MBA survey foresees a positive shift in commercial and multifamily mortgage markets
The commercial and multifamily mortgage sectors, which have been navigating through turbulent waters, are showing signs of stabilization in the coming year, according to the Mortgage Bankers Association.
MBA’s Commercial Real Estate Finance (CREF) Outlook Survey, which gathers perspectives from industry leaders on the state and future of the market, showed hope for more stable conditions in 2024 despite challenges.
“Commercial real estate markets are entering 2024 amid a great deal of uncertainty and, as a result, a significant slowdown in activity,” said Jamie Woodwell, head of commercial real estate research at MBA.
More than 90% of respondents view the current market as either somewhat or very unsettled. They were concerned over factors like capitalization rates, baseline interest rates, and their volatility, all contributing to the current financing challenges.
The office market is currently seen as the most challenging area for borrowing and lending. On the flip side, the industrial sector appears to be a bright spot, with a positive impact on the market, according to half of those surveyed.
While the start of the year might still feel the hangover of previous challenges, there’s an undercurrent of optimism among industry experts. They anticipate the fog of uncertainty will clear as the year progresses, potentially boosting borrowing and lending activities.
Read more: Commercial real estate in 2024 – what is the outlook?
“Leaders of top commercial real estate finance firms believe that a host of factors may continue to act as a drag – rather than a boost – to the markets,” Woodwell said in the report. “However, they believe that overall uncertainty will dissipate over the year, helping to boost borrowing and lending above 2023 levels.”
Interestingly, while lenders seem slightly more inclined to lend next year, borrower enthusiasm may not match up. Still, predictions for borrowing and lending volumes are on the rise for 2024, although opinions vary widely on specific capital sources and the balance of supply and demand for debt.
Overall, more negative than positive factors are perceived to affect commercial real estate finance volumes in the upcoming year.
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