The floundering single-family home sales performance is keeping more residents in their apartments, according to Ali Wolf, chief economist at Zonda.
Speaking at the J Turner Research Summit this week in Scottsdale, Ariz., Wolf addressed several macro trends in multifamily, single-family, and build-to-rent.
"The percentage of renters wanting to trade out to buy homes has slowed considerably, based on what I'm hearing during several apartment operators' earnings calls."
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She said AvalonBay generally saw that in the mid-teens percent of its residents, but now it's less than 10 percent. She said Equity Residential reported its number at 7.5% — its lowest since 2006.
"Apartment renewals are holding up well," she said.
When it comes to apartment starts, "My forecast is for a 30 percent decline in starts in 2024, and I'm hearing others say it will be closer to 50 percent," Wolf said. "New deals are hard to pencil in most cases.
"I'm hearing developers tell me that credit is tightening, it has stopped," she said. "Camden said on its recent earnings call that today's 'capital markets hurricane' has affected starts.
The build-to-rent market has also stalled out, according to Wolf.
"It's frozen, or at least in choppy waters when it comes to cap rates and penciling out.
In terms of the imminent spiking delinquencies in commercial real estate, "This is something we flagged as a threat on our weekly webinars for more than a year," Wolf said. "We mentioned in every week – floating rates (could be the catalyst) – but you can't really time it. But when it does happen, it's going to be bad."
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