As of November 2021, interest rates remain near-zero, which has boosted growth by encouraging investors to borrow more money at a lower cost since the Fed slashed interest rates in May of 2020.
While more people have been able to afford a home due to the lower interest rates and the growth in tech jobs, the rental market remains strong, with Multifamily national average rent rising 11.4 percent year-over-year through September to $1,558. With the growth of work-from-home, more people decide to rent their own apartment and leave their old roommates behind.
On Nov 3, 2021, the Fed started its tapering process by decreasing asset purchasing, which slows down the expansion of the monetary base; and reduces inflationary effects related to the monetary base. So, we expect the increase of asset prices and rent increases to slow down to normal levels.
The effects of the stimulus remain strong, with asset prices hitting all-time highs. People are feeling wealthy and this holiday season should be generous for all. I would exercise caution starting the new year as the market euphoria begins to wane.
The multifamily rental market will remain strong as it offers the buffer between homeowners selling their homes in the future, the freedom to move often to tech workers, and the convenience to live free of home maintenance hassles to Millennials, Gen-Z, and Retirees.
Formica Investment Group
In partnership with the GOB Network