Loan Maturities Could Entice Multifamily Investors This Year

Investors are showing renewed interest in the multifamily market, driven by pent-up demand, interest rate stability and normalizing apartment supply trends. This improved sentiment could prove to be a catalyst for sales activity in the multifamily market as a wave of loans mature in the coming two years, according to Gray Capital’s 2025 multifamily forecast. Coinciding with this trend, agency and FHA lenders are increasing their caps and loosening their sending standards as the capital markets environment turns favorable, said Gray Capital. The firm noted multifamily cap rates may not compress if interest rates remain elevated.

As evidence of improving investor sentiment, Gray Capital noted that the National Multifamily Housing Council’s equity financing index flipped during the third quarter to a reading of 63, the first quarter of more available equity financing since January 2022. The NMHC Debt Financing Index also came in above the breakeven level of 50, indicating more favorable conditions for debt financing compared to the previous three months, with a reading of 77. And the ULI Firm Profitability Prospects index was up 24% from last year.