Freddie Mac Multifamily Midyear Outlook Shows Moderation on Macro Headwinds

Rhea-AI Summary

Freddie Mac (OTCQB: FMCC) projects a moderated growth in multifamily fundamentals, with originations expected to contract to $440-450 billion in 2022, reflecting macroeconomic challenges like inflation and rising treasury rates. Despite an anticipated decrease in total volume, rent growth and occupancy rates are set to remain above long-term averages. Overall, gross income growth in multifamily markets is forecasted at around 6.8%, with vacancy rates stable at 4.8%. The Multifamily Midyear 2022 Outlook provides further insights into these trends.

Positive

• Gross income growth in multifamily markets is forecasted at around 6.8%.
• Vacancy rates are expected to remain stable at 4.8%.
• Rent growth and occupancy are projected to remain above long-term averages.

Negative

• Expected contraction in multifamily origination volume to $440-450 billion, a decline of 8-10% from 2021.
• Economic uncertainty and rising treasury rates are posing challenges to multifamily lending.

MCLEAN, Va., Aug. 02, 2022 (GLOBE NEWSWIRE) -- After six months of healthy growth in multifamily fundamentals, Freddie Mac (OTCQB: FMCC) projects the pace of growth will begin to moderate through the remainder of 2022. A contraction in multifamily origination volume to $440-450 billion is expected, down from the peak seen in 2021, driven by macroeconomic headwinds, including inflation and rising treasury rates.

“We believe the multifamily industry is well positioned to weather the economic uncertainty and interest rate volatility impacting the broader economy throughout the rest of the year,” said Steve Guggenmos, vice president of Multifamily Research & Modeling at Freddie Mac. “While we expect total volume projections will be down in 2022, rent growth and occupancy will still remain above their long run averages.”

The Multifamily Midyear 2022 Outlook from Freddie Mac’s Multifamily Research Center is available online here. The paper outlines several key findings:

• Growth Continues but Moderates: Multifamily growth continued to beat expectations through the first half of 2022 after coming off a record-breaking year in 2021.Freddie Mac expects gross income growth to moderate throughout the rest of the year but is on pace to outperform yearend inflation projections.
• Gross Income Gains Across the Board: Every market Freddie Mac tracks is projected to experience gross income gains. The Florida and Southwest markets are generally expected to outperform the nation, while the smaller markets in the Midwest and few gateway markets are generally expected to be among the comparatively weaker performers. Overall, gross income growth in 2022 is forecasted to be around 6.8% and vacancy rates are expected to remain flat at 4.8%.
• Slight Contraction in Multifamily Lending: Considering the heightened degree of economic uncertainty and volatile treasury rate environment, Freddie Mac expects originations in 2022 to experience a slight contraction to $440-450 billion, down 8-10% from 2021.
  

Multifamily’s outlook and additional related materials are available online here.

Freddie Mac Multifamily is the nation's multifamily housing finance leader. Historically, more than 90% of the eligible rental units we fund are affordable to families with low-to-moderate incomes earning up to 120% of area median income. Freddie Mac securitizes about 90% of the multifamily loans it purchases, thus transferring the majority of the expected credit risk from taxpayers to private investors.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we've made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac's blog FreddieMac.com/blog.

MEDIA CONTACT: Mike Morosi
(703) 918-5851
Michael_Morosi@FreddieMac.com
Erin Mancini
(703) 903-1530
Erin_Mancini@FreddieMac.com

FAQ

What is Freddie Mac's projection for multifamily origination volume in 2022?

Freddie Mac anticipates a contraction in multifamily origination volume to $440-450 billion in 2022.

What factors are driving the decline in multifamily origination volume?

The decline is driven by macroeconomic headwinds, including inflation and rising treasury rates.

What is the expected gross income growth for multifamily markets in 2022?

Gross income growth for multifamily markets is forecasted at around 6.8%.

What is the expected vacancy rate in the multifamily sector for 2022?

Vacancy rates are expected to remain stable at 4.8%.

How does Freddie Mac view the multifamily industry's resilience?

Freddie Mac believes the multifamily industry is well-positioned to manage economic uncertainty and interest rate volatility.