Fed Doesn’t Blink on Interest Rates

While the Federal Reserve has thus far not deviated from its projections of 3 federal funds rate reductions in 2024, it is in no hurry to begin these cuts this month. While current elevated rates are not ideal for multifamily borrowers, multifamily investors with a longer-term view of lower rates, a shift from the current supply-dominated market, and consistent housing demand have markedly increased their intentions to invest this year. 

Multifamily, the Nation, and the Economy

Multifamily, the Nation, and the Economy

Investor Intentions Survey: Multifamily Remains Most Preferred Sector for Global Real Estate Investors

Via CBRE: “For the first time in this survey’s eight-year history, multifamily was the most preferred sector in all three main global regions (Americas, Europe and Asia-Pacific)[,] . . . [and a]lmost 60% of survey respondents expect to see small or no price discounts for multifamily assets this year, up slightly from 2023.”

• Why Aren’t We Seeing More CRE Distress? (Marcus & Millichap) 
   
• FACT SHEET: President Biden Announces Plan to Lower Housing Costs for Working Families (The White House)
• Deciphering Today’s Debt Market (Cushman & Wakefield)

Multifamily and the Housing Market

Housing and Mortgage Outlook: Insurance Expenses and Housing Costs

Freddie Mac: “The cost of homeownership has risen significantly in recent years. This is largely driven by high mortgage payments fueled by elevated mortgage rates, but homeowners’ insurance (HO) costs also have a part to play – although at a smaller scale compared to mortgage principal and interest payments.”

• After Leading a Back to the City Movement, Many Millennials Moved to the Suburbs (Harvard Joint Center for Housing Studies) 
   
• Moderating Interest Rates, Pent-up Demand Push Single-Family Starts Higher (NAHB)
   
• What are some innovative ways to rethink new home communities? (John Burns Research and Consulting)

Multifamily Markets and Reports

West Region Records Nation’s Slowest Apartment Rent Growth Since Pandemic

RealPage: “Over the last four years, rents in the West have climbed from an average rate of $1,831 in February 2020 to $2,204 in February 2024 – an increase of about 20%, according to data from RealPage Market Analytics. That is by far the slowest rate of growth nationwide. Meanwhile, rents in the South, Midwest and Northeast have climbed approximately 29% since February 2020.”

• Seniors Housing Sector Recovery Slowed, Though Demand Remained Strong in 2023 (Fannie Mae)
   
• February Rental Activity Report: Minneapolis Is the Most Coveted City, Western Cities Dominate the Top 30 (RentCafe)
     
• Predicting and Navigating Student Housing Investment Sales (Cushman & Wakefield)

Commercial Real Estate and the Macro Economy

Federal Reserve still foresees 3 interest rate cuts this year despite bump in inflation

Via Associated Press: “Speaking at a news conference, Chair Jerome Powell said the surprising pickup in inflation in January and February hadn’t fundamentally changed the Fed’s picture of the economy: The central bank still expects inflation to continue to cool, though more gradually than it thought three months ago.”

• Stagflation Is a Real Possibility to These Analysts (GlobeSt)
   
• A Multi-perspective View on Cap Rates (CBRE)
• Retail Sales Research Brief (Institutional Property Advisor)

Other Real Estate News and Reports

Trepp Property Price Index (TPPI): Rate Cut Speculations Shape Varied Property Sector Performance in Q4 2023

Via Trepp: “While the overall CRE market has experienced a downward trend in recent periods, the magnitude of this decline varies across different property types,” and price declines are recovering more rapidly than the initial drop. 

• Nearly 300 Banks Are Vulnerable Because Of Their CRE Loans, Study Finds (Bisnow)
   
• The CRE CLO Problem Is More Grim Than It Seemed (GlobeSt)
     
• U.S. Lodging Overview – Year-End 2023 (Cushman & Wakefield)