US multifamily rent growth remained strong in the second quarter of 2023, however investment sales in the sector experienced a sharp decline. Avison Young reported that sales volume retreated 70.6% from its all-time highs seen between 2021 and 2022 during the first half of this year.
Peter Sherman, head of US multifamily at Avison Young commented on this phenomenon: “The past 12 months can be best described as a market in turmoil; spiking interest rates, growing cap rates and softening rents all contributed to deal making slowing down significantly with everyone dealing with uncertainty and an unknowing position when it comes to price discovery.” He further added that “the rate hikes appear to have largely been left behind us now which has provided investors more clarity while allowing for a new equilibrium settling into the market.”
CBRE also reported that going-in and exit cap rates for prime multifamily assets were little changed during Q2 leading to record low spread between them; mirroring Federal Reserve’s decision pause interest rate increases back in June.
