The Multifamily Dispatch,
from J+G Companies

Reports of the death of the multifamily market are greatly exaggerated, and that holds true whether you’re looking at the past few years or the next few decades. Certainly, investment activity and property valuations have fallen, especially compared to their 2021-2022 peaks, but this was more of an interest rate-driven price correction than a collapse. Likewise, there have been…

Recent CPI and PPI reports found higher inflation at the producer and consumer levels, and while a rate hike is not expected at this week’s Federal Reserve Open Market Committee meeting, there is little chance for a rate cut from the FOMC. Interestingly, multifamily buyers have slightly increased their plans for acquisitions in the next 6 months, despite (or perhaps…

Investors’ higher-for-longer interest rate expectations increased after the latest jobs report showed stronger-than-expected employment numbers. Mere months ago, projections pointed to multiple cuts in the federal funds rate, and now, markets expect one or more hikes by the end of this year. This elevated rate environment will likely lead multifamily sales activity to cool, but opportunities could emerge…

Peak rental season is in full swing, and there are signs that seasonal apartment rent growth patterns are returning to pre-pandemic norms. Coinciding with the substantial wave of new supply, apartment rent growth in recent years has peaked several months earlier than usual, but early rent growth data for May suggests a stronger late-Spring rental…

Bond yields remain high, inflation expectations are getting higher, and multifamily investors are readjusting their targets to account for increased debt financing costs over a longer period of time. While these interest rate pressures may not lead to a large-scale wave of distress, for borrowers and lenders of multifamily properties who have run out of…

Both the Consumer Price Index (CPI) and Producer Price Index (PPI) reports showed increasing inflation last week, continuing a trend from the previous month. The PPI’s 6% annual increase was the highest since December of 2022, suggesting that consumers may be facing elevated price growth for a more sustained period. Multifamily investors are watching bond…

Investment sales activity is up year-over-year in both the multifamily market and the CRE market as a whole. Lending activity has also increased for commercial and multifamily markets. Recent GDP and employment data tracks continued economic expansion and job growth, but at a moderate pace not high enough to dispel persistent economic uncertainty. Multifamily investors, however, continue to look past the…

GDP is up, but not enough to dispel the lingering uncertainty in the economy. Likewise, Jerome Powell’s final meeting as Fed Chair saw no change in the (elevated) federal funds rate, with few signs of rate cuts from the Fed in the months to come. In this environment, with major apartment REITs Avalon Bay and Equity Residential in merger…

Even as home price growth has slowed, high prices for single family homes have led to notable declines in homeownership. The rental market, however, has become increasingly affordable, with incomes outpacing rents nationally. Rental housing’s continued affordability advantage over homeownership supports persistent apartment demand, but this demand boost is weaker in markets in the South…