4 multifamily trends to watch in 2024
Senior Reporter Les Shaver led a discussion in Multifamily Dive this week on the challenges facing the rental housing industry in 2024. Karlin Conklin, IMG Principal, Co-President & COO, joined leading industry experts in sharing insight on top multifamily trends.
Despite the potential halt in interest rate hikes by the Federal Reserve, elevated interest rates will persist, making it difficult for property owners to refinance debt. The industry faces difficulties at the site level, with an influx of new apartment properties causing concessions to rise and limiting effective rent growth. Insurance and other expenses have also increased significantly since the COVID-19 pandemic.
The top trends affecting apartment operators in 2024 include:
Peak in Deliveries
Experts noted a significant increase in apartment deliveries in 2023 and expect even more supply in 2024. Developers are trying to stabilize new properties quickly to avoid increased costs. Concessions, such as rental giveaways, are rising, and the trend is expected to continue as more deliveries occur.
Class B properties have been impacted by concessions on new developments, leading to a 3.7% decrease in effective rents. Experts forecast minimal rent growth in 2024.
Rising expenses, particularly insurance costs, have been a challenge for the industry. With minimal rent growth and increasing costs, apartment operators are expected to prioritize efficiencies in 2024. The use of technology, such as artificial intelligence, is anticipated to increase and potentially cut operational costs.
Transaction Volume Increase
After a steep decline in transaction volume, there is optimism that sales could increase in 2024 as the Federal Reserve signals potential rate cuts. However, realistic pricing and a meeting in the middle between buyers and sellers are seen as necessary for the market to pick up.
“When the Fed signals the worst is behind us and rates start falling, investor options for refinancing or selling into a stronger market become more compelling,” said Karlin.
For the full article, visit MultifamilyDive.com.