Rising labor and materials costs coupled with more expensive debt due to rising interest rates are combining to cut into yields on multifamily development projects.
Weakening demand is shrinking an imbalance with housing supply and likely means that price growth will slow sharply over coming quarters, economists led by Jan Hatzius said in a research note on Tuesday.
Unlike institutional players, TIC investors want passive income and long-term holds, which works better for the types of deals Investors Management Group pursues, says the firm’s founder.
As interest rates rise and the outlook for the economy at large remains uncertain, CRE investors who depend on debt have had to reassess their strategies. That’s impacting the property types they might consider for acquisition.
Even as apartment rents rise, some nomads are returning to big cities for more stability. Many of them are growing older and finding that the lure of being a nomad is not always easy to reconcile with the demands of starting a family.
Buyers are beginning to ask for discounts and some deals fall through. But experts say the disturbance in the sector is based on “short-term uncertainty.”
