On The Market

226: Multifamily Sales Hit 4-Year Low: More Price Declines Incoming? w/Xander Snyder

Jun 17, 2024

Xander Snyder, Senior Commercial Real Estate Economist, discusses the current low multifamily sales, potential opportunities for buyers with higher cap rates and lower prices. Predictions on price declines, cap rate expansion, and rent growth are covered. Insights on oversupply, market dynamics, and future predictions for the multifamily market are shared.

30:59

Creator website

Episode guests

Xander Snyder

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Multifamily sales are at a 4-year low, indicating potential opportunities for buyers.

Cap rates have increased to 6% nationally, influenced by price declines and income stability.

Deep dives

Multifamily Transaction Volume Declining

Transaction volume for multifamily properties is currently at a four-year low, a significant decrease compared to previous periods. This decline is particularly noteworthy given the contextual comparison to the early stages of the pandemic when restrictions impacted transactions. The current levels of transaction volume are even lower than what was witnessed during the initial shock decrease in 2020. This slowdown in activity is reflective of the challenging market conditions affecting multifamily transactions.

Intro

4min

Challenges in Commercial Real Estate Market and Impact of Billion-Dollar Sale

6min

Exploring Cap Rates and Real Estate Investment Trends

6min

Analyzing Multifamily Market Trends and Historical Crises

2min

Challenges and Opportunities in the Multifamily Market

6min

Analysis of Current Multifamily Construction Trends and Future Market Predictions

5min

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!

Links from the Show

Find an Agent

Find a Lender

BiggerPockets Forums