The U.S. economy is now firmly playing defense as additional fundamental weaknesses emerge. Major equity indices have fallen back into bear market territory, and GDP will likely remain negative when the final estimate of second quarter economic growth is released on Thursday. Job growth and consumer and corporate balance sheets remain a few of the only strengths in the economy, and as inflation persists, consumer balance sheets are getting stretched. While consumer net worth remains at near historic levels, it peaked in the first quarter of 2022 and has been falling since. With the Fed indicating additional severe rate hikes, I expect a continued economic grind for the next few quarters.
While multifamily fundamentals have been softening for a few months, last week may have marked a significant point of stabilization, especially in the leading indicators traffic and leasing. Traffic fell slightly and leasing remained unchanged on a week-over-week basis, however both metrics recorded year-over-year gains for the first time in months. The increases were modest at the national level, however a number of major markets are seeing healthy increases in traffic compared to this time last year. I don’t think this will necessarily mean a new growth cycle is beginning, instead, it could represent a market bottom and an underlying level of continued demand for the foreseeable future.
Key Takeaways – Data as of 09/25/2022
Traffic and Leases:
Occupancy and Leased:
Net Effective Rent:
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