A Closer Look at Multifamily Weakness

Unveiling the Market's Secrets from Behind the Scenes

Author

Nuvo Capital
February 22, 2024

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"Headline housing starts in January came in well below consensus, but we note that this was driven entirely by weak multi-family activity. Permitting for multi-family remained weak, indicating that there is likely more declines on the horizon. Single family continues to be the bright spot in new construction results posting a high teens gain in starts and over 40% increase in permits, though note that both of these lap easy 2023 comps and single family results are still well below January 2022 and 2021 levels. The question in 2024 will be the cadence of Fed cuts and rate spreads with the result directly impacting starts direction, in our view."

Recent Multifamily Sales (Click to view details)

Recent Multifamily Loans (Click to view details)

Question: 

When devising a multifamily exit strategy, how do you balance the timing of the sale to maximize returns while considering potential market fluctuations and economic uncertainties?

Answer: 

Devising a multifamily exit strategy requires a careful consideration of timing to maximize returns amidst market fluctuations and uncertainties. Analyze current market conditions and forecast future trends to identify optimal selling windows. Consider the property's appreciation potential and potential changes in the local economy. Evaluate the impact of interest rates and financing availability on the broader real estate market. Factor in the property's depreciation schedule for tax optimization. By balancing these elements, investors can strategically time their exit to capitalize on market peaks while mitigating risks associated with economic uncertainties.

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OUR TECH STACK IS NOT JENGA

A conversation two long-time multifamily industry veterans, Samantha Chalmers, the Innovation and Integrations Director for Mill Creek Residential, and Savas Karas the Chief Technology & Transformation Officer at CAPREIT…discussing understanding and determining the strategy around technology.

Quiz of The Week

What does "Gross Rent Multiplier" (GRM) measure?

a. The total rental income of a property

b. The property's potential for capital appreciation

c. The ratio of property price to rental income

ǝɯoɔuᴉ ʅɐʇuǝɹ oʇ ǝɔᴉɹd ʎʇɹǝdoɹd ⅎo oᴉʇɐɹ ǝɥꓕ .ɔ

Random Tip of the Week

📝Consider Tax Benefits of Depreciation - Take advantage of depreciation as a tax benefit in real estate investing. Consult with a tax professional to understand how you can deduct the depreciating value of your investment property over time, reducing your taxable income and potentially increasing your overall returns.

Current Rates (Weekly Update)

10-Year Treasury - 4.27% (⬇️.04%)

Fed Funds Rate - 5.33% (0%)

1-Month Term SOFR - 5.32% (0%)

About Nuvo Capital Partners

Nuvo Capital Partners is a niche market-focused multifamily investment platform operating in the Southeast. As a dedicated sponsor (General Partner), we specialize in institutional quality real estate investments within these regions. Our team comprises industry professionals with 25+ years of combined experience, ensuring expertise and market knowledge. We pride ourselves on offering a transparent investment process, providing our investors with access to high-quality real estate opportunities while upholding integrity throughout.

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