By John Triplett
As the economy grows and the job market remains strong, what will 2025 look like for the multifamily industry?
“We expect multifamily advertised rents to increase moderately in 2025, by 1.5% nationally,” writes Yardi Matrix writes in its winter report. “Many of the underlying conditions that drove strong demand should persist in 2025. Most notably, weak buying power and the high costs of homeownership continue to keep potential buyers in apartments longer.”
While 2025 looks good, the market faces some questions, “including the impact of potential economic policy changes, how long it will take to absorb deliveries in high-growth Sun Belt markets, and whether interest rates will fall enough to revive transactions and avoid distress,” the company says in the Multifamily Outlook for 2025.
Yardi Matrix says the incoming Donald Trump administration will implement a new policy course.
“Some campaign policies such as relaxing regulations, eschewing rent control and reducing taxes should have a positive impact on multifamily. However, tariff threats and promises of large-scale deportations could raise prices and lower apartment demand,” the report says.
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Yardi Matrix says, “The elephant in the room for the forecast: a new administration that promises to bring about numerous policy changes. Growth should benefit from some new policies” such as extension of tax cuts and relaxing of some regulations.
“But some proposed policies could be detrimental to multifamily housing. Trump’s tariffs could not only elevate overall inflation but increase the cost of building materials, which could hinder development and possibly lead to retaliation from other countries.
“Also, higher costs could inhibit the Federal Reserve from cutting interest rates, which are such a key hurdle to commercial real-estate transactions.
The campaign promise for large-scale deportations of undocumented immigrants is another policy with potential negative impact as it could reduce housing demand and construction workers and introduce other areas of uncertainty. “Immigration, both legal and illegal, has been a source of demand for multifamily,” Yardi Matrix writes in the report.
Work-from-home is another driver of rental demand, even as calls to return to the office become more prevalent.
Roughly two-thirds of office workers are either hybrid or fully remote, which translates into more people wanting space for home offices. Work-from-home also boosts demand in suburbs and less expensive metros.
Read the full report from Yardi Matrix here.
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