2024 is gearing up to be a game-changer in the rental market!
In 69 markets tracked by CBRE, 17 are set to expand their inventories by over 7% in 2024 and 2025. Some cities like Chicago, Washington, D.C., and Las Vegas have already peaked in construction completions, while others will reach their zenith in 2024.
Despite economic challenges, strong demand will keep the average occupancy rate above an impressive 94%. Developers are strategically positioning in high-demand markets like Austin, Dallas, Nashville, and Atlanta, driven by job growth figures.
Multifamily real estate is tackling the severe shortage of single-family homes, especially in a high-interest-rate environment. The premium for monthly mortgage payment versus average monthly rent is expected to stay above 35% in 2024.
Yes, there are challenges. Multifamily construction starts have taken a hit due to weakening fundamentals and the rapid surge in interest rates. There is an anticipated 45% decline in starts in 2024 from pre-pandemic averages and a whopping 70% from the 2022 peak. This dip, however, is setting the stage for a spectacular recovery in both occupancy and rent growth, promising an exciting turnaround.
One city remains a shining star. Dallas, the largest multifamily investment market, is maintaining its lead with the lowest average prime multifamily cap rate. The trend is clear—Dallas is not just holding its ground but emerging as the most attractive and dynamic market for multifamily property investment in 2024.
U.S. real estate market outlook 2024 | CBRE. (n.d.). https://www.cbre.com/insights/books/us-real-estate-market-outlook-2024
Investing in a multifamily project has many advantages as, on balance, real estate offers lower economic and inflationary risks than stocks.
Of course, the decision to invest in real estate or invest in stocks or bonds or other asset classes, which offer different risks and opportunities, is a choice which depends on an investor's risk tolerance, objectives, financial status and investment style.
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Anna & Peter Tan
SuiteLifeMF has acquired, operated and invested in real estate for over 10+ years, investing in over 1500 doors and with over US$ 100 under management (900+ doors). The company also operates a property management company which handles a portfolio of single family homes. SuiteLifeMF maintains a disciplined approach to investing, which focuses on capital preservation and strong returns with a deep understanding of submarkets, economic and political situations.