August 2022 Multifamily Investment News Round-Up

As August 2022 begins, continued interest rate hikes and recession fears continue to dominate discussion and impact the multifamily world. Still, in spite of some economic headwinds and greater financing challenges, housing demand, particularly for multifamily, remains strong. Some sectors such as Student Housing are even setting records.

The Multifamily Investment News Round-Up is a monthly digest of five “must read” stories from around the Web.

Industry

The Housing Shortage Isn’t Just a Coastal Crisis Anymore (The New York Times)

“Freddie Mac has estimated that the nation is short 3.8 million housing units to keep up with household formation. Up For Growth, a Washington-based policy and research group focused on the housing shortage, says that deficit doubled from 2012 to 2019. In that time, supply worsened in 47 states and the District of Columbia, according to an Up For Growth report published Thursday. “

Student Housing Sector Sets Records (Multifamily Executive)

“At the core 175 universities tracked by RealPage, 86.2% of beds were preleased for the fall 2022 academic year as of June, marking the highest-ever reading for that month as well as higher than several recent July readings. The year-over-year asking rent was at 5.8% in June, matching May’s reading.”

Macro

Multifamily Braces for Another Fed Rate Hike (Multi-Housing News)

“Higher borrowing costs will mean that acquisitions, new developments or capital improvements may be put on hold, scaled back or canceled entirely, said Paula Munger, AVP, National Apartment Association (NAA). “It’s important to keep in mind that even if the Fed goes through with all the expected rate hikes in 2022, interest rates will still be historically low,” she said. “And for the moment, rent growth remains strong, if not at record-breaking levels.”

Kimble Ratliff, National Multifamily Housing Council (NMHC) vice president, Government Affairs, took a slightly different view. Investment and development may slow along with rising interest rates, but capital will remain available.”

Markets

U.S. Needs 4.3 Million Apartments Over Next Decade Just To Tread Water (Bisnow)

“The country needs to build 266,000 apartment units each year to meet demand, the report said, as households form among young workers leaving college or home, immigrants come to the U.S. and older people downsize from homeownership, among other demand drivers.”

Will increased borrowing costs dent sky-high apartment valuations? (Multifamily Dive)

“Daniel Jacobs, partner and head of credit at New York-based ACRE, an institutional fund manager that invests in multifamily properties as an owner and a debt provider, said the biggest risk in the interest rate environment is that rates could move so dramatically that they would put pressure on borrowers to pay debt service.  “I don’t think we’re there yet,” he said. “What we’re keeping an eye out for is what’s to come 12 to 18 months from now. If rates rise and financing becomes more expensive, it will continue to push on values.”

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