Why One Industry Exec Thinks Multifamily Buyers Will Have Outsized Opportunities in 2023

Multifamily deals offered with pre-existing loans and attractive interest rates will be most favored in the coming months as the inflationary environment heats up – and stabilized properties will be in even greater demand as they can provide higher returns and more certainty, according to one industry veteran.

Otto Ozen, Executive Vice President of The Mogharebi Group, says the asset class will continue to be an attractive inflation hedge: it’s historically outperformed other asset classes from a yield perspective, and as the costs of homeownership continue to be staggeringly out of reach for many would-be buyers, demand drivers remain strong.

“As mortgage rates rise, the affordability gap widens, increasing the barriers of entry for home buyers and subsequently pushing them towards renting,” he says. “This shift will provide a strong rental market allowing rental rate growth to outpace inflation.”

Ozen will expand on these insights and offer more thoughts on what will make multifamily deals successful in the current environment, at a panel discussion at GlobeSt’s upcoming Multifamily Conference in Los Angeles in October. He notes that value-add and opportunistic deals may start to slow down as the risk involved with these transactions increase as interest rates rise—and  says he’ll be watching core inflation and interest rates heading into 2023 to better gauge transaction velocity.

 “We will likely see a pricing gap between buyers and seller until there is a sense of stability in interest rates,” he says. But “multifamily fundamentals continue to be strong in the backdrop of rising rates and continually higher down payments. Buyers with excess equity capital will likely have an edge to seize opportunities with compelling deal metrics.” 

Check back soon for more updates from Otto Ozen and his fellow panelists at next month’s GlobeSt Multifamily Conference.