During a recent Walker Webcast, Jay Parsons of Madera Residential discussed the current state of the multifamily sales market with CEO Willy Walker. According to Parsons, there have been fewer transactions this year than expected due to an imbalance between buyers and sellers. The anticipated distressed sales that were predicted did not materialize, resulting in downward pressure on cap rates.
However, Parsons believes that this trend will eventually shift as there is a strong demand for both multifamily and single-family rental properties. He notes that international players are willing to accept lower returns in the short term because they believe in the long-term potential of these assets.
Parsons also points out that value-add buyers have been largely absent from the market so far this year. This has led to a lack of deals in Class C properties which will eventually come onto the market next year.
As someone who previously served as chief economist for RealPage before joining Madera Residential, Parsons was asked about his “heads on beds” strategy for tenant retention during 2023 and how it has played out since then. He explains that while he was bullish on front-door demand going into this year (which proved true), he was surprised by how well back-door retention rates held up despite record-high levels of apartment supply due to post-pandemic construction boom.
Parsons attributes part of this success to renters choosing convenience over financial savings when considering moving options across new developments opening nearby their current residence; however those who do decide move are often able find similar or better amenities at competitive rents elsewhere – leading overall renter base preservation even amidst high competition among newer product offerings..
The conversation also touched upon development costs and potential changes under Trump’s second administration regarding GSEs conservatorship status along with identifying markets offering greatest long-term investment opportunities – all while keeping affordability top-of-mind: While acknowledging affordable housing shortage nationwide , Parson emphasizes bifurcation within institutional grade rental housing sector where affordability is becoming more of a tailwind than headwind – with markets lacking supply still seeing rent growth.
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