Current trends point to a case for "moderate optimism" about the health of the multifamily sector and the likelihood of increased deal flow, according to Yardi Matrix's August 2024 national multifamily report.
The main reason for this optimism is the Fed's stated intention to begin cutting interest rates. The report noted that there is plenty of dry powder already sitting around with money ready to move into multifamily. However, high rates have discouraged investors from making many moves.
"The increased cost of debt since mid-2022 has produced a large bid-ask spread between buyers and sellers," the report stated. "But 4% yields don't work when mortgage rates are 6%-7%. Buyers generally avoid negative leverage and sellers held on to properties rather than selling at reduced prices."
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