Apartment sales will likely take off in the first half of the year as a result of the presidential election in November. In the prior presidential election in 2016, sales slowed following the election results, and experts expect that sellers will front-load this year in anticipation. Aside from scheduling differences, apartment investment activity in 2020 will look a lot like it did in 2019.

"All of the indicators look normal. I think that in 2020, we will see more of the same, but with the election impending, I think that sellers will front load their deals. That is because of the potential ambiguity," Bob Hart, founder, CEO and president of TruAmerica Multifamily, tells GlobeSt.com. "When Trump was elected, there was some ambiguity in the market until things settled in with the new administration. It should be interesting, but overall, I think that it will be a robust year."

In terms of a recession, Hart says there is a 25% chance that a downturn will strike this year. "There is more fuel left in the economy," says Hart. "This may be the new normal where we see smaller recessionary dips rather than big swings. We are still game on, and we are not changing our approach."

While Hart is bullish, there are some challenges in the year ahead. First, increased regulations around the apartment market could impact investment activity. "The only headwinds that we have seen are on the regulatory side, with some governments starting to show their colors on rent control," says Hart.

In addition to increased regulatory challenges, pricing, particularly in the class-B space, has increased significantly. "Class-B pricing has gotten really high, and in some areas it is even reaching replacement costs, so there is a cautionary tone when you are considering assets," says Hart. "For stabilized assets, cap rates definitely have to normalize. In the value-add space, people still believe that if the rents are low and the management or renovation team can pull up the value, they can stretch on the cap rate side."

However, that doesn't mean that sellers can't or won't achieve top pricing. As a seller, TruAmerica has seen strong interest from investment capital. "It only takes one buyer. We have sold $1.2 billion, and in some cases we had tons of buyers and in other cases we only had a few," says Hart. "There is still a real belief that multifamily still creates the best long-term durable cash flow, competing directly with industrial. There is a real risk-adjustment to the thinking, and that is what allows people to stretch on the cap rates, coupled with the fact that interest rates have been low."