Highlights:
- Oversupply in attractive markets will burn off by 2025, accelerating rent growth. The slowdown in construction starts will exacerbate the potential supply shortage in 2026 and beyond.
- Many investors who locked in long-term, fixed-rate loans will have little trouble in the current interest rate environment, although others who are contending with variable-rate debt or slower than expected lease-up may experience difficulty.
- Extensions have put off the day of reckoning for some investors with maturing debt, but lender patience has its limits.
- The multifamily market has entered a period of anticipation. Rate cuts would reignite the multifamily market, but timing remains uncertain.
- Current conditions highlight prudence. Overall, underlying fundamentals remain sound for well-capitalized, long-term investors.
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Additional Insights:
Developed in partnership with Rosen Consulting Group, Lument’s Q4 2023 multifamily market report examines how the multifamily sector is undergoing a period of transition in order to deal with excess supply and capital market limitations. The surge of new supply continues to weaken operating conditions in 2024 as new units outpace renter demand. However, with very little construction started in the last year, the oversupply is expected to burn off, leading to potentially stronger rent growth thereafter.
Market spotlights for Columbus, Ohio and Houston will follow on the heels of this report. All this valuable research is created to enable our clients to make faster, more informed decisions in today’s fast paced and rapidly evolving environment. It is available on our site within the Insights section by selecting “Research,” where it joins other research-based materials, like our recently released multifamily investor sentiment survey report.
