The multifamily housing market in the United States encompasses residential properties such as apartment buildings and condominiums. This sector plays a very important role in the real estate industry due to the high popularity it has achieved in recent years, especially since the end of the pandemic. popularity it has achieved in recent years, especially since the end of the pandemic. Below, we will explain the fundamentals of this asset class and its numbers today.

The most relevant factor that may affect this market is the increase in interest rates. When interest rates rise, loans for construction and property acquisition become more expensive for developers and investors. As a result, there may be less construction of new properties and rental prices may increase to compensate for higher financing costs. However, due to the steady rise in interest rates, traditional banks have become tighter, traditional banks have become stricter in providing financing for the real estate market and, therefore, for this type of investment.

This greater restriction of traditional banks opens an opportunity for non-traditional opens up an opportunity for non-traditional banking agents, as they offer a wider variety and better quality in terms of collateral.

The availability of units in this type of investment is another important aspect. Demand for this type of asset, especially for rentals, has been increasing due to factors such as lifestyle preferences, challenges in buying homes and demographic changes in new generations moving out of large cities. This has led to an increase in the construction of multifamily properties in many urban areas, which means there are more options available.

Historically, multifamily properties have had high occupancy, which shows a steady demand for rents.. Urban areas with strong job growth and attractive amenities tend to have higher occupancy rates than less attractive or economically stagnant areas. According to a CBRE report, vacancy rates remain historically low, moving from 4.5% in the last quarter of 2022 to 4.9% at the end of the first quarter of 2023.

Finally, during the first quarter of 2023, rental prices increased by 6% compared to the previous year, indicating signs of recovery after difficult years for this type of investment, as was the case in 2021 and 2022.

Bottom line, the multifamily housing market in the U.S. is influenced by several is influenced by a variety of factors, such as interest rates, unit availability and occupancy rates. interest rates, unit availability and occupancy rates. However, during the first half of the year, we have seen a recovery in this asset, we have seen a recovery in this asset, with historically low vacancy rates and an increase in rental prices. These factors indicate that this type of investment is beginning to stabilize and show an improvement in its performance.

Diego Covarrubias - Team Fynsa AGF