Election years often influence investor sentiment. While some adopt a cautious approach, others look to seize opportunities presented by market fluctuations. Regardless of individual strategies, multifamily investors must remain focused on critical economic fundamentals like supply and demand, interest rates, and regulatory landscapes. Below, we examine how the outcomes of the 2024 elections may shape these factors, with insights drawn from the campaign season. Please note that economic policies are subject to change, and specific outcomes cannot be guaranteed.
Supply and Demand
A 2022 study by the National Multifamily Housing Council and National Apartment Association identified a need for 4.3 million new apartment units by 2035 to address the ongoing housing shortage in the United States. The President-Elect has emphasized increasing housing development near urban and suburban centers and utilizing underutilized federal lands for new construction. These initiatives could unlock significant opportunities for multifamily developments in high-demand areas, potentially boosting property values over time while addressing affordability challenges.
For investors, this focus on strategically located developments underscores the potential for strong returns while meeting the growing demand for affordable housing.
Interest Rates
Inflation plays a pivotal role in the broader economic landscape, particularly for multifamily real estate. The President-Elect has outlined plans to reduce inflation through increased domestic energy production and disciplined government spending. A reduction in inflation could lead to several beneficial outcomes:
- Lower costs of goods and services, enhancing tenant affordability.
- Increased disposable income for renters, driving demand for multifamily housing.
- Potentially reduced interest rates, lowering financing costs for developers and owners.
These factors can enhance profitability, attract capital, and foster competition for multifamily properties—leading to increased valuations and returns for investors.
Regulations
Policy decisions significantly impact the real estate investment environment. The President-Elect has shown support for investor-friendly initiatives, including:
- Lower taxes on capital gains and income.
- Expanded Opportunity Zone programs to stimulate investment in underserved areas.
- Continued support for 1031 tax-deferred exchanges, a vital tool for real estate investors seeking to defer capital gains.
Additionally, a focus on reducing business regulations may streamline the development process, lowering costs and expediting project timelines. These measures create a conducive environment for growth in the multifamily sector.
Navigating the Post-Election Market
While elections can introduce short-term volatility, market performance is often influenced by broader economic and geopolitical factors rather than political outcomes alone. Historically, key market indicators realign with economic fundamentals and investor sentiment once election-related uncertainties subside.
Multifamily real estate remains a compelling investment option, offering stable returns and resilience in various market conditions. Whether you are a seasoned investor or exploring the multifamily sector for the first time, the opportunities are robust.
For more information on how Countrywide Capital Group can help you navigate multifamily investments in the post-election environment, reach out to our investor relations team today. Together, we can build strategies aligned with your goals and the evolving market landscape.
