Multifamily distress grows, but data suggest a contained problem

An anticipated debt reckoning is beginning to surface for apartment buyers who bought at peak prices. A wave of loans matures this year and next. Debt market conditions are driving concerns that the apartment sector faces a steep fall. The loan maturities will create painful outcomes for some borrowers. But dealmakers and economists say the “sky is falling” commentary is overblown. “There’s a lot of capital out there to refinance and provide debt financing to properly leveraged assets,” a real estate attorney said on background with HousingWire TBD. He said “dabblers,” small-scale developers without strong lender relationships, will take the brunt of the squeeze. Well-established, large investment groups will have better success filling an “equity hole” when they refinance, he said. Apartment demand has shown resilience and now outpaces a declining construction pipeline. That resilience is driving both refinancing activity and gap-filling deals. Worry has been building Valuation questions arose in 2021, when investors paid record prices for apartment properties. Those deals produced a record year for total sales volume. Cheap debt financed many of those higher prices. The Federal R...