July Pulse Check
Friend,
“Will Real Estate Ever Be Normal Again?”
That was the headline for an article in the New York Times, not last week, but in November 2021. The article documented early COVID distortions in the single-family market, with skyrocketing prices and intense competition among buyers.
In the multifamily industry, we are still asking that question.
Housing market predictions are a topic of much debate among experts. Housing construction – single-family and multifamily – is strong. Multifamily starts are up, and construction costs are moderating, while at the same time, higher rates and higher labor, insurance, and other costs make deals much harder to pencil. There is a sense, but not a consensus, that rates and costs will come down in 2024, as will multifamily production as projects are completed and fewer projects get underway.
Where are we going?
It has been a long time since we saw a business cycle that went anywhere but up. We don’t really know when it will be “normal” again, but we can be sure that it will. Business cycles still happen, and the laws of economics haven’t been repealed. Rates will fall, costs will moderate, and demand for housing in the U.S. will not abate. “Normal” will no doubt be the “new normal,” but it will come around again.
Multifamily remains a great investment class.
Multifamily housing has distinguished itself from other asset classes through all economic cycles and has been viewed as a safe haven during recessionary cycles. As we look ahead to 2024 and beyond, there’s no reason to think this will dramatically change. Those who can create and execute good deals will continue to come out ahead.
When you need a trustworthy partner on your side, count on AGM.