The latest National Multifamily Housing Council (NMHC) Quarterly Survey of Apartment Market Conditions for January 2024 has revealed a positive outlook for multifamily debt financing, marking the first time in over two years. However, the overall state of the apartment market continues to weaken as indicated by lower indexes in Market Tightness (23), Sales Volume (34), and Equity Financing (44).
According to Chris Bruen, NMHC’s senior director of research, this shift can be attributed to a drop in the 10-Year Treasury yield and signals from Fed officials about potential rate cuts in 2024. This has led to an increase in availability for debt financing after nine consecutive quarters of decline.
Despite this improvement, rent growth is still decreasing and vacancy rates are rising due to high levels of new supply being absorbed -the highest seen in over three decades. In fact, only half of respondents reported better debt financing conditions compared to none just three months ago. A significant portion also believed that now was not an ideal time for borrowing.
Overall, while there may be some positive developments on one front with regards to multifamily debt financing outlooks improving,the general state remains challenging with other sales metrics weakening accordingto NMHC’s latest report.
