The 10-year treasury is down about 35 basis points from its recent high in mid-October as signs of slowing fundamentals in the economy continue to arise. Mortgage rates have also fallen in recent weeks, prompting a slight uptick in demand for mortgages. The recent drop in mortgage rates may bring some renters back into the buyer pool, cutting into multifamily performance, however, I expect this to impact apartment demand only marginally.
U.S. equity markets have performed well in recent weeks, leading some forecasters to call for a year-end rally across the stock market. Major indices have bounced back significantly since recent lows at the end of October. Economists are predicting a strong fourth quarter for consumer spending despite credit card debt reaching a record in recent weeks. Sentiment surveys indicate that the American consumer is pessimistic about the state of the U.S. economy, yet retail sales and consumer spending continue to increase. The U.S. economy is holding strong, but there are some cracks emerging.
Apartment fundamentals are predictably declining as we approach the end of the year. Rent and occupancy fell modestly last week, while traffic and leasing were flat. Revenue per available unit (RevPAU) dipped as the compounding effect of declining rent and occupancy sent RevPAU further into negative territory.
Key Takeaways – Data as of 11/12/2023
Traffic and Leases:
Occupancy and ATR:
Net Effective Rent:
Revenue Per Available Unit:
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