Page 24 - AAGLA-JULY 2022

Multifamily News
JULY 2022
Outlook for Multifamily is Strong, Says Report by Walker & Dunlap
According to its quarterly, Multifamily Outlook report, commercial real estate lenders Walker & Dunlap, for commercial real estate investors, developers, and operators, the underlying fundamentals of the real estate market remains strong on the heels of 2021’s strong U.S. economy, stock market, incomes, and employment. Despite 2022’s labor market challenges, lingering supply-chain constraints,
rising inflationary pressures, the invasion of Ukraine, the report finds, “economic expectations are in line with a maturing economy” and “real GDP growth is expected to remain robust at 3.2% in 2022, with unemployment remaining near currently low levels.” What this means, according to the Walker & Dunlap report, for the multifamily space, revenue growth
and development metrics are surging higher, and the national multifamily market is expected to remain stable in 2022 as new supply meets demand.
The report also addresses speculation about a “housing bubble.” According to Walker & Dunlap, there are mixed signals on consumer confidence, still-rising construction costs, and an increase in 30-year mortgage rates to above 5% from 2.8% in early August 2021 that has many worried about possible frothiness in the housing market. The report notes that the Dallas Federal Reserve Bank noted in a recent research piece that there were signs
of a “brewing housing bubble.” According to Walker & Dunlap, “this would stand in contrast to the strength of the residential market in 2021, where the desire for more space alongside reduced concerns over commuting distances led to double-digit gains
in single-family home prices. Similarly, apartment rents are above pre-pandemic levels in many places and vacancy ratesstandatrecordlows.” Thereportstates;however,
that focus in investing has now shifted from coastal markets to sunbelt areas, with areas such as Atlanta, Houston, and Dallas-Fort Worth now experiencing record low “cap rates” and low double digit increases in
per unit multifamily pricing.
The report cites higher demand from renters returning to urban areas to be closer to work and lack of housing completions during COVID as driving higher rental prices and lower vacancies. The Walker & Dunlap report concludes that the “multifamily sector remains ‘hot’ and...doesn’t see it colling off anytime soon.”
24 JULY 2022 • WWW.AAGLA.ORG