Multifamily Interest Rates In 2022 (Our Thoughts)

financing a project market research market updates multifamily financing real estate financing real estate market Jan 25, 2022

What's the multifamily market like right now? Here are our thoughts on the markets we invest in and how we feel about interest rates for real estate investments (2022).

I hope that rates go up in 2020. Because we need things to calm down a little.  

Sherida Zenger: While I think they're going to because I think everyone's realizing it. We can take it and it, we need to kind of slow things down a little bit. Like we need another little bit of a reset. Right. Like a reality check. Yeah. Cause I think things have gotten kind of crazy out of control and when people have an insane amount of equity in their property, which is awesome, but there's still a huge need there. 

We need a little bit of a correction.  

Steve Olson: We're all hoping for a little bit of a, I don't want to call it a pause. We need time to gather. But we don't want it to blow. Don't tank on us. Yeah. And, and I think that the federal reserve, you know, they're raising rates. I think they're very cognizant of that. 

My theory, you hear it here first on the Build-to-Rent Show is that they are much more afraid of a rapidly declining housing market than they are of inflation because inflation, you can kind of hide. I don't feel it right away, but man, if, if they Jack rates up and it makes everything go sour that's definitely more in your face. 

Then some, I don't want to call it massive inflation. I heard like 7% yesterday. That's massive. Yeah. They want to dial that back. And so an interest rate increase of some kind is, is needed, but you know what, what's that magic number because we say, you know, well, if they raised the rates, it's gonna cause all this inventory on the house. 

No, no, it's not. There's not a lot of inventory on the housing market.  

Sherida Zenger: There's a lack. I think they're going to slowly trickle that. See where they get to a point where people start to maybe pull back and then say, okay, maybe we just hang out here for a minute. It's going to be a push-pull because there's a thing too. 

People have enough cash that if they really want a specific rate they can buy down the rate. Right. Yeah.  

Steve Olson: What does it do to these poor tenants? That, that can't do that? I mean, the here's the thing is rates going up. I think eventually that shows up in the form of higher rents too. 

If you're having to take on debt at 5% as a landlord it doesn't happen right away, but I've noticed that rents accommodate that it takes 18 to 24 months because you need a bunch of leases to reset in the market properties to go vacant, go look for something new.

That begins to show up.

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