Recession fears increased last week as the economy unexpectedly contracted in the first quarter. GDP fell 1.4%, marking the first economic decline since the COVID-19 pandemic began. Most economists will define a recession after two consecutive negative quarters, and there is a chance that Q1 GDP may yet be revised upward, however the surprising drop adds to the economic turmoil in April. Inflation continues to run high, and the Fed is expected to raise interest rates 50 basis points at their policy meeting this week. That would mark the largest single interest rate increase from the Fed since before the Great Financial Crisis. In anticipation of higher short-term rates and as the result of continued price increases, the 10-year treasury rate eclipsed three percent on Monday for the first time since 2018.
Wall Street is also hurting after the S&P 500 and NASDAQ suffered their worst month since 2008. Amazon’s stock had its worst day since 2006 at the end of April after posting weak earnings and issuing softer guidance than analysts expected. Reduced consumption coupled with increasing costs contributed to the pessimistic outlook from the e-commerce giant.
Despite the chaos in other sectors of the economy, the multifamily industry remains on solid footing and appears poised for a soft landing. Fundamentals remain strong, although NER continues to decelerate from its historic highs last year. Elevated demand is fueling continued traffic and leasing activity, which in turn is supporting steady and elevated occupancy levels.
Key Takeaways – Data as of 5/1/2022:
Traffic and Leases:
Occupancy and Leased Percentage:
Net Effective Rent:
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