In the fall of 2022, it was already becoming clear to many in CRE that markets would cramp up until there was some price discovery to reduce bid-and-ask gaps. In multifamily, that is still happening, with buyers and sellers waiting for each other to blink.
"Buyers are cautious, facing higher financing costs and downgraded projections of future rent growth," wrote Paul Fiorilla, director of research at Yardi Matrix, in February. Cap rates were up from low-to-mid-4% range at the start of 2022 to 5% by the end.
"Most apartment owners are holding on to properties unless there is a reason to sell, such as a death, the dissolution of a partnership, or a capital event like a maturing mortgage that creates a need for restructuring," said Fiorilla, who was expecting higher levels of distress.
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