The Federal Reserve's 25-basis-point rate hike signals a shift in monetary policy, prompting multifamily leaders to brace for tighter underwriting standards and slower transaction velocity.
Executive vice president says higher rates will put upward pressure on cap rates, more conservative underwriting, and continued friction in transaction volume.
Founder says the rate hike will add to the current malaise, though no immediate or sudden repercussions are expected.
The Federal Open Market Committee has raised the federal funds rate by 25 basis points to a range of 3.75% to 4%, marking the first increase in over three years. While the Fed aims to curb inflation, multifamily industry executives anticipate a period of continued market malaise and increased friction in transaction volumes due to higher borrowing costs.
Industry experts anticipate that higher rates will lead to more conservative underwriting, upward pressure on cap rates, and reduced transaction volume as refinancing becomes more expensive.