On a percentage basis, 30% of those surveyed believe market demand will be the biggest driver for buyers this year, while 28% said the same for sellers. The proportions were similar for economic conditions, with 28% of respondents saying a strong economy will be the biggest driver for buyers and 27% saying this about sellers.

Capital One Multifamily Finance conducted the survey at a Capital One event during January's National Multifamily Housing Council annual conference in San Diego. “Despite the headwinds of supply and demand concerns in certain markets and the possibility of rising interest rates, we are cautiously optimistic, much like our clients,” says Jeff Lee, EVP of Capital One Multifamily Finance. “Each year the multifamily industry faces new challenges while uncovering fresh opportunities, and our NMHC survey results demonstrate that this year is no different.”

BETHESDA, MD—With the possibility of multiple increases in the federal funds rate looking increasingly likely for 2017, it makes sense that the multifamily sector is keeping a weather eye on the Federal Reserve. Fifty-two percent of multifamily professionals surveyed by Capital One consider rising interest rates to be their biggest challenge this year.

That's more than double the 25% who cited rising costs as their greatest concern, while just 5% listed potential regulation as the biggest challenge they'll face as '17 progresses. Capital One says concerns over rates may signal the end of the current cycle for the multifamily market. Half of survey respondents said they believe the market has entered the last few legs of the race, compared to 7% who see the cycle in early innings at present.

“While more industry professionals expect to be buyers than sellers in 2017, increasing interest rates are a concern,” says Grace Huebscher, president of Capital One Multifamily Finance. “In general, this year's results seem more disparate than in the past, which could be a sign that, though cautiously optimistic, the market itself is not sure where things are heading.”

To Huebscher's point, 41% of respondents said that anticipate being buyers, as against 23% who anticipate being sellers. However, Capital One notes that market demand and strong economic conditions are both expected to drive buyers as well as sellers this year.

On a percentage basis, 30% of those surveyed believe market demand will be the biggest driver for buyers this year, while 28% said the same for sellers. The proportions were similar for economic conditions, with 28% of respondents saying a strong economy will be the biggest driver for buyers and 27% saying this about sellers.

Capital One Multifamily Finance conducted the survey at a Capital One event during January's National Multifamily Housing Council annual conference in San Diego. “Despite the headwinds of supply and demand concerns in certain markets and the possibility of rising interest rates, we are cautiously optimistic, much like our clients,” says Jeff Lee, EVP of Capital One Multifamily Finance. “Each year the multifamily industry faces new challenges while uncovering fresh opportunities, and our NMHC survey results demonstrate that this year is no different.”