The Multifamily Naughty and Nice List

Here’s what was good and challenging from the past year, and what multifamily investors should look forward to in 2023.


Through an anonymous leak from the North Pole, Swiftlane got its hands on this year’s multifamily naughty and nice list. Normally this list, although checked twice, is kept confidential. Until today. 

Here are the major tail and headwinds of the past year, starting first with the naughty side of the multifamily sector. 

Debt Costs

Have skyrocketed. The average 30-year rate this time last year sat around 3% but has since more than doubled. This has dramatically increased the cost of borrowing and has caused headaches for multifamily owners and builders who are left with difficult decisions to make.

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Account for about 40% of all multifamily development costs. In an era where more housing supply is needed across the board (we need 4.2M apartments), this blocker to development is a naughty one. Greater regulations decrease private sector interest in developing housing. Putting upward pressure on prices and reducing affordability.

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There isn’t enough of it. Therefore, retention and hiring remain top priorities for multifamily owners and investors. More specifically, multifamily owners report that human resources and staffing are an ongoing challenge amidst higher inflation, remote work demands, and a softening housing market overall.

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Supply chain shortages and a pandemic-fueled renovation boom are mostly to blame for the significant run-up in 2022 of building materials. This has placed additional pressure, including rising debt costs, on the construction and renovation of multifamily assets. Even as we entered Q4, material costs were increasing.

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That said, things weren’t all about challenges in 2022, we had some serious bright spots as we came out of a pandemic recession and lockdowns. As optimists, we believe the nices outweigh the naughties, so let’s get into the good news!


Although challenging for much of the economy, inflation favors hard assets such as multifamily. Despite rising debt costs, inflation eats away at historical debt, generally improves real estate values, and rents tend to keep pace as well. 

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Apartment demand is sky-high. The historical rise in housing costs, and now mortgage rates, pushed many to become renters. As interest rates remain elevated for the foreseeable future, look for increased demand for rental housing. This positive demand scenario is also exacerbated by the lack of supply, which is fuelled by population growth, increased regulations, and zoning restrictions.

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Speaking of zoning, we’ve seen a significant increase in 2022 in opposition to exclusionary zoning across North America. Many states and local municipalities have already effectively banned R1 zoning, meaning now developers and investors can, by legal right, increase density modestly on lots that previously only allowed for one unit. This is good news for investors and the housing supply overall as these upzoning initiatives enable light densification.

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Hit record highs this year, before decelerating later in the year. The rise in rents puts upward pressure on NOIs and valuations. Despite the ongoing deceleration in rents, many predict that due to lack of supply and decreased homeownership affordability, rents will remain robust well into 2023.

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