Even with the market in flux, opportunities continue emerging for well-positioned investors. Historically, some of the best multifamily deals were closed in down cycles or during the upswing to normalcy. Arbor’s Special Report Fall 2024 details why the current economic climate is ripe for investment.
Following strong post-pandemic gains, the U.S. labor market has cooled over the past few months, placing multifamily investors in a position to realize the benefits of less restrictive monetary policy.
Small multifamily continued to moderate through the midpoint of 2024, amid strong demand despite an elevated interest rate environment and rising property-level yields.
The single-family rental (SFR) sector’s performance surged again last quarter, demonstrating its ability to thrive in all economic cycles. SFR construction continued its record-breaking ascent as CMBS activity blossomed. Arbor’s Single-Family Rental Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, examines the sector’s fundamentals as would-be homeowners weigh the rent-vs-buy calculation.
Did you know that at the same time many renters navigate a housing market with limited affordable options, new apartment development continues to be held back by World War II-era zoning restrictions? In many localities, regulations introduced in the mid-1940s have choked the multifamily pipeline for decades, creating a “missing middle” that leaves low-income renters in a lurch.
Increasingly, single-family rental (SFR) operators have been relying on build-to-rent (BTR) development to bridge the housing gap, accelerating the momentum of SFR construction through 2024’s halfway point. Both total SFR/BTR housing starts and BTR’s share of all single-family housing starts reached new record highs in the second quarter, setting the stage for another banner year.
The small multifamily outlook continues to brighten as more signs indicate a normalization has already begun. In the second quarter, originations activity and borrowing conditions improved as completions sat at a five-decade high, Arbor’s Small Multifamily Investment Trends Report Q3 2024, developed in partnership with Chandan Economics, shows. While the subsector’s fundamentals are trending up, it still has room for growth when interest rate relief arrives.
Arbor’s Top Markets for Large Multifamily Investment Report 2023 is a roadmap for investors searching for the most desirable locations to invest $20 million or more. Developed in partnership with Chandan Economics, the study is a market-level comparison of the top 50 U.S. cities poised for apartment sector growth over the next year. This annual report pinpoints areas of opportunity at a time when economic headwinds have altered individual market dynamics.
The U.S. Department of Labor (DOL) recently published a Final Rule updating the Davis-Bacon and Related Acts’ formula for calculating local prevailing wages to keep worker pay in line with wage growth trends on most federal and federally assisted construction projects. The first update since the Reagan administration, it has met opposition from industry associations who contend its new wage determinations would raise costs and slow new construction at a time when strong wage gains have already pushed costs higher.
Although headwinds persist, solid national economic growth and the strength of multifamily fundamentals indicate it’s time to recalibrate for a soft landing, write Ivan Kaufman, Arbor’s Chairman and CEO, and Sam Chandan, Founding Director of the C.H. Chen Institute for Global Real Estate Finance at the NYU Stern School of Business. Historically stable in times of adversity, the rental housing market is well-equipped to thrive in today’s evolving economic environment.
From California to Maui, the frequency and scope of wildfire events are rising, causing insurance markets and public agencies to reevaluate property in areas at risk for catastrophic damage. As a result, rental housing providers are seeing greater limitations to coverage, higher premium prices, and, in some cases, a total absence of viable private insurance — a trend detailed in the NMHC 2023 State of Multifamily Risk Survey and Report. This troubling new trend has placed many rental housing operators in a bind where they must simultaneously contend with the declining availability and affordability of insurance options.
In the last three years, multifamily construction has reached levels not seen since the 1980s, supported, in part, by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) loans. If you are exploring the acquisition, refinancing, rehabilitation, or new construction of conventional multifamily, affordable housing, seniors housing, or a healthcare facility, consider FHA multifamily construction loans, a stable financing option with excellent terms and many other attractive advantages.
While the single-family rental (SFR) sector’s rent growth averages have retreated from record highs, structural tailwinds are keeping price growth positive — both nationally and in major SFR markets. In this research brief, Chandan Economics and Arbor Realty Trust analyze DBRS Morningstar data, which covers the top 20 MSAs by SFR activity, to discover the metropolitan areas where SFR rent growth is the hottest right now.
Fannie Mae recently announced that its Small Loan cap has increased from $6 million to $9 million for all loans committed as of August 22, 2023. Multifamily borrowers and lenders have praised the change to the Fannie Mae Small Loans program, which will encourage greater investment in a rapidly growing sector where demand remains high despite market volatility.
As Baby Boomers reach retirement age, their evolving geographic preferences are strengthening housing markets and local economies in new locations, which feature attractive climates, relative affordability, and ample outdoor activities. With swelling populations of senior citizens, our top five emerging metropolitan areas for retiree relocation are fertile ground for multifamily real estate investment.
More than halfway through 2023, the single-family rental (SFR) sector continues to demonstrate why it deserves the attention of multifamily investors. Arbor’s Single-Family Rental Investment Trends Report, developed in partnership with Chandan Economics, provides an inside look at this high-performing sector where SFR/build-to-rent (BTR) construction starts are breaking records amidst the ongoing challenges of elevated interest rates, tighter underwriting standards, and historically high cap rates.
Arbor has originated billions of dollars in multifamily loans over the last three decades through our long-term partnerships with Fannie Mae, Freddie Mac, and the U.S. Department of Housing and Urban Development (HUD), consistently outperforming quarterly projections. Known industrywide as a top multifamily lender, Arbor has the unique ability to maximize investment portfolios with the type of personal touch not seen anywhere else.