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Pricing, Cap Rates, and Credit Conditions Show Improvement
Small multifamily’s normalization pushed forward last quarter as the Federal Reserve made a long-awaited reduction to the target federal funds rate. Arbor’s Small Multifamily Investment Trends Report Q4 2024, developed in partnership with Chandan Economics, shows signs of stability have multiplied. Robust rental demand, a limited supply of quality affordable housing, and several other promising developments should support the subsector’s strength heading into 2025.
Key Findings:
- Small multifamily valuations stabilized in the third quarter of 2024.
- Cap rates moved off post-pandemic high point and declined slightly from the previous quarter’s mark.
- Credit conditions loosened as the Federal Reserve initiated its first interest rate cut in four years.