Trepp: Apartment prices fell 2.56% year over year in Q2

Apartment prices fell 2.56% year over year in the second quarter but only 0.1% from the first, according to the Trepp Property Price Index. The equal-weighted reading, which balances representation across property types and price tiers, puts multifamily prices down 3.49% since June 2022.

Trepp’s value-weighted view, which leans on larger-dollar transactions, shows a steeper decline: down 17.8% since June 2022, 3.41% year over year and 0.54% from the first quarter. Trepp said the results suggest the sector’s price decline slowed in the second quarter, with new supply pressure easing in some markets and expenses moderating.

Multifamily is the weaker half of the same index. As this publication reported on Oct. 7, Trepp’s all-property equal-weighted index sits 4.96% above its June 2022 level, while the value-weighted version is 9.89% below it. Apartment pricing trails the all-property averages on both measures — negative where the broad index is positive, and deeper in the red where both are down.

The 10-year Treasury hit 5.24% on Monday, according to CNBC, and Trepp notes that its quarter-over-quarter reading of a 0.1% decline came before the recent spike in Treasury rates. Trepp said operating fundamentals have improved, but not enough to offset the higher cost of capital since the Federal Reserve started raising rates in 2022. The firm also said rising capital costs make buying and refinancing harder, more loans are maturing, and lenders are growing impatient.

Borrowing costs running higher for longer would matter more than any single Federal Reserve move, according to Ian Symington, vice president and head of acquisitions at Lion Real Estate Group. In emailed comments, he said that if borrowing costs continue to rise, less capital will be deployed into commercial real estate as investors look for alternatives with less exposure to interest-rate risk.

Otto Ozen, executive vice president at The Mogharebi Group, ties apartment pricing to longer-term Treasury yields along with the cost and availability of debt. If rates keep moving higher, he said in emailed comments, expect upward pressure on cap rates, more conservative underwriting and continued friction in transaction volume.

The maturity wall is not a multifamily-only problem: this publication reported Trepp’s tally of $239.7 billion in stated 2026 bank maturities and $113.1 billion at securitized lenders across income-producing commercial real estate, figures Trepp says likely overstate the real refinancing task. Trepp’s Q2 index closed before the latest move in the 10-year, so the third-quarter reading is where the direction of that 0.1% quarterly decline likely gets tested.