Multifamily market “poised for growth” this year, says Freddie Mac

A strong labor market, demand from new households, and steady absorption rates strengthen the sector

Multifamily market “poised for growth” this year, says Freddie Mac

Multifamily origination volume could grow to around $295bn this year, according to new data from Freddie Mac.

This multi-hundred-billion dollar increase would depend on the 10-year treasury rate and whether it stays in the 2.5% range.

Read more: Commercial/multifamily off to uncertain start after strong 2016

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."

Read next: Single-family housing starts hit 10-year high

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.