Trouble has continued to brew in the US commercial real estate market as interest rate volatility and greater debt costs put pressure on the sector.
Total commercial and multifamily mortgage originations are expected to lose $504 billion in 2023, which is a 38% plunge from $816 billion last year, according to the Mortgage Bankers Association’s latest forecast. Of the total $504 million figure, multifamily originations are anticipated to fall $299 billion, down 38% from $480 billion in 2022.
“Higher and volatile interest rates, uncertainty about property values, and questions about some property fundamentals have led to an impasse in property sales and mortgage originations activity this year,” said Jamie Woodwell, head of commercial real estate research at MBA. “Our baseline economic forecast anticipates that interest rates will moderate over the next year and a half, helping to break the current logjam in transaction activity and bringing relief to financing costs and property valuations.”
