Commercial, multifamily slowdown: permanent problem or temporary blip?

MBA predicted a 7% year-over-year drop in multifamily lending, down to $455 billion from last year’s record of $487 billion. However, the slowdown may be temporary. The trade group anticipates borrowing and lending to rebound in 2023 to $848 billion in total commercial real estate lending and $451 billion in multifamily lending.

“Given market changes, we forecast a significant slowdown in the second half of the year – driven by rising interest rates and capitalization rates and uncertainty among buyers, sellers, and other stakeholders about where market values may lie,” Woodwell said. “As we have noted before, most commercial real estate market fundamentals remain strong, with significant increases in the incomes and values of many properties in recent years. These factors are why MBA expects loan demand to begin to bounce back in 2023 and 2024.

“MBA’s CREF Forecast is based on our baseline economic forecast, but the outlook is particularly uncertain right now. Different macroeconomic paths could lead to very different outcomes around the demand for and supply of commercial mortgage debt. Should the economy enter a recession, which has become considerably more likely, commercial and multifamily borrowing and lending would likely be further constrained.”