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The Multifamily Market’s “Supply” Issue

The prevailing narrative in 2023, and 2024, is that there remains a significant oversupply of new multifamily rental units compared to overall demand. While the newfound supply coming onto the market is already having an effect — with average rents nationwide virtually flat or down for the past seven months — it is having little impact on the one area of the market where there has been far too little building: affordable housing.

A new report by the National Low Income Housing Coalition (NLIHC) found the need for affordable rental housing is now more severe than it was prior to the pandemic, with the shortage of affordable rental homes up 480,000 from 2019. This gap isn’t just deep, it’s widespread, affecting every state and 50 of the largest metropolitan areas.

Amidst these challenges, investors are adjusting their strategies in response to uncertain inflation and interest rate levels, favoring short-term instruments and yield-focused approaches, with short-term affordable housing bridge loans emerging as a potential avenue due to their stability and cash flow yields.

To learn more, we invite you to read our full quarterly market commentary here.