WEEKLY
Mortgage Rate (30-Year Fixed): 6.95% (as of 11/03)
MONTHLY
Existing Home Sales: -1.5% (September 2022)
New Residential Sales: +17.6% (September 2022)
Median Sales Price for New Houses Sold: $470,600 (September 2022)
Construction Spending: 10.9% YoY (September 2022)
New Residential Housing Starts: 1.44 million (September 2022)
New Residential Housing Completion: 1.43 million (September 2022)
QUARTERLY
Homeownership Rate: +66.0% (3Q22)
Rental Vacancy Rate: +6.0% (3Q22)
Sources: NAR, BLS, Federal Reserve Bank, MBA
Note: Rates listed are estimates and may not reflect actual rates depending on term, sponsor location, and other factors involved.
10. Consumer optimism towards housing market reaches a low point
In October, just 16% of consumers said they thought now is a good time to buy a home, according to a monthly survey by Fannie Mae. With interest rates rising, midterms looming, and the overall volatility of the current economy, this comes as no real surprise. Regardless, these numbers seem to bode well for the rental industry and multifamily housing.
9. Jacksonville multifamily market sustains potential
Franklin Street’s 3Q22 report states that the Jacksonville multifamily market is going to experience more demand as it stays in the top 10 markets for annual rent growth. Average rent was up 17.3%, compared to the start of 2021, which makes it profitable for investors. Average vacancy is at 7.4%, up from 5% in 2Q21.
8. Multifamily sector will hold as preferred investment destination
Mike Wolfson, director of Capital Markets Research at Newmark, expressed his concern about the impact of rapid interest rate hikes on the real estate industry, but not for the multifamily sector. He cited the resilience of the multifamily market during the 2016 election and during the peak of the pandemic, and praises the forward-thinking strategy among investors that revised their acquisitions to lower the risk. This is evident in the repurposing of under-utilized offices into apartments.
7. Multifamily investors pursue properties with assumable debt in light of high interest rates
Multifamily investors continue to look at loan assumptions to combat today’s higher interest rates. These types of loans can take advantage of lower rates and favorable market-bearing terms, according to David Le, assistant vice president of acquisitions for Atlas Real Estate Partners. Fixed rates that were acquired in the previous years are more attractive compared to today’s expensive mortgages, making assumable debt more ideal today. Although it does not account for equity, assumable mortgages allow multifamily investors to take on the loan balance at original terms.
6. San Antonio tops cities with top opportunities for multifamily investments
Arbor Realty Trust’s Top Opportunities in Large Multifamily Investment Report 2022 identified San Antonio as the top metro with the greatest potential for multifamily development or investment. It cites the market growth that comes from high-tech, finance, petrochemicals and other industries in the area. The report also highlights San Antonio’s large multifamily supply gaps as construction falls behind the inflow of new demand for rental housing. Rounding out the top three in the LMIR report are Kansas City and Las Vegas.
5. Phoenix posts higher multifamily investment volumes
Phoenix’s multifamily investment volume rose 4.2% YoY to $9.7 billion through September, according to Yardi Matrix. Although the overall number of properties that changed hands has dropped, the group still commends the strong appetite for investments that boosted per-unit price by 35.8% to $331,915. This is the highest increase in all western markets.
4. Albuquerque’s multifamily market remained resilient in 3Q22
Albuquerque’s multifamily rent growth increased 1.1% on a trailing three-month basis to $1,261, which was supported by soaring demand and a tight inventory in 3Q22. The occupancy rate in stabilized areas was recorded at 96.6% as of June, which is lower by 20 basis points YoY, but still remains strong compared to other markets. Multifamily properties in the pipeline remain robust with 3,378 units soon to be delivered.
3. Multifamily serves as a hedge against inflation, according to investors
Speaking to Yahoo Finance Live, Carly Tripp, CIO of Nuveen Real Estate Global, said that rental properties are a good option for investors who want to hedge against inflation. With the high cost of properties, Tripp believes that demand for rental housing will remain high. In particular, multifamily investments allow owners to reset lease rates as frequently as every 12 months, compared to 3 to 10 years for other property types. This allows them to offset rising operational costs.
2. Nashville ranks first in ‘Top Markets to Watch’ list for the second time
Sun Belt markets occupied top spots in Urban Land Institute’s (ULI) Top Markets to Watch report. Among 80 markets in the US and Canada, Nashville topped the list with huge prospects for employment brought about by the new office campuses of Amazon and Oracle. Population growth rate was also recorded at 21%, with more pressure coming from the Northeastern and West Coast migrants and recent university graduates looking to take advantage of the metro’s low cost of living.
1. Multifamily property market will continue to gain strong demand
Urban Land Institute’s (ULI) Emerging Trends in Real Estate 2023 report revealed several multifamily-related growth prospects. According to the group, real estate investors will remain focused on multifamily because of strong fundamentals and continued capital flow into the asset class due to perceived safety. In addition, more aging office, retail and industrial buildings will be repurposed or upgraded with potential for residential conversion.
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