1. 2024 US MULTIFAMILY OUTLOOK
• According to a recent forecast by Yardi Matrix, the US multifamily sector faces a mixed outlook in 2024. While apartments have performed relatively healthily during the Fed’s ongoing tightening cycle, sector
valuations will face challenges from a wave of supply coming online alongside rapid growth in costs and mortgage rates that are likely to remain high in the short term.
• The report notes that economic growth is likely to slow in 2024, potentially inducing a commercial real estate market reset with higher financing costs, acquisition yields, and lower leverage and values.
• Multifamily rent growth is likely to remain positive in 2024 but diminished by recent standards as supply grows and absorption slows. Supply growth sits at decades-long highs, with more than 1.2 million units
under construction and over half of a million deliveries expected in 2024.
• Expenses such as materials and maintenance continue to rise rapidly, with income growth projected to slow, shifting the focus of the industry towards increasing operating efficiency and cost-cutting.
• Transaction volume fell by 70% in 2023, according to Yardi, and activity is expected to remain weak in 2024.
2. FOMC ECONOMIC PROJECTIONS
• The FOMC’s December 2023 Summary of Economic Projections updated the Central Bank’s interest rate and growth forecasts for 2024, with the consensus expecting to cut rates by 75bps next year.
• Policymakers spoke of the recent dampening of economic and job growth indicators despite the betterthan-expected performance of each in recent months.
• According to the FOMC’s growth projections, GDP growth is expected to finish at 2.6% this year compared to their previous projection of 2.15%. Growth is expected to fall in 2024 to 1.4%— ten (10) basis points
below their September projection.
• According to the FOMC’s inflation projections, the PCE price index was revised lower for the end of 2023 (2.8% vs 3.3%) and 2024 (2.4% vs 2.5%).
• The Unemployment rate is expected to finish 2023 at 3.8% before rising to 4.1% in 2024.
