How Interest Rate Cuts Could Impact Dallas-Fort Worth’s Multifamily Market

On November 7, the Fed cut interest rates by 25 bps, putting the benchmark federal funds rate between 4.5% and 4.75%. This marks the second rate cut in two months, after the Fed cut rates by 50 bps in September.

While this is a relatively small shift, any rate change draws attention in the multifamily sector.

Could this latest rate cut meaningfully impact multifamily housing in Dallas-Fort Worth? Here’s what industry experts are saying.

The general consensus: This small rate drop will provide minor stimulus.

Trevor Ryan, the chief financial officer of Marquette Companies, told Multifamily Dive that “it would take the Fed pushing target rates down another 100 basis points or more to help owners refinance or exit the properties that were purchased at the peak with floating rate loans and higher leverage.”

“A slightly lower-rate environment would also drive more transaction volume toward traditional levels,” he said.

Ultimately, the cumulative amount of cuts so far isn’t large enough to be compelling for many investors.

Dallas developer Peter Brodsky told the Dallas Business Journal: “I don't know a developer that isn't eagerly anticipating rate cuts, not only because it means that any variable rate debt will start being less expensive [but] also because real estate values are inversely proportionate to rates. The higher the rates, the lower the real estate value for the most part.”

“The lack of lending capital from banks and other institutions has been the main driver behind the inability of borrowers to refinance. A rate cut, regardless of its size, can help bring lenders slowly back into the market, providing much-needed refinancing opportunities,” says Tommy Spinosa, managing partner at Enverra Real Estate Partners.