NMHC Annual Meeting Recap: Optimism Abounds for 2024
Woodland Hills, CA— January 31, 2024— Investors Management Group attended the 2024 National Multifamily Housing Council (NMHC) Annual Meeting in San Diego. Designed exclusively for NMHC Members, the meeting is the largest gathering of the year where multifamily leaders come together for educational presentations and networking. In recent years, the four-day event has drawn record-breaking crowds of more than 8,000 industry professionals.
The atmosphere was brimming with optimism as multifamily industry professionals gathered to discuss the outlook for the apartments sector in the coming year. Despite lingering uncertainties, the overall sentiment was one of cautious hope, with many participants expressing a belief that the worst may be behind us.
Interest Rates & Financing
Discussions at the conference frequently circled back to the topic of interest rates, a key factor influencing the rental housing market. While predictions varied, with some speculating a downturn in the 10-year treasury to 3.75%, others anticipated a more stable rate around 4% throughout the year. Despite the uncertainty, there was a general consensus that interest rates could offer some relief, potentially spurring increased volume in the latter half of the year.
Creative financing solutions emerged as a focal point, particularly for operators facing challenges such as flattening NOI and decreasing property values. With rate caps and loan maturities adding to the complexity, discussions centered on innovative financial products aimed at providing short-term assistance to multifamily operators.
Insurance & Tax Considerations
Insurance providers expressed optimism about potential price reductions driven by increased competition in the market. However, caution prevailed as experts warned of potential choppiness in the market over the next few years.
Tax discussions revolved around policy changes in 168(k) allowance bonus depreciation and the significant implications for businesses and investors. Originally, the policy allowed for 100% depreciation in the first year, providing a substantial tax benefit to qualifying assets. However, recent revisions have altered this allowance. The revised policy now permits 80% depreciation in the first year, with annual reductions of 20% until it reaches 0%. These changes, which are subject to congressional approval, mark a shift in the tax landscape for businesses, potentially impacting investment decisions and financial planning strategies.
As discussions continue and developments unfold, stakeholders are closely monitoring the implications of these policy adjustments on their operations and bottom line.
Market Dynamics & Inventory
Despite the prevailing optimism, concerns lingered over the limited inventory available in the multifamily sector. Brokers reported an uptick in Broker Opinion of Value (BOV) assessments, signaling owners’ efforts to understand their property values in anticipation of potential sales. With billions in loan maturities looming in the latter half of the year and into the next, industry experts suggested that deals could soon hit the market.
In summary, while challenges remain and uncertainties persist, the mood at the 2024 NMHC Annual Meeting was one of guarded optimism. As discussions continue and developments unfold, industry stakeholders remain hopeful for a brighter future in the multifamily market.