If you’re an investor in multi-family real estate, you may have been wondering what’s going on with the market. Is the market heading towards recession? Or is it just a small blip on the radar? To get some answers to these questions, let’s take a look at some of the recession indicators and see what they tell us about the future for multi-family real estate.
Economy & Interest Rates
One of the primary indicators of recession is when we start to see a decline in economic activity. This could be from a decrease in consumer spending or from businesses scaling back their operations. We can also look at interest rates as an indicator because when they drop, this could be an indication that investors are expecting weaker economic growth ahead. Currently, both economic activity and interest rates remain healthy which is good news for multi-family real estate investors.
Employment & Wage Growth
The health of the job market is another key indicator to watch out for since it directly impacts demand for rental housing. When unemployment rises and wages stagnate, demand tends to fall which can hurt rental prices. Right now, employment numbers remain strong and wages have been steadily increasing which suggests that there is continued demand for rental housing and that prices should remain stable.
Consumer Confidence & Retail Sales
Consumer confidence and retail sales can also provide insight into whether or not we are headed towards recession. If consumers feel pessimistic about their future prospects, they are less likely to make large purchases such as buying houses or cars. Similarly, if retail sales are weak then this could be an indication that consumers are not willing to spend money on non-essential items, which could signal an impending recession. Fortunately, consumer confidence remains high and retail sales continue to grow which should mean steady demand for multi-family housing units in the foreseeable future.
While no one can predict the future with certainty...
looking at some of these recession indicators does give us some insight into what’s happening with the market right now and where it might be headed in the near future. From what we can tell so far, it looks like multi-family real estate remains a safe investment option even amidst potential economic downturns—great news for limited partners, families, high income earners, accredited investors alike! Would you like to learn more about multifamily investing? Click the button below to schedule an appointment with our team!
Comments