Gray Report host Spencer Gray speaks with guest Paul Fiorilla, Director of Research at Yardi Matrix, and reviews the most important trends affecting the multifamily market in 2024. For the latest multifamily news from across the internet, visit the Gray Report website: ⁠https://www.grayreport.com/⁠ Sign up for our free multifamily newsletter here: ⁠https://www.graycapitalllc.com/newsletter⁠ Learn more about Gray Capital's latest multifamily investment offering for accredited investors: https://www.graycapitalllc.com/new-offering/ DISCLAIMERS: This podcast does not constitute professional finan ..read more

Cap rate trends and interest rate trends have come under the spotlight, with several reports on the topic as well as specific developments that will play a major factor in how the economy progresses. Sources discussed in this episode: Federal Reserve Bank of the United States: “Monetary Policy Report” - https://www.federalreserve.gov/publications/files/20240301_mprfullreport.pdf Capital Spectator: “US Growth Expected To Slow In Next Month’s Q1 GDP Report” - https://www.capitalspectator.com/us-growth-expected-to-slow-in-next-months-q1-gdp-report/ CBRE: “U.S. Cap Rate Survey H2 2023” - https ..read more

As we move further from the uncertainty and rent growth stagnation of 2023, an increasing number of sources are finding room for optimism in the multifamily investment market. A looming drop-off in multifamily supply, the consequence of an interest-rate-driven decline in new construction projects, has become a central part of projections for the multifamily market, leading to expectations of higher rent growth and increased apartment demand in 2025 and 2026. Sources discussed in this episode: Bureau of Economic Analysis: “PCE Inflation, January 2024” - https://www.bea.gov/news/2024/personal-in ..read more

Single family rentals are a growing portion of the housing market, and while the single family market is correlated and connected to multifamily performance, single family rentals are not necessarily a competitive threat to the multifamily market. Sources cited in this episode: Yardi Matrix: National Multifamily Report, Jan. 2024 - https://www.yardimatrix.com/publications/download/file/5071-MatrixMultifamilyNationalReport-January2024 CoreLogic: “US Single-Family Rent Index – February 2024” - https://www.corelogic.com/press-releases/corelogic-us-annual-rent-growth-remains-slow-steady-december ..read more

This month's inflation report came in slightly higher than expected, causing some worry that the much-anticipated interest rate cuts from the Fed may not arrive as quickly as previously thought. A "higher for longer" environment is one reason why some are pessimistic about multifamily in 2024, but there is little evidence for continued declines in multifamily valuations, which are already 20-30% below the peak. Consistent demand, a more balanced supply/demand environment after 2024, and, yes, lower interest rate expectations are a strong counter-balance to multifamily doomsayers and help expla ..read more

The enormous amount of apartment supply expected this year should temper any expectations of apartment demand, but newly-published research on the topic argues that U.S. housing needs are far larger than can be addressed even with the historic amount of multifamily completions last year and forecasted for this year. On the capital markets side, recent data points to a substantial increase in CRE investment interest, but given the Federal Reserve's recently-announced intentions to keep interest rates at their current levels past March of this year, the market may n ..read more

Markets in the Northeast and the Sun Belt continue to get attention, along with mountain locales like Idaho and Montana, but affordability is a significant draw for Midwestern markets like Cincinnati and Indianapolis. Sources discussed in this episode: U-Haul: “Top Growth States of 2023” - https://www.uhaul.com/Articles/About/U-Haul-Announces-Top-Growth-States-Of-2023-30660/ United Van Lines: "2023 Annual National Movers Study" - https://www.unitedvanlines.com/newsroom/movers-study-2023 Atlas Van Lines: “2023 Migration Patterns Study” - https://www.atlasvanlines.com/resources/migration-pattern ..read more

Recent reporting on commercial real estate financing has highlighted the role of private credit in providing funding for CRE sponsors/owners and delaying the need for a capital call, and despite the expectation of interest rate reductions later in the year, it is clear that private credit will remain an important tool in 2024. Newly-published reports on multifamily performance continue to clarify the near-term challenges for apartment operators, but data showing record vacancies for office properties presents a bleaker picture and signs of persistent shifts in remote/in-person work that could ..read more

While the continued surge in newly-constructed apartments is relatively unchanged from 2023, the outlook for 2024 interest rates is less clear. The longer-term prospects for the multifamily market remain strong, but given the continued pressure from apartment supply, investors who speculate on lower interest rates and future asset valuation increases could be vulnerable to short-term headwinds. Sources discussed in this episode: Reuters: “Higher forever? Markets see few rate cuts after 2024” - https://www.reuters.com/markets/rates-bonds/higher-forever-markets-see-few-rate-cuts-after-2024-2023 ..read more

The Gray Capital team shares their predictions for the multifamily market and the economy in 2024, comparing them to other forecasts that have recently been published. Sources discussed in this episode: Marcus & Millichap: “What to Expect for CRE in 2024” - https://www.marcusmillichap.com/research/videos/what-to-expect-for-cre-in-2024 CBRE: “U.S. Real Estate Market Outlook 2024” - https://www.cbre.com/insights/books/us-real-estate-market-outlook-2024/multifamily Cushman & Wakefield: “2024 U.S. Macro Outlook: A Rolling Recession Is Here” - https://www.cushmanwakefield.com/en/united-stat ..read more