Every year since 2018, I’ve predicted what I believe the coming year will bring for multifamily real estate investment. (You can read my 2025 predictions here, and watch the webinar as well.) And every year, I calculate my accuracy on the previous year’s predictions. This exercise is important to me. It demonstrates our expertise in multifamily real estate, and our commitment to straightforward communications with investors. Predicting 2024 events was more difficult than any of the previous five years I’ve done this, given the confluence of unique economic uncertainties. The biggest unknown: whether the U.S. Federal Reserve would cut interest rates, and by how much.
I entered this year with an average accuracy rate of 93%. With each prediction worth 10 points, my accuracy for 2024 is 87%. And my average accuracy is now 92%. Read on to find out how I did. Point totals are next to the original prediction.
1: Interest rates will stay high. (10/10)
At the end of 2023, inflation was slowing and so had the cadence of interest rate hikes. I believed the 10-year Treasury yield would hover from 3.50% to 4.50%, but I didn’t expect a substantial drop. A year ago, the market was euphoric about potential rate cuts. But I didn’t see that many happening, and I was right. The 10-year Treasury yield remained within the predicted range, reaching its lowest point of the year, 3.63%, in September. It ended 2024 at 4.58%.
2: A recession is likely. (3/10)
I underestimated the effects of two things on multifamily real estate investment. First, the Fed’s fight to curb inflation by pulling money out of the economy. Second, the impact of fiscal stimulus including the Inflation Reduction Act and the CHIPS Act in 2022. The GDP ended Q3 with a 3.1% annualized growth rate driven by strong consumer spending but ended the year with lower year-over-year growth. Relatively low unemployment increased in 2024. And the inverted yield curve, a traditional harbinger of recession, was the longest in history. Investment in artificial intelligence and tech companies, a form of infrastructure spending, created a wealth effect that stimulated consumption.
3: Multifamily market fundamentals will remain strong. (8/10)
We discussed this throughout 2024, but the multifamily real estate investment sector achieved an unusual equilibrium: Near-record supply was matched by demand driven by the relatively lower cost of renting versus homeownership. Long term, multifamily demand fundamentals are strong, but rents and occupancy last year were in recovery mode. A serious supply shortage is looming. “Extend and pretend” limited deep distress triggered by maturing loans made during the sales frenzy of 2021-22. Average year-over-year rental rates in markets across the U.S., as well as in Origin’s target markets, stabilized as Multilytics®️ predicted.
4: New multifamily development will come to a standstill even as demand increases. (10/10)
The decline in new multifamily building starts is happening, but it started a little later in the year than I expected. According to Newmark, starts and permitting declined sharply in Q3 over their peaks in 2022. As of November 2024, construction starts were down from late 2022 to early 2023, according to Yardi Matrix. Development declined in Q3 2024 to an annualized rate of 325,000 units, but overall activity is declining more slowly than expected, the report said. However, 2024 was another lost year for housing development—and we can’t fix that overnight.
5: Elevated multifamily valuations have mostly corrected but will fall lower. (9/10)
According to Freddie Mac’s 2024 Midyear Multifamily Outlook, an initial steep decline in property prices has become more gradual in recent quarters. But trends suggested that valuations in multifamily real estate investment may keep falling because of supply and continuing higher interest rates. A CBRE executive in November cited a 20% to 30% overall drop in multifamily values since the peak in 2021, but positive fundamentals had poised the sector for a turnaround. The Kansas City Fed reported that in Q3 2024 multifamily valuations were recovering. According to the Green Street CPPI, a public markets benchmark, the value of the apartment sector rose 14% in 2024 but was still 20% below the 2022 peak. Buyers and sellers couldn’t meet in the middle to seal a deal, so transactions were low. Activity picked up when interest rates dipped in Q3, but the market seized up again in Q4.
6: Rent growth will stabilize to historic norms. (10/10)
You can find more specifics in our outlook for 2024 in our Multilytics®️ rent growth forecast for 2024. Results speak for themselves—and for the accuracy of Multilytics’ predictions. You can find them and our latest outlook in Multilytics’ 2025 forecast.
7: More distressed assets will emerge in multifamily in the second half of the year. (10/10)
This prediction contradicted some market sentiment in early 2024. We’ve written about “extend and pretend,” which had a dampening effect on distress, but the market remained mostly paralyzed. No one is confident about valuations. According to Newmark, the total amount of securitized debt past its original maturity still outstanding for multifamily totaled $34.9 billion in Q2 2024, with $22.5 billion lacking extension options; in Q3 2024 it was $42.3 billion, with $26.9 billion lacking extension options. The Mortgage Bankers Association also reported that multifamily delinquencies increased slightly in Q3 over Q2.
8: Home prices will start to correct. (7/10)
Earlier in 2024, I was at a lunch attended by about 20 investors in Austin, telling them how multifamily fundamentals were going our way because of continued high home prices. To a person, this group told me that their home values were down 10% to 20%. The national numbers tell a different story: The National Association of Realtors reported that in Q1 through Q3, home prices rose but at a slower rate than 2023. Home prices are nuanced down to the neighborhood level, but in many cases, homeowners decided they didn’t want to trade their 3% or 4% mortgage for one in the low 7s.
9: High insurance rates are here to stay. (10/10)
While we weren’t expecting the violent repricing we saw in 2022, we saw no evidence of insurance rates repricing or even correcting measurably over the course of 2024. And in our experience, when insurance prices increase, they have never been corrected back to the previous level. That’s with a decline in extreme weather events.
10: Consolidations will shrink the real estate investment industry. (10/10)
While it’s difficult to gather definitive proof that mergers and acquisitions in commercial real estate increased over 2024, there are trends of consolidation and concentration of capital among larger firms. According to Deloitte, dollar volumes in global M&A declined 62% to $158 billion in 2023. But M&A activity through May 2024 rebounded in North America from the year-earlier period by 50%. Big players made big moves, such as Blackstone completing a $10 billion acquisition of AIR Communities in June and Ares announced its acquisition of GLP International for $3.7 billion (that deal won’t close until this year). The Property Chronicle cites increased consolidation by asset managers and churn on PERE’s list of top asset managers, growth driven primarily by M&A. According to CoStar, publicly traded U.S. REITs raised $84.7 billion in 2024, the most in three years.
Previous predictions: If you’d like to see my predictions for years past, you can find them here: 2023, 2022, 2021, 2020 and 2019.
