Arbor Realty Trust’s Post

The U.S. multifamily market experienced a remarkable increase in demand, with 70,200 units of positive net absorption in Q2, marking the first significant quarterly demand since Q1 2022. Read on. #multifamilymarket #multifamily

The U.S. multifamily market experienced a remarkable increase in demand, with 70,200 units of positive net absorption in Q2, marking the first significant quarterly demand since Q1 2022. Read on. #multifamilymarket #multifamily

In 2023, a apartment operators saw a modest 1.6% increase in national multifamily rental asking rents, according to Yardi Matrix However, upcoming market trends indicate a significant shift. With the absorption of excess supply and stabilizing rent growth, new opportunities for investors and renters are expected in 2024 as the market seeks a new equilibrium between supply and demand. Increased supply poses a unique challenge as record-high availability is expected to limit rent appreciation. This surge, mainly in pandemic-thriving areas, may lead to negative growth in some markets. Despite higher absorption rates, full integration of this new supply could take over a year. The rent gap is decreasing, aligning in-place rents with asking rents. This trend suggests market stabilization, moving away from the larger rent increases of previous years. Regional trends played a crucial role in 2023, with Western and Southwestern regions experiencing downturns, while mid-sized cities near major universities showed impressive growth. A subdued 0.8% growth in asking rents is expected for most markets in 2024. After absorbing the current oversupply, a return to the typical 3-4% annual growth rate in asking rents is anticipated.

The U.S. multifamily market experienced a remarkable increase in demand, with 70,200 units of positive net absorption in Q2, marking the first significant quarterly demand since Q1 2022. Read on. #multifamilymarket #multifamily

2023 was a challenging year for multifamily: the post-pandemic construction boom delivered a significant amount of supply into an environment of rising rates and still high inflation. What helped multifamily was the unaffordability of single-family houses and the fact that the consumer has continued to remain strong. CoStar data for HCG’s key market of Bowling Green show that: Rent growth fell from 4.9% in 2022 to 1.2% in 2023; Sales in 2023 fell to less than half of 2022’s total with vacancy rates increasing by 0.20%; and, Cap rates increased by 0.25%-0.50% across property types. Despite these pressures, HCG was able to keep growing its rental rates and NOI in the high single digits thanks to its operational capabilities and asset selection in desirable areas. Looking ahead, we continue to see challenges for the broader market in 2024 and will rely on our operational discipline to navigate these waters. Please reach out if you would like to see a copy of our detailed outlook.

Last week, the Thrive FP multifamily team attended the National Multifamily Housing Council's Apartment Strategies Conference. Here are 5 key takeaways from the event. 1. There's a renewed sense of optimism in the multifamily housing sector, contrasting sharply with last year's sentiment. Although 2024 is expected to be challenging in terms of operations and deal-finding, the prevailing attitude is one of cautious optimism, with expectations that market conditions, including commercial real estate prices, are stabilizing. 2. The demand for apartments remains robust, fueled by strong consumer confidence, a resilient job market, and wages that are increasing faster than rents. This demand is expected to continue outstripping supply in 2024, keeping the market competitive for renters and challenging for operators. 3. The multifamily housing industry is focusing on maintaining high occupancy rates, even if it means compromising on pricing, especially as a significant number of new units are anticipated to hit the market in 2024. This competitive landscape is pushing operators to focus on retention and adapt to the increased market supply. 4. A notable decrease in new construction starts suggests a reduction in new supply entering the market by late 2025, potentially improving revenue prospects for existing properties. However, this comes amid changing financial conditions, with more equity required for construction loans. 5. Financial pressures remain a concern, with expenses in many markets expected to rise faster than revenues in 2024. Yet, there are signs that the rate of expense growth could be moderating, providing a glimmer of hope for property owners facing tight margins. #multifamily #multifamilyinvesting #NMHC #marketinsights

As we navigate the ever-changing economic landscape, Multifamily Empire remains steadfast in our belief in the enduring value of multifamily real estate investments. Recently, in a compelling Forbes article, Danny Kattan, Managing Partner at PIA Residential, echoed our sentiments and highlighted several key reasons why the current period presents a unique opportunity for investors in this sector: Ripple Effect: Economic disruptions often trigger forced selling, presenting chances to acquire properties at reduced prices as investors rebalance portfolios or address cash flow concerns. Anticipated Rate Reversal: Expected interest rate drops in 2024 may unlock refinancing opportunities, potentially boosting returns and multifamily asset profitability. Rental Dynamics: Slower multifamily construction, especially in high-growth regions like the Southeast, may spur a supply-demand imbalance, lifting rental rates, especially for Class B properties. Operational Efficiency: Projected interest rate reductions could lower financing costs and inflation, offering operational savings and bolstering profitability. Institutional Shifts: Growing institutional interest in residential assets may compress cap rates, elevating property values. The multifamily sector attracts seasoned investors, fostering a favorable market for expansion. At Multifamily Empire, we remain vigilant in monitoring market dynamics and identifying profitable opportunities for our investors. We are committed to staying ahead of the curve, ready to seize opportunities swiftly and decisively. Join our newsletter to stay informed about market trends and industry insights. Or, book a call with us to gain a deeper understanding of the opportunities awaiting you. https://lnkd.in/gHyEuJMK https://lnkd.in/g_6xU5zq #MultifamilyInvesting #RealEstateInvestment #MarketOutlook #EmpireGroup