Multifamily Loses Some Shine Under Harsh Light of Reality

LightBox recently wrote that a number of factors suggest that CRE professionals avoid overconfidence. Stifel investment banking firm Keefe, Bruyette & Woods (KBW) went further, believing the industry is headed for a hard landing.

But more specifically, each had something to say about multifamily. KBW frames the view investors and developers have had of the sector — one of the two unstoppable darlings of the pandemic period. “For the past 15-plus years, multifamily (i.e., the apartment sector) has been perceived as a safe haven asset class as it offers an inflation hedge and fulfills the essential need of housing,” they said. “Alongside growing institutional allocations to CRE, frothy markets bolstered by low interest rates, and surging rental demand coming out of the pandemic, this sentiment caused multifamily valuations, transaction volumes, and construction pipelines to reach record highs in 2021 and through mid-2022.”