[ad_1]
MCLEAN, Va., Dec. 21, 2022 (GLOBE NEWSWIRE) — The multifamily market will continue to cool in 2023, according to Freddie Mac’s (OTCQB: FMCC ) Multifamily 2023 Outlook, with rent growth slowing, vacancies rising and loan originations slowing for the year . Property values are also expected to decrease, but overall income growth will remain positive. Fundamentals are expected to recover slowly in the second half of the year as the market stabilizes.
“Unstable capital markets and a rise in the 10-year Treasury rate have led to a decline in multifamily loans in 2022, which will continue through 2023,” said Steve Guggenmos, vice president of research and modeling for Freddie Mac Multifamily. “Economic uncertainty and rising prices have reduced demand for housing.” This coupled with increased levels of construction will cause rents to rise to a level and eventually normalize. This environment puts downward pressure on property values, which have risen at a high rate in recent years.”
The Freddie Mac Multifamily Outlook is available online at FreddieMac.com, along with a companion outlook and podcast.
The 2023 Multifamily Outlook includes several key findings:
- Rent growth has slowed and some data providers are now indicating that rents are falling on a month-to-month basis. Freddie Mac expects 2022 growth to be 6-8% per year.
- Some data sources point to vacancy rates through 2022, while others show very little change. Freddie Mac expects vacancy rates to level off in 2022 from last year.
- For 2023, Freddie Mac expects multifamily fundamentals to start the year slowly but rebound in the second half of the year. The Outlook forecasts gross income to increase by 3.5% and the vacancy rate to rise modestly to 5.1%.
- The level of multifamily construction remains extremely high, which could put additional pressure on fundamentals in some markets.
- In 2023, Freddie Mac expects the most successful markets to be predominantly the smaller Southwest and Florida markets. Low performance markets are a geographically diverse mix of small and large markets, many of which are expected to experience high levels of new supply.
- Through 2022, the 10-year Treasury rate has been rising and volatile, while equity rates have been relatively stable, leading to equity rate compression. This will put pressure on marginal rates, which will put downward pressure on valuations.
- Given the broad economic uncertainty and volatile Treasury rate environment, Freddie Mac expects originations to decline approximately 5.5% in 2022 to a total of $460 billion, with a further decline of 4-5% to $440 billion in 2023.
Freddie Mac empowers millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we have made housing more affordable and accessible to homebuyers and renters across the country. We’re building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com on Twitter @FreddieMac and Freddie Mac’s blog at FreddieMac.com/blog.
Media Contacts:
Mike Moros
(703) 918-5851
[email protected]
[ad_2]
Source link
