The multifamily industry experienced a slowdown in growth and decline in operating fundamentals in 2022. Occupancy rates fell and rents, while rising in the first half of the year, have since declined nationwide. However, average net effective rents in most markets remain above pre-pandemic levels. The industry is expected to return to normal in terms of seasonal trends in 2023, but overall growth is likely to be weak in most markets. Demand for housing is concentrated in the sunbelt and southeast, with Texas, Florida, Georgia, and the Carolinas seeing the strongest demand. The trend of remote work and virtual touring is expected to lead to changes in the industry, including shorter and more flexible lease terms and a shift in housing preferences.
The US economy fell into a slight recession in 2022, and is likely to experience another period of shrinking activity before the next prolonged growth cycle. However, the return to stable and sustainable growth is necessary after the extreme volatility and growth of 2020 and 2021. The ongoing pandemic has also led to a transformation of many industries, including the multifamily industry. The death of the office and the hybrid or remote work experience, as well as the reliance on virtual touring and shorter and flexible lease terms, are expected to be long-term changes for the industry. Additionally, continued technological advancements will reshape the industry, as companies look to operate in a more lean and conservative manner in the face of economic headwinds.
As we move into 2023, it’s important for industry professionals to stay informed and adapt to the changing market. By staying informed, being flexible, focusing on strengths, networking and taking action, you’ll be better equipped to weather any challenges and capitalize on new opportunities as they arise.
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