Builders are now slowing down on building apartments. This is bad news for Renters.
2024 will be one of the strongest years for new multifamily supply since the 80’s. That is great news for renters and not so great for apartment owners—lots of competition and options for renters, which could push up vacancies and bring rental rates down. More inventory will hit the market in 2025/2026 but this will be short-lived as new construction will slow way down.
Higher rates and lower leverage are making financing for multifamily construction very challenging.
As renters will be enjoying all the new supply and competitive rental rates over the next few years this will come to an end.
Once demand catches up with supply this will start to push up rents. Why? Because long-term renters are going to have fewer options due to less inventory hitting the market.
Housing Market in the Future
If we look at 2027 we will see a different landscape.
Low inventory is hitting the market and all the new supply that hit the market on 24/25/26 will be filled up. Because of this rents will start to rise again.
New construction projects are at a standstill with these high-interest rates. And who will be punished? That’s right! Renters will get punished and the apartment owners that made it through will reap the benefit.
United States is a RENTERS nation
The US has 45 million renters, we are a renter’s nation and with a lack of inventory for first-time home buyers, affordability issues, and high rates more and more folks are being pushed to stay renters for longer.
We need more housing for renters and home buyers! This has always been an issue with building costs, financing costs, construction delays, and hard-to-get plans/permits through the system it seems we will always be behind the curve.
With so much uncertainty in the commercial real estate market and getting loans challenging, expect the commercial real estate market to face challenges and headwinds in the next few years. Long-term real estate holders will feel the pain in the short term but long-term things are looking much brighter.
Follow us on our socials!
