It's going to be another challenging year for multifamily owners and operators. Many factors will converge and control what owners must do to survive the business. Frequently, that will mean lower rental growth and increased operating expense, leading to narrower margins. Not only will that affect return, but the attractiveness to lenders for refinancing.

Moody's estimate for rent growth in the U.S. as of the second quarter of 2024 is low-to-mid-1% range. The gap between asking and effective rents on average remains above $90. That's been true for three quarters running now. That is an expression of the highest concession levels in Moody's tracking history. Whether lowering average monthly rent or providing rent-free periods in negotiations.

Over-supply has been the most important driving factor on the rent front. There has been explosive growth in the number of housing units, particularly multifamily. In June 2024, private-owned housing completions had increased sequentially by 10.4% to a seasonally adjusted annual rate of 1.71 million units. That includes both single-family and five-or-more-unit multi-family. The latter represented the bulk of the construction at 656,000 units. That was an increase of 26.2% month over month or 40.2% year over year. That's the highest seasonally adjusted rate since September 1974.