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.
With home prices nearing all-time highs, single-family rental (SFR) housing is uniquely positioned to capture an even larger slice of the for-sale market. As structured capital markets rebound, SFR will benefit from a set of tailwinds that include robust levels of new construction and favorable trends in cap rates and debt yields. Arbor’s Single-Family Rental Investment Trends Report, developed in partnership with Chandan Economics, shows why this sector’s prospects are so strong.
Building on an organizational commitment to the inclusion of individuals from all backgrounds, Arbor — in partnership with the Real Estate Pride Council and Dr. Sam Chandan, Founder of Chandan Economics, Founding Director, NYU Stern School of Business C.H. Chen Institute for Global Real Estate Finance, and Co-Chair of the Real Estate Pride Council — hosted a speed networking event in Manhattan on November 20 for local LGBTQIA+ students and commercial real estate mentors.
Small multifamily continued to moderate through the midpoint of 2024, amid strong demand despite an elevated interest rate environment and rising property-level yields.
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Units
Houston
Year Built
A real estate investment firm was exploring a full acquisition of a newly constructed apartment community in Houston, TX. Without an existing asset and with limited operating history in this region, the borrower sought expert guidance to develop a strategy to acquire the property. With interest rates rising, the borrower wanted to lock in a highly competitive rate to refinance a rental community that had swelled to over 90% capacity.
Arbor worked with the U.S. Department of Housing and Urban Development (HUD) to secure an FHA 223(f) loan refinance with green savings, which provides long-term, fixed-rate financing for refinancings, acquisitions, or moderate renovations. Arbor negotiated an underwriting change while interest rates were increasing, allowing the borrower to secure a Bridge to HUD loan to help improve net operating income and increase loan proceeds. In addition, Arbor connected the borrower with HUD’s green program, which reduces existing loan interest rates.
The borrower secured a Bridge to HUD loan that funded the acquisition of a beautiful and sprawling Houston apartment community with wide-ranging amenities. They achieved a better-than-anticipated rate for their HUD execution. The apartment community, constructed to meet high energy efficiency and sustainability standards, was then entered into HUD’s green program, reducing mortgage insurance premiums enabling the borrower to achieve optimal savings.