Analyzing Multifamily Market Trends and Historical Crises

Analysis of the current state of the multifamily market indicates potential price declines due to margin pressures on net operating income, leading to higher cap rates. Comparison to historical crises highlights differences and similarities in price trends and durations.

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Multifamily sales are at the lowest point in the past four years. We haven’t seen transaction levels this low since the start of the pandemic and after the last housing crash. But, for buyers, this could point to some tremendous opportunities. With fewer sales could come higher cap rates, lower prices, and more profit per dollar spent on your next multifamily deal. The question is, how low will prices go, and when WILL be the right time to buy?

Xander Snyder, Senior Commercial Real Estate Economist at First American, joins the show to give us the latest update on multifamily sales, prices, cap rates, and even a prediction for 2025. Xander strongly argues that multifamily price declines could be far from over. With buyers patiently waiting for sellers to drop their prices and the cost of capital still so high, motivated sellers must act quickly to get a buyer, which could mean more price cuts.

We’ll also discuss why cap rates are expanding and how they’ve already jumped fifty percent in some markets. Plus, what could happen to rents as the “oversupply” of multifamily investments hits the market? An even better question is what happens when all that supply gets used up? We’re answering it all in this episode.

In This Episode We Cover

2024 multifamily transaction volume updates and why sales are so low

Cap rate expansion and why this is great news for buyers (but NOT for sellers)

Why multifamily price drops aren’t even close to finished

Rent price growth predictions and why multifamily investors shouldn’t be too sure that they can increase rents

How our multifamily “oversupply” could quickly become an undersupply

What to expect from the multifamily market in 2024 and into 2025 (significant changes!)

And So Much More!

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