, you might be most interested to know 2 figures, Median Sales Price and Average Sales Price. The Median Sales Price for January 2015 was $265,000 (up 1.9% from January 2014) and the Average Sales Price is $342,106 (Up 1.1% from January 2014).
Overall, these indicators are a sign that the market is rebounding in a very healthy way, without too much decrease or increase in a short amount of time. The next data release from the Greater Fort Lauderdale REALTORS® is expected in on March 23, 2015.
Congratulations to Attorney Khila L. Khani for achieving an AV Preeminent Rating wih Martindale-Hubbell! Khani & Auerbach is delighted about this achievement. Martindale-Hubbell’s AV Preeminent rating is a significant accomplishment and a testament to the fact that a lawyer’s peers rank him or her at the highest level of professional excellence. These ratings serve as an objective indicator that a lawyer has the highest ethical standard and professional ability. To find out more about Martindale-Hubbell’s ratings, please click here.
AIR BAG RECALL
By: Steven S. Farbman
The government has recently recalled more than 2 million Toyota, Chrysler and Honda vehicles because of a second fix needed for air bags that may inadvertently inflate while the car is running. The recall includes some Acura MDX, Dodge Viper, Jeep Grand Cherokee, Honda Odyssey, Pontiac Vibe, Toyota Corolla and Toyota Avalon models made from 2002 to 2004. Carmakers had originally tried to fix the defects by partially replacing the electronic control unit, made by TRW Automotive of Livonia, Mich., but that fix didn’t always work. The new remedy – full replacement of the unit – will be available to all affected vehicles by the end of the year. However, the NHTSA is urging consumers with cars under the first recall to have the partial unit installed despite the fix’s failure rate, even if they have to return to the dealer under the second recall. “Even though it’s a temporary solution until the new remedy is available,” NHTSA Administrator Mark Rosekind said, consumers “and their families will be safer if they take the time to learn if their vehicle is covered and follow their manufacturers’ instructions.”
Approximately 39 air bags that had been replaced under the previous recall have deployed inadvertently again. The agency says about 1 million Toyota and Honda vehicles involved in the new recalls are also subject to a separate recall related to defective air bags made by Takata of Japan. Those air bags can deploy and rupture with enough force to cause injury or death. In nine cases, cars had problems that included both the inadvertent deployment and the Takata rupture. Three of those cases resulted in injuries, including eye injuries, scratches and burns. No death or injuries related to non-Takata air bag failures have been reported.
The Law Offices of Steven S. Farbman are always interested in the safety and well-being for the people of our community. As always please feel free to contact my office with any legal questions you may have. For more than 30 years, Steven S. Farbman has been helping members of this community who have been seriously injured due to the carelessness and negligence of others.
Law Offices of Steven S. Farbman, P.A.
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According to the Mortgage Credit Availability Index (MCAI), a report from the Mortgage Bankers Association (MBA) indicates that February resulted in a slight increase in mortgage credit availability.
The MCAI increased 0.7 percent to 118.6 in February. This slight increase in the index indicates that credit is loosening, while a decrease would indicate that lending standards would tighten.
The MBA’s Chief Economist stated, “Credit availability improved marginally in February, led by further increases in jumbo loan programs, and additional take-up of Fannie Mae’s 97 LTV program. More than half of investors are now offering a 97 LTV program, and Freddie Mac announced that their program will be available in mid-March. In terms of conforming credit, this was offset by somewhat tighter constraints on cash-out loans and investors with multiple financed properties.”
It’s good news for consumers seeking to borrow money in order to buy real estate and that’s good news for everyone!