This is a narration of our weekly Rent and Operating Trends Report.
When the Fed will cut interest rates is anyone’s best guess as conflicting market indicators continue to muddy the waters of monetary policy decision making. The likelihood of a rate cut in Q2 was dealt another blow last week when the Personal Consumption Expenditures Index came in higher than economists’ expectations. As the preferred inflation gauge of the Fed, the elevated PCE data will likely delay any easing discussion when the Fed next meets this week. However, the post-meeting press conference should give us some insight into how the Fed currently views the interest rate market. With oil firmly rooted above $80 per barrel and consumer spending continuing, I do not expect inflation to fall drastically in the summer months.
Most multifamily indicators were flat last week at the national level as we near the end of April. I anticipate we will see continued modest improvement in overall fundamental performance, yet the pace of growth will likely remain muted. New supply continues to dominate the focus for multifamily operators nationwide, but local demand trends are having a major impact on property fundamentals at the market level. Two peer markets that have been widely discussed from a supply and demand perspective are Austin and Nashville. Recent news of Oracle’s headquarter relocation from Austin to Nashville, along with mass layoffs at the Tesla plant outside of Austin, may drive demand in two separate directions for the popular secondary markets. Job growth and the diversity of the employment market will continue to be key factors in determining the strength of a metro’s multifamily market.
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