2024 Apartment Forecast: Strong Fundamentals Despite Twists & TurnsDespite concerns about uncertainties and a potential recession, the 2024 forecast for the rental market shows robust fundamentals for multifamily. |
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Supply surge predictions: The number of new multifamily apartment units under construction reached a record 1M in late 2023. Origin Investments predicts a slowdown in new starts next year due to a lack of funding and ongoing uncertainties. Yardi Matrix analysis also aligns with this prediction. |
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Rent growth outlook: Rent growth, which cooled due to easing demand and rising supply, is expected to recover slightly in 2024 but remain in the low single digits. Negative rent growth is projected to return to the historic norm within a 2–4% range by 2H24, similar to 2022 levels. |
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Homeownership barriers: Systemic barriers to homeownership, such as high prices and spiking mortgage rates, contribute to the long-term renter trend. Few buyers can afford homes and existing owners are reluctant to sell. Consensus expectations suggest mortgage rates will ease in 2024 but won’t significantly impact the for-sale market. |
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➥ THE TAKEAWAY |
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New realities and opportunities: Next year’s apartment forecasts reveal new realities and new opportunities. Hybrid work, driven by the pandemic, will become the new normal, creating demand for rentals that accommodate flexible work-life balance. And insurance, which shot up in 2022 due to natural disasters, may stay high. Despite this, ongoing opportunities and potential returns, particularly in senior debt and preferred equity, are attracting plenty of attention. |
Randolph is a Multifamily Investment Sales Broker with eXp Commercial servicing Multifamily Buyers and Sellers in the Greater Chicago Area.