Chandan Economics

Back-to-back quarters of price gains in the small multifamily sector could signal valuations have already turned a corner. Buoyed by a rising occupancy rate and higher average net operating incomes (NOI), optimism in small multifamily is building. Read more from Chandan Economics: https://bit.ly/4kTlYCm #ArborResearch #Multifamily #RealEstateInvesting

As costs rise and new tariffs target key trade partners, how much higher will rents climb before affordability breaks? Can new residential construction still pencil out as tariff costs hit every American? TLDR: This week’s economic data contrasts with policy discussions on tariffs. The latest Bureau of Labor Statistics' Producer Price Index (#PPI) showed final demand goods rising 0.3% in February, a slowdown from January, while the Consumer Price Index (#CPI) indicated annual inflation easing for the first time in five months. Unfortunately, these backward-looking reports don’t the reflect inflationary pressures new tariffs will introduce. New tariffs on key trading partners will drive up residential #construction #costs, squeezing affordability. The National Association of Home Builders warns tariffs on Canadian softwood lumber alone could add $7,500 to $10,000 to a new home’s cost. The The Wall Street Journal reported this week that while investors expect builders to absorb these costs, given market conditions, they will inevitably be passed on to buyers and renters. The impact extends beyond for-sale single-family homes. Higher construction costs mean higher rents for MFR and build-to-rent (#BTR) developments, straining affordability nationwide. Arbor Realty Trust and Chandan Economics reported in early 2024 that multifamily permitting had already slowed due to oversupply concerns. I expect this trend to continue in 2025 as costs climb. While BTR and single-family rentals (#SFR) may absorb some demand, these units already command higher rents. With escalating costs, breakeven rents must be higher than originally underwritten, intensifying lease-up risks and affordability challenges. A potential recession adds a dual threat: limiting achievable rent increases while deepening financial hardship for renters. Labor shortages adds even more complexity. As Aziz Sunderji highlights, undocumented workers are crucial to construction, especially in Texas and California. Potential deportation actions could worsen labor shortages, driving up costs and causing significant project delays. The National Association of Home Builders estimates that labor accounts for 25% of a home's price. Meanwhile, with framing lumber prices surging and Canadian lumber tariffs possibly exceeding 50%, the impact could resemble COVID-era supply chain disruptions. Chandan Economics recently underscored that, despite economic uncertainty, the SFR sector remains a key driver of rent growth and maintains strong occupancy amid high mortgage rates. However, the sector is shifting. While a plateauing of BTR/SFR development was expected, 2025 was initially projected as a year of stabilization rather than decline. Yet, with occupancy falling and an influx of completions, the sector’s trajectory remains uncertain. Whether it stabilizes or faces deeper challenges depends on how developers and investors navigate rising costs, shifting renter demand, and broader economic conditions.

Did you know 99 of 100 of the largest U.S. single-family rental markets posted positive average rent growth last year? Read Chandan Economics’ new analysis to find out which city had more price momentum than any other: https://bit.ly/3Fu0oEo #ArborResearch #SFR #RealEstateInvesting

Immediately following yesterday's #CPI release, the probability that #Fed officials would keep rates unchanged at their May 2025 meeting increased by about 7%. The slight cooling in #inflation comes amid a flurry of economic policy moves by the White House that could have both short- and long-run implications for growth and inflation. Overall, the small change in CPI had a negligible impact on the prevailing outlook for key industries such as housing and commercial real estate but added some optimism to an increasingly uncertain economic landscape. In the months ahead, inflation data will likely take on greater importance as changes to US trade policy filter into pricing dynamics. Read the full Chandan Economics analysis by following the link in the comments. #cre #realestate #housing #rentals #apartments

This month's CPI data release comes amid a wave of consequential policy developments out of Washington and a volatile week on Wall Street. Our latest Chandan Economics Real Impact report cuts through the noise to determine how the latest inflation data affects the interest rate outlook for 2025. Immediately following the release, forecasts for next week’s FOMC policy meeting consolidated further around the expectation of no rate cuts but caused a notable shift in the forecast for the May Fed meeting. View our full analysis of CPI, interest rate forecasts, and how both affect the rental housing outlook via the link in the comments. (cc: Jonathan O'Kane; Sam Chandan)

Real Impact by Chandan Economics explores how cornerstone data releases impact interest rate forecasts and shift the rental housing sector's outlook. ? In this briefing, we examine today's release of the Consumer Price Index (#CPI) by the Bureau of Labor Statistics. Despite #inflation easing slightly, markets increasingly expect that the FOMC will keep rates unchanged at its March and May policy meetings. For our full breakdown of February's CPI data and its impact on the #rental #housing sector, see the link in the comments below. #multifamily #sfr #realestate #cre #fomc #ratecuts #data #economy cc: Sam Chandan Jason M. Davis

Chandan Economics analyzed the top markets for multifamily permitting by capita to answer the question on every investor’s mind: What is the next hot market? Find out why ??Austin, TX, climbed to the top of the list and how other leading cities compared. Read more: https://bit.ly/42XCr20 #ArborResearch #Multifamily #CensusData

Arbor employees recently attended a book launch at NYU Stern Real Estate for “Living Beyond Your Dreams: 11 Principles for Triumphing in Life and Leadership,” by William Ferguson Co-Chairman and CEO of Ferguson Partners and Founder of The Ferguson Centers for Leadership Excellence. Ferguson interviewed 24 CEOs, presidents, and board members with diverse backgrounds from multiple industries, including real estate, for their perspectives and advice on career advancement, leadership excellence, and good citizenship. Ferguson’s book includes reflections from Priscilla Almodovar, President and CEO of Fannie Mae Multifamily, a quote from her on the Spanish term “ganas,” and why people shouldn’t settle for ordinary career paths or self-limiting dreams. “It’s like grit," said Almodovar on ganas. “But it’s not just grit. It’s a desire or a self-confidence where you know that even though you might not be the smartest person, you will somehow figure it out.” Thank you to Dr. Sam Chandan, Founder and Non-Executive Chairman of Chandan Economics and Founding Director of the Chen Institute for Global Real Estate Finance at NYU Stern School of Business, for hosting this discussion and creating a forum for young professionals to learn from the careers of diverse leaders who have made significant contributions to their industries.? #ArborRealtyTrust #Leadership #Multifamily Tres Seippel, MAI, MRICS | Dan Peltier | Langston Su

The Arbor Small Multifamily Price Index shows valuations rose in each of the final two quarters of last year as property-level revenues enjoyed a rosier outlook. Learn more in the latest Small Multifamily Investment Trends Report, developed in partnership with Chandan Economics: https://bit.ly/41H5yUR #ArborResearch #Multifamily #RealEstateInvesting

How did Friday's Jobs Report impact the outlook for the #multifamily and #rental #housing sector writ large? Interest rates are the connecting thread. Year-end projections for interest rates consolidated slightly. The majority forecast of three quarter-percentage-point cuts between now and the end of 2025 ticked up from 31.9% prior to the employment release to 33.0% immediately following it. See the link in the comments for the full Chandan Economics analysis. #interestrates #labor #data #cre #realestate #ffr #fed #federalfundsrate #ratecuts #ratecut #forecast