In this episode of The Brinkman Report, Kevin Brinkman had the pleasure of speaking with John Chang, the National Director of Research and Advisory Services for Marcus & Millichap. They delved into the multifamily real estate market, focusing on the impacts of interest rates and economic conditions on this asset class.

The discussion began with an examination of the current supply dynamics in the market. John indicated that they were in the latter innings of a construction wave, with a significant reduction in new supply expected in the coming years. He highlighted that the pace of construction was slowing, particularly in secondary and tertiary markets, where development cycles are quicker compared to high-density urban areas.

John also shared insights on the challenges developers faced, including rising construction costs and elevated interest rates, which had made it difficult for new projects to pencil out. He emphasized that while demand for housing continued to grow, the supply constraints would likely lead to upward pressure on rents in the future.

The conversation then shifted to transaction volumes and valuations in the real estate market. John noted that while transaction activity had decreased compared to the peak years of 2021 and 2022, it was not as dire as some media reports suggested. He mentioned that there was still a significant amount of capital waiting on the sidelines, and if interest rates stabilized, they could see a resurgence in transaction activity.

Towards the end of their discussion, they talked about the potential for a recession and the factors that could influence the economy in the next 12 to 18 months. John expressed cautious optimism, citing strong consumer fundamentals and demographic trends that supported continued demand for multifamily housing.

Overall, the episode provided valuable insights into the multifamily real estate landscape, the challenges and opportunities ahead, and the broader economic factors at play.