The Gray Report Podcast: Recent Episodes
Spencer Gray
Learn how to find the best real estate investment with the best information: The Gray Report Podcast, with Gray Capital CEO Spencer Gray, covers the important people, ideas, and trends in the multifamily and commercial real estate industry. Episodes include interviews with industry experts, highlights from the latest news, and in-depth explanations of the crucial concepts and processes behind successful investments in apartments.
Conditions may not be perfect for multifamily investors right now, but the lending environment and supply/demand fundamentals are lining up for a significant improvements in 2025. With markets currently expecting two more rate cuts before the end of the year, cap rate-interest rate spreads may widen enough to bring more investment activity after a lengthy period in which sales volumes were half the pre-pandemic levels.Sources discussed in this episode:CBRE: “Fed Makes First of Several Expected Rate Cuts” - https://www.cbre.com/insights/briefs/economic-watch-fed-makes-first-of-several-expected-rate-cuts
Fannie Mae: “Fed Cuts Interest Rates Amid Sluggish Existing Sales but a Rebound in Starts Activity” - https://www.fanniemae.com/research-and-insights/forecast/fed-cuts-interest-rates-amid-sluggish-existing-sales-rebound-starts-activity
Cushman & Wakefield: “Fed Pivots: The Next Chapter for CRE” - https://www.cushmanwakefield.com/en/united-states/insights/fed-pivots-the-next-chapter-for-cre
Cushman & Wakefield: “Unpacking Multifamily Supply Risks and Demand Booms” - https://www.cushmanwakefield.com/en/united-states/insights/unpacking-multifamily-supply-risks-and-demand-booms
Harvard Joint Center for Housing Studies: “Affordability Challenges and the Composition of Middle-Income Renters” - https://www.jchs.harvard.edu/blog/affordability-challenges-and-composition-middle-income-renters
Moody’s Analytics: American Needs More Affordable Housing, Not Just Class A Inventory - https://cre.moodysanalytics.com/insights/market-insights/america-needs-more-affordable-housing-not-just-class-a-inventory/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
In this edited replay of our live Gray Report video on the recent interest rate decision from the Federal Reserve, Spencer Gray, Jay Reeder, and Matt Bastnagel of Gray Capital discuss the current multifamily market as well as remarks from Federal Reserve Chair Jerome Powell at the September 2024 FOMC meeting and press conference.Sources discussed in this episode:Apartment List: “Apartment List's 2024 Millennial Homeownership Report” - https://www.apartmentlist.com/research/millennial-homeownership-2024For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
With CPI showing continued declines in inflation this week and lower ten-year treasury yields foreshadowing an expected interest rate reduction from the Federal Reserve, investors continue to show more activity and interest in the CRE investment market, with multifamily properties specifically showing noticeable positive growth in property prices since the beginning of the year. Rents in the apartment sector will likely follow a similar trajectory as 2023, with seasonal trends pointing to slower rent growth through the end of the year, but investors are not blind to the prospects of the multifamily market and are acting on expectations of stronger performance as the surge in newly-built apartments wanes through the end of 2024 and into 2025.
Sources discussed in this episode:
Associated Press: “Police deny Venezuela gang has taken over rundown apartment complex in Denver suburb” https://apnews.com/article/venezuela-immigrants-aurora-colorado-police-37acd4e064347d51808cb244117ac21e
CBS News: “Colorado law firm report claims Venezuelan gang has "stranglehold" on apartments, takeover began in 2023” - https://www.cbsnews.com/colorado/news/colorado-law-firm-report-claims-venezuelan-gang-stranglehold-apartments-takeover-began-2023/
Bureau of Labor Statistics: “Consumer Price Index, August 2024” - https://www.bls.gov/news.release/cpi.nr0.htm
Colliers: Capital Markets Snapshot: “Major Investors Return to the Market” - https://www.colliers.com/en/research/nrep-uscm-capital-markets-us-snapshot-q2-2024
MarketWatch: “Commercial real-estate investors are ready to get back in the market, says PGIM” - https://www.marketwatch.com/story/commercial-real-estate-investors-are-ready-to-get-back-in-the-market-says-pgim-dbd4fc06
Green Street: “Commercial Property Price Index” - https://www.greenstreet.com/insights/CPPI
Apartment List: National Rent Report, August 2024 - https://www.apartmentlist.com/research/national-rent-data
Yardi Matrix: “National Multifamily Report: August 2024” - https://www.yardimatrix.com/publications/download/file/6087-MatrixMultifamilyNationalReport-August2024
RealPage: “U.S. Apartment Market Sees Negligible Change in August” - https://www.realpage.com/analytics/august-2024-data-update/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Recent years have seen housing costs rapidly climb, and high interest rates are only part of the problem. Housing policies attuned to the benefits of additional housing supply often meet opposition at the hyper-local level, but policymakers are becoming increasingly more attentive to the ways in which deregulation can help solve the housing affordability crisis and create more housing supply. Multifamily rent growth has been dampened by the record levels of new apartment supply, but apartment investors remain encouraged by the signs of sustained housing demand.Sources discussed in this episode:The Atlantic: “The Labyrinthine Rules That Created a Housing Crisis” - https://www.theatlantic.com/ideas/archive/2024/09/jerusalem-demsas-on-the-housing-crisis-book/679666/CoreLogic: “10 Things to Know About the Mortgage and Housing Market Right Now” - https://www.corelogic.com/intelligence/10-things-to-know-august-2024/Harvard Joint Center for Housing Studies: “Rental Markets Are Cooling, but Rents Still Far Exceed Pre-Pandemic Levels” - https://www.jchs.harvard.edu/blog/rental-markets-are-cooling-rents-still-far-exceed-pre-pandemic-levelsFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
The multifamily market continues to work through historic amounts of new apartment supply as the end of peak leasing season approaches, and rent growth could remain below average through the end of this year. At the same time, cap rate estimates suggest higher investor demand moving forward, particularly when factoring in a more favorable debt environment, and persistent housing demand is expected to support a more active and competitive apartment market as the amount of newly-built apartments diminishes through the end of 2024 and into 2025.
Sources discussed in this episode:
CBRE: “U.S. Cap Rate Survey H1 2024” - https://www.cbre.com/insights/reports/us-cap-rate-survey-h1-2024
Fannie Mae: “2024 Mid-Year Multifamily Market Outlook – Skies Remain Cloudy” - https://www.fanniemae.com/media/53066/display
Bisnow: “Harris and Trump Agree On Lowering Housing Costs — But Their Plans Take Radically Different Paths” - https://www.bisnow.com/national/news/multifamily/housing-has-emerged-as-a-top-election-issue-heres-where-harris-and-trump-stand-125615
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
With the Democratic National Convention bringing increasing attention to the policy platform of presidential candidate Kamala Harris, the Gray Capital team breaks down her comments on the economy and housing made during a campaign stop several days before the convention.
Sources discussed in this episode:
The New York Times: “U.S. Added 818,000 Fewer Jobs Than Reported Earlier” - https://www.nytimes.com/2024/08/23/business/the-big-number-818000-jobs-revision.html
The White House: “Remarks by Vice President Harris at a Campaign Event in Raleigh, NC” - https://www.whitehouse.gov/briefing-room/speeches-remarks/2024/08/16/remarks-by-vice-president-harris-at-a-campaign-event-in-raleigh-nc/
Peter Welch (US Senator from Vermont): “Welch and Wyden Introduce Legislation to Crack Down on Companies that Inflate Rents with Price-Fixing Algorithms” - https://www.welch.senate.gov/welch-and-wyden-introduce-legislation-to-crack-down-on-companies-that-inflate-rents-with-price-fixing-algorithms/
The Atlantic: “We’re Entering an AI Price-Fixing Dystopia” - https://www.theatlantic.com/ideas/archive/2024/08/ai-price-algorithms-realpage/679405/
Marcus & Millichap: "The CRE Investment Climate Just Changed…" - https://www.marcusmillichap.com/research/videos/the-cre-investment-climate-just-changed
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
While recent stock market volatility brought about strident calls for relief from the Fed, longer-term trends like the steadily lower yields for Ten-Year Treasuries since May, consistently lower inflation numbers since March, and a slowing labor market are equally if not more persuasive indicators that an interest rate reduction would be appropriate. CRE sales remain subdued, but there are growing signs that investors are tracking similar trends and expect a more favorable environment for investment in the coming months.
Sources discussed in this episode:
Bureau of Labor Statistics: “Consumer Price Index, July 2024” - https://www.bls.gov/news.release/cpi.nr0.htm
Institutional Property Advisors: “Interest Rates Trend Lower, Paving Way for
Invigorated Commercial Property Investment” - https://www.institutionalpropertyadvisors.com/research/special-report/2024/08/research-brief-august-capital-markets
NAR: “Commercial Real Estate Market Insights, July 2024: ‘While the market awaits the interest rate cuts from the Federal Reserve, commercial real estate is also on hold.’” - https://www.nar.realtor/commercial-real-estate-market-insights/july-2024-commercial-real-estate-market-insights
Institutional Property Advisors: “Interest Rates Trend Lower, Paving Way for
Invigorated Commercial Property Investment” - https://www.institutionalpropertyadvisors.com/research/special-report/2024/08/research-brief-august-capital-markets
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Weaker jobs numbers, rising Japanese interest rates, AI bubble fears, and election-year uncertainty are among the many factors posited as the cause of the stock market's steep declines this week, and the lengthy period of elevated interest rates in the United States has helped create this fragile economic environment more vulnerable to recession. A major economic downturn would be keenly felt for apartment operators facing continued challenges with lower rent growth and higher expenses, but given the magnitude of housing demand, the proven resilience of apartment assets, and the likelihood of lower interest rates, many investors are anticipating more activity and opportunity in the multifamily investment market.
Sources discussed in this episode:
Axios: “The Stock Market Slump Doesn’t Mean We’re in a Recession” - https://www.axios.com/2024/08/06/stock-market-recession
Bloomberg: "My [The Sahm Rule] Recession Rule Was Meant to Be Broken" -
CRE Analyst: "Sorry, low rates can be bad for real estate…" - https://www.linkedin.com/posts/cre-analyst_sorry-low-rates-can-be-bad-for-real-estate-activity-7226198761625018370-QE-4
The Wall Street Journal: “Fannie, Freddie Are Poised to Tighten Real-Estate Lending Rules” - https://www.wsj.com/real-estate/fannie-mae-freddie-mac-commercial-property-lenders-brokers-rules-116907c2
Yardi Matrix: “National Multifamily Report, July 2024” - https://www.yardimatrix.com/publications/download/file/5938-MatrixMultifamilyNationalReport-July2024
Apartment List: "National Rent Report" - https://www.apartmentlist.com/research/national-rent-data
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
In the multifamily market, rents growth continues to be sluggish, but growing signs of apartment demand support the long-term health of the sector. In the broader housing market, household growth and pent up demand are bracing against affordability barriers like high interest rates.
Sources discussed in this episode:
MSCI - "As Fed Rate Hopes Shift, So Too Does Real-Estate Sentiment" - https://www.msci.com/www/blog-posts/as-fed-rate-hopes-shift-so-too/04826872290
Cushman & Wakefield: “The much-anticipated lagged relationship for housing inflation still exists” amid a “Decidedly Dovish Shift from Powell” - https://www.cushmanwakefield.com/en/united-states/insights/market-matters-exploring-real-estate-investment-conditions-and-trends
Marcus & Millichap: “Will Commercial Real Estate Distress Surge?” - https://www.marcusmillichap.com/research/videos/will-commercial-real-estate-distress-surge
Apartment List: “More young adults now live with their parents than at any point since 1940” - https://www.apartmentlist.com/research/most-young-adults-live-with-parents-since-1940
Harvard Joint Center for Housing Studies: “What Effects Will the Recent Surge in Immigration Have on Household Growth?” - https://www.jchs.harvard.edu/blog/what-effects-will-recent-surge-immigration-have-household-growth
Carl Whitaker (RealPage): “Average household size ticking down” - https://www.linkedin.com/posts/carlwhitaker15_for-the-first-time-in-many-years-the-country-activity-7223682871243194368-HPbd?utm_source=share&utm_medium=member_desktop
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Single family homes prices are as high as they've ever been, but home sales are low. High interest rates have suppressed both multifamily and single family building, and lack of housing supply has led to declining affordability and a sustained housing deficit. There is significant pent up demand in the housing market. In both single-family and multifamily markets, this extended period of unusually low sales activity has led to building pressure as this pressing need for homes contends with housing costs that are too high for demands to be met.
Sources discussed in this episode:
John Burns Research and Consulting: “Unlocking single-family rental (SFR) trends early and accurately” - https://jbrec.com/insights/unlocking-single-family-rental-sfr-trends-early-and-accurately/
NAR: “Residential Real Estate Market Snapshot” - https://www.nar.realtor/research-and-statistics/research-reports/residential-real-estate-market-snapshot
Moody’s Analytics: “Elevated Completions Continue to Weigh on Multifamily Rent Growth” - https://cre.moodysanalytics.com/insights/cre-news/elevated-completions-continue-to-weigh-on-multifamily-rent-growth/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
The Biden administration has announced a proposal for a 5% rent cap, despite the fact that rent growth has been markedly below average for the past year-and-a-half, with this rent growth correction finally showing up in the Consumer Price Index and contributing to the milestone monthly deflation recently recorded for June. With lower inflation numbers and some suggestions of impending rate cuts from the Federal Reserve, the multifamily lending market should become more favorable; however, despite optimistic projections for the future of the apartment market, initial rate cuts from the Fed may not alleviate some multifamily borrowers' current distress, which has grown significantly in recent months.
Sources discussed in this episode:
The White House: “President Biden Announces Major New Actions to Lower Housing Costs by Limiting Rent Increases and Building More Homes” - https://www.whitehouse.gov/briefing-room/statements-releases/2024/07/16/fact-sheet-president-biden-announces-major-new-actions-to-lower-housing-costs-by-limiting-rent-increases-and-building-more-homes/
Bisnow: “Multifamily Distress Leaps 185% As Delinquencies Pile Up” - https://www.bisnow.com/national/news/capital-markets/multifamily-distress-leaps-185-as-delinquencies-tick-up-125089
Moody’s Analytics: “It Is Not All About Insurance: Navigating Through Major Expenses for Multifamily Properties” - https://cre.moodysanalytics.com/insights/cre-trends/major-expenses-for-multifamily-properties/
RealPage: “RealPage Forecast Points to Improved Rent Growth in 2025” - https://www.realpage.com/analytics/apartment-forecast-2nd-quarter-2024/
Marcus & Millichap: “Has the Fed Finally Reached a Tipping Point?” - https://www.marcusmillichap.com/research/videos/has-the-fed-finally-reached-a-tipping-point
The Bureau of Labor Statistics: “Consumer Price Index - June 2024” - https://www.bls.gov/news.release/cpi.nr0.htm
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Apartment prices increased a full 4.9% last month, according to recent data from Green Street's Property Price Index, which follows a 2% increase from the previous month and is the strongest positive trend since late 2021. Apartment demand remains strong amid a generational peak in new apartment supply. Weakening (however gradually) inflation, alongside indications from the Federal Reserve that interest rate cuts are a growing possibility, could finally lead to a more active multifamily investment market, but currently, sales activity is relatively low.
Sources cited in this episode:
Green Street: “Commercial Property Prices Trending Upward” - https://insights.greenstreet.com/hubfs/GSCPPI-20240705.pdf
RealPage: “U.S. Apartment Demand Surges in Second Quarter” - https://www.realpage.com/analytics/2nd-quarter-2024-data-update/
Yardi Matrix: “National Multifamily Report, June 2024” - https://www.yardimatrix.com/publications/download/file/5800-MatrixMultifamilyNationalReport-June2024
GlobeSt: “Rent Control’s Impact on Multifamily” - https://www.globest.com/2024/07/08/rent-controls-impact-on-multifamily/
Harvard Joint Center for Housing Studies: “Middle-Income Housing Programs Emerge as Affordability Challenges Climb the Income Ladder” - https://www.jchs.harvard.edu/blog/middle-income-housing-programs-emerge-affordability-challenges-climb-income-ladder
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
Learn more about Gray Capital's latest multifamily investment opportunity: SolanaIndy.com
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Gray Report host Spencer Gray speaks with Chris Salviati, Senior Housing Economist at Apartment List, about major trends in the multifamily space, notable apartment markets, and multifamily in relation to the larger economy.
Follow the latest reports from the Apartment List research team:
https://www.apartmentlist.com/research
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
Learn more about Gray Capital's latest multifamily investment opportunity: SolanaIndy.com
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
A "trifecta of positive inflation reports" shows consistently weakening inflation, and data from both the single-family and multifamily markets points to persistent strong housing demand. Multifamily investment activity, however, is low, and there is little sign of interest rate relief for multifamily borrowers still struggling with high debt costs and sluggish rent growth. The sharpening contrast between the potential for growth and the current stagnation in the multifamily market represents a significant opportunity for investors, especially those with greater access to capital.
Sources discussed in this episode:
Apartment List: Rent Report, June 2024: https://www.apartmentlist.com/research/national-rent-data
Colliers: “Capital Markets | 2024 Multifamily Outlook” - https://www.colliers.com/en/research/nrep-colliers-capital-markets-multifamily-market-outlook-2024
NAHB: “Considering Housing Inventory: Why Both New and Existing Supply Matters” - https://eyeonhousing.org/2024/06/considering-housing-inventory-why-both-new-and-existing-supply-matters/
Marcus & Millichap: “Get Ahead of The Fed – Why Inflation Isn’t As High As People Think” - https://www.marcusmillichap.com/research/videos/2024/07/get-ahead-of-the-fed-why-inflation-isnt-as-high-as-people-think
Learn more about Gray Capital's latest multifamily investment opportunity: SolanaIndy.com
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Amid persistently high interest rates and waning, but still-elevated, inflation, prices for single-family homes continue to increase, and despite the lower rent growth in the apartment market, the Harvard JCHS's recent State of the Nation's Housing Report finds continued affordability pressure in both the rental and for-sale areas of the housing market. While both rent growth and the growth of single-family home prices have sharply increased in the past 3 years, prices for single-family homes have increased by a far greater amount, which is a strong signal of housing demand that points to higher rent growth in the multifamily market as the wave of new apartment deliveries subsides over the next year-and-a-half.
Sources discussed in this episode:
Harvard Joint Center for Housing Studies: “The State of the Nation’s Housing 2024” - https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_The_State_of_the_Nations_Housing_2024.pdf
John Burns Research and Consulting: “How will the declining birth rate impact the move-up housing segment?” - https://jbrec.com/insights/declining-birth-rates-fewer-children-affect-us-housing-demand/
Apartment List: “The U.S. Added Nearly 600,000 Super Commuters in 2022” - https://www.apartmentlist.com/research/the-us-added-nearly-600000-super-commuters
The Conference Board: "US Consumer Confidence Weakens Slightly in June" - https://www.conference-board.org/topics/consumer-confidence
Learn more about Gray Capital's latest multifamily investment opportunity: SolanaIndy.com
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Lower housing starts could exacerbate housing affordability issues, and while much of the US multifamily market is cooling due to to increased supply, midwestern multifamily markets are showing solid performance above national averages.
Sources cited in this episode:
The United States Census Bureau: "New Residential Construction, May 2024" - https://www.census.gov/construction/nrc/current/index.html
The Wall Street Journal: “Rent Hikes Loom, Posing Threat to Inflation Fight” - https://www.wsj.com/real-estate/rent-hikes-loom-posing-threat-to-inflation-fight-e6797e39
RealPage: “Most U.S. Apartment Markets Recording Occupancy Improvement” - https://www.realpage.com/analytics/strong-occupancy-growth-in-april-may/
Bisnow: “'The Darling Of The Party': Investors Flock To Midwestern Multifamily As They Flee Struggling Asset Classes” - https://www.bisnow.com/chicago/news/multifamily/the-darling-of-the-party-investors-flocking-to-midwestern-multifamily-as-they-flee-struggling-asset-classes-124744
Yardi Matrix: National Multifamily Report, Summer 2024 - Multifamily’s Second-Half Balancing Act” - https://www.yardimatrix.com/publications/download/File/5778-MatrixMultifamilyNationalReport-Summer2024
Learn more about Gray Capital's latest multifamily investment opportunity: SolanaIndy.com
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
On the same day that the CPI showed yearly inflation ticking down to 3.3%, with zero price growth last month, the Federal Reserve released its updated economic projections along with commentary that raised the possibility of an interest rate cut this year, but there was little definitive indication on when that might take place. While CRE markets are showing more signs of adjustment to "higher for longer" rates, the improved inflation numbers and potential for lower rates are meaningful developments for the CRE lending market that is continuing to feel pressure from the persistent high-rate environment.
Sources discussed in this episode:Apartment List: “What will the pullback in multifamily construction permitting mean for the rental market?” - https://www.apartmentlist.com/research/what-will-the-pullback-in-multifamily-construction-mean-for-the-rental-marketCushman & Wakefield: “U.S. Macro Outlook: An Uncomfortable Soft Landing” - https://www.cushmanwakefield.com/en/united-states/insights/us-macro-outlookMarcus & Millichap: “Perceptions of the CRE Investment Market” - https://www.marcusmillichap.com/research/videos/2024/06/perceptions-of-the-cre-investment-marketFannie Mae: “Homebuying Sentiment Hits New Survey Low” - https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-surveyFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
In a conversation with real estate reporter Mickey Shuey of the Indianapolis Business Journal, Spencer Gray discusses the specific developments and major trends in the city of Indianapolis.For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Consumer price index numbers show inflation down from 3.5% to 3.4% year-over-year in April, with monthly inflation numbers falling from 0.4% to 0.3%. It may be a bumpy road to the Federal Reserve's inflation target, but given the moderation in the job market along with these latest numbers from the CPI, speculation that the Fed will lower interest rates in September may have some validity, but in the meantime, elevated interest rates will put pressure on multifamily borrowers as the issue of loan maturities persists as a background factor that continues to shape the motivations of apartment buyers and sellers.Sources discussed in this episode:Bureau of Labor Statistics: “Consumer Price Index, April 2024” - https://www.bls.gov/news.release/cpi.t02.htmIndianapolis Business Journal: “Timeline firming up for converting Gold Building to apartments as construction costs climb”CBRE: “Some Distress Will Emerge Amid Wall of Loan Maturities” - https://www.cbre.com/insights/briefs/some-distress-will-emerge-amid-wall-of-loan-maturitiesMoody’s Analytics: “Q1 2024: Top/Bottom Performing Multifamily Markets” - https://cre.moodysanalytics.com/insights/cre-news/q1-2024-top-bottom-performing-multifamily-markets/Yardi Matrix: “Research Bulletin: Rent Growth Continues in Many Secondary Markets” - https://www.yardimatrix.com/publications/download/file/5619-MatrixBulletin-MultifamilyForecast-May2024For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
As a historic wave of newly-built apartments continues beyond the one-year mark, elevated absorption numbers and data showing the first positive growth in occupancy in 2+ years are noteworthy signs of resilience in the apartment market. In the broader economy, lower jobs numbers and declining consumer credit suggest a pullback in consumer spending and (hopefully) lower inflation, but while consumers may balk at ever-pricier Big Macs or Frappuccinos, apartment housing is still in high demand.
Sources discussed in this episode:
RealPage: “Apartment Occupancy Ticks Up for the First Time Since Early 2022” - https://www.realpage.com/analytics/april-2024-data-update/
Yardi Matrix: “National Multifamily Report, April 2024” - https://www.yardimatrix.com/publications/download/file/5497-MatrixMultifamilyNationalReport-April2024
Reuters: “Weaker US jobs data soothes Fed worries of renewed overheating” - https://www.reuters.com/markets/us/weaker-us-jobs-data-brings-some-relief-fed-2024-05-03/
The Motley Fool: “Consumer Credit Oozes Up 0.4%” - https://www.fool.com/investing/general/2013/06/07/consumer-credit.aspx
Federal Reserve Bank of San Francisco: “Pandemic Savings Are Gone: What’s Next for U.S. Consumers?” - https://www.frbsf.org/research-and-insights/blog/sf-fed-blog/2024/05/03/pandemic-savings-are-gone-whats-next-for-us-consumers/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
With the Fed’s recent decision to keep rates at their current elevated levels, investors are facing a choice between increasingly positive multifamily fundamentals and an extended period of difficult financing.
CNBC: “Fed keeps rates steady as it notes ‘lack of further progress’ on inflation” - https://www.cnbc.com/2024/05/01/fed-rate-decision-may-2024-.html
Apartment List: “National Rent Report: ‘[G]rowth stalled out this month’” - https://www.apartmentlist.com/research/national-rent-data
CBRE: “The Past May Still Be Prologue in Multifamily Markets” - https://www.cbre.com/insights/briefs/motm-the-past-may-still-be-prologue-in-multifamily-markets
Pension Real Estate Association: “Compendium of Statistics” - https://www.prea.org/research/compendium/#:~:text=The%20Compendium%20of%20Statistics%20compiles,is%20available%20to%20members%20only.
RealPage: “Multifamily Starts Plunge in March, Indicating When Supply Wave Could Taper” - https://www.realpage.com/analytics/multifamily-starts-plunge-in-march-indicating-when-supply-wave-could-taper/
Cushman & Wakefield: Top Trends in the Multifamily Market: “Occupancies Are Holding Up Despite Record Deliveries” - https://www.cushmanwakefield.com/en/united-states/insights/top-trends-across-cw-multifamily-portfolio
Institutional Property Advisors: “Consumer Resilience Offers Benefits and Drawbacks for Commercial Real Estate” -
https://www.institutionalpropertyadvisors.com/research/special-report/2024/04/research-brief-april-gdp
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Multifamily investor sentiment improves even as debt financing challenges continue. Strength in the labor market, robust apartment demand, and stable consumer sentiment are some of the reasons behind this, but another significant factor is the decline in the multifamily construction pipeline.
NMHC: “Quarterly Survey of Apartment Conditions (April 2024)” - https://www.nmhc.org/research-insight/quarterly-survey/2024/nmhc-quarterly-survey-of-apartment-conditions-april-2024/
Fannie Mae: “Commercial-to-Residential Conversions: A Review of Existing Research” - https://www.fanniemae.com/media/51071/display
TheRealDeal: “Chavin surrenders Loop office-to-resi play with deed-in-lieu of foreclosure” - https://therealdeal.com/chicago/2024/04/23/intersection-drops-loop-office-conversion-with-deed-in-lieu/
Moody’s Analytics: “U.S. Consumers Remain Resilient but Blemishes Exist” - https://cre.moodysanalytics.com/insights/cre-news/u-s-consumers-remain-resilient-but-blemishes-exist/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Comments this week from Federal Reserve Chair Jerome Powell are among the most forceful indications yet that interest rate cuts may be delayed past initial expectations. While some extreme predictions push the rate cuts all the way out to March 2025, futures data is pointing closer to September (at the moment). These shifting interest rate expectations may curb the activity of a CRE sales market that was just beginning to revive after a sluggish 2023, but strong housing demand and solid apartment fundamentals continue to attract investor attention in the multifamily market.
Reuters: “Blunt Powell signals rate cut plans on ice” - https://www.reuters.com/markets/us/global-markets-view-usa-2024-04-17/
Bloomberg: “Vanguard Warns 10-Year Treasury Yields Risk Jump Back to 5%” - https://www.bloomberg.com/news/articles/2024-04-18/treasuries-vanguard-warns-10-year-yields-risk-spiking-back-to-5
CME Group: "FedWatch Tool" - https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
RealPage: “U.S. Marks Largest Volume of Quarterly Apartment Supply in History” - https://www.realpage.com/analytics/1st-quarter-supply-highest-ever/
RealPage: “Putting 1st Quarter 2024 Apartment Demand in Perspective” - https://www.realpage.com/analytics/perspective-us-apartment-demand-1st-quarter/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
A 3.5% annual jump in CPI inflation numbers has led investors and experts to rethink their expectations of an interest rate cut in mid-year 2024, but Blackstone's recent agreement to acquire Apartment Income REIT Corp. for $10 billion could spark greater investment activity in spite of elevated interest rates, especially given the improving fundamentals in the apartment market. Sources discussed in this episode: CPI: “Consumer Price Index, March 2024” - https://www.bls.gov/news.release/cpi.nr0.htm The Wall Street Journal: “Blackstone Making $10 Billion Multifamily Purchase, Going on the Real Estate Offensive” - https://www.wsj.com/real-estate/blackstone-making-10-billion-multifamily-purchase-going-on-the-real-estate-offensive-f3126928 Yardi Matrix: “Multifamily Sets Strong Early Tone in 2024” - https://www.yardimatrix.com/publications/download/file/5355-MatrixMultifamilyNationalReport-March2024 RealPage: “RealPage Slightly Strengthens Forecast in Most Apartment Markets Based on Economic Indicators” - https://www.realpage.com/analytics/1q24-foreast-update/ For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/ Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/ DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Sources discussed in this episode:
Moody’s Analytics: “Q1 2024 Preliminary Trend Announcement” - https://cre.moodysanalytics.com/insights/cre-trends/q1-2024-preliminary-trend-announcement/
The Conference Board: "U.S. Leading Economic Index" - https://www.conference-board.org/topics/us-leading-indicators
The Wall Street Journal: "What's Wrong with the Economy? It's You, Not the Data" - https://www.wsj.com/economy/consumers/whats-wrong-with-the-economy-its-you-not-the-data-cfa911e6
Bureau of Labor Statistics: "The Employment Situation - March 2024" - https://www.bls.gov/news.release/empsit.nr0.htm
Apartment List: “March 2024 Rent Report” - https://www.apartmentlist.com/research/national-rent-data
CBRE: “Made in the Midwest” - https://www.cbre.com/insights/reports/made-in-the-midwest
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Costs for homebuyers have been growing at more than twice the rate as rentals, making renting a more affordable option. Buoyed by recent data on apartment fundamentals multifamily investors are re-entering the market, undaunted by persistent high interest rates, last year's sluggish rent growth, and projections of elevated supply through the end of 2024.Sources discussed in this episode:Realtor.com: “February 2024 Rental Report: Renting a starter home is more affordable than buying one in all 50 metros” - https://www.realtor.com/research/february-2024-rent/CBRE: “Assessing Investor Sentiment: A Window Of Opportunity” - https://www.cbre.com/insights/articles/cmc-episode-4-investor-sentimentMoody’s Analytics: “This Time is Different: A Counter to the Urban Doom Loop Narrative” - https://cre.moodysanalytics.com/insights/market-insights/this-time-is-different-a-counter-to-the-urban-doom-loop-narrative/Harvard Joint Center for Housing Studies: “After Leading a Back to the City Movement, Many Millennials Moved to the Suburbs” - https://www.jchs.harvard.edu/blog/after-leading-back-city-movement-many-millennials-moved-suburbsGray Report Commentary: “Rent a Starter Home More Affordable Than Buying” - https://www.graycapitalllc.com/gray-report-commentary-march-29-2024/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
The Federal Reserve has thus far not deviated from its projections of 3 federal funds rate reductions in 2024, but it is in no hurry to start. While current elevated rates are not ideal for multifamily borrowers, multifamily investors with a longer-term view of the apartment market and housing demand have markedly increased their intentions to invest this year.
Sources discussed in this episode:
The Wall Street Journal: “Stocks Gain after Fed Holds Rates Steady” - https://www.wsj.com/livecoverage/fed-meeting-fomc-interest-rate-decision-march-2024
Trepp: "Trepp Property Price Index (TPPI): Rate Cut Speculations Shape Varied Property Sector Performance in Q4 2023" - https://www.trepp.com/trepptalk/tppi-2023-q4-rate-cut-speculations-shape-varied-property-sector-performances
Cushman & Wakefield - “Deciphering Today’s Debt Market” - https://www.cushmanwakefield.com/en/united-states/insights/deciphering-the-debt-market
CNBC: “Biden targets ‘rent gouging’ landlords as high housing costs factor into 2024 race” - https://www.cnbc.com/2024/03/19/biden-targets-rent-gouging-landlords-as-high-housing-costs-2024-race.html
The White House: “FACT SHEET: President Biden Announces Plan to Lower Housing Costs for Working Families” - https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/07/fact-sheet-president-biden-announces-plan-to-lower-housing-costs-for-working-families/
U.S. Department of Housing and Urban Development: "Existing Policy on Non-Rent Fees in Housing Choice Voucher (HCV) and Project-Based Voucher (PBV) Programs" - https://www.hud.gov/sites/dfiles/PIH/images/HCV_PBV%20Non-Rent%20Fees%20Chart_Final_2-21-24.pdf
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
In a return appearance on the Gray Report, RealPage Director of Research & Analysis Carl Whitaker discusses economic trends, construction issues, rent growth developments, and the data that can give multifamily investors a clear view of the market in 2024.For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Multifamily loan maturities have not led to a full-scale crisis in the apartment investment market, but the issue is far from resolved for many borrowers, which could lead to pockets of distress in the sector.
Sources discussed in this episode:Yardi Matrix: “Multifamily Loans Coming Due Face Stress Test” - https://www.yardimatrix.com/publications/download/file/5217-MatrixResearchBulletin-MultifamilyMaturity-March2024Bureau of Labor Statistics: “Consumer Price Index, February 2024” - https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htmHarvard Joint Center for Housing Studies: “Power to the Neighborhoods: NYC Growth Politics and the Origins of the Housing Crisis” - https://www.jchs.harvard.edu/blog/power-neighborhoods-nyc-growth-politics-and-origins-housing-crisisFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Grant Cardone shares his inimitable insights on the current state of multifamily investment and specific markets across the country.For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Gray Report host Spencer Gray speaks with guest Paul Fiorilla, Director of Research at Yardi Matrix, and reviews the most important trends affecting the multifamily market in 2024.For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Cap rate trends and interest rate trends have come under the spotlight, with several reports on the topic as well as specific developments that will play a major factor in how the economy progresses.
Sources discussed in this episode:
Federal Reserve Bank of the United States: “Monetary Policy Report” - https://www.federalreserve.gov/publications/files/20240301_mprfullreport.pdf
Capital Spectator: “US Growth Expected To Slow In Next Month’s Q1 GDP Report” - https://www.capitalspectator.com/us-growth-expected-to-slow-in-next-months-q1-gdp-report/
CBRE: “U.S. Cap Rate Survey H2 2023” - https://www.cbre.com/insights/reports/us-cap-rate-survey-h2-2023
https://sprcdn-assets.sprinklr.com/2299/d55fbd12-8b34-4725-8e93-6ae0119dad6d-603683686.pdf
Newmark: “Valuation and Advisory’s North American Market Survey” - https://www.nmrk.com/storage-nmrk/uploads/documents/va-market-survey/Newmark_VA_North-American-Market-Survey-2024.pdf
Marcus & Millichap: “January CRE Foreclosures” - https://www.marcusmillichap.com/research/videos/2024/03/january-cre-foreclosures
Apartment List: “National Rent Report, Feb. 2024” - https://www.apartmentlist.com/research/national-rent-data
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
As we move further from the uncertainty and rent growth stagnation of 2023, an increasing number of sources are finding room for optimism in the multifamily investment market. A looming drop-off in multifamily supply, the consequence of an interest-rate-driven decline in new construction projects, has become a central part of projections for the multifamily market, leading to expectations of higher rent growth and increased apartment demand in 2025 and 2026.
Sources discussed in this episode: Bureau of Economic Analysis: “PCE Inflation, January 2024” - https://www.bea.gov/news/2024/personal-income-and-outlays-january-2024John Burns Research and Consulting, CRE Daily: “Fear and Greed Survey, 4Q23” - https://jbrec.com/wp-content/uploads/2024/02/Fear-and-Greed-Index-Chartbook-2024-02.pdf Newmark: “4Q23 State of the U.S. Capital Markets” - https://www.nmrk.com/storage-nmrk/uploads/documents/4Q23-Newmark-State-of-the-U.S.-Capital-Markets_FINAL_EXTERNAL.pdf Fannie Mae: “2024 Outlook for Multifamily Affordability – Many Renters Remain Cost-Burdened” - https://www.fanniemae.com/media/50411/display CBRE: “Multifamily Market Travails Not Likely to Last” - https://www.cbre.com/insights/briefs/cotw-multifamily-market-travails-not-likely-to-last For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/ Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/ DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
Single family rentals are a growing portion of the housing market, and while the single family market is correlated and connected to multifamily performance, single family rentals are not necessarily a competitive threat to the multifamily market.Sources cited in this episode:Yardi Matrix: National Multifamily Report, Jan. 2024 - https://www.yardimatrix.com/publications/download/file/5071-MatrixMultifamilyNationalReport-January2024CoreLogic: “US Single-Family Rent Index – February 2024” - https://www.corelogic.com/press-releases/corelogic-us-annual-rent-growth-remains-slow-steady-december/RealPage: “Incomes Grew Faster Than Rents in 2023” - https://www.realpage.com/analytics/rent-income-ratios-decline-2023/Moody’s Analytics: “Q4 2023 Housing Affordability Update: Rent Burden Lightened for Median US Households Last Year, but Not Everyone Felt the Relief” - https://cre.moodysanalytics.com/insights/market-insights/q4-2023-housing-affordability-update-rent-burden-lightened-for-median-us-households-last-year-but-not-everyone-felt-the-relief/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Any offering would be made through a private placement memorandum and would be limited to accredited investors.
This month's inflation report came in slightly higher than expected, causing some worry that the much-anticipated interest rate cuts from the Fed may not arrive as quickly as previously thought. A "higher for longer" environment is one reason why some are pessimistic about multifamily in 2024, but there is little evidence for continued declines in multifamily valuations, which are already 20-30% below the peak. Consistent demand, a more balanced supply/demand environment after 2024, and, yes, lower interest rate expectations are a strong counter-balance to multifamily doomsayers and help explain why investors intend to be far more active this year compared to 2023.
Gray Capital's latest multifamily offering for accredited investors: https://www.graycapitalllc.com/new-offering/
Link to webinar on February 20 at 1PM Eastern: https://youtube.com/live/LCkECUK05BI?feature=share
Sources cited in this episode:
Bureau of Labor Statistics: “Consumer Price Index - January 2024” - https://www.bls.gov/news.release/cpi.nr0.htm
BiggerPockets: “Multifamily Is at High Risk of Continuing Its Historic Crash in 2024—Here’s Why” - https://www.biggerpockets.com/blog/multifamily-crash-to-continue-through-2024
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest. Offering limited to accredited investors.
Compared to the prevailing uncertainties of 2023, a better view of the multifamily market and its driving forces points to increased investment activity as the year progresses. Significant challenges remain for apartment operators in 2024, but greater clarity on apartment construction, interest rates, housing demand, and the economy, alongside pent-up demand from investors who were inactive this past year, are a marked contrast from 2023 and highlight the solid investment prospects of the multifamily market.Sources cited in this episode:Moody’s Analytics: “Groundhog Day: Will There Be A Long Winter for CRE?” - https://cre.moodysanalytics.com/insights/cre-news/groundhog-day-will-there-be-a-long-winter-for-cre/RealPage: “7 Takeaways from NMHC’s Annual Meeting” - https://www.realpage.com/analytics/7-talking-points-nmhc-2024/Marcus and Millichap: “U.S. Multifamily Investment Forecast” - https://www.marcusmillichap.com/research/market-report/multiple-markets/2024-us-multifamily-investment-forecastBlackrock: “Private Markets Outlook” https://www.blackrock.com/institutions/en-us/literature/whitepaper/2024-private-markets-outlook-stamped.pdfFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcasts does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The enormous amount of apartment supply expected this year should temper any expectations of apartment demand, but newly-published research on the topic argues that U.S. housing needs are far larger than can be addressed even with the historic amount of multifamily completions last year and forecasted for this year. On the capital markets side, recent data points to a substantial increase in CRE investment interest, but given the Federal Reserve's recently-announced intentions to keep interest rates at their current levels past March of this year, the market may not thaw until later in the summer when financing conditions improve.
Sources cited in this episode:
CBRE: “2024 U.S. Investor Intentions Survey: Investment Activity Expected to Increase” - https://www.cbre.com/insights/briefs/2024-us-investor-intentions-survey
Moody’s Analytics: “One Good Year Does Not Solve America’s Housing Shortage” - https://cre.moodysanalytics.com/insights/cre-news/one-good-year-does-not-solve-americas-housing-shortage/
Harvard Joint Center for Housing Studies: “Six Takeaways from America’s Rental Housing 2024” / America's Rental Housing 2024 - https://www.jchs.harvard.edu/blog/six-takeaways-americas-rental-housing-2024 / https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2024.pdf
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
While recent migration and employment data highlights the continued growth of the Sunbelt, the massive amount of newly-built apartments in Sunbelt markets far outweigh the effects of demand drivers like population or job growth. Given this dynamic, investors may find higher-performing assets in multifamily markets in the Midwest and Northeast that have not seen as much apartment construction.
Sources discussed in this episode:
John Burns Research and Consulting: “How to Ride the Apartment Supply Wave” - https://jbrec.com/insights/how-to-ride-the-apartment-supply-wave/
Apartment List: “Renter Migration Report: 2024” - https://www.apartmentlist.com/research/apartment-list-renter-migration-report-2024
RealPage: “Our Economists’ Picks for Favorite Apartment Markets in 2024” - https://www.realpage.com/analytics/markets-outperform-2024/
Fannie Mae: “2024 Multifamily Market Outlook: Instability Expected as Skies Remain Cloudy” - https://www.fanniemae.com/media/50101/display
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Markets in the Northeast and the Sun Belt continue to get attention, along with mountain locales like Idaho and Montana, but affordability is a significant draw for Midwestern markets like Cincinnati and Indianapolis. Sources discussed in this episode:U-Haul: “Top Growth States of 2023” - https://www.uhaul.com/Articles/About/U-Haul-Announces-Top-Growth-States-Of-2023-30660/ United Van Lines: "2023 Annual National Movers Study" - https://www.unitedvanlines.com/newsroom/movers-study-2023 Atlas Van Lines: “2023 Migration Patterns Study” - https://www.atlasvanlines.com/resources/migration-patterns Zillow: “Hottest Housing Markets of 2024” - https://zillow.mediaroom.com/2024-01-04-Buffalo-charges-to-the-top-of-Zillows-2024-hottest-markets-list NAR: “County Median Home Prices and Monthly Mortgage Payment” - https://www.nar.realtor/research-and-statistics/housing-statistics/county-median-home-prices-and-monthly-mortgage-payment Berkadia: “2024 National Forecast Report” - https://berkadia.com/wp-content/uploads/2024/01/Berkadia-2024-Forecast-National-multifamily-research.pdf Moody’s Analytics: “Takeaways from the CRE Finance Council Conference” - https://cre.moodysanalytics.com/insights/cre-news/january-2024-crefc-miami-takeaways/ For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/ Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Recent reporting on commercial real estate financing has highlighted the role of private credit in providing funding for CRE sponsors/owners and delaying the need for a capital call, and despite the expectation of interest rate reductions later in the year, it is clear that private credit will remain an important tool in 2024. Newly-published reports on multifamily performance continue to clarify the near-term challenges for apartment operators, but data showing record vacancies for office properties presents a bleaker picture and signs of persistent shifts in remote/in-person work that could lead to more sustained housing demand in the future.
Sources discussed in this episode:
Bureau of Labor Statistics: “Consumer Price Index, December 2023” - https://www.bls.gov/news.release/cpi.nr0.htm
MSCI: “Inflating Returns with Private Lending Subscription Lines of Credit” - https://www.msci.com/www/blog-posts/inflating-returns-with/04311213880
Apartment List: “National Rent Report, December 2024” - https://www.apartmentlist.com/research/national-rent-data
Integra Realty Resources: “2024 Viewpoint Report” - https://www.irr.com/news/just-released-viewpoint-2024-25065
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
While the continued surge in newly-constructed apartments is relatively unchanged from 2023, the outlook for 2024 interest rates is less clear. The longer-term prospects for the multifamily market remain strong, but given the continued pressure from apartment supply, investors who speculate on lower interest rates and future asset valuation increases could be vulnerable to short-term headwinds.Sources discussed in this episode:Reuters: “Higher forever? Markets see few rate cuts after 2024” - https://www.reuters.com/markets/rates-bonds/higher-forever-markets-see-few-rate-cuts-after-2024-2023-12-29/RealPage: “Rents Flat as Supply Surges” - https://www.realpage.com/analytics/december-2023-data-update/Cushman & Wakefield: “10 Critical Questions for CRE and the Economy in 2024” - https://www.cushmanwakefield.com/en/united-states/insights/10-critical-questionsApartment List: “National Rent Report, December 2023” - https://www.apartmentlist.com/research/national-rent-dataFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Recent forecasts and expectations for the 2024 CRE and multifamily markets are not very much different than the discussions heading into 2023: Economic uncertainty, expense burdens, high interest rates, and historic amounts of new apartment supply will be major factors for multifamily asset performance next year the same as they were this year, but interest rate cuts on the horizon, lower inflation, and an uptick in consumer confidence are key differences from last year and possible glimpses of an end to stagnation for the apartment market. Sources discussed in this episode: RealPage: “What We Got Right - and Wrong - About the Apartment Market in 2023” - https://www.realpage.com/analytics/what-we-got-right-2023/ Yardi Matrix: 2024 Forecast: Multifamily Demand to Stay Positive, but Market Faces Hurdles - https://www.yardimatrix.com/publications/download/file/4915-MatrixMultifamilyNationalReport-Winter2024?signup=false&utm_source=hs_email&utm_medium=email&_hsenc=p2ANqtz-_GbAT2FAplKsj8izORE9R-sxnTxPU1EEyhw5Cid8Y1Jqqxgq1vbNojzBzzelmkUpqJHrTd The Conference Board: “Consumers End 2023 with a Surge in Confidence and Restored Optimism For 2024” - https://www.conference-board.org/topics/consumer-confidence University of Michigan: "Surveys of Consumers" - http://www.sca.isr.umich.edu/ For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/ Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
The Gray Capital team shares their predictions for the multifamily market and the economy in 2024, comparing them to other forecasts that have recently been published.Sources discussed in this episode:Marcus & Millichap: “What to Expect for CRE in 2024” - https://www.marcusmillichap.com/research/videos/what-to-expect-for-cre-in-2024CBRE: “U.S. Real Estate Market Outlook 2024” - https://www.cbre.com/insights/books/us-real-estate-market-outlook-2024/multifamilyCushman & Wakefield: “2024 U.S. Macro Outlook: A Rolling Recession Is Here” - https://www.cushmanwakefield.com/en/united-states/insights/us-macro-outlookFannie Mae: “Multifamily Values Not Driven Solely by Rent Growth” https://www.fanniemae.com/media/49951/displayFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
On the heels of a CPI report showing inflation on the slow decline, Federal Reserve Chairman Jerome Powell announced that the FOMC would keep the federal funds rate at its current level, with 3 rate cuts expected in 2024. Stock markets reacted with the typical enthusiasm associated with the hope of lower interest rates, and some interesting buying opportunities could emerge in 2024 for investors tracking stronger long-term rent growth and lower financing costs in the multifamily market.Sources discussed in this episode:Bureau of Labor Statistics: “Consumer Price Index - November 2023” - https://www.bls.gov/news.release/cpi.nr0.htmGlobeSt: “Prediction: Multifamily Distress Will Start in H2 2024” - https://www.globest.com/2023/12/11/prediction-multifamily-distress-will-start-in-h2-2024/Colliers: “2024 Outlook: Navigating Equilibrium, Distress, and Anticipated Policy Easing in Commercial Real Estate” - https://www.colliers.com/en/research/outlook-2024Cushman & Wakefield: “2024 U.S. Macro Outlook: A Rolling Recession Is Here” - https://www.cushmanwakefield.com/en/united-states/insights/us-macro-outlookHarvard Joint Center for Housing Studies: “Move over Millennials, Gen Z Is Driving Rental Demand” - https://www.jchs.harvard.edu/blog/move-over-millennials-gen-z-driving-rental-demandFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
There is little reason to expect that last-minute deals will buoy the low sales activity in the multifamily market in 2023, but investors should look for opportunities to emerge in 2024 as persistent challenges change the calculation for property owners unable to "survive until 2025."Sources discussed in this episode:Moody’s Analytics: “Timing out the CRE Waiting Game” - https://cre.moodysanalytics.com/insights/cre-news/timing-out-the-cre-waiting-game/GlobeSt: “Multifamily Maturities Weaken, While Office Improves” - https://www.globest.com/2023/12/04/multifamily-maturities-weaken-while-office-improves/ Institutional Investor: “As Private Credit Surges, Banks and Alternative Asset Managers Turn Frenemies Rather Than Foes” - https://www.institutionalinvestor.com/article/2ciy5fv74kddt9eoq1m2o/corner-office/as-private-credit-surges-banks-and-alternative-asset-managers-turn-frenemies-rather-than-foesRealPage: “Apartment Rents Remain Flat, and Could Be for a While” - https://www.realpage.com/analytics/november-2023-data-update/Yardi Matrix: “National Multifamily Report, November 2023” - https://www.yardimatrix.com/publications/download/file/4781-MatrixMultifamilyNationalReport-November2023Apartment List: “7 Predictions for the 2024 Rental Market” https://www.apartmentlist.com/research/2024-rental-market-predictionsFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
Continued updates on housing starts and permits shows multifamily construction starts down sharply even as single family construction continues to grow. The seasonal cooldown in rent growth is less pronounced than last year but remains a challenge for owners and operators continuing to deal with high expenses and the pressure of persistent high interest rates. At the same time, positive economic signals, continued investor confidence in the multifamily sector, and improving balance of apartment supply and demand point to strong longer-term prospects for multifamily investments.
Link to sources discussed in this episode:
Fortune: “The red-hot economy is growing even faster than we thought, with GDP surging 5.2% last quarter” - https://fortune.com/2023/11/29/u-s-economy-gdp-revision-5-2/
CNBC: "Black Friday weekend shopping turnout soars to a record, as consumers seek bargains" - https://www.cnbc.com/2023/11/28/black-friday-weekend-shopping-turnout-soars-to-a-record.html
RealPage: “Census is Likely Overstating Multifamily Starts in 2023” - https://www.realpage.com/analytics/us-census-starts-probably-overstated/
Axios: “Home vacancies near all-time lows as housing shortage bites” - https://www.axios.com/2023/11/21/housing-shortage-vacancies
Colliers: “Capital Markets U.S. Snapshot | 2023 Q3” - https://www.colliers.com/en/research/capital-markets-us-snapshot-q3-2023
Apartment List: “National Rent Report, November 2023” - https://www.apartmentlist.com/research/national-rent-data
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
With forecasts of greater supply and continued pressure from high interest rates, predictions that we are in the early moments of CRE valuation adjustment are gaining prominence, but expanded interest in non-bank lending is helping multifamily borrowers looking to resolve challenges related to increased borrowing costs.
Sources discussed in this episode:
Newmark: “United States Multifamily Capital Markets, 3Q 2023” - https://www.nmrk.com/insights/market-report/united-states-multifamily-capital-markets-report
Cushman & Wakefield: “Market Matters, Nov. 20, 2023” - https://www.cushmanwakefield.com/en/united-states/insights/market-matters-exploring-real-estate-investment-conditions-and-trends
Bloomberg (via Yahoo Finance): “Private Credit Titans Are Grabbing More Than Half of New Deals” - https://finance.yahoo.com/news/private-credit-titans-grabbing-more-150041214.html
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
With continued low CRE property sales and a narrow cap rate-interest rate spread, investors looking for investment opportunities are turning to non-bank lending, preferred equity, and other strategies in place of direct investment and acquisitions.Sources discussed in this episode:CPI: “Consumer Price Index: October 2023” - https://www.bls.gov/news.release/cpi.nr0.htmUrban Land Institute: “2024 Emerging Trends in Real Estate” - https://knowledge.uli.org/-/media/files/emerging-trends/2024/2024-etre-us.pdfCBRE: “How Much Stress is Likely on the Road to Distress?” - https://www.cbre.com/insights/briefs/client-call-how-much-stress-is-likely-on-the-road-to-distressYardi Matrix: “Multifamily Supply Forecast: Q4 2023” - https://www.yardimatrix.com/publications/download/file/4648-YardiMatrixMultifamilySupplyForecastQ42023For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
New data showing that multifamily loan originations are down 50% from last year (and down by 40% compared to pre-pandemic 2019 numbers) joins a growing discussion about the changing state of multifamily lending, and a recent report suggests that rent growth patterns are stabilizing and trending toward historical norms.Sources discussed in this episode:Mortgage Bankers Association: “Quarterly Survey of Commercial / MultifamilyMortgage Bankers Originations | Q3 2023” - https://www.mba.org/docs/default-source/research-and-forecasts/cmf-originations-index/3q23cmforiginationssurvey.pdfRealPage: “After Rapid Cooldown, Apartment Rents Plateau (For Now)” - https://www.realpage.com/analytics/october-2023-data-update/Cushman & Wakefield: “Multifamily Monthly: Preferred Equity Update” - https://www.cushmanwakefield.com/en/united-states/insights/multifamily-monthlyReuters: “US regulators agree to ramp up oversight of systemically risky non-banks” - https://www.reuters.com/business/finance/us-financial-regulators-approve-process-revive-systemically-important-non-bank-2023-11-03/Bisnow: "REPORT: Freddie Mac Investigating Meridian Capital" - https://www.bisnow.com/national/news/capital-markets/freddie-mac-begins-investigation-of-meridian-capital-121524For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
For CRE investors waiting to buy (or sell) properties, a rate hike pause may not be enough to encourage their re-entry into the market as investors expect further cap rate expansion in 2024. For multifamily specifically, confidence in longer-term asset performance has led to greater investor interest compared to other CRE sectors, but overall investment volume is lower than pre-pandemic averages.Sources discussed in this episode:Gray Capital: "Huge Buying Opportunity: Potential Multifamily Crash?" - https://youtu.be/TBZB9vpDW6MReuters: “Fed keeps rates unchanged, acknowledges economy is 'strong’” - https://www.reuters.com/markets/us/fed-poised-hold-rates-steady-despite-economys-bullish-tone-2023-11-01/Independence Realty Trust: "Independence Realty Trust Announces Third Quarter 2023 Financial Results" - https://investors.irtliving.com/press-releases/press-release/2023/Independence-Realty-Trust-Announces-Third-Quarter-2023-Financial-Results/default.aspxJohn Burns Research and Consulting: “Home Supply Glut?” - https://www.linkedin.com/posts/johnburns7_if-not-for-the-lack-of-resale-homes-we-would-activity-7124734200955510784-RlKv?utm_source=share&utm_medium=member_desktopJay Parsons (RealPage): “Cap rates are not (directly) correlated with interest rates” - https://www.linkedin.com/posts/jay-parsons-a7a6656_cre-capitalmarkets-multifamilyrealestate-activity-7124753714694819841-heSF?utm_source=share&utm_medium=member_desktopPromarket (U Chicago Booth School of Business) - “Evaluating Concerns of Collapsing Commercial Real Estate Prices” - https://www.promarket.org/2023/10/10/evaluating-concerns-of-collapsing-commercial-real-estate-prices/Apartment List: “National Rent Report, October 2023” - https://www.apartmentlist.com/research/national-rent-dataFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
While home buyers contend with higher costs, apartment renters have benefited from lower rent growth in 2023, with recent coverage of the housing market describing how rising mortgage rates and still-elevated home values have led to soaring costs of home ownership compared to the price of rent.Sources discussed in this episode:The Wall Street Journal: There’s Never Been a Worse Time to Buy Instead of Rent - https://www.wsj.com/economy/housing/theres-never-been-a-worse-time-to-buy-instead-of-rent-bd3e80d9RealPage: “Which Markets Could Be Most—and Least—Impacted by Apartment Construction?” - https://www.realpage.com/analytics/markets-most-impacted-by-apartment-construction/Freddie Mac: “Millennial household formation—potential for another 3 million households” - https://www.freddiemac.com/research/forecast/20231020-US-economy-continues-to-grow-at-a-pace-closer-to-long-term-trendFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
While recent comments and reports depict our current moment as a substantial opportunity for multifamily investors, there has been little disagreement about the headwinds for apartment performance in 2024, with continued rent growth stagnation and elevated interest rates as prominent challengers for investors. A more favorable environment for multifamily asset performance is expected to develop moving into 2025, but for many apartment investors, the math simply does not work right now.Sources discussed in this episode:Marcus & Millichap: “Is Now the Time to Buy Multifamily?” - https://www.marcusmillichap.com/research/videos/is-now-the-time-to-buy-multifamilyMarcus & Millichap: “What's Holding Sidelined Capital Back?” - https://www.marcusmillichap.com/research/videos/whats-holding-sidelined-capital-backApartment List: “More than Half of All Renters Are "Cost-Burdened" According to New Census Data” - https://www.apartmentlist.com/research/more-than-half-of-all-renters-are-cost-burdenedFannie Mae: “Fannie Mae Multifamily Introduces Sponsor-Dedicated Workforce (SDW) Housing to Support Workforce Rental Affordability” - https://www.fanniemae.com/newsroom/fannie-mae-news/fannie-mae-multifamily-introduces-sponsor-dedicated-workforce-sdw-housing-support-workforce-rentalFannie Mae: “Multifamily and Economic Commentary, Oct. 2023: Rising Number of Multifamily Properties Offering Concessions” - https://www.fanniemae.com/media/49331/displayRealPage: “Here’s the Most Unexpected Twist of the Apartment Sector in 2023” - https://www.realpage.com/analytics/class-b-market-softening/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The Gray Capital team discusses cap rate trends and apartment supply. Also in this episode, Gray Capital President, CEO, and Co-Founder Spencer Gray brings Hannah Ott and Cameron Benz, powerhouse multifamily brokers on the Indianapolis Cushman & Wakefield team, into the studio for a discussion of what's happening on the ground for multifamily buyers and sellers.
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Multifamily assets have proven their worth in both strong and weak economies, but cripplingly high interest rates have frozen the sales market for apartment properties in 2023, leaving the outlook unclear for 2024. Even though the potential for lenders to grant accommodations to troubled borrowers could extend the stagnation and uncertainty in the multifamily sales market, pressures on bank balance sheets could prevent lenders from providing help to many lenders.
Sources discussed in this episode:
Federal Reserve Instagram Account - https://www.instagram.com/federalreserveboard/
Bisnow: Could Discounted Loan Payoffs Be What Finally Restarts The CRE Debt Market?” - https://www.bisnow.com/national/news/capital-markets/debt-negotiations-stalling-discounted-payoff-option-120929
Business Insider: Biden's top economist says the key to ending the housing crisis is giving cities and developers monetary incentives to build more affordable homes - https://www.businessinsider.com/housing-crisis-monetary-incentives-build-affordable-housing-economist-jared-bernstein-2023-10
Apartment List: “National Rent Report, September 2023” - https://www.apartmentlist.com/research/national-rent-data
Harvard Joint Center for Housing Studies “Home Prices and Interest Rates Still Rising, Shutting out More Potential Homebuyers” - https://www.jchs.harvard.edu/blog/home-prices-and-interest-rates-still-rising-shutting-out-more-potential-homebuyers
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Reports of persistently-high expenses for commercial real estate operators, extended periods of higher interest rates, and lower rent growth have compounded the potential for distress linked to the wave of multifamily loan maturities due in Q4 of this year. Solid, long-term fundamentals and robust housing demand continue to make multifamily an attractive investment, but for floating-rate borrowers whose loans are coming due, these accumulating challenges could motivate sales at prices low enough to break the multifamily sales market out of its current stagnation.Sources discussed in this episode:Gray Capital: Research Update: "Wave Multifamily Loan Maturities Imminent" - https://www.graycapitalllc.com/report/CBRE: Older Multifamily Properties Achieve Above-Average Rent Growth - https://www.cbre.com/insights/briefs/older-multifamily-properties-achieve-above-average-rent-growthRealPage: “Concession Usage in Minneapolis More Than Doubles Midwest Average” - https://www.realpage.com/analytics/minneapolis-concessions-double-midwest-average/Bloomberg (via The Seattle Times): "First American city to tame inflation owes success to affordable housing" - https://www.seattletimes.com/business/first-american-city-to-tame-inflation-owes-success-to-affordable-housing/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The Federal Reserve decided this week to maintain the current Federal funds rate without an increase (or decrease), but their updated economic projections suggest that the Fed is more driven to sustain these elevated rates through 2024, increasing their end-of-year 2024 projection from 4.6% in June to 5.1% now. While CRE pricing has been trending down since the start of this elevated interest rate regime, these extended projections of lasting high rates could accelerate further price discovery, especially in the context of the dramatic increase in loan maturities coming due in Q4 2023 and early 2024.Sources discussed in this episode:CBRE: Midyear Pulse Check: U.S. Multifamily Market - https://www.cbre.com/insights/briefs/midyear-pulse-check-us-multifamily-marketRealPage: “Class A Rent Performance Weighing Down Some Apartment Markets” - https://www.realpage.com/analytics/class-a-underperformance/RealPage: “Flip the Script: Wage Growth Is Outpacing Rent Growth Again” - https://www.realpage.com/analytics/wage-growth-outpacing-rent-increases/Yardi Matrix: “Multifamily Rent Forecast Update” - https://www.yardimatrix.com/publications/download/file/4482-MatrixBulletin-MultifamilyForecast-August2023Cushman & Wakefield: “Market Matters” - https://www.cushmanwakefield.com/en/united-states/insights/market-matters-exploring-real-estate-investment-conditions-and-trendsFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
While recent topline inflation numbers may help justify the recent interest rate increase from the Federal Reserve, a more compelling signal of economic activity can be seen in the robust housing demand that has led to rebounding single family home prices in spite of the high mortgage rate environment, which is a strong indication of robust multifamily demand moving forward.
CBRE: “2023 U.S. Real Estate Market Outlook Midyear Review” - https://www.cbre.com/insights/reports/2023-us-real-estate-market-outlook-midyear-review
Yardi Matrix: “National Multifamily Report, August 2023” - https://www.yardimatrix.com/publications/download/file/4361-MatrixMultifamilyNationalReport-August2023
Apartment List: “Rents Continue to Dip, While Home Prices Rebound to All-Time Highs” - https://www.apartmentlist.com/research/rents-continue-to-dip-while-home-prices-rebound
CoreLogic: “US Home Price Insights – September 2023” - https://www.corelogic.com/intelligence/us-home-price-insights-september-2023/
The Harvard Joint Center for Housing Studies: “With Existing Inventories Historically Low, Homebuyers Turn to the New Home Market” - https://www.jchs.harvard.edu/blog/existing-inventories-historically-low-homebuyers-turn-new-home-market
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
Recent reports on the apartment market show year-over-year rent growth heading into negative territory after 18+ months of deceleration from its peak in late 2021/early-2022. Alongside lower rent growth and higher vacancy, apartment operators contend with rising expenses and higher interest rates, and the sharp increase in multifamily loan maturities in the coming months is a dramatic example of the potential for near-term distress in the market. Despite these ongoing challenges, the long-term fundamentals of the apartment market are strong. Climbing homebuying costs and consistently-high single-family home valuations signify continued high housing demand in spite of high interest rates, and the apartment market remained relatively stable while adding the most new apartment supply in decades, a mark of resilience for the sector that will strengthen as new supply is expected to decrease in the coming years.
Sources discussed in this episode:
RealPage: “U.S. Job Growth Exceeds Expectations in August” - https://www.realpage.com/analytics/august-job-growth-exceeds-expectations/
Apartment List: “National Rent Report” - https://www.apartmentlist.com/research/national-rent-data
Marcus & Millichap: “Multifamily National Report, 3Q 2023” - https://www.marcusmillichap.com/research/special-report/2023/09/3q23-multifamily-national-report
CBRE: “Multifamily rent growth to persist where least expected” - https://www.cbre.com/insights/briefs/motm-multifamily-rent-growth-to-persist-where-least-expected
Harvard Joint Center for Housing Studies: “Local Population Growth Dependent on Migration and Immigration” - https://www.jchs.harvard.edu/blog/local-population-growth-dependent-migration-and-immigration-2022-0
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Low transaction activity in the commercial real estate markets has some looking for "secret" distress, and while the growing perception that interest rates will remain high is slowly impacting price discovery, there is still room for prices to reach a point that would bring sales volumes in line with historical averages.Sources cited in this episode:CBRE: “Spiking 10-Year Treasury Rate Signals Caution for Commercial Real Estate” - https://www.cbre.com/insights/viewpoints/spiking-10-year-treasury-rate-signals-caution-for-commercial-real-estateGlobe Street: “Maybe Secret Distress Is Behind CRE Market Performance” - https://www.globest.com/2023/08/29/maybe-secret-distress-is-behind-cre-market-performance/Marcus & Millichap: “Are CRE Prices Still Too High?” - https://www.marcusmillichap.com/research/videos/are-cre-prices-still-too-highRealPage: “Multifamily Permitting Down by Almost One-Third” - https://www.realpage.com/analytics/multifamily-permitting-down-july-2023/Fannie Mae: “Multifamily Economic and Market Commentary, August 2023” - https://www.fanniemae.com/media/48731/displayFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Katrina Greene is the Director of Property Management for Gray Residential, and her upcoming podcast, The Complex, will detail the complicated and crucial aspects of managing apartment properties.
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Multifamily capital markets have seen the greatest drop in transaction activity compared to other CRE sectors, but all CRE markets have seen lower sales numbers in the current interest rate environment. As members of the Fed meet in Jackson Hole, the potential for an extended high-interest-rate regime could have a significant impact on commercial real estate.
Sources discussed in this episode:
All In Podcast: E142, "Real Estate Capital Crunch" - https://youtu.be/dlzobkV_CgU?si=kLdb9kKeuYO-Ch__&t=3695
Financial Times: “‘Higher-for-longer’ rate debate to dominate Jackson Hole meeting” - https://www.ft.com/content/ead217db-a833-4837-b2d7-dcc563a54f90
Freddie Mac: “Economic, Housing, and Mortgage Market Outlook – August 2023” - https://www.freddiemac.com/research/forecast/20230817-economic-housing-and-mortgage-market-outlook-august-2023
Colliers: “Capital Markets U.S. Snapshot | Q2 2023” - https://www.colliers.com/en/research/capital-markets-us-snapshot-q2-2023
Apartment List: “Rents Are Falling, but They're Falling Slower In the Suburbs” - https://www.apartmentlist.com/research/rents-are-falling-slower-in-the-suburbs
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
Berkshire Hathaway's recent investment in homebuilding companies is a sound endorsement of the housing sector and continued strong demand for homes, and Warren Buffet's new focus is supported by decreasing building material costs and increased permitting and starts for single family home projects, indicating continued interest in purchasing a home, even as mortgage rates make home ownership more costly. Housing demand is highly correlated, and these signs of increased demand in the single family home space point to improved future performance in the multifamily market and a clear end of the current cooling period for the apartment market by 2024.
Sources discussed in this episode:
The Wall Street Journal: “Berkshire Hathaway’s Latest Bet: Homebuilder Stocks” - https://www.wsj.com/articles/berkshire-hathaways-latest-bet-homebuilder-stocks-9ef1478a
John Burns Real Estate Consulting: “How Long Will Home Builder Euphoria Last?” https://jbrec.com/insights/how-long-will-home-builder-euphoria-last/
RealPage: “How Far is Each Market Past Peak Apartment Construction?” https://www.realpage.com/analytics/markets-past-peak-construction/
The New York Times: “Why This Company’s Financial Crisis Threatens China’s Economy” - https://www.nytimes.com/2023/08/15/business/country-garden-china-property.html
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Mid-year updates and forecasts for the apartment and CRE markets uniformly note the improved economic conditions compared to the start of the year, but forecasts for rent growth and capital markets are diverging. Under one scenario, a recession in late 2023/early 2024 will prompt an interest rate reduction that could stimulate CRE capital markets, but under an alternative scenario, we are spared from a recession but deal with a longer period of elevated interest rates and inflation. Regardless of the ultimate outcome, interest rates are expected to remain high for at least 6 months, and the potential for property distress has not gone away.
Sources discussed in this episode:
Gray Capital: “CPI Rent Growth Contradicts Market Reality” - https://www.graycapitalllc.com/rent-report/
GlobeSt: “WeWork Says It is at Risk for Bankruptcy. Has Co-Working Died?” - https://www.globest.com/2023/08/09/wework-says-it-is-at-risk-for-bankruptcy-has-co-working-died/
National Bureau of Economic Research: “Converting Brown Offices to Green Apartments” - https://www.nber.org/system/files/working_papers/w31530/w31530.pdf
TheRealDeal: “Office-to-resi conversions are financially feasible, but just barely: report” - https://therealdeal.com/new-york/2023/08/08/report-identifies-nyc-offices-ripe-for-resi-conversion/
CBRE: “Midyear Global Real Estate Outlook 2023” - https://www.cbre.com/insights/books/midyear-global-real-estate-market-outlook-2023/economic-outlook
RealPage: “As Annual Rent Growth Slips Below 1%, How Much Further Could Rents Cool?” - https://www.realpage.com/analytics/july-2023-apartment-market-update/
Institutional Property Advisors: “Midyear Multifamily Outlook” - https://www.institutionalpropertyadvisors.com/research/special-report/2023/08/ipa-midyear-multifamily-outlook-special-report
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Rent growth trends continue to moderate from last year's historic peak, and many of the top markets of last year have seen much lower rent growth due to the influx of apartments. Strong GDP numbers and a healthy job market, however, support continued housing demand and economic stability despite the elevated interest rate environment.
Sources discussed in this episode:
CoreLogic: “US Home Price Insights – August 2023” - https://www.corelogic.com/intelligence/us-home-price-insights-august-2023/
The White House: “Biden-Harris Administration Announces Actions to Lower Housing Costs and Boost Supply” - https://www.whitehouse.gov/briefing-room/statements-releases/2023/07/27/biden-harris-administration-announces-actions-to-lower-housing-costs-and-boost-supply/
GlobeSt: “Converting Office & Retail to Affordable Housing May Soon Be Easier” - https://www.globest.com/2023/07/28/converting-office-retail-to-affordable-housing-may-soon-be-easier/
RealPage: “Stellar 2Q Apartment Demand in Key Markets” - https://www.realpage.com/analytics/markets-solid-2nd-quarter-demand/
RealPage: “Multifamily Development is Definitely Slowing” - https://www.realpage.com/analytics/multifamily-permits-declining-june-2023/
Berkadia: “2023 Mid-Year National Report” - https://base.berkadia.com/wp-content/uploads/2023/07/Berkadia-Midyear-2023-Multifamily-Report-National-1.pdf
JLL: “JLL unveils first GPT model for commercial real estate” - https://www.us.jll.com/en/newsroom/jll-unveils-first-gpt-model-for-commercial-real-estate
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The Federal Reserve raised the federal funds rate by 0.25%, and while Federal Reserve staff "are no longer forecasting a recession," others are more confident in a recession as the inevitable product of this lengthy period of elevated interest rates. Amidst this continuing economic uncertainty, the multifamily market has shown solid demand. That being said, nationwide rent growth projections are more subdued compared to historical averages, but Northeast and Midwest markets continue to outperform.
Sources discussed in this episode:
Federal Reserve Bank of the United States: "Federal Reserve Issues FOMC Statement" - https://www.federalreserve.gov/newsevents/pressreleases/monetary20230726a.htm
MarketWatch: “‘No chance we’re having a soft landing’: Stock-market strategist David Rosenberg gives Powell’s Fed no credit — and no mercy” - https://www.marketwatch.com/story/no-chance-were-having-a-soft-landing-stock-market-strategist-david-rosenberg-gives-powells-fed-no-credit-and-no-mercy-52ea2ed6
Nature: "Negativity drives online news consumption" - https://www.nature.com/articles/s41562-023-01538-4
The Conference Board: “US Leading Indicators” - https://www.conference-board.org/topics/us-leading-indicators
Fannie Mae: “Multifamily Economic and Market Commentary, July 2023” - https://www.fanniemae.com/media/48391/display
CBRE: “Cap Rates for Multifamily Stabilize for Q2” - https://www.cbre.com/insights/briefs/cap-rates-for-prime-multifamily-assets-stabilize-in-q2
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
While there has been more optimism about the economy generally, apartment rent growth continues its moderation on a national level, with some notable regional variation. Unlike more costly markets in the West and South, recent apartment rent growth reporting highlights the consistent growth of more affordable multifamily markets in the Midwest, a trend that also extends to the homebuying market.
Sources discussed in this episode:
Yardi Matrix: “National Multifamily Report, June 2023” - https://www.yardimatrix.com/publications/download/file/4192-MatrixMultifamilyNationalReport-June2023
McKinsey: “Empty spaces and hybrid places: The pandemic’s lasting impact on real estate” - https://www.mckinsey.com/mgi/our-research/empty-spaces-and-hybrid-places#/
National Association of Home Builders: “Homeownership across US Counties” - https://eyeonhousing.org/2023/07/homeownership-across-us-counties/
Harvard Joint Center for Housing Studies: “8 Facts About Investor Activity In The Single-Family Rental Market” - https://www.jchs.harvard.edu/blog/8-facts-about-investor-activity-single-family-rental-market
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The CPI recorded another substantial drop in inflation, which should ease some financial burdens for renters and could act as a signal to the Federal Reserve Bank that interest rates need not increase any further. The resumption of student loan repayments this August could have a more direct impact on apartment demand, and three separate reports this week review the implications of student loan repayment on the multifamily market, housing, and the economy more broadly.
Link to sources discussed in this episode:
Bureau of Labor Statistics: “Consumer Price Index, June 2023” - https://www.bls.gov/news.release/cpi.nr0.htm
Federal Reserve Bank of New York: “Where Is Inflation Persistence Coming From?” - https://libertystreeteconomics.newyorkfed.org/2023/07/where-is-inflation-persistence-coming-from/
John Burns Research & Consulting: “Student Loan Restart Will Drag on Economy” - https://jbrec.com/insights/student-loan-restart-will-drag-on-economy/
Education Data Initiative: "Student Loan Debt Statistics" - https://educationdata.org/student-loan-debt-statistics
Moody's Analytics: "Resuming Student Loan Payments May Exacerbate Affordability Crisis and Pressure Retail Sector" - https://cre.moodysanalytics.com/insights/cre-news/resuming-student-loan-payments-may-exacerbate-affordability-crisis-and-pressure-retail-sector/
Fannie Mae: “Consumer Confidence in Housing May Have Plateaued” - https://www.fanniemae.com/research-and-insights/surveys-indices/national-housing-survey
RealPage: “Apartment Demand Rebounds as Rent Growth Further Cools” - https://www.realpage.com/analytics/us-apartment-demand-rebounds-2nd-quarter/
Apartment List: "National Rent Report, June 2023" - https://www.apartmentlist.com/research/national-rent-data
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
The multifamily market continues to steadily improve, with solid underlying fundamentals but softer demand in areas that have seen a major influx of supply, a situation that lines up with the mixture of positive and negative indicators for the broader housing market and for the economy as a whole. Both home prices and rents have recently shown negative year-over-year numbers, but they are increasing on a monthly basis and are showing greater strength as the summer months continue.
Sources covered in this episode:
Harvard Joint Center for Housing Studies: The State of the Nation’s Housing 2023 - https://www.jchs.harvard.edu/state-nations-housing-2023
Fannie Mae: “Mixed Data Muddles Macroeconomic Forecast” - https://www.fanniemae.com/research-and-insights/forecast/mixed-data-muddles-macroeconomic-forecast
CBRE: “Multifamily vacancy poised to rise in all major markets” - https://www.cbre.com/insights/briefs/cotw-multifamily-vacancy-poised-to-rise-in-all-major-markets
GlobeSt: "Expenses Rising Faster Than Revenues for Many Apartment Owners" - https://www.globest.com/2023/06/16/expenses-rising-faster-than-revenues-for-many-apartment-owners/
RealPage: “Apartment Residents Shopping at a Seasonally Normal Rate” - https://www.realpage.com/analytics/apartment-renters-shopping-normally/
Freddie Mac: “Housing Sentiment in the Second Quarter of 2023” - https://www.freddiemac.com/research/consumer-research/20230621-housing-sentiment-2Q23
NAR: “Realtors Confidence Index, May 2023” - https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index
CoreLogic: “US CoreLogic S&P Case-Shiller Index Posts a Small Annual Decline, Down by 0.2% in April” - https://www.corelogic.com/intelligence/us-corelogic-sp-case-shiller-index-posts-a-small-annual-decline-down-by-0-2-in-april/
Harvard University: "The Power of Proximity: Office Interactions Affect Online Feedback and Quits, Especially for Women and Young Workers" - https://scholar.harvard.edu/pallais/publications/power-proximity-office-interactions-affect-online-feedback-and-quits-especially
Nature: "The effects of remote work on collaboration among information workers" - https://www.nature.com/articles/s41562-021-01196-4
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
The multifamily market continues to steadily improve, with solid underlying fundamentals but softer demand in areas that have seen a major influx of supply, a situation that lines up with the mixture of positive and negative indicators for the broader housing market and for the economy as a whole. Both home prices and rents have recently shown negative year-over-year numbers, but they are increasing on a monthly basis and are showing greater strength as the summer months continue.
Sources covered in this episode:
Harvard Joint Center for Housing Studies: The State of the Nation’s Housing 2023 - https://www.jchs.harvard.edu/state-nations-housing-2023
Fannie Mae: “Mixed Data Muddles Macroeconomic Forecast” - https://www.fanniemae.com/research-and-insights/forecast/mixed-data-muddles-macroeconomic-forecast
CBRE: “Multifamily vacancy poised to rise in all major markets” - https://www.cbre.com/insights/briefs/cotw-multifamily-vacancy-poised-to-rise-in-all-major-markets
GlobeSt: "Expenses Rising Faster Than Revenues for Many Apartment Owners" - https://www.globest.com/2023/06/16/expenses-rising-faster-than-revenues-for-many-apartment-owners/
RealPage: “Apartment Residents Shopping at a Seasonally Normal Rate” - https://www.realpage.com/analytics/apartment-renters-shopping-normally/
Freddie Mac: “Housing Sentiment in the Second Quarter of 2023” - https://www.freddiemac.com/research/consumer-research/20230621-housing-sentiment-2Q23
NAR: “Realtors Confidence Index, May 2023” - https://www.nar.realtor/research-and-statistics/research-reports/realtors-confidence-index
CoreLogic: “US CoreLogic S&P Case-Shiller Index Posts a Small Annual Decline, Down by 0.2% in April” - https://www.corelogic.com/intelligence/us-corelogic-sp-case-shiller-index-posts-a-small-annual-decline-down-by-0-2-in-april/
Harvard University: "The Power of Proximity: Office Interactions Affect Online Feedback and Quits, Especially for Women and Young Workers" - https://scholar.harvard.edu/pallais/publications/power-proximity-office-interactions-affect-online-feedback-and-quits-especially
Nature: "The effects of remote work on collaboration among information workers" - https://www.nature.com/articles/s41562-021-01196-4
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
With office real estate suffering as remote working arrangements persist and drive down demand for office space, there is increasing attention on the broader impacts and knock-on effects related to the shift away from the office. Commercial real estate lenders have yet to panic, even in this environment of high interest rates and low transaction volumes, and while multifamily valuations have also suffered due to high rates, the same work-from-home factors that are hurting office CRE performance could support more consistently elevated values for residential real estate.
Sources covered in this episode:
Commercial Property Executive: “Servicing, Defaults Dominate CREFC Discussion” - https://www.commercialsearch.com/news/servicing-defaults-dominate-crefc-discussion/
The New York Times: “Return to Office Enters the Desperation Phase” - https://www.nytimes.com/2023/06/20/business/return-to-office-remote-work.html
Moody’s Analytics: “Capital Market Quick Take: What Does It Take to See a Peak-to-Trough Office Value Decline of 40%?” https://cre.moodysanalytics.com/insights/cre-news/capital-market-quick-take-what-does-it-take-to-see-a-peak-to-trough-office-value-decline-of-40/
John Burns Research and Consulting: “Will the strongest housing demand surge in 20 years continue?” - https://jbrec.com/insights/will-strongest-housing-demand-surge-continue/
Axios: “America's housing shortage is keeping home prices high” - https://www.axios.com/2023/06/20/housing-shortage-prices-high
Indiana Business Review: “Uncertainty in the national real estate market” - https://www.ibrc.indiana.edu/ibr/2023/summer/article2.html
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
With the Consumer Price Index showing declining annual inflation, (from 4.9% in April to 4% in May) and low, 0.1% month-over-month inflation, the Federal Reserve's decision to keep interest rates level is understandable, but Jerome Powell's remarks did not indicate that rates will go down any time soon. Even as these paused interest rate increases bring a glimmer of hope that CRE capital markets might improve, stories of looming office property foreclosures, lower property valuations, and interestingly-timed sales activity suggest that a more buyer-friendly CRE sales environment is forming, which will create opportunities for multifamily investors in resilient apartment markets.
Sources covered in this episode:
The Wall Street Journal: “Renters Are About to Get the Upper Hand” - https://www.wsj.com/articles/renters-are-about-to-get-the-upper-hand-f6387df4
The United States Bureau of Labor Statistics: “Consumer Price Index - May 2023” - https://www.bls.gov/news.release/cpi.nr0.htm
Multi-Housing News: “How the Fed’s Pause on Interest Rates Impacts Multifamily” - https://www.multihousingnews.com/will-the-fed-hit-pause-multifamily-experts-weigh-in-on-a-potential-rate-hike/
The Federal Reserve Bank of the United States: “June 14, 2023 FOMC Statement” - https://www.federalreserve.gov/newsevents/pressreleases/monetary20230614a.htm
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The drumbeat of coverage on commercial real estate loan trouble continues this week as strong jobs numbers fuel more uncertainty about inflation and economic strength, and while the multifamily market has shown stable rent growth, there is a high amount of regional variability. With the exception of Texas markets and the indefatigable growth of Miami, a number of Sunbelt markets have had negative rent growth, while markets in the Midwest and Northeast have much stronger rent growth as a group, especially more affordable markets with low rent-to-income ratios.
Sources discussed in this episode:
Gray Capital: “Loan Maturities and Distress in the Multifamily Market” - https://www.graycapitalllc.com/report/
Urban Land Institute: “ULI's Spring Real Estate Economic Forecast Projects Slowed GDP Growth As Inflation Decreases” - https://americas.uli.org/real-estate-economic-forecast-spring-2023/
Apartment List: “As the Rental Market Cools, These Cities Are Cheaper Today than One Year Ago” - https://www.apartmentlist.com/research/annual_rent_growth_tracker
Yardi Matrix: “National Rent Report, May 2023” - https://www.yardimatrix.com/publications/download/file/4053-MatrixMultifamilyNationalReport-May2023
The Wall Street Journal: “Interest-Only Loans Helped Commercial Property Boom. Now They’re Coming Due.” - https://www.wsj.com/articles/interest-only-loans-helped-commercial-property-boom-now-theyre-coming-due-c3754941
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Signs of positive signs for job growth and housing demand are at odds with sluggish commercial real estate capital markets, but key developments could spur more activity among investors and property owners.
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
Sources discussed in this episode:
CoreLogic: “US CoreLogic S&P Case-Shiller Index Posts a Small Gain in March, Up 0.7% From Last Year” - https://www.corelogic.com/intelligence/us-corelogic-sp-case-shiller-index-posts-a-small-gain-in-march-up-0-7-from-last-year/
RealPage: “U.S. Home Prices Accelerate, Rising for Second Consecutive Month” - https://www.realpage.com/analytics/us-home-prices-up-second-consecutive-month/
RentCafe: “New Build-to-Rent Homes Hit Record With 3 Times as Many Houses Under Construction” - https://www.rentcafe.com/blog/rental-market/market-snapshots/build-to-rent-single-family-homes-construction/
Newmark: “United States Multifamily Capital Markets Report, Q1 2023” - https://www.nmrk.com/insights/market-report/united-states-multifamily-capital-markets-report
MSCI: “Prices of All Major US Property Types Fell in April” - https://www.msci.com/www/quick-take/prices-of-all-major-us-property/03849362277
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Fannie Mae predicts recession, Freddie Mac expects interest rates to remain elevated for the long term, and there is growing attention on the impact of upcoming loan maturities in the multifamily investment market. Continued signs of growing housing demand support the strong fundamentals of the multifamily market, but investment sales activity remains low in the current high interest rate environment.
Sources discussed in this episode:
The Wall Street Journal: “A Housing Bust Comes for Thousands of Small-Time Investors” - https://www.wsj.com/articles/a-housing-bust-comes-for-thousands-of-small-time-investors-3934beb3
Fannie Mae: May 2023 Economic and Housing Forecast” - https://www.fanniemae.com/research-and-insights/forecast/economy-still-expected-slow-housing-construction-looking-more-upbeat
Freddie Mac: “Economic, Housing and Mortgage Market Outlook” - https://www.freddiemac.com/research/forecast/20230522-economic-risks-remain-weighted-downside-because-stubborn-inflation
Moody’s Analytics: “America’s Downtown Recovery and What that Means for the Multifamily/Office Market” - https://cre.moodysanalytics.com/insights/cre-news/americas-downtown-recovery-and-what-that-means-for-the-multifamily-office-market/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The potential for distress looms large over the commercial real estate market, and a recent report notes that the multifamily market "has the most significant amount of debt maturities coming due," and "pricing is off the most of any asset class." With elevated interest rates as a persistent challenge, these debt maturities could have a major impact on multifamily pricing. At the same time, the fundamentals of the multifamily market are still strong, which continues to drive the interest of investors waiting for a buying opportunity at the intersection of the pricing mismatch and looming debt maturities in the apartment market.
Sources discussed in this episode:
Colliers: "US Market Snapshot Q1 2023" - https://www.colliers.com/download-article?itemId=2f46bb37-44a6-4a2d-8b2a-f9fda0a60c14
GlobeSt: "CRE Lending Index Shows 33% Drop" - https://www.globest.com/2023/05/16/cre-lending-index-shows-33-drop/
GlobeSt: "Warren Buffett: It's Time for CRE Borrowers to Feel the Pain" - https://www.globest.com/2023/05/12/warren-buffett-its-time-for-cre-borrowers-to-feel-the-pain/
GlobeSt: "Can These Recent Private Equity Deals Actually Save Commercial Real Estate?" - https://www.globest.com/2023/05/16/can-these-recent-private-equity-deals-actually-save-commercial-real-estate/
Gallup: "Real Estate Lead as Best Investment Shrinks, Gold Rises” - https://news.gallup.com/poll/505592/real-estate-lead-best-investment-shrinks-gold-rises.aspx
Bisnow: "‘There’s A Degree Of Wonder’: Why New AI Tools May Finally Be The Tech That Shakes Up Real Estate" - https://www.bisnow.com/london/news/proptech/theres-a-degree-of-wonder-why-new-ai-tools-may-finally-be-the-tech-that-shakes-up-real-estate-118953
Bisnow: "How ChatGPT Will Change Real Estate — In Its Own Words" - https://www.bisnow.com/london/news/proptech/how-chatgpt-will-change-real-estate-in-its-own-words-118956
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
New rent growth data cements a robust positive trend for multifamily performance, with four consecutive months of increasing monthly rent growth and forecasts that Q2 rent growth could exceed pre-pandemic averages if current trends continue. On the other hand, the rent growth measured in the Consumer Price Index, (0.6% month-over-month and 8.8% year-over-year), continues to misrepresent the current state of the market and are a large part of the high year-over-year inflation number (4.9%) and the elevated monthly inflation (0.4%, up from 0.1% the previous month).
Sources discussed in this episode:
Bureau of Labor Statistics: “Consumer Price Index, April 2023” - https://www.bls.gov/news.release/cpi.nr0.htm
NAR: “April 2023 Commercial Market Insights” - https://www.nar.realtor/commercial-market-insights/april-2023-commercial-market-insightsYardi Matrix: “National Multifamily Report, April 2023” - https://www.yardimatrix.com/publications/download/file/3792-MatrixMultifamilyNationalReport-April2023Apartment List: “The Number of ‘Super Commuters’ Has Fallen to the Lowest Level in Over a Decade” - https://www.apartmentlist.com/research/number-of-super-commuters-has-fallen-to-lowest-level-in-over-a-decadeSSRN: “Persistently Poor Performance in Private Equity Real Estate” - https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4437519For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The Federal Reserve increased the Federal Funds rate by 25 BPS, breaking the 5% barrier in a rate hike that was largely anticipated by the markets, but with comments by Fed Chair Powell indicating a pause in interest rate increases, the next meeting of the Federal Reserve could be a significant indicator of the Fed's path going forward. As the FOMC anticipates economic decline, the multifamily market continues to see positive rent growth in the Northeast and Midwest, but growth has been slower in many previously-strong markets in the Sunbelt and West.Sources discussed in this episode:Yahoo Finance: “Federal Reserve pushes interest rates above 5% for first time since 2007” - https://finance.yahoo.com/news/federal-reserve-interest-rate-decision-may-3-155524134.htmlRealPage: “Reframing 1st Quarter’s Performance Into Historical Perspective” - https://www.realpage.com/analytics/1st-quarter-demand-comparison/Apartment List: “National Rent Report, April 2023” - https://www.apartmentlist.com/research/national-rent-dataIU Center for Real Estate Studies: Prepare for a Generational Housing Bubble” - https://www.ibrc.indiana.edu/realestateoutlook/index.htmlRealPage: “Apartment Operational Expenses Soar” - https://www.realpage.com/analytics/apartment-operational-expenses-soar/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
Despite a report from Fannie Mae downplaying the region's performance, Midwestern markets have been a major contributor to the upswing in national rent growth.Sources discussed in this episode:RealPage: “U.S. Apartment Market Rallies After 3+ Volatile Years” - https://www.realpage.com/analytics/volatile-us-apartment-market-calms/Fannie Mae: “Multifamily Economic and Market Commentary” - https://www.fanniemae.com/media/46851/displayMarcus & Millichap: “What’s Happening with CRE Supply and Demand?” - https://www.marcusmillichap.com/research/videos/whats-happening-with-cre-supply-and-demandHarvard Joint Center for Housing Studies: The Sociology Of Housing: How Homes Shape Our Social Lives - https://www.jchs.harvard.edu/blog/sociology-housing-how-homes-shape-our-social-livesFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
A recent article from Charles Schwab claims that the Federal Reserve will avoid further rate hikes, but these lower interest rate forecasts are accompanied by the expectation of an economic downturn. In the multifamily market, a recent rent growth report has recorded a rare year-over-year rent decrease, but when viewed alongside numerous other reports showing improving performance for multifamily assets, it is clear that rent growth is strengthening as we enter into peak leasing season.Sources discussed in this episode:Redfin: “Rental Market Tracker: U.S. Rents Post First Annual Decline in Three Years” - https://www.redfin.com/news/redfin-rental-report-march-2023/Marcus & Millichap: “Where Is Distress Risk in Today’s CRE Market?” - https://www.marcusmillichap.com/research/videos/where-is-distress-risk-in-todays-cre-marketApartment List: “Apartment List's 2023 Millennial Homeownership Report” - https://www.apartmentlist.com/research/millennial-homeownership-2023Charles Schwab: “Schwab Market Perspective: Top of the Rate Cycle” - https://www.schwab.com/learn/story/market-perspectiveFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
The latest numbers from the Consumer Price Index showed lower-than-expected inflation, but uncertainty (or pessimism) regarding the Federal Reserve's interest rate path has dampened some of the enthusiasm about the inflation news. This uncertainty is keenly felt in the still-stagnant apartment sales market, but when it comes to apartment demand, solid positive rent growth trends are a clear highlight amidst the anxious unknowns elsewhere in the multifamily market and the economy as a whole.Sources discussed in this episode:Bureau of Labor Statistics: “Consumer Price Index: March 2023” - https://www.bls.gov/news.release/cpi.t02.htmSt. Louis FRED: “Personal Saving Rate” - https://fred.stlouisfed.org/series/PSAVERTSt. Louis FRED: “Credit Card Revolving Credit” - https://fred.stlouisfed.org/series/CCLACBW027SBOGYardi Matrix: “National Multifamily Report, March 2023” - https://www.yardimatrix.com/publications/download/file/3641-MatrixMultifamilyNationalReport-March2023RealPage: “Apartment Construction at 50-Year High? Yes, But… Not Really” - https://www.realpage.com/analytics/apartment-construction-50-year-highs/Newmark: “North American Market Survey, Q1 2023” - https://www.nmrk.com/storage-nmrk/uploads/documents/va-market-survey/Newmark_VA_North-American-Market-Survey-1Q-2023.pdfFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
High home prices were a prominent subject two years ago, and despite a dip in values, still-elevated home values and high mortgage rates have kept the topic in conversation. While multifamily investors are familiar with these issues for homebuyers and their implications for the rental market, the enduring nature of this buyer-renter gap will lead even more families and individuals priced out of homeownership to seek apartments instead.
Sources discussed in this episode:Marcus & Millichap: “Housing” - https://www.marcusmillichap.com/research/research-brief/2023/03/research-brief-march-housingThe Wall Street Journal: “Apartment-Building Sales Drop 74%, the Most in 14 Years” - https://www.wsj.com/articles/apartment-building-sales-drop-74-the-most-in-14-years-9a80aa48Moody’s Analytics: “CRE is Vulnerable, but Please Don’t Overlook the Details” - https://cre.moodysanalytics.com/insights/cre-news/cre-is-vulnerable-but-please-dont-overlook-the-details/Marcus & Millichap: “Could CRE Disrupt the Banking System?” - https://player.vimeo.com/video/814308634For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Following the high profile bank crises earlier this month are worries regarding commercial real estate debt, but while multifamily investors continue to wait for distressed assets and buying opportunities that have yet to arrive in significant numbers, office properties are under greater stress, with growing concern of a crisis in the office real estate market that could contribute to a downturn in the larger economy.Sources discussed in this episode:
MSCI: “Apartments Led Steepening Drop in US Property Prices” - https://www.msci.com/www/quick-take/apartments-led-steepening-drop/03727239509Apartment List: “March 2023 Rent Report” - https://www.apartmentlist.com/research/national-rent-dataRealPage: “Which U.S. Apartment Markets are Low-Risk and Which are High-Reward?” - https://www.realpage.com/analytics/mitigating-risk-among-local-apartment-markets/Berkadia: "Multifamily Return Volatility and Why it Matters" - https://www2.berkadia.com/betawhitepaper
Cushman & Wakefield: “Multifamily Development Risks” - https://www.cushmanwakefield.com/en/united-states/insights/us-articles/contextualizing-development-riskFor the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The Federal Reserve's just-announced rate hike of 25 BPS puts more strain on an economy under increasing pressure, and commercial real estate markets are among the many areas of the economy that are vulnerable to these rising rates. At the same time, the the growing chasm between expensive mortgage payments and more-affordable rental prices will continue to bolster multifamily demand and drive would-be homebuyers into the rental market.
Sources discussed in this episode:Federal Reserve Bank of the United States: “Federal Reserve issues FOMC statement” - https://www.federalreserve.gov/newsevents/pressreleases/monetary20230322a.htmFederal Reserve Bank of the United States: "Summary of Economic Projections" - https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230322.pdfRealPage: “The Best and Worst Performing Submarkets Since the Pandemic” - https://www.realpage.com/analytics/the-best-and-worst-performing-submarkets-since-the-pandemic/
Realtor.com: “Looking for a Deal? Too Bad. Rents Are Rising the Fastest in the Cheapest Real Estate Markets” - https://www.realtor.com/news/trends/rents-are-rising-the-fastest-in-the-cheapest-real-estate-markets/Institutional Property Advisors: “Multifamily Population Trends” - https://www.institutionalpropertyadvisors.com/research/special-report/2023/03/special-report-march-multifamily-population-trends
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletterDISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
The collapse of Silicon Valley Bank is linked to the same assumptions of persistent low interest rates that have contributed to the higher potential for distress in the multifamily market. Recent reports, however, show positive momentum for apartment demand, especially in Midwestern markets with less growth in apartment supply.
Sources discussed in this episode:
CNN: “The Latest on the Silicon Valley Bank Collapse” - https://www.cnn.com/business/live-news/silicon-valley-bank-collapse-updates-03-14-23/index.htmlBureau of Labor Statistics: “Consumer Price Index, February 2023” - https://www.bls.gov/news.release/cpi.nr0.htm
BLS - PPI - The Producer Price Index for Final Demand decreased 0.1 percent in February,https://www.bls.gov/news.release/pdf/ppi.pdfCoStar: “Apartments.com’s February reports reveals positive monthly rent growth for second month in” a row - https://www.costargroup.com/costar-news/details/apartments.com-publishes-february-2023-rent-growth-report
Globe St. “Midwest Apartment Rent Growth Outpaces Other Regions”https://www.globest.com/2023/03/16/midwest-apartment-rent-growth-outpaces-other-regions/Yardi Matrix: “National Multifamily Report, February 2023” - https://www.yardimatrix.com/publications/download/file/3507-MatrixMultifamilyNationalReport-February2023Apartment List: “Sun Belt metros lead apartment construction boom in 2023” - https://www.apartmentlist.com/research/sun-belt-metros-lead-apartment-construction-boom-2023RealPage: “Class A Apartments Commanding 28% Premium Over Class B Prices” - https://www.realpage.com/analytics/class-a-rents-commanding-28-percent-premium-over-class-b-prices/For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Gray Report guest Paul Bergeron works at the nexus of information on the multifamily market, gathering data and opinions on the most important events in multifamily and commercial real estate. Gray Capital President and CEO Spencer Gray speaks with Paul about his experience reporting on CRE as well as the major issues currently shaping the multifamily industry.
Paul Bergeron LinkedIn Profile: https://www.linkedin.com/in/paul-bergeron-6762b26/
Sources discussed in this episode:
GlobeSt: "Banks Collapse Affecting Mortgage Rates, VC, PropTech" - https://www.globest.com/2023/03/14/%E2%80%8Bbanks-collapse-affecting-mortgage-rates-vc-proptech/
GlobeSt: "BH Management Sees Momentous Value in Customer-Centric, Centralized Operations" - https://www.globest.com/2023/03/03/bh-management-sees-momentous-value-in-customer-centric-centralized-operations/
GlobeSt: "Opportunity to Buy Assets at Lower Prices Might Not Last for Long" - https://www.globest.com/2023/03/14/opportunity-to-buy-assets-at-lower-prices-might-not-last-for-long/
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Comments from Fed chair Jerome Powell indicate that we are headed towards even higher interest rates, which will almost certainly present a larger obstacle for potential sellers of apartment properties looking to wait out current conditions and avoid selling in a softening market. Recent reports on housing demand, on the other hand, support continued strong fundamentals for multifamily assets.
Sources discussed in this episode:
- Associated Press: “Powell says ‘no decision’ on the Fed’s next move on rates” - https://apnews.com/article/federal-reserve-powell-inflation-rates-economy-debt-89c49a1032527f2d2f1d6d674bafe187
- The Gray Report: "Invaluable Apartment Market Analysis from Apartment List's Igor Popov" - https://youtu.be/geEPtm94LZA
- CBRE: “Looming Multifamily Oversupply Likely Will Be Short-Lived” - https://www.cbre.com/insights/briefs/looming-multifamily-oversupply-likely-will-be-short-lived
- Campden Wealth/Titan Bay: “The Ultra-High Net Worth Private Equity Investing Report 2023” - http://campdenwealthresearch.msgfocus.com/files/amf_campden_wealth/workspace_4/FINAL_Campden_Titanbay_UHNW_PE_report_0322c_spreads.pdf
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Gray Capital President and CEO Spencer Gray speaks with Igor Popov, Chief Economist at Apartment, to explain the crucial trends driving housing, apartments, and the economy in 2023.
Apartment List Research: https://www.apartmentlist.com/research
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Declining asset prices for commercial real estate, noted in several new reports as well as the recently-published minutes from last month's meeting of the Federal Reserve Open Market Committee, have been a long-expected eventuality ever since interest rates began rising last year. While apartment asset prices are beginning to soften, strong fundamentals and positive rent growth trends could lead buyers and investors to see the light of opportunity shining through the cracks forming in multifamily property values.
Link to sources discussed in this episode:
Apartment List: “National Rent Report, February 2023” - https://www.apartmentlist.com/research/national-rent-data
Federal Reserve Bank of the United States: “Minutes of the Federal Open Market Committee January 31–February 1, 2023” - https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230201.pdf
Moody’s Analytics: “The Fed’s 2% Rule: Is It Realistic? How Would a New Economic Regime Impact CRE?” - https://cre.moodysanalytics.com/insights/cre-news/the-2-percent-commitment/
MSCI: “Prices of US Commercial Property Tumbled in January” - https://www.msci.com/www/quick-take/prices-of-us-commercial/03673737959
Federal Reserve Bank of the United States: "2023 Stress Test Scenarios, February 2023" - https://www.federalreserve.gov/newsevents/pressreleases/files/bcreg20230209a1.pdf
RealPage: “Multifamily Permits and Starts Both Decline” - https://www.realpage.com/analytics/multifamily-permits-and-starts-both-decline/
United States Census Bureau: "Monthly New Residential Construction, January 2023" - https://www.census.gov/construction/nrc/pdf/newresconst.pdf
Berkadia: “Construction Timelines Research Report” - https://base.berkadia.com/wp-content/uploads/2023/02/Berkadia-Apartment-Construction-Timelines-Update-2023.pdf
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
As the multifamily market slowly emerges from a sluggish winter, investors are diligently searching for buying opportunities. Analysts continue to look for the most likely markets to find distressed assets, and some investors are looking into digital metaverse real estate which, while infinitely more available than real-world multifamily properties, is severely lacking in the ability to provide shelter to human beings.
Sources discussed in this episode:
The New York Times: “The Next Hot Housing Market Is Out of This World. It’s in the Metaverse.” - https://www.nytimes.com/2023/02/19/realestate/metaverse-vr-housing-market.html
Regions Bank: “January Residential Construction: Single Family Stabilizing, Multi-Family Not So Much...” - https://assets.realclear.com/files/2023/02/2134_residential.pdf
RealPage: “Apartment Performance by Product Class Narrows” - https://www.realpage.com/analytics/product-class-apartment-performance-narrows/
Trepp: “Multifamily Markets to Watch (for Distress)” - https://www.trepp.com/hubfs/Trepp%20Multifamily%20Markets%20to%20Watch%20Report%20January%202023.pdf
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The recent CPI report showed a nominal decrease in inflation compared to last year, but its 0.5% monthly increase is a sign that the inflation cooldown is going to be a bumpy ride. While those following the apartment market are familiar with the roughly 1-year lag between market rent growth and CPI-measured rent growth, it is worth noting that the still-high rent growth numbers in the CPI are expected to come down considerably in the next few months. It remains to be seen whether the Federal Reserve will respond to these CPI numbers and the recent strong job growth figures with more aggressive rate hikes, but equally important is the question of how long these rates will stay high. The last time that the federal funds rate was this high (2006-2007), a full year elapsed before they were reduced, and multifamily investors—both buyers and sellers—may need to adjust their perspective to account for an era (hopefully no longer than 1 year) of higher rates.
Sources discussed in this episode:
Bureau of Labor Statistics: “Consumer Price Index, Jan. 2023”
Yardi Matrix: “National Multifamily Report, January 2023”
Redfin: “January 2023 Rental Report”
Moody’s Analytics: “Inclusionary Housing Policies Ramp Up Amidst Affordability Crisis”
TheRealDeal: "Everyone's a Genius in a Good Market"
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Investors and buyers wait eagerly for signs of distressed deals, price discovery, and activity in the sluggish market, but the multifamily market and the economy as a whole have been showing signs of resilience that are at odds with earlier, more pessimistic projections. Declining rent growth looks to have tapered off, and while recent strong job growth has caused some inflation worries, the favorable employment and subdued wage growth numbers are certainly more favorable than recession-level job losses and increasing inflation.
Sources discussed in this episode:
WTHR: “Bill holding landlords accountable passes Indiana House”
Indiana General Assembly: "House Bill No. 1075"
Vox: "Stop treating unemployment as a necessary evil to curb inflation"
Yahoo Finance: “Fed Chair Powell says 'disinflationary process has begun' in the US economy”
GlobeSt: “Here is Where You Will Find Distress in Multifamily”
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
DISCLAIMERS: This video does not constitute professional financial advice and is for educational/entertainment purposes only. This video is not an offer to invest.
Yardi Matrix Director of U.S. Research, Paul Fiorilla, joins Gray Capital President and CEO Spencer Gray in a conversation about the factors driving the multifamily market and what to expect as the year progresses.
Sources discussed in this episode:
Yardi Matrix: "December 2023 National Multifamily Report" - https://www.yardimatrix.com/publications/download/file/3335-MatrixMultifamilyNationalReport-December2022
Yardi Matrix: "Winter 2023 U.S. Multifamily Outlook" - https://www.yardimatrix.com/publications/download/File//3345-MatrixMultifamilyNationalReport-Winter2023
Yardi Matrix: "Yardi Matrix U.S. Self-Storage Report, January 2023" - https://www.yardimatrix.com/publications/download/File/3344-MatrixNationalSelfStorageMonthly-January2023
For the latest multifamily news from across the internet, visit the Gray Report website: https://www.grayreport.com/
Sign up for our free multifamily newsletter here: https://www.graycapitalllc.com/newsletter/
DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
As multifamily industry leaders gather for the NMHC Conference in Las Vegas, the market remains in a tenuous state, with confidence in apartment fundamentals alongside uncertainty about the economy. Additionally, the Federal Reserve's recent 0.25% rate hike could point to a forthcoming taper and decrease in interest rates as the year progresses, but the Fed's actions will likely do little in the near term to resolve the financing and pricing challenges in the multifamily market.
Sources discussed in this episode:
Marcus & Millichap: “Housing Research Brief” - https://www.marcusmillichap.com/research/research-brief/2023/01/research-brief-january-housing
Marcus & Millichap: “2023 U.S. Multifamily Investment Forecast” - https://drive.google.com/file/d/1ANgdyinHxEo7LwSxhWLpuNXPHx9GN_AI/view?usp=share_link
The White House: “Fact Sheet: Biden-Harris Administration Announces New Actions to Protect Renters and Promote Rental Affordability” - https://www.whitehouse.gov/briefing-room/statements-releases/2023/01/25/fact-sheet-biden-harris-administration-announces-new-actions-to-protect-renters-and-promote-rental-affordability/
The White House: "Blueprint for a Renters Bill of Rights" - https://www.whitehouse.gov/wp-content/uploads/2023/01/White-House-Blueprint-for-a-Renters-Bill-of-Rights.pdf
Jacobin: "Joe Biden’s New Relief Plan for Renters Is Incredibly Weak" - https://jacobin.com/2023/01/joe-biden-renter-relief-plan-weakness-tenant-organizing-landlord-profits
Apartment List: “National Rent Report, January 2023” - https://www.apartmentlist.com/research/national-rent-data
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Director of Research & Analysis, Carl Whitaker, joins Gray Capital President and CEO Spencer Gray to discuss major trends, markets, and metrics to follow in 2023.
Sources discussed in this episode:
RealPage: "Three Types of Apartment Markets That Could Outperform in 2023" - https://www.realpage.com/analytics/three-types-of-markets-that-could-outperform-in-2023/
RealPage: "Three Types of Markets That Could Struggle in 2023" - https://www.realpage.com/analytics/three-types-of-markets-that-could-struggle-in-2023/
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Forecasts continue to provide a clearer view of the major factors expected to drive multifamily fundamentals in 2023, and the investment market is waiting for the kinds of sales activity that will clarify a pricing environment that is still adjusting to the escalating interest rate hikes from the Federal Reserve. Additionally, the as-yet-unknown timing and severity of a potential recession, even a mild one, could mean the difference between robust rent growth or flagging performance in 2023.
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Projections for multifamily performance in 2023 hew far closer to historical averages than in past years, and the potential for recession has played a major role in experts' predictions for the multifamily market. With incoming apartment supply expected to make a big impact on markets throughout the country, insights into the drivers of housing demand, like those found in a new report on household formation from the Harvard Joint Center for Housing Studies, are critical for navigating the multifamily investment market this year.
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The apartment market has shifted in a number of ways, not the least of which is moderating national rent growth, but the U.S. national average obscures a marked reshuffling among individual multifamily markets in the country. Less volatile markets that saw slower growth in 2021 and early 2022 have risen to the top of rent growth rankings, while the hyper-growth remote working destinations of yesteryear are seeing more anemic performance that could persist given the amount of new apartment supply scheduled to be completed in those markets.
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Among the many recent outlooks and projections for the multifamily market this year, some predictions will naturally be more accurate than others. The Gray Capital team discusses the state of the multifamily market and different visions for the markets and trends that will be the most prominent in 2023.
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Some impactful trends of 2022 may not be as prominent next year. For example, this year's dramatic interest rate increases are expected to plateau and 2022's high levels of inflation will likely to decrease in 2023. That being said, many of the major forces driving the multifamily market will continue. The critically low supply of housing may not have gotten as much attention in light of the declining rent and single family home prices this year, but housing demand will remain high until single family and apartment construction dramatically increases, which will not happen overnight or next year, for that matter.
Sources discussed in this episode:
Apartment List: “2022 Rental Market Recap Report – 9 Key Trends” - https://www.apartmentlist.com/research/2022-rental-market-recap-report-9-key-trends
St. Louis FRED: “Household Estimates” (Click “Edit Graph” and change Units to “Percent Change from Year Ago” to get a view of changing household formation) - https://fred.stlouisfed.org/series/TTLHHM156N#0
Federal Reserve Bank of the United States: “Summary of Economic Projections, December 14, 2022” (page 4 contains dot plot of interest rate projections) - https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20221214.pdf
Wisconsin Institute for Law and Liberty: “How Laws and Regulation Add to Housing Prices in Wisconsin” - https://will-law.org/wp-content/uploads/2022/12/Housing-FINAL-2.pdf
Berkadia: “Rent Control 2022 Elections Update” - https://base.berkadia.com/wp-content/uploads/2022/12/Berkadia-Rent-Control-2022-Elections-Update.pdf
The Atlantic: “The Obvious Answer to Homelessness” - https://www.theatlantic.com/magazine/archive/2023/01/homelessness-affordable-housing-crisis-democrats-causes/672224/
The Manhattan Institute: “How to Fight Housing Price Inflation Policy Menus for Stopping Government-Induced Housing Woes from Spreading Beyond the Coasts” - https://www.manhattan-institute.org/how-to-fight-housing-price-inflation
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A working paper from the Federal Reserve Bank of Cleveland outlines a new way of measuring rent growth with strong implications for how economic policy makers understand and track inflation, Fannie Mae's most recent commentary on the multifamily market reviews the housing implications associated with the growth of the 75+ population, Japan's bond market shifts signal greater concerns about inflation, and reports on the apartment market continue to highlight the strength of Midwestern markets with a lower cost of living.
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The Federal Reserve is raising rates another 50 basis points, the CPI report is showing inflation cooling, and multifamily investors and industry leaders are making predictions for the apartment market and commercial real estate in the year to come. Expectations of a serious economic downturn next year have lessened, and while financing will remain a challenge in 2023, strong apartment demand will continue to make multifamily assets a very attractive investment option.
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Investor capital flowing out of major real estate investment trusts like Blackstone's BREIT and Starwood's SREIT may cause some anxiety about the state of the multifamily market, but there is very little indication that these issues in the REIT space will have a meaningful impact on apartment asset prices. The issues affecting these REITs are the same ones driving the commercial real estate market as a whole: Interest rates have dampened investor demand and caused property values to moderate. Looking forward to 2023, multifamily fundamentals remain strong and Midwestern markets continue to attract positive attention from investors looking for stable, strong performance in the coming year.
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Reports on the apartment market continue to show declining rent performance at the national level, but there is considerable variation among different markets, with midwestern markets receiving more attention for their strong, positive performance compared to many of the previously high performing markets in the South and West. In the broader economy, middling jobs numbers could mean that the Federal Reserve is less inclined toward another sharp increase in the Federal Funds Rate, but we have not yet felt the full effects of this year's rate hikes, which will continue to shape the multifamily market throughout 2023.
Sources discussed in this episode:
ADP: “Employment Report” - https://adpemploymentreport.com/
GlobeSt: “Federal Reserve Watchers Wondering If It Will Finally Slow Rate Hikes” - https://www.globest.com/2022/11/29/federal-reserve-watchers-wondering-if-it-will-finally-slow-rate-hikes/
Colliers: “Capital Markets U.S. Snapshot, Q3 2022” - https://www.colliers.com/en/research/capital-markets-market-snapshot-q3-2022
Apartment List: “National Rent Report” - https://www.apartmentlist.com/research/national-rent-data
RealPage: “Loss to Lease Markets to Watch in 2023” - https://www.realpage.com/analytics/loss-to-lease-markets-to-watch-in-2023/
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DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
Interest rate pressures have settled the multifamily market considerably since the beginning of 2022, but the size and persistence of the housing shortage and unaffordability crisis all but ensures that home values will remain elevated in the future. While near-term economic uncertainty continues, the fundamentals of the multifamily market remain strong.
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As investors slow down activity amid an uncertain economy and a multifamily market that continues to moderate, real opportunities for investment remain in a number of specific markets throughout the country. The rent growth story of 2022 has diverged significantly from 2021, and many of the markets with incredible growth last year have slowed down significantly in 2022, especially in the past few months. Increasingly, however, the markets that saw elevated—but not extreme—growth in 2021 are rising to the top this year, with Midwestern markets like Louisville, KY; Indianapolis, IN; Kansas City, MO, and Cincinnati, OH among the top markets for year-over-year rent growth.
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As the results of the midterm elections point to a likely-divided Congress at the federal level, local ballot measures across the country bring changes to a number of markets, with some cities enacting rent control measures, dedicating money to building additional housing, or discouraging homeowners from leaving a property vacant for extended periods. While these policy changes are limited to specific markets, at the national level, the apartment market should not expect dramatic changes in the wake of the elections, as investors, buyers, and sellers continue to navigate the elevated interest rate environment and the potential for continued inflation in the immediate future.
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The Federal Reserve has raised interest rates by another 75 basis points even as the economy and the housing market in particular have not fully absorbed the rate accumulating rate hikes from earlier this year in 2022. Reports published this week show lower sentiment in the multifamily market alongside slightly stronger seasonal rent trends, but other recent reports serve as a reminder of the resilience of the apartment market amidst an increasingly uncertain economy.
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Recent Case-Schiller figures show single family home prices continuing to slide downwards, and discussions of a deflating housing bubble have steadily increased. At the same time, multifamily fundamentals are still strong, and while rising mortgage rates are a major factor in declining single family home prices, apartment demand should remain high given that mortgage rates are not a factor in renters' decisions.
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While the Consumer Price Index recorded a substantial .8% monthly increase in rent prices, these historically-lagging figures are at odds with apartment industry reports showing moderating rent growth over the past few months. Even so, the positive long-term prospects for multifamily are reinforced by new research suggesting that the 15-year trend of declining U.S. birth rates may be reversing for certain populations.
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Multifamily fundamentals remain strong amidst an uncertain economic environment, which is as true today as it is reflective of the historic performance of the apartment market. Even so, we have seen a slowdown in rent growth as we approach the end of the year, and while this pullback in rent growth is in line with typical seasonal trends, recent reports have found a number of steady-growth markets and sub-markets that have outperformed the rent growth leaders of 2021.
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Even as apartment demand continues to normalize and ever-increasing interest rates create more challenges for investors, reports published this week emphasize the performance and stability of private commercial real estate investments like multifamily apartments, which have historically been valued as less volatile and better-performing alternatives to the stock market during periods of economic uncertainty.
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Newly published reports and examinations of the housing environment and multifamily market underscore the impacts of the Fed's latest rate hike as we head into the final quarter of the year. Apartment rents are trending toward a seasonal slowdown in line with pre-pandemic trends, and while home values are falling, housing affordability remains a problem. Despite these headwinds, the multifamily market is on solid footing, supported by consistent high demand, and in the context of the volatility and uncertainty in the broader economy, the historic stability of apartment assets and the longer hold period for these investments continue to draw attention from investors looking for an attractive risk-return profile in the current economic environment.
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The Federal Reserve's 0.75% increase in the federal funds rate places even more pressure on the economy, and as home prices show consistent signs of a cooldown, multifamily investors are watching the market closely. While single-family home prices are correlated with multifamily rents, apartment rent growth has not seen the same declines, partly because average monthly payments for single-family homes have been consistently above the price of rentals, providing some cushion against the interest-rate-related volatility we are currently facing.
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Stock markets fell after the latest CPI report showed higher-then-expected inflation, but the nominal increase—0.1% month-over-month—is relatively low. More significantly, the CPI shows that rental housing has become one of the most powerful drivers of inflation. Notably, market rate apartment rents remain below the 30% unaffordability threshold, and elevated mortgage rates have kept rental housing as a more affordable option than buying a home, suggesting that there may be room for further growth.
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Apartment industry professionals expect continued pressure from interest rates and inflation through the rest of the year, with many expecting mild cap rate expansion in the near future. That being said, the multifamily market's strong fundamentals and history of stable performance amidst economic volatility leaves open the possibility of greater investor interest, especially in the wake of such strong rent growth in 2021 and 2022.
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Despite continued turbulence in the economy, persistent trends in the multifamily market and commercial real estate are sharpening many projections for 2022 and 2023. A recently-published cap rate survey further highlights the effect that the Federal Reserve's interest rate regime has had on CRE markets, and several recent multifamily reports show how the higher-performing apartment markets of 2021 have softened in 2022, with renter and investor demand increasing in smaller secondary/tertiary markets.
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Sales volumes for single family homes have decreased significantly due to increasing mortgage rates, but with the slowdown so strongly linked to interest rate hikes, there is no evidence that would suggest an implosion or collapse. Housing demand remains strong, but the sharp increases in average mortgage payments have priced a growing number of people out of buying a home. As reports published this week note, the apartment market can expect continued demand from would-be homebuyers, and while multifamily development continues at elevated levels, longer construction timelines and persistent materials and labor problems will make it difficult to substantially impact demand.
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Adam Neumann was ousted as CEO of the office-sharing company he founded, but Andreessen Horowitz's $350 million investment in Neumann's multifamily-focused venture, the largest first-round investment in Andreessen Horowitz's history, is a substantial second chance for Neumann. It is not surprising that more investors are entering the apartment investment market, as multiple reports published this week continue to illustrate its resilience and elevated rent growth, but Andreessen's insistence that the rental market is "soulless" and in need of ground-up transformation ignores the significant progress and already-existing technologies in the multifamily industry that continue to improve the lives of renters and their apartment communities.
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Last week's jobs numbers revealed a stronger-than-expected labor market, and the just-released CPI report shows that inflation has leveled off and could be heading down. The economic anxieties of 2022, however, will not be so easily dispelled. Wage growth from the strong jobs market has the potential to re-ignite the rising prices of previous months, and apartment rents are becoming an increasingly powerful driver of inflation. The recent reports on employment and inflation are clearly good news, and for multifamily market specifically, its historic resilience during inflationary periods, along with recent projections of consistent elevated rent growth for the next several years, are positive signs for apartment investors.
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In the face of mounting anxieties about the broader economy, several reports were published this week that analyze the long-term and short-term risks for the multifamily market, from consumer sentiment, to apartment performance during a recession, to the prospect of lower population growth. In this episode we discuss the likelihood of these risks, how the multifamily market might perform if these risks were realized, and what investors should do to account for these possibilities.
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Along with negative GDP numbers for Q2, the second consecutive 0.75% rate increase from the Federal Reserve comes as reports on decreased home sales show the impact of previous rate hikes. In the multifamily market, higher cost of leverage is expected to continue to further impact cap rates and asset prices as more apartment buyers are unable to make their investment plans work in a higher interest rate environment.
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As rising interest rates and inflation do little to resolve the housing affordability crisis, anxious stories about excessively high rents are not difficult to find. Recent reporting on renter income trends and household formation, however, suggests that there is room for apartment rents to grow, especially among lifestyle and middle-income renters at class A and B properties.
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A certain strain of anxiety has carried forward from the bigger-than-expected employment numbers in last week’s jobs report to the inflation numbers in this week’s consumer price index. This heated economy is expected to bring an additional 75+ basis-point interest rate increase from the Federal Reserve, and within this heightened economic atmosphere, apartment assets have taken an increasingly influential role as rent growth impacts inflation.
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Rate hikes from the Federal Reserve and greater economic uncertainty have had a clear affect on investor demand, with fewer investors and purchasers able to make multifamily projects work in an elevated interest rate environment, which could lead to higher cap rates. At the same time, the fundamentals of apartment assets are as strong as ever, to the point where rising apartment rents are expected to play an increasingly substantial inflationary role as the year progresses.
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The multifamily market continues its stable performance and elevated rent growth, but there are signs of changes in housing demand in the coming months, with the Case Shiller Home Price Index showing a slight decrease in single family home price growth. Apartment demand, however, should remain high, with multiple reports published this week supporting the resilience of the multifamily market.
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It has only been one week after the Federal Reserve's recent interest rate increase, but the effects of the Fed's earlier interest rate movement are clear in the reduced sales volumes for single family homes and lower housing sentiment in general. While the Federal Reserve's actions have had a noticeable effect on home buyer demand, overall housing demand has changed very little, and rising apartment rents have become an even more prominent topic of discussion.
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The Federal Reserve's 0.75% increase in the Federal Funds rate is the largest since 1994, causing some volatility in the stock market this week and leading to some anticipation of higher cap rates for CRE markets in the near term. Multifamily assets, however, have continued to perform very well, with several reports published this week noting how rising single-family mortgage rates have driven more people into the apartment market.
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Steady apartment rent growth and continued investor interest in multifamily properties have led to optimistic assessments of the market, even though this year's rent growth is not expected to return to 2021 levels. Discussions of the housing market as a whole are, even in this reduced-sales-volume, higher-interest-rate environment, consistently marked by the mention of our low housing supply. Lumber prices may be down quite a bit from their peak, but the high prices of other materials, in addition to labor shortages and logistical delays, remain a significant barrier to bringing new housing supply online quickly.
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As the Federal Reserve moves forward with Quantitative Tightening along with its recent interest rate increases, home sales have gone down slightly, but still-elevated home prices and persistent difficulties with housing construction continue to keep housing demand high. While homebuyers are balking at elevated mortgage payments, multifamily rent growth is expected to remain strong and stable as peak leasing season continues.
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Apartment properties and the commercial real estate market as a whole have historically been secure investment options during inflationary periods like the one we are currently facing, and while multifamily sales volumes may be reduced due to rising interest rates, properties in more competitive, low-cap-rate markets may be more sensitive to these changes than those in other markets. Reports published this week outline the long-term decline in cap rates in previous years, but the current rising cost of debt could run counter to this decline, at least in the near-term.
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As prices continue to rise throughout the economy, the Biden administration has announced plans to address the rising cost of housing specifically, and while these plans have not yet been implemented, they reflect a growing amount of public attention on housing affordability. While much of this attention is centered around the affordable housing space, the issues and policies associated with affordable housing affect the housing market as a whole, including market-rate multifamily properties.
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Apartment investors are seeing a re-pricing of assets off the extreme low cap rates driven by low interest rates and enticing bridge and debt fund financing that has fueled the historic price growth seen since the start of the pandemic.
At the same time, several reports published this week find that multifamily assets themselves continue relatively stable growth as rents continue to rise and occupancy is tight, a sharp contrast from the enormous volatility in the stock market.
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The recent .5% rate increase from the Federal Reserve may have been expected, but the effects of these rising rates are more open-ended. Jerome Powell acknowledged the difficulty in managing inflation without precipitating an economic downturn, but he also noted that our strong job market makes an economic crisis less likely. In the near term, rising mortgage rates are moving home buyers into the rental market, but these rate increases are leading some multifamily investors to look beyond popular Sunbelt markets where low cap rates have made investment projects less feasible.
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DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. The opportunities referenced in this podcast do not represent an offer to invest.
The multifamily market has continued its strong performance, even as recent ups and downs in the stock market, high inflation, rising interest rates, and growing recession worries impact the economy more broadly. Employment and demographic trends point to continued apartment rent growth and elevated demand, especially in markets with robust and growing local economies.
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DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. The opportunities referenced in this podcast do not represent an offer to invest.
Recession expectations continue unabated, but along with the benefit of having long-term horizons beyond 2022 or 2023, commercial real estate investors continue to see growing returns. While a purely long-term perspective may not be helpful as it relates to the rapid interest rate increases we’ve seen in the past few months, being able to filter out the day-to-day noise can allow investors to take note and react quickly when an inflection point approaches.
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DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. This podcast is not an offer to invest.
The strength of the apartment market and the continued increase in inflation is currently at odds with the potential for reduced demand that has arisen from the Fed's plans for rate hikes, but the high levels of economic activity recorded in recent reports are expected to cool given the Fed's hawkish stance. While strong employment and retail sales numbers could be lagging indicators that will soon show the impact of the Fed's previous rate hikes, it remains to be seen whether these signs of economic strength will serve to cushion the blow of interest rate increases or compel more aggressive interest rate increases from the Federal Reserve.
For the latest multifamily news from across the internet, check out the Gray Report website: https://www.grayreport.com/
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DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only. The opportunities referenced in this podcast do not represent an offer to invest.
The multifamily market is in great shape right now, but that makes it even more important for investors to attend to the possible direction of the economy as a whole and the best actions to take in a rising interest rate environment. Despite strong jobs numbers, there are growing concerns about inflation, higher interest rates, and the ongoing war in Ukraine that have many worried about a recession. Amidst this uncertainty, the strength of the apartment market continues to attract investors in pursuit of assets with proven stability during periods of economic volatility.
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DISCLAIMERS: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor. Opportunities described in this podcast do not represent an offer to invest and are open to accredited investors only.
For the latest multifamily news from across the internet, check out the Gray Report website: https://www.grayreport.com/
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only.
Last week's announcement of rising interest rates from the Federal Reserve bank has led to some anxious speculation in the economy, and in this episode of the Gray Report, the Gray Capital team explains the potential impacts for multifamily investors.
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DISCLAIMER: This video does not constitute professional financial advice and is for educational/entertainment purposes only.
Multifamily assets are becoming increasingly valuable as investors take note of the potential for truly disruptive inflation and pursue investments that perform well during inflationary periods. The multifamily market has largely been insulated from inflation as rents continue to grow at more than double their historical averages.
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
Several reports on the housing market bring renewed attention to the ongoing housing affordability crisis, specifically the rising costs of homeownership. While the rise of hybrid working arrangements have motivated some movement into suburban areas farther away from employers in central business districts, a growing number of Gen Z renters have been moving to the city, forming a substantial portion of renter demand downtown.
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
Apartment developers have continued to increase housing supply to address high demand, with multifamily construction increasing more than single family by the end of last year. The pace of rent increases has subsided but remains above the historical average, and housing demand is such that, even as builders work hard to bring new supply onto the market, elevated rent growth is expected through the end of 2022 if not longer.
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
Brigham Michaud is an attorney at Jones Pyatt Law working in the area of tax appeals, and he shares his expertise in commercial real estate tax law in this episode, explaining some of the broader elements of the property tax process along with some specific, valuable insights about assessment and other important considerations for investors and multifamily owners.
DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
The Gray Capital team discusses rising rents, the housing affordability crisis, the supply/demand imbalance, and the potential for 2022 rents to continue the kinds of growth seen in 2021.
For the latest multifamily news from across the internet, check out the Gray Report website: www.TheGrayReport.com
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
Noah Stone from Berkadia's thought leadership team speaks with Spencer Gray about the impact of interest rates and inflation on the multifamily market, the differing performance of primary and secondary markets, and the fundamental stability of apartment assets.
Berkadia Research and Thought Leadership: https://base.berkadia.com/research-and-resources/
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
Multifamily investment volume is rising dramatically, and recent reports on housing affordability and increased investor activity in apartment markets have led to some concern about housing costs and the potential for a crisis. The Gray Capital team provides some important context to these issues and explains the larger trends that may be a factor in the multifamily market today.
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
Brian Briscoe is the Co-Founder and Marketing Director of Four Oaks Capital, a multifamily real estate investment firm. He is a multifamily expert with an exceptional professional, academic, and military background matched by his abundant intelligence and sound judgment. The clarity of his thought process and his insightful perspective on the multifamily industry are valuable resources for investors at all levels.
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
For the latest multifamily news from across the internet, check out the Gray Report website: www.TheGrayReport.com
Sign up for our free multifamily newsletter here: www.graycapitalllc.com/newsletter
DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
In this episode of The Gray Report Podcast, Spencer Gray interviews Michael Blank, the host of the popular “Financial Freedom with Real Estate Podcast,” the founder and CEO of Nighthawk Equity, and the expert multifamily authority behind TheMichaelBlank.com, which provides useful content and resources for individuals interested in multifamily investing. His popularity is well-earned, as experts and beginning investors alike are drawn to his extensive knowledge and accessible advice on the multifamily industry.
For the latest multifamily news from across the internet, check out the Gray Report website: www.TheGrayReport.com
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
The Gray Capital team discusses tokenized real estate, emerging alternative investments, multifamily’s success compared to other real estate sectors, and trends in rent payment rates over the last three years.
For the latest multifamily news from across the internet, check out the Gray Report website: www.TheGrayReport.com
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DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.
The Gray Report was created to stay on top of the news, research, and trends shaping the multifamily industry, and The Gray Report Podcast will bring you the latest reports, ideas, and information along with insight and discussion from Gray Capital President and CEO Spencer Gray.
DISCLAIMER: This podcast does not constitute professional financial advice and is for educational/entertainment purposes only; please consult a licensed financial advisor.