The Multifamily Real Estate Group LLC Unlocking the potential of multifamily living
ABSTRACT Florida's multifamily real estate sector stands at the intersection of population growth, economic resilience, and housing market challenges in 2024. Anticipated as a year of tempered growth, the state foresees sustained
FLORIDA’S MULTIFAMILY FUNDAMENTALS FOR 2024 Manny J Herrera
demand in the multifamily sector fueled by an influx of residents, despite a projected nationwide economic slowdown. This projection sets the stage for a complex landscape where rental dynamics and market competition will evolve amidst housing shortages, rising home prices, and fluctuating mortgage rates.
Manuel J. Herrera
The Multifamily Real Estate Group, LLC
Introduction
F
lorida's multifamily real estate landscape appears to be dynamically driven by projections of steady population growth, economic resilience, and housing market challenges. Anticipated as a year of tempered growth, Florida foresees a continuing influx of residents, contributing to sustained demand for housing in the multifamily sector. Despite an expected nationwide economic slowdown, Florida's economy is predicted to remain comparatively robust. While housing shortages and rising home prices pose home ownership challenges at the overall residential real estate market level, within the multifamily market will bring increasing competition, influencing rental dynamics. The balance between housing supply, affordability concerns, and evolving buyer behaviors amid fluctuating mortgage rates shapes the intricate landscape of Florida's multifamily market in 2024. This Photo by Unknown Author is licensed under CC BY-SA-NC
Forecast Based on the opinions and forecasts about Florida's economy and real estate market for 2024, here are some potential insights for the multifamily market: 1. Population Growth: Florida's population is expected to continue growing, although at a slower pace. This ongoing population increase is likely to sustain the demand for housing, particularly multifamily properties. 2. Economic Conditions: Despite an anticipated economic slowdown, Florida's economy is predicted to remain relatively resilient. The state's economy is expected to maintain growth, notwithstanding at a slower rate, which could positively influence the multifamily housing market. “The Legislature’s Office of Economic and Demographic Research released a report this week that showed the Florida state’s estimated population in April was 22,634,867, an increase of nearly 359,000 people, or 1.61%, from a 2022.” “Population projections through 2028 show growth could begin to taper off, however. The rate of growth is expected to slow to 1.51% next year, 1.37% in 2025, 1.3% in 2026, 1.24% in 2027 and 1.18% in 2028."
3.
Housing Market Challenges: The state is experiencing housing shortages, driven by fast population growth and limited housing supply. This imbalance could lead to increased competition within the multifamily market, potentially driving rental prices higher.
4. Home Prices and Demand: Home prices are projected to continue rising due to tight inventory, which might encourage more individuals to opt for rental properties, boosting demand for multifamily units. 5. Mortgage Rates and Buyer Behavior: While mortgage rates are anticipated to stabilize in the latter half of 2024, historically high rates might deter some potential homebuyers. This could indirectly benefit the multifamily market as people may opt to rent rather than buy. This Photo by Unknown Author is licensed under CC BY 6. Job Market and Affordability: A strong job market and favorable tax policies in Florida will continue attracting individuals and families to the state. However, concerns about affordability due to rising housing costs, will also drive more individuals towards renting. Under Construction Units
7. Capitalization Rate
FIGURE 1 CAP RATE CURVE Looking ahead to 2024, Florida's multifamily market might indeed sustain demand. Factors such as population growth and economic resilience often contribute to ongoing demand for rental properties. Challenges in the housing market, including high home prices and mortgage rates, could drive more individuals towards renting rather than homeownership, thus further supporting the rental market's robustness.
A word of caution However, economic downturns can disrupt these projections. Uncertainties in the economy, job markets, or unforeseen events can impact housing demand, affordability, and overall market dynamics. Policies and interventions that support affordability, rental assistance programs, and measures to stabilize housing could play pivotal roles in mitigating the potential impact of economic downturns on the rental market. It's essential for multifamily real estate stakeholders, and housing advocates, to continually assess the market conditions, monitor legislative changes, and implement strategies that promote tenancy stability. A good source of information regarding this topic can be found at: https://florida.evictionprotection.org/
CONCLUSION AND RECOMMENDATIONS Whether you are considering selling your multifamily real estate property, or looking into expanding your current portfolio, your strategy for 2024 should contain a significant degree of flexibility and adaptability. However, the following steps must be taken in any case to ensure successful results.
For Multifamily Real Estate Buyers
Market Research: Conduct thorough research on local market trends, rental demands, and growth projections in different regions of Florida. Identify areas with potential for long-term appreciation and steady rental income. Financial Preparedness: Given the rising home prices and potential mortgage rate fluctuations, secure pre-approval for financing and consider working with lenders who specialize in multifamily properties. Diversification: Consider diversifying your portfolio by investing in multifamily units in different areas or exploring different types of multifamily properties (e.g., A mix of assets class A, B, and C) is also recommended, to spread or mitigate risk. Due Diligence: Perform meticulous due diligence on the property, examining its condition, rental history, expenses, and potential for value-add opportunities like renovations or improvements.
For Multifamily Real Estate Sellers: •
Pricing Strategy: Despite rising home prices, ensure your pricing strategy aligns with current market conditions and is competitive enough to attract buyers while reflecting the property's value. • Property Preparation: Enhance the property's appeal by addressing any maintenance issues, highlighting amenities, and staging units, if possible, to attract potential buyers. • Marketing and Visibility: Utilize comprehensive marketing strategies, including online platforms, real estate agents, and targeted advertising to maximize visibility and attract potential buyers. • Professional Assistance: Consider working with experienced real estate agents or brokers specializing in multifamily properties to navigate negotiations, paperwork, and legal aspects for a smooth transaction. Local market trends and regulations Both buyers and sellers should stay updated on Submarket trends, regulations, and economic indicators that could impact the multifamily real estate landscape. Particularly, Vacancy Rate, Capitalization Rate, Market Sale per unit, among other key submarket indicators. In essence, key submarket indicators serve as a key metric influencing investment decisions, pricing strategies, and market positioning for both buyers and sellers in the multifamily real estate market. Next page shows historic, current, and forecast values of the above-mentioned indicators.
Thank you for your interest in working with us. My name is Manny J Herrera, Multifamily Real Estate Agent with Century 21 Baggins Enterprises, and Founder of The Multifamily Real Estate Group LLC. Whether you're considering selling a multifamily real estate property or looking to expand your portfolio, we are here to help you. We specialize in the acquisition, sale, and financing of multifamily real estate properties. As a member of the Group, you can get comprehensive support from a collaborative network that spans Management Companies, Mortgage Bankers, Syndication Law firms, Title Companies, and more. Our suite of services includes: Financial Performance Evaluation: Regular assessments of your property's financial performance are crucial to understand its profitability, identify areas of improvement, and make informed decisions. In addition, monthly evaluations help in tracking income, expenses, occupancy rates, and overall cash flow, allowing you to optimize your property's financial health. Market and Submarket Trends Analysis: Understanding multifamily market and submarket trends is essential for making strategic decisions. Detailed reports on these trends provide insights into factors like supply and demand, rental rates, demographics, and economic conditions, enabling you to adapt your strategies to the evolving market landscape. Long-Term Financial Planning: Crafting a 5-year financial plan helps set clear goals and strategies for sustained success. These plans consider various financial aspects, including projected income, expenses, capital improvements, and potential market changes. They provide a roadmap for achieving financial objectives and adapting to market fluctuations. Fiduciary Representation: Whether you're selling or acquiring multifamily real estate, having expert representation is invaluable. Professionals experienced in these transactions can navigate complexities, negotiate terms, conduct due diligence, and ensure that your interests are protected throughout the process, maximizing your returns. Explore our website, www.mreexchange.com, to join our community of members and access our free market report. Your involvement will be greatly appreciated as we navigate the multifamily real estate market together.
I look forward to discussing how we can assist you in achieving your multifamily real estate investment objectives. Warm Regards,
Manny J Herrera
3450 Palencia Dr Suite 307, Tampa FL 33618 Mobile: +1 (813) 951 5880 www.mreexchange.com LinkedIn
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APPENDIX
VACANCY RATE
FIGURE 2 CAPITALIZATION RATE
CAPITALIZATION RATE
AVERAGE PRICE PER UNIT
AVERAGE RENT PER UNIT