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Commercial real estate experts say they expect multifamily sales to rebound in 2024 if long-term interest rates stabilize, even as they continue to struggle to borrow money. This was revealed in the latest investigation by a US government agency. Berkadia.
Berkadia’s 2024 Leading Nation Poll will be released on Wednesday and Wednesday obtained According to a Commercial Observer survey, 72% of investment distributors and fixed income brokers expect institutional trades of more than $50 million to increase year-over-year.
However, not everyone is so confident. Of the 212 experts surveyed, 13% expect multifamily sales to decline in 2024, while 15% expect them to remain unchanged starting in 2023.
The growing expectations of the majority are federal reserve sign He said in December that rate hikes were likely to end, with three cuts likely in 2024. Ernie Katai, Executive Vice President and Head of Production at Berkadia. While 50% of poll respondents expect the impact of rising interest rates to continue to impact trading this year, Katai said the move will need to be made once there is a clear direction for the 10-year Treasury yield. He expressed the view that there is. .
“We got a little help from the Fed in December to get some clarity on what the market is going to do and what direction it’s going to go,” Katai told CO. “Couple that with the fact that 2023 was a very slow, quiet year, and the fact that money is on the sidelines and needs to be active in 2024.”
And there’s a lot of ground to make up for. Berkadia’s multifamily investment sales fell 70 percent from 2022 to 2023, and lending fell 50 percent. This closely reflects the trends tracked by Berkadia. Mortgage Bankers Association.
Forty-four percent of those surveyed by Berkadia expect the 10-year Treasury yield to end 2024 between 3.5% and 4%. Long-term interest rates hovered above 5% in late October for the first time since 2007, but fell below 4% in mid-December.
Berkadia respondents were 35% split on whether cap rates would be higher or lower at the end of 2024, with 30% saying they would stay the same. A cap rate is a rate of return calculated by dividing a property’s net operating income by its asset value, and typically increases or decreases based on interest rates.
While many banks are still not lending due to rising interest rates and increased regulatory pressure, 87% of brokers surveyed said government-sponsored enterprises (GSEs) are the most active source of financing for multifamily transactions. It is expected that life insurance companies will follow suit. investigation.
“It’s kind of their charter to be there when others aren’t necessarily there,” Katai said of GSE’s important role. fannie mae and freddie mac It plans to offer multifamily loans this year. “Life insurance companies are also active and I think we’ll see some securitization loans as well.”
Distressed real estate is expected to be the most popular, with 44% of poll respondents believing that institutional investors will flood into distressed real estate in 2024, followed by core real estate and core plus real estate.
The majority of Berkadia respondents (78%) said private investors play a leading role in driving multifamily acquisitions. The multifamily market is expected to be centered around Class A properties, with Class B and affordable housing also attracting investor interest.
Andrew Cohen can be contacted at: acoen@commercialobserver.com.
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