Cap Rates Expand, Multifamily Prices Fall as Sales Hit New Low

Episode #226
Multifamily sales are at the lowest point in the past four years. We haven’t seen transaction levels this low since the start of the pandemic and after the last housing crash. But, for buyers, this could point to some tremendous opportunities. With fewer sales could come higher cap rates, lower prices, and more profit per dollar spent on your next multifamily deal. The question is, how low will prices go, and when WILL be the right time to buy?
Xander Snyder, Senior Commercial Real Estate Economist at First American, joins the show to give us the latest update on multifamily sales, prices, cap rates, and even a prediction for 2025. Xander strongly argues that multifamily price declines could be far from over. With buyers patiently waiting for sellers to drop their prices and the cost of capital still so high, motivated sellers must act quickly to get a buyer, which could mean more price cuts.
We’ll also discuss why cap rates are expanding and how they’ve already jumped fifty percent in some markets. Plus, what could happen to rents as the “oversupply” of multifamily investments hits the market? An even better question is what happens when all that supply gets used up? We’re answering it all in this episode.
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Show notes at: link.chtbl.com/OTM
00:00 Intro
01:03 Multifamily Transactions at Rock-Bottom
04:34 Why Volume is So Low
06:29 Buyers Are Waiting for This
08:38 Cap Rates Expand
13:31 Investors Will Have to Wait
14:35 Will Prices Keep Declining?
17:17 Multifamily Rent Forecast
19:02 The "Oversupply" Could Flip
22:53 2025 Predictions

[@zz5guy]

Why would i buy a 6% cap when i can get 5% money market?

[@AOChronicles]

What location(s) are you referring to in this vehicle? Real estate is local. Especially multifamily

[@neerajchaudhary1821]

Dave one of your best shows!

[@Rocko1II]

4%cap rate makes sense at 0% interest rate but it doesn't when a t bill or money market pays 5.5% and corporate bonds pay 11%.

[@dennishowland7495]

Get into the residential space as well I think you’re correct David I may not be that much multifamily billion dollars

[@neilquinn]

I really question if it's worth it. Definitely capped upside, and rapidly rising increases in insurance/tax. Regulatory risk rising as well as cities add more and more insane rent control and eviction laws. Government really wants private landlords to subsidize social programs.

[@Koushi82]

Considering landlords are source of inflation with free fed money. As a landlord benefiting the most from inflation. You should be glad to be slave of the state that gives your prop any value

[@andrej1923]

@neilquinn agreed I’m in CA stopped buying multi family here. Have other investments in TN that are doing well

[@EGoldman]

@@Koushi82how are landlords the source of inflation? They cant increase the money supply themselves

[@Rocko1II]

If we are lucky the government will build their own apartments like the 50s.

[@chadgriffith5819]

@@Koushi82 Ignorant statement sorry lol. Perhaps read up on Government policy, regulation, tax increases and fed rate. All goods and services increase rates for desired returns. "landlords cause inflation" lol