Source: Forbes —
The multifamily space has been performing incredibly well for the past two-plus years with record demands for rentals, surging rental rates and accelerated demographic changes that have had people flocking to new markets in droves. In aggregate, this helped drive historically high occupancy rates and double-digit rent growth, resulting in historically high returns for owners and investors in the space.
Now, as the calendar runs out on 2022, multifamily real estate is facing pressures across a variety of fronts including sharply rising interest rates lingering supply chain issues, geopolitical issues, record-breaking inflation, declining consumer confidence, pressures on rent and the looming threat of a recession.
It sounds ominous, and we’re already seeing some of the impacts in the multifamily space. But what will 2023 hold for multifamily owners, operators and investors?
A Return To Normalcy
Despite the headwinds, the multifamily market remains on solid footing. We’re most likely just starting to see a return to normal. While vacancies in many markets have jumped, they still remain low from a historical perspective. Similarly, while we are seeing a slowing in rent growth, it’s likely that we will continue to see higher levels than what was typical prior to the pandemic in the near and mid-term.
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