Felson Companies, Inc.

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After 2 years of?cap?rate expansion (pricing declines), we are expecting to see?cap?rates?for multifamily assets compress back down (pricing increases), albeit at a gradual pace.?This forecast, as outlined in the below chart from CoStar’s 2024 report on the Seattle market, is a function of forecasted drops in interest?rates?and inflation, while rent growth accelerates.?We see now as a really exciting time to buy apartments as the market is expected to bottom out! ?

One of the reasons we are bullish on investing in Seattle apartments is a function of the supply slowdown of new apartments coming online in the next few years.?According to CoStar, new construction is lower than it has been in the last 10 years, creating fantastic opportunities for existing properties to capture demand and drive rental growth. ? Want to see the full report??Send us a DM! Source: CoStar Report, October 2024

Market selection is very important to us in our acquisition strategy.?Here’s why we are bullish on expanding our footprint in Seattle: ? Economic Powerhouse:?Long known for being a hub of innovation and employment, Oxford Economics ranked Seattle amongst the top 6 of their 2024 Global Cities Index based on GDP size, growth and stability. ? Affordability Dynamics:?Purchasing a home continues to very difficult in our target markets, with Seattle ranking 4th, respectively, as highest Median Home Price to Median Rent in major US Markets according to a 2024 report from Zillow. ? Absorption during Supply Wave:?In a year of record supply, Seattle has absorbed 102% of the newly delivered apartments so far in 2024, whereas many other markets have seen negative absorption rates (Denver 91%, Dallas 74%, and Atlanta 83%) which reinforces Seattle’s strong demand fundamentals. (CBRE 2024-Q2 report) ? While you hear a lot about Texas and Sun Belt cities, we believe The Emerald City is a great place to invest in multifamily. ?

Market selection is very important to us in our acquisition strategy.?Here’s why we are bullish on expanding our footprint in Seattle: ? Economic Powerhouse:?Long known for being a hub of innovation and employment, Oxford Economics ranked Seattle amongst the top 6 of their 2024 Global Cities Index based on GDP size, growth and stability. ? Affordability Dynamics:?Purchasing a home continues to very difficult in our target markets, with Seattle ranking 4th, respectively, as highest Median Home Price to Median Rent in major US Markets according to a 2024 report from Zillow. ? Absorption during Supply Wave:?In a year of record supply, Seattle has absorbed 102% of the newly delivered apartments so far in 2024, whereas many other markets have seen negative absorption rates (Denver 91%, Dallas 74%, and Atlanta 83%) which reinforces Seattle’s strong demand fundamentals. (CBRE 2024-Q2 report) ? While you hear a lot about Texas and Sun Belt cities, we believe The Emerald City is a great place to invest in multifamily. ?

Market selection is very important to us in our acquisition strategy.?Here’s why we are bullish on expanding our footprint in Seattle: ? Economic Powerhouse:?Long known for being a hub of innovation and employment, Oxford Economics ranked Seattle amongst the top 6 of their 2024 Global Cities Index based on GDP size, growth and stability. ? Affordability Dynamics:?Purchasing a home continues to very difficult in our target markets, with Seattle ranking 4th, respectively, as highest Median Home Price to Median Rent in major US Markets according to a 2024 report from Zillow. ? Absorption during Supply Wave:?In a year of record supply, Seattle has absorbed 102% of the newly delivered apartments so far in 2024, whereas many other markets have seen negative absorption rates (Denver 91%, Dallas 74%, and Atlanta 83%) which reinforces Seattle’s strong demand fundamentals. (CBRE 2024-Q2 report) ? While you hear a lot about Texas and Sun Belt cities, we believe The Emerald City is a great place to invest in multifamily. ?

The recent National Multifamily Housing Council survey indicates promising signs for multifamily investors, with indexes for sales volumes, equity financing, and debt financing reaching their highest levels since April 2022. This improvement, fueled by the Fed's interest rate cut, reflects increased availability of capital and borrowing opportunities, although market tightness continues to loosen, particularly in the South and Sun Belt due to a surge in new construction.

This article signals positive trends for multifamily investors and asset managers, with multifamily sales stabilizing and volumes potentially increasing for three consecutive months. As market conditions improve, this creates opportunities for strategic investments and capital deployment in the multifamily sector. ?

This?highlights strong market fundamentals and value-added opportunities for multifamily investors, especially those ready to act in a cautious, evolving environment. The potential for significant rent growth, particularly as supply tightens, presents a favorable landscape for strategic acquisitions and long-term asset appreciation.?

The insights from Goldman Sachs regarding the prolonged challenges of housing affordability highlight the need for commercial real estate companies to?strategically invest in multifamily properties. By understanding market trends and consumer demand, they can position themselves to effectively address the affordability crisis and capitalize on opportunities in the evolving real estate landscape. ?