2024 Outlook: Five Multifamily Market Forces We're Watching

(Updated on 03.13.24)

Financing a multifamily property is rarely a simple task, and the pervasive volatility defining our current market can add stress and uncertainty to the process. It doesn't have to be that way. While there are many market forces at play, NewPoint professionals are no strangers to navigating shifting conditions. Our team is closely watching the following five areas that will shape the multifamily landscape in 2024.

Improving Interest Rates

In its first meeting of 2024, the FOMC decided to pause rate hikes for the fourth month in a row and hold its target range of 5.25% to 5.50%. While markets were originally anticipating that a rate cut could come in March, flat economic data and stickier-than expected-inflation now has analysts and economists are looking to the to the June meeting for the first potential cut. Consumer Price Index data printed higher than expected in January and February, which may reinforce the Fed's wait-and-see stance regarding rate reductions. The next FOMC meeting is March 19-20, so we won't have to wait long for a position update. That being said, we've seen an uptick in inquiries and activity as investors are optimistic for 2024 and confident that rates are no longer rising.   

Evolving Policy Landscape

Election years typically bring economic and political uncertainty. Some market participants may take to the sidelines, especially toward the second half of the year. Regardless of election results, we expect rent control, tax policy, and LIHTC expansion to remain popular topics of policy discussions.

Moderating Property Fundamentals

The largest wave of apartment deliveries in decades is expected to peak in 2024, moderating rent growth. Concessions are at a two-year high nationally, though regional trends are in play. Sunbelt and Mountain West markets that saw high levels of new supply are now seeing rents decline. Cities in the Midwest and Northeast are still seeing positive growth, given limited new supply. Operators across the board are trying to optimize NOI against rising labor, tax, and insurance costs.

Focusing on Workforce Housing

Multifamily borrowers are incorporating affordability into their properties to qualify for interest rate pricing incentives. With the Federal Housing Finance Agency's 2024 volume cap structure offering additional support for workforce housing, we expect this trend to accelerate.

Shifting Finance Structures

Borrowers continue to look to secure five- and seven-year Agency structures. Those with a primary objective of avoiding rate cap costs will look for a fixed-rate loan. Alternatively, a prepayable floating rate loan or a three- to five-year fixed-rate loan with prepayment flexibility will offer the ability to refinance at (hopefully) lower rates in a few years. 

With unrivaled intellectual capital and a suite of Fannie Mae, Freddie Mac, and HUD/FHA loan programs, along with innovative Proprietary solutions and extensive third-party capital relationships, NewPoint has the full range of financing you need to meet market shifts and new opportunities. Let us help you navigate the market – no matter what the year ahead holds.