Capital One survey: Multifamily slowdown not coming next year

Don’t expect much if any slowdown in multifamily sales next year. According to a recent survey, multifamily professionals are ready to add to their apartment portfolios in 2020.

The survey from Capital One found that 74 percent of multifamily professionals said that they would primarily be buyers instead of sellers in 2020. Just 19 percent said that they would primarily be sellers next year.

The survey also had some good news for the Midwest: It indicates that investors are targeting multifamily properties throughout the region. Survey respondents said that secondary or tertiary markets offer the greatest opportunity in the year ahead. Capital One said that 40 percent of participants cited these markets as being areas of opportunity in 2020, with an additional 22 percent saying that urban markets presented the strongest opportunity and 15 percent saying the same for suburban markets.

Multifamily pros expect 2020 to be a strong year for this sector, too. Only 9 percent of multifamily professionals surveyed predicted less opportunity in 2020.

“Though the market prognosis was unclear earlier this year, the multifamily community is now more confident there will be a strong level of opportunity in 2020, even in the midst of potential changes brought on by issues like rent control,” said Jeff Lee, president of Capital One Multifamily Finance, in a statement. “It’s evident there is a strong investor appetite for multifamily properties, and coupled with the industry’s sturdy fundamentals, we believe the multifamily sector is positioned for sustained growth over the next year.”

The survey did, though, identify a point of contention among multifamily professionals on how investor strategy will be affected by legislators and the push for affordable housing next year. Nearly one-third (31 percent) believe the most notable move here will occur with respect to a shift in markets, 27 percent pointed to a shift in property types, while 14 percent believe that the call for more affordable housing will cause a decrease in overall investment. Just more than a quarter of respondents believe this would not change investor strategy.

Respondents were not nearly as divided when asked how rent control would affect their respective primary markets. Nearly two-thirds (63 percent) expect it would reduce investment. About a quarter (28 percent) believe rent control would not affect investment in their primary market, and only 9 percent of those surveyed said it would somewhat increase investment.

Banks are set to maintain their position as the go-to for financing in the multifamily sector, in line with last year’s results. When asked to name the source they expect to go to for the majority of financing in 2020, 37 percent said banks, followed by those who plan to turn to agency lenders (24 percent) and other capital sources (18 percent).