I saw a headline this week that really grabbed my attention:
Quite a bold statement from the largest commercial real estate firm in the world.
But bold as it may be, feels directionally correct.
You know that gut feeling you sometimes get, where you just know something's up? That's how I feel about the multifamily market right now.
I’m not as bold as CBRE to officially call a bottom. But if we’re not at the bottom, I sure do think we’re close. A combination of anecdotal and hard data suggest we've turned a corner.
Market Sentiment is Shifting
From the CBRE report referenced by GlobeSt (emphasis mine):
“Market sentiment has improved significantly, as many investors believe that values have bottomed,” said Kelli Carhart, leader of Multifamily Capital Markets for CBRE. “Investor conviction remains strong, buoyed by stabilizing fundamentals and strong absorption and a decreasing delivery pipeline.”
Further, John Chang of CRE brokerage Marcus & Millichap said in a recent research piece:
The real estate investor buzz has already begun. I can see it, feel it, sense it. The market is beginning to turn. The investment climate is thawing.
Chang goes on to say that a combination of:
- Fed Chair Jay Powell’s dovish (inclined to cut rates) comments last month
- The weak July jobs report
really flipped the investor sentiment switch.
And sentiment is further buoyed by a widening spread between the yield on 10-Year Treasurys and average cap rates: