2024 Transaction Volume

[Justin Goodin]

Hey everyone! In your opinion, do you think multifamily transaction volume will increase in 2024?

There is some discussion that rates will decrease in 2024. $1.9T worth of CRE loans are set to expire by the end of 2025. Multifamily fundamentals are still strong.

So what do you think? Thanks for any feedback!

[Evan Polaski]

@Justin Goodin, my take: regardless of the possible rate cuts or the loan maturity issues, I would find it hard to believe there won't be at least a slight uptick in volume in 2024.  

Per Ben's comment though: a bit comes down to how desperate sellers get and how confident buyers get.  In the value-add space, buyers are still contending with escalating renovation costs. Developers are battling the same.  Rate cuts will help, but are not projected to be precipitous, so will have an effect, but not a major effect.  Interest rate cap pricing is all based on forward curve, which is forecasting the cuts, so the cost of repurchases has come down a fair amount already, which is alleviating some of the cash flow issues many syndicators are feeling.

All that being said, I think volume will increase overall.  I don't think it is going to surge back, and I think a lot of the deals coming to market are not going to be all that great.  They will be the ones that couldn't secure pref equity into the deal to keep it afloat longer, which would imply the deals that can't source pref equity/rescue capital are those that are generally too hairy to want anyways.