Big 2024 Fed Rate Cut Predictions for Multifamily Investors

The multifamily industry’s 2024 fed rate cut predictions spell out spectacular outcomes for real estate investors. Below, we’ll break down what industry experts have to say about this recent breaking news—and what it means for you.

Main Takeaways

• Top multifamily apartment industry insiders found that fed rate cuts could provide lower loan interest rates and increased liquidity throughout the industry.
• Also, the 2024 fed rate cuts may spur on a transitional period in which it’s more viable to purchase properties with high cap rates. During this period, it could also be more affordable to buy properties, in general.
• Furthermore, many feel this fed rate cut points to better federal policies. With it, the multifamily housing market may achieve more stabilization.

2024 Fed Rate Cut Predictions: Table of Contents

• What is the Fed Rate Cut?
• About Our Sources
• 2024 Fed Rate Cut Predictions for Multifamily Real Estate Investors
• When Will Fed Rate Cuts Truly Impact

What is the Fed Rate Cut?

On September 18, 2024, the Federal Reserve announced it would lower its interest rate by 0.5 points, to a range of 4.75-5%.

For multifamily real estate investors and Baltimore hard money lenders, this is huge news. Essentially, the Federal Reserve’s interest rate serves as a point of reference for lenders’ interest rates around the country. So, this news could get you lower loan interest rates across the board.

About Our Sources

To give you the most complete, nuanced 2024 fed rate cut predictions possible, we examined some of the multifamily apartment investing industry’s biggest players’ takes on the topic.

More specifically, we examined Multi-Housing News, Multifamily Dive, JP Morgan, the Atlus Group, and CRE Daily’s evaluations for a fuller picture. This way, you can get the key points of each expert’s analyses, boiled down into one convenient, comprehensive article.

2024 Fed Rate Cut Predictions for Multifamily Real Estate Investors

Many multifamily apartment investing professionals’ 2024 fed rate cut predictions hold promising signs for investors. Here’s how the fed rate cut could impact your future:

Lower Loan Interest Rates

Obviously, but most significantly, the Fed rate cut will likely lower loan interest rates for millions of borrowers across the US. Especially if the Feds decide to make further cuts, borrowers could have a smoother financial road ahead. In turn, this would make it viable for multifamily real estate investors to get involved in deals that were off the table before.

Increased Liquidity

With the Fed rate cut, the industry’s financial system could develop more liquidity. Cash flow coverage could increase. Then, lenders can channel this extra money into the market to offer more multifamily apartment investing deals. Finally, this gives multifamily real estate investors more opportunities to get funding.

Lower Apartment Building Prices (For Now)

It’s important to note that this section is built on the assumption that further fed rate cuts will happen in December, as predicted. Some industry insiders feel that it will take multiple fed tax cuts to truly affect property values, so the following section would be most relevant in that outcome.

If more cuts do happen, property values may rise in the long term. Still, right after these cuts are announced, the market may be in a state of flux for a while. This could give multifamily real estate investors the chance to capitalize on unique opportunities they otherwise couldn’t.

The next few months may be a unique transitional period in which cap rates haven’t changed to reflect the new fed rate cut while borrowing costs have. In other words, investors could momentarily experience a combo of properties with high cap rates and lower borrowing rates with which to buy them.

Ordinarily, investing in properties with higher cap rates might be enticing, yet risky. However, lower borrowing rates can help offset these risks so that you can focus on the huge potential returns. All in all, if you’re looking to take a chance on a property you otherwise might be unable to, this might be the time to do it.

Later, things might change a bit. As interest rates truly start to go down, liquidity goes up, and cap rates stabilize, these factors may make apartment building values even out more. In particular, this holds true with larger housing markets like Maryland which have big, wealthy renter pools.

This could be a delicate, short timeframe. As such, multifamily real estate investors would want to take advantage of such value drops while they last. They could do this by expanding to new markets, asset classes, and asset types. For instance, if you’ve always wanted to dip your toe into mixed-use properties, this might be a prime opportunity to do so.

Signals Multifamily Market Stabilization

Most importantly, the Feds’ move signals to the multifamily apartment industry that bigger, better policies are coming. This shift in the air encourages otherwise hesitant investors to jumpstart more transactions than before. In turn, more activity leads to a healthier market.

When Will Fed Rate Cuts Truly Show Their Impact?

There is a widespread consensus in the multifamily apartment investing industry that one cut likely won’t transform it in one fell swoop. It’s too small, too incremental. Instead, it will take multiple cuts to really get things moving.

Luckily, as we mentioned before, further cuts are projected to happen. For instance, the Federal Reserve is projected to instate a 100 to 125 cut in December.

Such a generous cut would bring echoes throughout the multifamily apartment investing industry. They would encourage more transactions and property development, which could in turn spur on a bull market.

Other broader factors come into play, too. For example, if inflation continues to loosen, the Federal Reserve may soften its policies to benefit borrowers even more. Furthermore, the election’s outcome and subsequent policies will also have a substantial impact on the industry climate.

Fund Your Multifamily Apartment Investing with MHML!

All in all, 2024 fed rate cut predictions point to promising trends for multifamily real estate investors. If the Federal Reserve keeps on making cuts as expected, investors could enjoy lower interest rates, increased industry-wide liquidity, and a more stabilized market.

Most significantly, if the 2024 fed rate cut predictions go as planned, investors will enjoy buying cheap properties for a while. As the country gradually adjusts to lower rates, property prices may cool down during that transitional period. If this happens, it will be imperative for investors to nail down the properties for themselves before the deals are gone.

However, to take advantage of this time-limited period, you need fast funding. You can’t sit idly by, waiting months for your loan application to be approved. After all, if the clock’s ticking and the competition is closing in, sellers won’t wait for you to finally show up prepared.

That’s where hard money loans come in. Hard money loans are designed especially for real estate investors in need of hyper-expedited funding.

Plus, if you’re a borrower with significant investing experience, sufficient collateral, and a strong credit history, you may get rewarded for working with a Baltimore hard money lender like us. If this sounds like you, we may offer you up to 100% funding. Call us today to learn how we can help you secure urgent, time-sensitive deals!