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
Giants 400 | Dec 20, 2023
Top 40 Student Housing Construction Firms for 2023
Findorff, Juneau Construction, JE Dunn Construction, and Weitz Company top BD+C's ranking of the nation's largest student housing facility general contractors and construction management (CM) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Dec 20, 2023
Top 30 Student Housing Engineering Firms for 2023
Kimley-Horn, Wiss, Janney, Elstner Associates, KPFF Consulting Engineers, and Olsson head BD+C's ranking of the nation's largest student housing facility engineering and engineering/architecture (EA) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Dec 20, 2023
Top 90 Student Housing Architecture Firms for 2023
Niles Bolton Associates, Solomon Cordwell Buenz, BKV Group, and Humphreys and Partners Architects top BD+C's ranking of the nation's largest student housing facility architecture and architecture/engineering (AE) firms for 2023, as reported in Building Design+Construction's 2023 Giants 400 Report.
MFPRO+ News | Dec 18, 2023
Berkeley, Calif., raises building height limits in downtown area
Facing a severe housing shortage, the City of Berkeley, Calif., increased the height limits on residential buildings to 12 stories in the area close to the University of California campus.
Condominiums | Dec 12, 2023
5 condominium trends for 2024
While the condo market faces challenges heading into 2024, it continues to adapt to changing buyer preferences and focus on offering luxury experiences.
Codes and Standards | Dec 11, 2023
Washington state tries new approach to phase out fossil fuels in new construction
After pausing a heat pump mandate earlier this year after a federal court overturned Berkeley, Calif.’s ban on gas appliances in new buildings, Washington state enacted a new code provision that seems poised to achieve the same goal.
MFPRO+ News | Dec 11, 2023
U.S. poorly prepared to house growing number of older adults
The U.S. is ill-prepared to provide adequate housing for the growing ranks of older people, according to a report from Harvard University’s Joint Center for Housing Studies. Over the next decade, the U.S. population older than 75 will increase by 45%, growing from 17 million to nearly 25 million, with many expected to struggle financially.
University Buildings | Dec 8, 2023
Yale University breaks ground on nation's largest Living Building student housing complex
A groundbreaking on Oct. 11 kicked off a project aiming to construct the largest Living Building Challenge-certified residence on a university campus. The Living Village, a 45,000 sf home for Yale University Divinity School graduate students, “will make an ecological statement about the need to build in harmony with the natural world while training students to become ‘apostles of the environment’,” according to Bruner/Cott, which is leading the design team that includes Höweler + Yoon Architecture and Andropogon Associates.
MFPRO+ News | Dec 7, 2023
7 key predictions for the 2024 multifamily rental housing market
2024 will be the strongest year for new apartment construction in decades, says Apartment List's chief economist.
Codes and Standards | Dec 7, 2023
New York City aims to spur construction of more accessory dwelling units (ADUs)
To address a serious housing shortage, New York City is trying to get more homeowners to build accessory dwelling units (ADUs). The city recently unveiled a program that offers owners of single-family homes up to nearly $400,000 to construct an apartment on their property.
