Matrix Assesses Multifamily Market

Webinar insights include economy, WFH, affordability and more

By Leah Etling on Sep 25, 2023 in Matrix

Yardi Matrix vice president Jeff Adler delivered an in-depth update on the state of the U.S. economy and the multifamily investment landscape last week, covering everything from inflation to recession risk to post-pandemic in-office trends.

You can review the recording of the webinar and presentation materials here. Industry insiders know that these webinars are among the very best way to stay up to date on trends, performance and data. The next Matrix webinar will cover the outlook for the student housing sector on Oct. 25. You can sign up here.

Among the key Yardi Matrix house view takeaways on the economy:

• U.S. economic growth is still strong, at 2.4 percent GDP growth in Q2 and strong early numbers for Q3
• Inflationary pressures have started to cool, but remain elevated due to underlying price pressures
• Labor market is tight, but showing signs of softening

“Inflationary pressures have been cooling, they remain a bit elevated, they are coming down. Maybe not as quickly as the Fed would hope,” Adler said.

He still anticipates that a mild recession is on the way, likely landing in Q4 or the first half of 2024. “It’s a little hard for me to pinpoint exactly, but the process is pretty much played out, if not the exact timing of it.”

Top line takeaways for those interested specifically in the multifamily sector:

• The market continues to outperform expectations, despite decelerating rent growth
• Regional market rotation is underway. Examples include slowing performance of Lifestyle units in the Sunbelt, due to increased supply, and outperformance in Midwest, Northeast and some Mountain metros
• This market rotation is due to affordability, which has become a primary focus for renters and pundits alike
• Supply shortage of U.S. housing is likely to be in place for the next decade

 “Rent growth has slowed down. We’re now looking at a tenth of a point in August over July,” Adler stated. Sequential rent growth is also very weak.

While beneficial for multifamily operators, one of the sector’s greatest challenges is housing supply and affordability, which go hand in hand.

“The housing deficit that built up from the Great Recession is still there. Regulatory costs account for 40 percent of multifamily development costs,” Adler noted. Some states, like California, Texas and Florida, but still have a long way to go.

“If you really want to solve the problem, you got to have supply of all kinds. Where we have seen rents come down or decelerate, it’s been in markets with lots of supply,” he stated.

One of the most interesting points shared in the webinar was how in-office work trends have played out over the last year. Data was delivered by Scoop. These metrics are relevant to the housing market because they determine how much flexibility workers have with where they live.

Key takeaways included:

• The majority of U.S. companies, 61 percent, are allowing workers some in-office/remote flexibility
• The average in-office requirement time per week is currently 2.6 days
• Massachusetts, Oregon and Washington are the states with the most flexibility for remote work. The least flexible are Alabama, Kentucky and Arkansas
• Bottom line, rise in remote work has allowed workers to leave cities for more suburban areas, leading to declining population in some metros

Want to gain all the great insight from Wednesday’s webinar? Find the recording of the webinar and presentation materials here and get informed!