The multifamily sector continues to be strong in 2024, even when a handful of challenges are present. That is according to the Matrix Multifamily National Report for Summer 2024.
This research report looks towards the second half of the year to see what we can expect for rent growth, supply, and economic uncertainty.
U.S. Multifamily Outlook for Summer 2024
While demand remains steady, factors like rising supply and financing difficulties are creating headwinds. The coming months will likely see a slowdown in growth, with regional variations depending on supply and economic factors.
Moderate Challenges
While the economy remains stable and job growth persists, some challenges are emerging for multifamily markets. Rent growth and occupancy rates, once strong, have softened since the 2022 peak.
“All eyes in the multifamily market are on the direction of inflation and interest rates,” the report states.
Financing presents another hurdle. High interest rates are dampening transaction activity. Investors are waiting for prices to adjust before buying, while lenders are cautious and many banks are staying on the sidelines.
Debt is a concern, especially for properties financed with short-term loans. Well-capitalized investors can weather the storm, but some value-add properties face potential distress.
Mixed-Bag Supply & Demand
Demand is a double-edged sword. Would-be homebuyers are staying put due to high mortgage rates, which bolsters rental demand. However, these same high rates are hindering refinancing and sales activity in the multifamily market.
Supply is on the rise, especially in Sun Belt markets. This influx of new units is putting pressure on rent growth in those areas, while other regions with slower delivery rates are seeing more stable rents. This trend is expected to continue in the short term, with a peak of 553,000 new units projected for 2024.
“Multifamily is on schedule this year to achieve the highest number of deliveries in decades, but the pipeline will moderate in following years as starts slow,” the report states.
From January to May 2024, rent growth reached 1.1%—a $19 increase. Although average rent prices across the country remains positive, growth has slowed considerably in the past two years.
Overall, the U.S. multifamily market is experiencing a period of mixed signals that will persist throughout the rest of 2024.
RELATED
Related Stories
Adaptive Reuse | Nov 1, 2023
Biden Administration reveals plan to spur more office-to-residential conversions
The Biden Administration recently announced plans to encourage more office buildings to be converted to residential use. The plan includes using federal money to lend to developers for conversion projects and selling government property that is suitable for conversions.
Mass Timber | Oct 27, 2023
Five winners selected for $2 million Mass Timber Competition
Five winners were selected to share a $2 million prize in the 2023 Mass Timber Competition: Building to Net-Zero Carbon. The competition was co-sponsored by the Softwood Lumber Board and USDA Forest Service (USDA) with the intent “to demonstrate mass timber’s applications in architectural design and highlight its significant role in reducing the carbon footprint of the built environment.”
Smart Buildings | Oct 27, 2023
Cox Communities partnership levels up smart tech for multifamily customers
Yesterday, Cox Communities announced its partnership with Level Home Inc., a provider of next-generation smart IoT solutions for multifamily customers.
Student Housing | Oct 25, 2023
Pierce Education Properties acquires Penn State student housing
The two communities offer a wide range of amenities, including swimming pools with sun decks, study rooms with complimentary printing services, fitness centers, tennis court, and sand volleyball courts.
Giants 400 | Oct 23, 2023
Top 115 Multifamily Construction Firms for 2023
Clark Group, Suffolk Construction, Summit Contracting Group, Whiting-Turner Contracting, and McShane Companies top the ranking of the nation's largest multifamily housing sector contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Giants 400 | Oct 23, 2023
Top 75 Multifamily Engineering Firms for 2023
Kimley-Horn, WSP, Tetra Tech, Olsson, and Langan head the ranking of the nation's largest multifamily housing sector engineering and engineering/architecture (EA) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Giants 400 | Oct 23, 2023
Top 190 Multifamily Architecture Firms for 2023
Humphreys and Partners, Gensler, Solomon Cordwell Buenz, Niles Bolton Associates, and AO top the ranking of the nation's largest multifamily housing sector architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report. Note: This ranking factors revenue for all multifamily buildings work, including apartments, condominiums, student housing facilities, and senior living facilities.
Senior Living Design | Oct 19, 2023
Senior living construction poised for steady recovery
Senior housing demand, as measured by the change in occupied units, continued to outpace new supply in the third quarter, according to NIC MAP Vision. It was the ninth consecutive quarter of growth with a net absorption gain. On the supply side, construction starts continued to be limited compared with pre-pandemic levels.
Urban Planning | Oct 12, 2023
Top 10 'future-ready' cities
With rising climate dilemmas, breakthroughs in technology, and aging infrastructure, the needs of our cities cannot be solved with a single silver bullet. This Point2 report compared the country's top cities over a variety of metrics.
Modular Building | Oct 11, 2023
Development startup brings modular solution to hospitality industry
The company's approach extends to various types of accommodations, from landscape hotels and cozy bed and breakfasts to compact micro hotels and food and wine-themed properties.
