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But volumes in subsequent years will be even worse, he predicted: Just $45 billion in 2004 and $48 billion in 2005.
“Things are going to be pretty slow for a while,” Lawch ventured. Noting that the apartment sector tends to lag the general economy, the Fannie Mae executive said multifamily lending won't return to last year's levels until the economy improves and the market catches up.
The market's fundamentals are “profoundly terrible” right now, he told the conference. “Only after the economy gets going will apartment lending pick up.”
Lawch said the only reason lenders have remained in the market this long is that apartments are the only investments that offer any kind of decent return. “Multifamily is one of the prettiest pigs in the barn,” he said. “Capital is looking for a home and multifamily is just swell. In fact, it looks pretty good when compared to other investments. But capital is fickle, and the only question is how long it will stay in multifamily housing.”
He added, however, that over the longer haul, the demographic trends suggest “nothing but positive markets are ahead for those who can wait out the current doldrums. With 78 million echo boomers age 18-35 on the horizon and 700,000 immigrants coming to U.S. shores every year,” he said, “a great decade lies ahead of us.”
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