Multifamily Capital Activity to Pick Up This Year

Finally, some good news for the multifamily sector. Lending and borrowing are expected to go up this year, according to a new analysis from the Mortgage Bankers Association (MBA). Other commercial sectors should also see more money flowing in.

In total, MBA predicts $576 billion in loans will flow into CRE and multifamily in 2024– up 29% from 2023’s estimated $444 billion. Of the total, multifamily will absorb $339 billion – 25% more than in 2023. Next year, 2025, could be even better, totaling $717 billion for all CRE and $404 billion for multifamily lending.

Welcome as the news may be, lending and borrowing in 2024 will still not match 2017 levels. After the slowest year in a decade, the expected market reset will represent only a marginal pickup, said Jamie Woodwell, MBA’s head of CRE research.

MBA’s CRE Finance Outlook Survey of senior lenders at top mortgage origination firms reflected continuing uncertainty about the extent of any pickup in 2024. Some 21% expected loan originations to rise 5-10%, 47% expected a 0-5% increase, 21% anticipated no change and 10% a decline. The office outlook was viewed as negative by 90%. Half thought industrial prospects were positive.

The survey results, posted in an MBA blog, revealed that any recovery was expected to unfurl gradually over the year, with 61% of respondents of the view that the markets would be settled by 2025.

“Commercial mortgage originations have historically followed property prices, and the uncertainty about the future path of interest rates has been a contributing factor to the current slowdown,” Woodwell noted. Borrowing would increase if interest rates and cap rates fell, and vice versa.

The contest, as Woodwell sees it, is between two world views: “Stay alive till ‘25” or “Do more in ’24.”