Multifamily Markets Remain Strong Heading Into Q4 2021
It has been an incredibly strong season for multifamily investors. This year we have seen dramatic increases in rent rates in almost every market where we have active investments. Steeple Rock, in cooperation with our co-operating partners exited two of our projects in the Phoenix market achieving a 25% average annual return in our first project and 2X return after 17 months in the second. For the time being, we are waiting and watching as Phoenix prices remain risky for buyers.
We are taking advantage of the price spike to unload 3 other projects in Jacksonville, Atlanta, and Key West. But overall, the prospects for real estate going into the 4th quarter of 2021 remain very strong.
MBA mortgage purchase applications hit a cycle high in January of 2021, and even though the trend has been drifting lower (down 22% from January), the application rate is still above pre-Covid levels and headed back up on a month over month basis.
Federal Reserve policy is continuing to favor low rates and money printing leading to higher asset values. Real estate is benefiting greatly from these lower 10-YR yields, and capital is abundant. The narrative of transitory inflation is just that, a narrative. The data shows that we should see inflation stick around for several quarters. (See CRB Index Chart below: This is NOT transitory!) This is leading to higher rental rates across all of our favored multifamily metros.
Steeple Rock is continuing to pursue opportunities where they exist. Some newly constructed projects are looking attractive and will allow us to take advantage of the opening of the economy, diminishing Covid Cases, and growing herd immunity. There continues to be a shortage of multifamily housing in the fastest and most business-friendly metro markets. These conditions bode well for our current portfolio and for particular markets and projects.