Multifamily transaction activity slowed in the second half of 2022 and continues to remain muted due to pricing uncertainty. U.S. multifamily sales totaled $187 billion in 2022, down 16.1 percent from $222.9 billion in 2021, according to Yardi Matrix. The Federal Reserve has raised its key short-term rate, the federal funds rate, nine times over the past year for a total of 475 basis points in an aggressive move to fight inflation. The Fed’s actions have led to a sharp rise in commercial mortgage rates, which have a significant impact on pricing, states Yardi Matrix. The 10-year Treasury yield, the benchmark for permanent, long-term financing, is now hovering around 3.5 percent, up from 2.3 percent one year ago. “In the current climate with inflation and rising interest rates, we’re a bit more cautious, but no less active in scouring the market for great investments,” says Tim Donovan, director of investments for Midloch Investment Partners. “Investment sales are happening in this market, including by us, but it’s generally taking longer for buyers and sellers to agree on a price, and for buyers to raise the equity required to meet lender terms for permanent financing.” In January, the Consumer Price Index rose …
