Multifamily Loses Some Shine Under Harsh Light of Reality
Low interest rates and booming demand since the pandemic led to a building frenzy over the past couple of years, but not to worry. Multifamily has been a “safe haven asset class” for 15 years, particularly because it’s considered a hedge against inflation and fulfills an essential need—housing. With development reaching its highest rate since the 1970s—934,000 units were under construction in December 2022—and cap rates rising, rents will soften, but that doesn’t mean the market is going to crash. Instead, property owners will see rent growth at a respectable 5 to 7 percent rather than double digits.