We survived until 2025. Now what?
That question kicked off the recent Multifamily Midyear Investment Outlook webcast hosted by Multi-Housing News, where experts highlighted the industry’s persistent strengths and ability to remain an attractive investment.
Multi-Housing News Editorial Director Suzann Silverman, Lument’s President of Mortgage Banking Tyler Griffin, and other industry leaders discussed economic shifts, constantly evolving federal policies, and changing capital market conditions, all of which are making for a challenging investment landscape. Despite the headwinds and macro-economic volatility, however, panelists agreed that the multifamily industry’s prospects remain positive, as high occupancy rates, steady rent growth, and an increasing population of renters make it a strong investment and development prospect.
Panelists noted that although transaction volume is still muted compared to the days between 2020 and 2022, the pace has accelerated of late. Many of the transactions that are coming to market are those being pushed by a loan maturity, a trend the industry has been watching for the last couple years. The anticipated flood of maturities has been more of a trickle, however, thus those high-quality deals that do come to market face fierce competition.
The most appealing opportunities are often found in Class B communities built in the 1980s and 1990s that have a substantial value-add component. Many are financing such deals with bridge loans to buy time while renovations are completed and performance is improved, with an eye toward agency financing as the permanent funding solution.
In terms of federal policy, panelists expressed hope that the regulatory burden for developers could be lessened in the coming years. In some cases, laws that were meant to make housing more affordable ultimately ended up doing the opposite, as complex regulations can make it more difficult to do business, which drives consolidation. The current administration could provide some relief by eliminating or easing regulations to help make life easier on developers, panelists agreed.
The discussion kept coming back to the omnipresent issue of interest rates, as most of the industry’s challenges stem from fiscal uncertainty and an inability to make transactions pencil out.
“If we can get some stability on rates, we will be in much better position going forward,” Griffin concluded.
Everyone agreed with that sentiment. Likewise, all agreed that we are coming out of the market downturn and that upside is eminent for multifamily.
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