Recent years have been both a challenge and a boon for many multifamily owners, and as we come into the end of 2022 the market feels much the same and uncertainties surround us. But now, owners who have adapted well to the variables of the marketplace, are positioned well to enter the continued uncertainties that lie ahead.
As the rising cost of debt continues to add difficulties to the acquisition pipelines and underwriting of new projects for multifamily owners, the labor market also continues to be spotted. Turnover rates are high, labor shortages continue to be problem, property management positions and leasing specialist jobs remain unfilled across the country, as well as complications created by the eviction moratorium, and inflation. But despite these hardships, demand for rental housing remains reasonably strong, particularly in urban markets. There is some downturn, and analysts believe that downturn will extend through the end of the year and into Q1 of 2023, but it will be short lived and not dramatic. Overall, owners are optimistic that better opportunities are just over the horizon - as rates continue to surge it will force some owners to adjust holdings and bring many new property assets to the market.
Amid these market climate changes, sun-belt state communities compare strongly with other parts of the United States and have particularly strong demand in metropolitan centers. Increased migration due to warmer weather, lower cost of living, and remote job opportunities has actually driven many sub-belt communities to record high rent growth in some areas. One way some owners plan to encourage this growth and mitigate some of the challenges is by focusing on mixed-income developments, which provide a combination of market-rate and affordable housing units. This approach not only helps address the growing need for affordable housing, but also creates a more diverse resident communities, which can lead to a stronger and more vibrant neighborhoods.
Looking ahead, the multifamily market will continue to evolve, as it always does, driven by ongoing changes in demographics, technology, and economic conditions. Property managers who keep on top of these changes and train their staff regularly will always perform the best. It’s important to have leasing agents who are adaptable, and understand the changing needs of prospects and tenants and use that understanding to provide better service and drive sales.