01 Dec NAHB study shows multifamily developer confidence has declined in Q4
Thanks to a recent study by the National Association of Home Builders (NAHB), we know that multifamily developer confidence has declined in Q4.
The NAHB survey analyzes two indices to determine the findings in their survey; they specifically look at the multifamily production index and the multifamily occupancy index.
In both cases, each index saw declines by at least 10-15 points in Q4, and the declines are predicted to continue into 2023 (and beyond), as inflation and rising interest rates continue to hit multifamily developers hard.
How Long Will the Downward Trend Continue?
With some economists predicting a long and deep recession, it’s likely that the decline in multifamily developer confidence is likely to continue as developers are higher material costs, continued supply chain issues, and less demand for Class A and B properties.
Yes, the United States has had the most multifamily properties under construction since the 1970s but with recent Fed monetary policy affecting material costs, it’s likely that it will take longer for some developers to finish their housing projects.
Other developers may end up focusing on smaller projects or pivoting from multifamily altogether, as the possibility of not being able to break even on properties has become a real threat for developers for the first time since 2010.
Will Multifamily Still Be a Good Investment In 2023?
Despite the challenges that the economy faces, investing in existing multifamily housing will continue to be a smart investment in 2023 and beyond.
More people are renting units in multifamily properties than ever before because multifamily units are often more affordable than single-family rentals and a multifamily property offers more amenities as well.
Contact MW Real Estate Group
At MW Real Estate Group, our team specializes in managing multifamily properties in the Los Angeles area.
If you plan on investing in LA Multifamily properties, or you’re searching for a new property manager to manage those buildings, contact us today by calling (213) 927-2117 or click here to connect with us online.