This multi-hundred-billion dollar increase would depend on the 10-year treasury rate and whether it stays in the 2.5% range.
Volume growth would also depend on the treasury rate – if it suddenly rises, it could slow down to 3%, but a positive outcome could result to 6% growth.
“The multifamily market is poised for growth and record origination volumes in 2017 under either interest rate scenario. This fact underscores the underlying strength of the multifamily sector thanks to a strong labor market, demand from new households, and steady absorption rates," said Steve Guggenmos, Freddie Mac Multifamily vice president of research and modeling. "Consequently, a moderate rise in interest rates alone will not be enough to cause any significant disruption to the multifamily investment market."
The government-sponsored enterprise also expects the nationally aggregated cap rate to be from 5.8% to 6%, which will help reduce the rate of property price growth from 13% in 2016 to a range of 2.9% to 4.5% this year.
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Multifamily origination volume could grow to around $295bn this year, according to new data from Freddie Mac.