Earlier this week, the Fed cut the federal funds rate by a half point. According to the Fed, the choice of a 50 basis point cut comes with an emerging consensus around additional rate cuts this year and into 2025.
There is certainly room for additional cuts—rates are still about 300 basis points higher than they were at the start of the pandemic—and the move by the Fed is a good sign.
And there are other good signs as well.
Cushman & Wakefield’s August Multifamily Digest points to a shift in multifamily markets nationwide. All markets are local, but the national trends offer positive signs for our industry. According to C&W, the US multifamily vacancy rate declined modestly in the second quarter, the first such decline since 2021. Absorption at 140,000 units in the first half of this year nearly matched absorption for all of 2023, while construction starts have fallen sharply. Rent growth is positive, if still below historical averages.
For developers (and their lenders), it is much easier to follow rates as they go down than to chase them as they go up. Deals that have gone quiet are coming back to life, and new deals are starting to pop up.
With rates down and industry fundamentals showing signs of improvement, we just might be starting to turn the corner.
When you’re ready to talk about your next project, please schedule a call.
About AGM Financial Services, Inc. Family-owned with over 30 years of experience, AGM has closed over $10 billion in FHA-insured multifamily project loans nationwide. We underwrite, fund, and service all of our loans. Developers and owners can count on AGM to be accessible, transparent, consistent, and ready to lend. From new construction to substantial rehabilitation to acquisition and refinance — for both market-rate and affordable projects — we can get the deal done. To learn more about AGM, call 800.729.4266 or visit agmfinancial.com.
