As economic headwinds mount, the big question on many industry watchers' lips is whether certain high-flying asset classes will return down to earth.

Continuing rate hikes from the Fed, together with rising inflation and a tense geopolitical picture, have some multifamily investors taking a somewhat more cautious approach to asset acquisitions than since the onset of the pandemic. While vacancy remains about 100 basis points below the norm in most markets, investors and operators see a "more uncertain outlook," according to analysts from Northmarq.

"Inflation is proving to be a persistent challenge, and rising price levels spill over into nearly every segment of the economy, including the rental markets," the Northmarq report, which takes a look at the multifamily market as of mid-year, states. Inflation had been running below 1.5% toward the end of 2020, but pressures began to mount early last year as the economy began to reopen. Armed in some cases with ample stimulus funds, Americans began shopping, dining out and traveling — and inflation responded in kind. Annual rates of inflation averaged 5.3% from May through September last year, according to Northmarq, before beginning a precipitous climb that saw inflation hit 7% by December.