In the past year, the multifamily sector has seen a rise in renter demand and an abundance of supply, resulting in slower rent growth. According to experts at Origin Investments and Apartment List, these trends are expected to continue into 2024 with strong fundamentals for multifamily real estate.
One key prediction is that there will be an increase in long-term renters due to rising mortgage rates and home prices. This creates a favorable situation for investors as buying becomes less affordable. Additionally, current homeowners with low mortgage rates are not likely to sell their homes, leading many families to remain renters longer than before.
The number of new multifamily units under construction is expected to reach one million by 2024 according Apartment List. However, Origin Investments cautions that this may come to a halt due lack of real estate lending and potential defaults on expiring debt.
Despite negative rent growth caused by new unit deliveries this past year, both sources predict positive single-digit rent growth by the end of 2024 as supply catches up with demand. Furthermore,the rise of hybrid workers who work from home part-time will impact the need for shared workspaces and extra bedrooms in multifamily properties.
Another trend predicted is an increase in distressed assets within the market as falling valuations combined with variable-rate bridge loans coming due create investment opportunities for those able find quality value-add properties at or below replacement cost pricing by Q3 2024.
