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Multifamily Loan-to-Values (LTVs) are Lowest in CRE Today Investors Retreating To Lower LTVs

Sam Tenenbaum • 8/29/2022

This week, we’re taking a look at the effect of rate movement on LTVs.

The volatility in the market has investors adopting a risk-off approach. It’s no secret that in today’s choppy market, buyers have been forced to bring more equity to the table. But this market is unique in modern history: at no point since the early 2000s have LTVs been as low as they’ve been this year. Not only that, but for the first time since 2009, LTVs for multifamily have dropped below those of the other asset classes.

Despite LTVs dropping precipitously, debt volumes in the first half of 2022 held up well. This data lags, so we can’t show more up-to-date figures, but through the first half of 2022, buyers have taken on more debt than in 2021, despite lower LTVs. That ties to the fact that overall sales volume thus far in 2022 has been remarkably strong given the uncertain macro backdrop, with sales volume through August already surpassing every previous year’s annual performance, with the exception of 2021.

 

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sam tenenbaum
Sam Tenenbaum is Cushman & Wakefield’s Head of Multifamily Insights. In this series, he shares unique perspectives on today’s multifamily market, gathered from Cushman & Wakefield’s unique data on the lending environment, strong capital markets presence and the 175,000 units that we manage across the U.S. 

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