Capital One: Interest Rates Still a Concern for Multifamily

Given the choice, more would rather buy than sell in 2017.

Jeff Lee, executive vice president, Capital One Multifamily Finance
Jeff Lee, executive vice president, Capital One Multifamily Finance

Bethesda, Md.—The multifamily market is showing concern over the interest rate hike, with 52 percent of professionals saying it will be their biggest challenge in 2017. According to a survey conducted by Capital One, interest rate concerns might signal the end of the current cycle for the market.

About 50 percent believe the market has entered the last legs of the race, while 7 percent feel the cycle is in its early stages. The amount of professionals concerned about interest rates were more than double the 25 percent that said rising costs were a greater concern, with only 5 percent showing uneasiness for potential regulation changes.

“We’ve conducted this survey several times now, in order to gauge industry sentiment. This year we found that, despite concerns around potential interest rate increases and the overwhelming sense that this current cycle is nearing its peak, multifamily professionals are still feeling fairly optimistic,” Jeff Lee, executive vice president of Capital One Multifamily Finance, told Multi-Housing News. “We look forward to, as always, pulling from our toolkit of products, services and expertise to help our relationships navigate challenges and meet their business goals.”

Multifamily professionals are going into the year with the goal of being buyers more than sellers. About 41 percent surveyed said they would be buyers, with 23 percent focusing on selling assets. That being said, both market demand and strong economic conditions are expected to drive the industry, with 30 percent of buyers saying market demand was a big driver and 28 percent of sellers. Economic conditions were seen as the largest driver for buyers at 28 percent and at 27 percent for sellers.

“While more industry professionals expect to be buyers than sellers in 2017, increasing interest rates are a concern,” said Grace Huebscher, president of Capital One Multifamily Finance. “In general, this year’s results seem more disparate than in the past, which could be a sign that, though cautiously optimistic, the market itself is not sure where things are heading.”

Image courtesy of Capital One