Multifamily Outlook for Back Half of 2024
Terrydale Capital
Jul 29, 2024 5 Min read
As we enter the back half of 2024, it is as imperative as always for investors to stay ahead of the curve. This means absorbing the trends and information that came from the first two quarters of the year and looking ahead through the final quarters. Multifamily has been under the microscope by both investors and experts alike as it remains the pillar of the commercial real estate industry. Here we will break down where multifamily stands at the end of Q2 and where it could potentially be heading.
Most Affordable Rental Markets
Affordability has continued to be a sore spot for renters in the market with many struggling to make ends meet between their income and monetary obligations. However, woe doesn’t reflect everywhere. The following markets have been deemed the most affordable and renter friendly with rent costing as low as 15% of income.
- Bismarck, North Dakota
- Overland Park, Kansas
- Scottsdale, Arizona
- Sioux Falls, South Dakota
- Lewiston, Maine
- Chandler, Arizona
- Fargo, North Dakota
- Gilbert, Arizona
- Huntsville, Alabama
- Lincoln, Nebraska
Top Metropolitan Markets For Demand
Looking to the major markets that have reflected the large majority of demand for which investors can continue to turn an eye, are as follows:
- Dallas - Plano - Irving | Texas
- Austin - Round Rock | Texas
- Phoenix - Mesa - Scottsdale | Arizona
- Houston - The Woodlands - Sugar Land | Texas
- New York - White Plains | New York
- Atlanta - Sandy Springs - Roswell | Georgia
- Denver - Aurora - Lakewood | Colorado
- Nashville - Davidson - Murfreesboro - Franklin | Tennessee
- Washington - Arlington - Alexandria | DC, Maryland, Virginia
- Seattle - Bellevue - Everett | Washington
Current Challenges
The largest challenge facing multifamily deals in terms of financing, as of late, has been appraisals and property values. With property valuations coming in lower than anticipated, many lenders find it more difficult to pencil out deals and deliver the most favorable terms. The value of appraisers can not be understated when looking to seek financing and investors must keep their expectations tempered compared to prior market conditions.
Looking Forward
Since the outset of the year, a multitude of commercial real estate experts have been expecting an approach of a market bottom with many stating that we are now closer than ever. With volume and pricing hitting a new low in Q2 2024, experts are anticipating a turnaround for all assets. Another factor influencing this, is the surge in commercial foreclosures, indicating this bottom being near.
Lending avenues for multifamily continue to be very favorable in the agency sector with mid 5% rates; albeit, at a more drawn out process to acquire loans due to government regulations. We anticipate agency avenues to remain strong with other avenues bringing down their rates in order to compete on that front.
Conclusion
The back half of 2024 could still have many tricks up its sleeve especially in the dawn of a national election. Investors should be prepared for anything moving forward and be prepared to execute at a moment's notice. When you need the right team behind you to prepare your execution, look no further than Terrydale Capital. Our collective knowledge and experience coupled with our vast industry connections make us the right team to have in your investing corner. Contact us today.
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Headquartered in Dallas, Texas, Terrydale Capital is a leader in commercial real estate financing. We have close relationships with the nation’s top banks, lenders & family offices allowing us to provide the most competitive financing solutions in the market.
