Commercial, Multifamily Slowdown: Permanent Problem or Temporary Blip?

By Candyd Mendoza 

After a strong half-year, commercial and multifamily mortgage transactions are forecasted to fall 14% year over year to $766 billion in 2022, according to the Mortgage Bankers Association.

From January through June, the commercial/multifamily sector record an unprecedented $891 billion in 2021. Solid fundamentals and values in recent years have fuelled commercial and multifamily borrowing and lending. However, investors and lenders are expected to start pulling back as the current economic climate grows more unsteady.

“We continue to see significant changes, volatility, and uncertainty in the space, equity, and debt markets that drive commercial real estate values and transaction volumes,” said Jamie Woodwell, VP of commercial real estate research at MBA. “There was a record level of borrowing and lending during the first half of this year.”

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.

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