Segmentation in the Multifamily Mortgage Market: Evidence from the Residential Finance Survey
It has been observed that small multifamily properties with fewer than 50 dwelling units are important from a policy standpoint because they are more affordable and often are located in underserved areas. Small properties appear to experience greater difficulty than larger properties in securing mortgage financing. It is estimated that 41.5 percent of units in the multifamily housing stock are from small properties. Differences exist between small and large multifamily markets in the percentage of properties financed and the incidence of adjustable rate financing. Regression analysis confirms a lower incidence of mortgage financing and higher exante likelihood of relational and adjustable-rate financing among small properties, after controlling for risk, location, and owner characteristics.