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Lack of New Multifamily Starts Bodes Well for Real Estate Investors
How supply-demand factors are a real estate tailwind
01.12.2024
Rising real estate construction costs, a skilled labor shortage and significantly higher interest rates have fueled a dramatic slowdown in multifamily construction starts, now almost 30% lower compared to the second quarter of 2022 (Figure 1).
Estimates expect declines to continue throughout 2024 and beyond; within two years, new multifamily deliveries are estimated to be less than half current levels. Within the supply-demand dynamics that underpin the real estate business, a drop in new multifamily starts constrains the supply of rental properties, providing a tailwind for rents to grow—good news for investors in real estate strategies.
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Source: FRED, CBRE, as of Q3 2023.
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