In the first quarter of 2023, multifamily sales were almost $40 billion lower than they had been the year before. To put that into context, the loss of $40 billion is a 74 percent drop from the year prior, signaling a slowdown in one of the most active real estate industries in the midst of rising interest rates and banking unrest. Brokers and investors said they don’t anticipate a major increase in building sales until next year, in part due to the approximately 500,000 new units expected to be delivered (the highest amount in more than four decades) this year.
After historic rises, rents are staying the same or even decreasing in some major metro regions. Interest rates and the cost of construction have made buildings less profitable yet most owners are not willing to sell at a discount. Unless the economy changes the unfortunate end to this stalemate is like forced sales that come when current owners are not able to refinance. Seems weird to root for that outcome but it has been a weird year.