Key Findings:

  • The Economy Will Avoid a Recession
  • Both Tailwinds and Headwinds Exert Pressure
  • Multifamily Market Dynamics Will Shift to Favor Buyers
  • Conventional and Affordable Investors Differ on the Best Solutions to Increase Affordable Units

Actionable Insights:

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A Frequent Question: What’s Next?

As the recovery from the Great Recession stretched on through the 2010s, it became all too easy to assume that the stability and historic low-interest rates of the decade would continue long into the future. And perhaps they would have, but the abrupt changes generated by the pandemic have swept these assumptions aside.

The last year and a half have been challenging for the multifamily industry as it assessed and adjusted to these new conditions and began to chart a path forward under very different circumstances. Lument launched this survey—Challenges and Strategies for Multifamily Investors—to gauge their sense of how the next 12 months will unfold and to learn more about the steps investors are contemplating or taking to navigate the next year successfully. This report reflects our findings.

“The entire multifamily industry wants to know, ‘What’s next?’ for interest rates, cap rates, insurance costs, and other critical topics that impact all of our businesses,” said Lument CEO Jim Flynn. “We understand that there is no better source to take this question to than multifamily investor decision makers. Our goal is that these survey results and the related actionable insights prove useful as the industry looks ahead to 2024.”

Industry Fueled Insights

Lument engaged with 300 senior multifamily executives, conducting 25-minute telephone conversations on topics that ranged from their views on the economy to steps they are taking to address insurance costs. The key findings of this survey show the participants and their companies have been closely monitoring the macroeconomic environment against the backdrop of their individual circumstances and have emerged with a guardedly optimistic view of the future.

Some of the changes multifamily investors are facing, such as the shift to remote work, are immediate results of the pandemic. Others like dramatic increases in insurance costs and emerging shifts in investor preferences for different geographic areas are the result of external factors like extreme weather. Challenges and Strategies for Multifamily Investors sheds light on these changes and highlights actionable insights that investors might consider when adjusting to these developments.

The results of this survey also illuminate how the industry is responding to the tectonic shifts in economic and market conditions. In addition to enumerating the methods multifamily investors are employing to meet these immediate challenges, it underscores the opportunities for those who successfully make the transition to the new environment.

These opportunities persist because of the strong underlying fundamentals for multifamily—a long-term shortage of housing and steady population growth. The multifamily industry has weathered a series of cycles over the last fifty years, and the survey results support the contention that it will once again achieve a new equilibrium.

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