Arbor’s Special Report Spring 2025, developed in partnership with Chandan Economics, covers the state of the U.S. rental housing market on the cusp of a new cycle. After a year of steady growth, favorable trends put wind in the sector’s sails, giving rise to budding optimism. With the economic landscape shifting, the rental housing market’s resilient performance in 2023 and 2024 provides a solid foundation for continued growth.
Continually challenged by low inventory, affordable housing sits at a crossroads following the 2024 election. Incoming leadership plans to introduce market-based principles to an agenda that may also include an expanded Housing Choice Voucher program.
A loan closing is only the beginning of the borrower-lender relationship. Partnering with a lifecycle lender that also services its loans gives borrowers continuity from origination through servicing. Throughout the life of the loan, borrowers can benefit from in-house commercial loan servicers’ tailored solutions and superior customer service, which are hallmarks of a strong long-term partnership.
Four in 10 renters in large multifamily apartment communities do not envision homeownership as a part of their American Dream, a survey by Entrata recently found. Instead, lifestyle renters opt for newly constructed, high-quality rental housing with many of the typical amenities of homeownership without its traditional downsides.
The structural strengths of the single-family rentals sector far outweigh cyclical headwinds as it remains well-positioned to build on its momentum in 2025 and beyond.
Multifamily households reached a new high for the third consecutive year in 2023, extending a growth spurt that began after the 2008 housing crisis. With strong tailwinds at its back, multifamily’s latest record may not stand for very long.
The U.S. multifamily market held steady in a more normalized cycle during 2024, following the pandemic-related economic contraction and its rapid recovery. Rental demand remained strong, driven by the ongoing nationwide housing shortage and robust wage growth, as younger generations continued to embrace lifestyle renting.
Unless an 11th-hour agreement is reached, an impasse will trigger the first U.S. government shutdown since 2019. Starting December 21, 2024, many non-essential federal government operations will be limited or suspended, but most multifamily financing activities will not be disrupted.
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.
While the overall pace of new multifamily permitting per capita in the U.S. slowed recently, it has picked up momentum in pockets of the country, especially the Midwest. In the first two quarters of 2024, Madison, WI, Columbus, OH, and Omaha, NE, were among the major metropolitan markets posting solid permitting gains, another sign of multifamily’s strength in all cycles.
Did you know that more U.S. renters now spend over 30% of their income on housing and utilities than at any other time on record? Limited affordable housing options not only increase the rent burdens of low-income tenants but disrupt physical and mental health, underscoring the need for the creation and preservation of more affordable housing units nationwide. Quality affordable housing adds stability to communities and supports healthier environments that can significantly improve well-being.
Single-family rental (SFR) CMBS issuance saw a sizeable pickup through the first half of 2024, with $4.2 billion in new issuance, placing it on pace to at least triple last year’s annual total.
Build-to-rent (BTR), a compelling solution to the U.S. housing market’s evolving needs, is experiencing record growth. BTR accounted for 8% of all single-family rental (SFR) construction starts in the 12 months that ended in the first quarter of 2024, according to Arbor’s Single-Family Rental Investment Trends Report Q2 2024. As the need for quality rental units remains high, borrowers have much to gain from partnering with an experienced lender who specializes in build-to-rent financing.
Whether you are just beginning your investing journey or are looking to take your portfolio to the next level, Arbor stands ready with our talented team and decades of expertise. Given our vast experience and national footprint of successful deals, we are familiar with many common commercial real estate investor questions, such as the ones answered in this article.
With the macroeconomy maintaining its underlying strength and a handful of rate cuts expected by the Fed within the next 18 months, green shoots of optimism within the multifamily sector are multiplying. Even as high interest rates impede normal operations, stabilization is underway while the sector’s long-term prospects remain unwavering. In this deep dive, our research teams will explore the tailwinds underpinning the multifamily sector’s short- and long-term outlook.
After the volume of newly issued multifamily permits hit a 37-year high in 2022, multifamily completions surged another 22.3% last year. As the sector continues to gain strength, its growth has remained concentrated in the southern and western regions of the country, according to an analysis of new data from the U.S. Census Bureau’s Survey of Construction.
During the post-global financial crisis (GFC) cycle, a disproportionate share of new multifamily construction was of high-rise units in properties with amenities. However, the tides have turned. The rising cost of homeownership has brought the need for more affordable housing development in the U.S. to the top of many legislative agendas. In this deep dive, our research teams utilize data from the U.S. Census Bureau’s Annual Survey of Construction to show how and why the characteristics of new multifamily properties continue to evolve alongside shifting market needs.
In this exclusive, new video, Dr. Sam Chandan, Founding Director of the Chen Institute for Global Real Estate Finance at the NYU Stern School of Business and non-executive chairman of Chandan Economics, contextualizes the key takeaways from Arbor’s Affordable Housing Trends Report Spring 2024, developed in partnership with Chandan Economics.