Rent and Operating Trends Week of November 20th

U.S. retail sales accelerated in October after three consecutive months of mixed results. On a seasonally adjusted basis, retail sales increased 1.3%, providing further support that the American consumer remains well capitalized and willing to spend. As Americans continue to spend, prices are likely to keep rising, and thus the Fed is likely to keep hiking interest rates to combat inflation. A number of Fed governors have recently made public remarks indicating continued rate hikes well into next year. The pace and severity of increases may slow down, but rates will likely keep rising until inflation falls back to around 2%.

2022’s multifamily operating slog continues, with all key indicators falling or remaining flat once again last week. Transaction activity has all but dried up, and many owners with loans maturing in the coming months are focusing on building reserves in order to refinance debt. Buyers and sellers remain too far apart for many owners to accept offers at the current time. As a result, hold periods are being extended and owners with maturing debt or expiring rate caps are facing significant issues meeting return expectations. A number of owners have resorted to limiting or pausing investment distributions to create a buffer against interest rates for newly refinanced loans. On the operations side, performance remains steady, but continues to slow.