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Multifamily Finance Experts: No National Bubble, But Concern About Some Markets

Around the country, the multifamily sector has been booming in recent years. As the economy continues its slow recovery from the 2008 financial crisis, many are looking to see if some of the same aggressive lending that caused that crash is happening today. 

Todd Harrop, executive vice president, national director of capital markets, speaks at a recent Bisnow event.

Multifamily finance experts at Bisnow's Multifamily Annual Conference recently said not to worry about this issue on a national level, but to be careful in certain markets with construction booms. 

Bellwether Enterprise national director of capital markets Todd Harrop says he has seen banks begin to pull back on lending for new construction, which can make it harder to finance new developments, but is a good sign of a more disciplined market

"I've survived two downturns and experienced two run-ups prior to that, and I think this time feels a little different," Todd, speaking next to moderator Heidi Henderson of Engineered Tax Services, said. "The primary reason is the capital is still very disciplined. So there are a lot of lenders that are drawing the line lower in the stack, and they’re not going to go above it."


Walker & Dunlop managing director Brendan Coleman agreed the market is not showing the same warning indicators that led to the financial crash. 

"It's still really disciplined, we're not being as aggressive as we were in 2006 and 2007," Brendan said. "It was crazy how aggressive everybody was, we're not seeing that now."

Brendan did express concern about some markets where there could be overly aggressive construction. He said he was in Miami for a conference recently and couldn't believe how many cranes he saw in the sky. 

"I said, 'Oh no, this is what was going on in 2007, and those didn’t get built till 2010,'" Brendan said. "Now I look at those cranes over Miami and that feels like a bubble to me."


Pillar head of multifamily construction Ed Hussey says nationwide market fundamentals continue to be strong as more people choose to rent apartments rather than buy homes.

"Is there a nationwide bubble? I don't see it," Ed said. "In individual markets, you’ve got to be careful because there could be a lot of construction there and you may have a softness."


The morning at BMAC began with a focus on affordable housing. First, Enterprise Community Investment CEO Charlie Werhane discussed his plan to end housing insecurity within a generation. Then the affordable housing panel, above, discussed some of the emerging trends in the industry.

Nixon Peabody partner Meghan Altidor works with companies trying to get into the affordable housing space. She says the biggest trend she is seeing is new kinds of players entering the industry. 

"We're seeing private equity in a lot of affordable deals where we've never seen it before," Meghan, speaking in the back right, says. "A lot of market-rate developers are seeing the activity in the affordable space and asking 'what is that about?' and wanting to learn more."