Top 2025 Predictions for Multifamily Real Estate

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The 2024 Year in Review

• Early 2024 saw a strong start in home sales, but momentum slowed as mortgage rates climbed back to 7%–7.5% during the core spring selling months. This resurgence in rates dampened buyer enthusiasm and tempered the housing market's initial optimism.

• The Sunbelt and affordable markets continued to lead growth; however, states like Florida and Texas experienced setbacks due to rising listings and new home inventory. This increase in supply softened sales, indicating a more complex market dynamic in traditionally booming regions.

• Affordability concerns deepened, with home sales to first-time buyers hitting record lows amid rising prices and high mortgage rates. This trend underscores the growing challenges for new entrants trying to access the housing market.

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Top 10 2025 Predictions for Multifamily Real Estate

• Rent growth exceeding 4% is expected in cities like Miami, Seattle, New York, and Los Angeles, driven by high demand and limited construction. This supply-demand imbalance underpins a positive forecast for multifamily investors in 2025.

• Elevated borrowing costs and stricter bank lending continue to pose challenges, but debt funds are filling the gap in financing. As loans from 2021-2022 mature, some owners may face refinancing struggles.

• High home prices and mortgage rates are keeping renting attractive for many Americans, fueling demand. Limited new construction and tight rental supply are likely to sustain rent growth through 2025.

• click on the link to see the rest of the list.

Commercial real estate trends for 2025 link

• The U.S. commercial real estate market is stabilizing as it heads into 2025, with significant financings like the $3.5 billion refinancing of Rockefeller Center indicating renewed investor interest. Debt funds are increasingly stepping in as traditional banks pull back, especially after the 2023 regional bank failures.

• The NYC office market has rebounded robustly in 2024, creating a tight market not seen since before 2019.Tenants are facing challenges finding space, with many desirable locations quickly occupied, leading to rising rents and low vacancy rates, particularly in prestigious areas like Park Avenue.

• The trend of converting unoccupied office buildings into residential spaces is gaining traction as office vacancy rates hit record highs, causing property values to plummet. In 2024, there have been 73 completed conversion projects with 309 more planned or underway, predominantly focusing on office-to-residential transformations, contributing approximately 38,000 new residential units.

Home sales poised to increase next year: Zillow link

• Zillow projects home sales to rise from 4.06 million in 2024 to 4.16 million in 2025, driven by anticipated rate declines. Home values are expected to appreciate by 2.2% in 2025, aligning with November’s annual growth of 2.3%.

• Inventory challenges persist, with total listings 26% below pre-pandemic norms despite a 17.2% increase compared to last year. New listings in November were still 13.5% lower than pre-2020 levels, but up 0.6% year-over-year.

• Buyers face less competition, as only 27.8% of homes sold above the list price in November, continuing a downward trend since July. Major metros like Austin, Tampa, and San Antonio saw the largest monthly price drops.

Zumper’s 2024 annual rent report reveals a transformative year in the rental market link

• Renters gained more bargaining power in 2024 due to a record-high influx of supply, leading to concessions like waived fees and free rent in cities like Austin, Phoenix, and Miami. Stabilizing or declining rents in these cities contrasted with spikes in the Northeast and Midwest.

• The national median rent for one-bedroom apartments rose 2.8% to $1,538, while two-bedrooms increased 3.2% to $1,906, even as 42% of renters' pre-tax income went to housing. This financial strain has led to declining satisfaction, with only 50% of renters feeling they have a good deal.

• Growing demand in tech hubs such as San Francisco pushed rents higher, while affordability concerns prompted declines in San Diego and stabilization in Florida, Texas, and Arizona. New York set a record with $4,500 for a one-bedroom, marking the highest in the nation.

10 surprising countries to get a golden visa through real estate investment link

• Countries like Panama and Northern Cyprus offer low minimum investments starting at $300,000 and no minimum, respectively, making residency more accessible. Northern Cyprus requires proof of funds (£8,000 for two years), and Panama appeals with its low monthly income requirement of $1,000.

• Popular destinations like Spain and Portugal have discontinued real estate-linked golden visas, pushing interest to less conventional countries like Mauritius and Cambodia. Mauritius stands out with its projected 95% wealth growth by 2024, while Cambodia offers permanent residency after a $100,000 investment.

• Golden visas can be controversial due to their potential to inflate local housing markets, but they offer significant perks. For instance, St. Kitts and Nevis provides visa-free travel to over 150 countries, and Costa Rica features eco-friendly living with a minimum investment of $150,000.

Key Miami neighborhood sees largest 2024 retail rent growth in Americas link

• Miami's Design District led the Americas in retail rent growth, soaring 67% year-over-year to $500 per square foot. It ranked fifth globally in Cushman & Wakefield's report, moving up six spots from last year.

• Other Miami neighborhoods, including Wynwood and Brickell Boulevard Corridor, saw double-digit rent growth, while Lincoln Road remained flat. This demonstrates Miami's increasing appeal to retail investors and businesses.

• Retail rents in the Americas rose 4% overall, surpassing pre-pandemic levels by 6%, with U.S. rents showing nearly 11% YOY growth. Europe and Asia Pacific lagged behind with slower growth rates.

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Vidit

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