May 9, 2023
Ashcroft Capital’s Chief Investment Office, Scott Lebenhart, wrote an article for Multifamily Insiders, shared on April 24, 2023, “Apartment Investment Sales Will Rebound in Time”
Read the full article at Multifamily Insiders.
Looking ahead, it appears the slow pace of multifamily property sales will continue for a while. But at some point – and perhaps sooner rather than later – multifamily properties will once again become a favorite destination for investor dollars.
The Current Landscape
It’s no mystery why the pace of property sales is so slow. Rising interest rates and volatility in the debt markets – including the recent failures of several regional banks – have made transactions difficult. Slowing rent growth, the impact of a potential recession on renter demand and soaring property insurance costs are giving buyers pause, too. As a result, while there appears to be plenty of capital looking to invest in multifamily, a large gap generally still remains between sellers’ asking prices and what buyers are willing to pay.
In addition, not many distressed properties are available for acquisition right now as those owners still have term on their loans, which gives them the ability to wait a bit longer in hopes that the capital markets will improve and allow them to refinance their current loans with more favorable options than are available today. Investors are waiting for these properties to become truly distressed, and there is widespread belief that more will be on the market later in the year.
It’s quite possible that investment sales won’t pick up real momentum until next year. The Federal Reserve raised interest rates again in March, and according to the Associated Press, there is support among Fed officials for at least one more rate hike this year.
But as we gain more clarity about the interest rate outlook, which could happen later this year, sales activity will begin to rise, and you don’t have to squint hard to see the multifamily sector once again becoming a favored asset among investors.
Lebenhart, Scott. “Apartment Investment Sales Will Rebound in Time” Multifamily Insiders, 24 April 2023, https://www.multifamilyinsiders.com/multifamily-blogs/apartment-investment-sales-will-rebound-in-time