Apartment Market Set to Bounce Back in 2024
According to statements made by multifamily executives participating in a nationwide annual discussion on the outlook for 2024, there is an anticipated strengthening of apartment investment in the latter part of the year. Executives from various companies across the United States expressed optimism during this discussion. They identified more stable interest rates as a pivotal factor, believing that this stability will instill confidence in both buyers and sellers, ultimately narrowing the pricing gap. This positive sentiment stands in stark contrast to the challenges faced by the U.S. apartment investment market in the current year. Increased interest rates, concerns of a recession, and disagreements on deal prices prompted a retreat from the market by both buyers and sellers.
The present economic landscape is more favorable than has been seen over 2023. In the final quarter of this year, there have been positive macroeconomic signs that the Federal Reserve is close to successfully accomplishing their "soft landing" plan that would keep the US out of a recession. Many economists are currently optimistic about the economy's resilience against a recession and anticipating sustained growth in employment. It is anticipated that the Federal Reserve will consider, if not an immediate easing of rates, at least a stop to further increases. This decision by the Federal Reserve will provide stability in the debt markets which will ultimately bring buyers and sellers back to looking at apartments as an attractive investment option.
The amount of new construction projects starting in 2024 and 2025 has sharply decreased compared to previous years, posing a potential challenge to the future supply of housing units. The decrease in supply is expected to generate new interest among investors in existing properties, helping revitalize the values and sales of multifamily properties. This slow down in new construction starts will translate into rent growth as we see the supply of new apartment inventory significantly decline.
If you would like to learn more about the present economic conditions of the apartment market or want an updated market analysis for your property, please feel free to reach out to us by giving us a call.
If you would like to know more about 1031 exchanges, want to know the market value of your investment property or would like a referral to a tax, legal or 1031 exchange professional, please feel free to reach out to anyone on their team. Brian Platt at Brian@ParagonREA.com (206) 251-8483, Michael Urquhart at Michael@ParagonREA.com (425) 999-6650, or Ben Douglas at Ben@ParagonREA.com (206) 658-7247.