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Mada Partners > Blog > Will Multifamily Asset Prices Go Down?
Multifamily

Fewer investors and buyers are able to make multifamily projects function in an elevated interest rate environment, which could result in higher cap rates. This has an obvious impact on investor demand. Rate hikes from the Federal Reserve and increased economic uncertainty have also had this effect. The fundamentals of apartment assets are as solid as ever, and as the year goes on, rising apartment rentals are anticipated to have an increasingly significant inflationary impact.

Why is it a good idea to invest in multifamily apartments right now?

  • The lack of construction over the past ten years has resulted in a record-breaking gap between housing supply and demand.
  • Over the next three years, effective rents are expected to increase
  • Multifamily properties offer the strongest risk-adjusted inflation protection.
  • Many people can’t afford single-family houses, which raises the need for rental housing.
  • Baby boomers who are downsizing are renting for flexibility
  • Incredible tax benefits including 
  • Apartments have proven to be “recession resilient”
  • Protected against stock market and geopolitical risks
  • A steady source of income

Inflation Is Here to Stay and That Makes a Recession Inevitable (Bloomberg)

Via Bloomberg: With rents increasing as a result of increased demand from people turning away from home buying, “[t]he results will be a faster pace of rate hikes, a higher interest rate when the Fed stops, and an end to hopes the US can avoid recession.”

How Do Rents Move in a High-Inflation Market? Look to the 1970s. (RealPage)

THE MADA EDUCATIONAL YOUTUBE SERIES

The Mada Partners Youtube series is your source for the latest news, insights into the US real estate multifamily market,  and the economy. Listen now for expert interviews with multifamily industry leaders along with commentary and perspectives from our team and speakers.

Here is the latest episode with Bronson Hill about using real estate as a hedge against inflation. 👉 https://youtu.be/GVyYyHeR48g 

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