Commercial Insights

Southeast multifamily market holding steady

Owners looking to acquire or refinance have options.

Key takeaways

• The Southeast continues to attract new residents, supporting strong long-term demand for multifamily housing.
• Recent apartment deliveries are being absorbed, but affordable housing supply remains insufficient to meet demand.
• Rent growth remains positive, though at a more moderate pace as new supply enters the market.
• Renters continue to face affordability challenges, while owners contend with rising insurance costs, taxes, and evolving lending requirements.
• Many multifamily owners are refinancing loans that originated during low-rate periods, often requiring additional equity.
• Fannie Mae and Freddie Mac remain important financing sources and are placing increased emphasis on property condition during underwriting.
• Interest rate uncertainty remains a key market factor, but borrowers currently have a wide range of financing options available.
• Industry forecasts call for increased multifamily lending activity, signaling continued confidence in the sector.

The southeast United States offers an overall quality of life that is attractive to many Americans today and, because of that, continues to draw newcomers from the Midwest, Northeast and elsewhere in the U.S. Many are renter households. In recent years, real estate developers have sought to meet the increased demand for quality apartments and responded with an influx in new unit supply. This supply, which was part of the country’s recent well-recorded surge in new apartment unit deliveries, continues to be absorbed in the region today.

While market-rate and luxury unit deliveries have surged, unit deliveries for Americans with lower incomes have failed to keep pace. This can be attributed in large part to financials that don’t pencil for developers, especially in the absence of comprehensive local, state and federal tax incentives and legislative solutions. Rising construction costs and labor challenges compound the problem.

As a result, the southeastern states face a housing affordability crisis much like the rest of the country. There aren’t enough affordable units to meet demand among households with low and extremely low incomes. To combat the issue with true efficacy, a combination of robust public and private solutions is required. Today, local, state and federal tax incentives and legislations with the intent to assist do exist; however they are sporadic, vary across regions and are not sufficiently comprehensive.

Additionally, because apartments in major metros are typically pricier, there’s a visible trend of households moving outward into secondary suburban markets in search of decent, more affordable units.

Rent growth and occupancy in the Southeast are generally trending in the right direction, though with nuance. Rents continue to tick upward, albeit at a slower pace than in recent years as the market absorbs the wave of new supply. Occupancy has softened somewhat during that absorption process, a dynamic that should stabilize as new construction slows._

Both consumers and owners face their own headwinds. Renters are contending with rents that continue to outpace wage growth. On the ownership side, taxes and insurance remain challenging. Insurance costs have spiked. Additionally, there are updated guidelines from Fannie Mae and Freddie Mac for borrowers navigating the financing process.

This year, many additional borrowers in the Southeast are facing maturity for existing loans on their apartment communities and are thus seeking re-finance solutions. In February, the Mortgage Bankers Association indicated 13% of mortgages backed by multifamily properties will come due this year. Many of these loans were issued during a record low-interest rate environment. This scenario poses challenges for these owners as they will need to bring additional capital to the table during re-financing.

While additional finance sources have opened up and become more active in the marketplace, borrowers must determine which solution is most ideal for their current situation and business goals. GSEs Fannie Mae and Freddie Mac remain solid sources, providing liquidity to qualifying apartment owners nationwide and across the spectrum of multifamily asset categories. They also offer non-recourse loan options, where other sources might not. Borrowers should also be aware that both Freddie Mac and Fannie Mae are placing greater emphasis during underwriting on property condition and the maintenance and state of the apartment communities they evaluate for potential loans.

The Federal Reserve held interest rates steady at a target range of 3.50% to 3.75% at their meeting on June 17. That said, a growing number of those at the meeting also projected at least one rate hike would be warranted by the close of 2026. Interest rates, and any potential shifts in them, will remain closely watched this year amid persistent inflation, employment data reporting and ongoing geopolitical tensions.

The Mortgage Bankers Association predicted at the MBA CREF Conference in February that multifamily lending in the U.S. (with Southeast region numbers included in the projections) would increase to $399.2 billion this year, from the $330.6 billion total expected for 2025. Actual volume numbers at year-end will confirm whether this forecast comes to fruition. The good news is borrowers do currently have options for loans, as finance solutions are widely available today.

Looking to finance your apartment community?

Regions Real Estate Capital Markets is here to assist both multifamily borrowers and brokers in the Southeast as well as in the greater United States. Explore our multifamily loan program options and contact us today.

About the author

Based in the Southeast United States, Richard Rennell is Managing Director, Real Estate Capital Markets, for Regions Bank. As a licensed nationwide lender partner to Freddie Mac, Fannie Mae and HUD, Regions Real Estate Capital Markets serves a wide range of multifamily owners nationwide with loan options for affordable, workforce and market-rate properties. Visit https://www.regions.com/commercial-banking/real-estate-banking/real-estate-capital-markets.