Freddie Mac (OTCQB: FMCC) released its 2024 Multifamily Outlook projecting the year ahead will bring positive growth despite continued headwinds for the multifamily industry, and that the long-term forecast for the asset class remains positive.
The Outlook indicates an elevated multifamily supply pipeline, with peak completions predicted in 2024, will moderate potential rent gains, which are expected to be positive in the year ahead, although below longer-run averages. The Outlook also forecasts 2024 vacancy rates will be modestly higher than average but notes a more stable interest rate environment could help spur transaction volume in 2024, with demand for rentals driven by prevailing demographic trends and expensive for-sale housing.
“The economy appears to be on track for a soft landing, although it may be bumpy throughout next year,” said Sara Hoffmann, director of Multifamily Research at Freddie Mac. “In 2024, the multifamily market may see additional strain from high levels of new supply and continued high interest rates but remains a favorable asset class given the state of the for-sale market and long-term demographic trends.”
The Freddie Mac Multifamily 2024 Outlook projects an expected gross income growth of 2.1% for the year. Specific forecasts include:
Although interest rates are expected to remain elevated in 2024, additional stability should result in stabilized cap rates and property values. By allowing buyers and sellers to agree on asset value, this trend could help drive transaction volume in the multifamily market.
The Outlook predicts volume growth will return in 2024, up to $370 billion-$380 billion, which is in line with 2019 volume but well below the post-pandemic years of 2021 and 2022.
Freddie Mac Multifamily is the nation's multifamily housing finance leader. Historically, more than 90% of the eligible rental units we fund are affordable to families with low-to-moderate incomes earning up to 120% of area median income. Freddie Mac securitizes about 90% of the multifamily loans it purchases, thus transferring the majority of the expected credit risk from taxpayers to private investors.
Freddie Mac’s mission is to make home possible for families across the nation. We promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, we have helped tens of millions of families buy, rent or keep their home. Learn More:
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