Ferndale Michigan | Michigan Multifamily | Investment Highlights

Including an update on interest rates, treasury yields and the labor market.

Author

Michael McClafferty
October 04, 2024

Market Pulse Q4 2024

In September, Federal Open Market Committee voted 11 to 1 to lower benchmark rate by 50 basis points to target range of 4.75%-5.0%, the first rate cut in more than four years. This can be considered a vote of confidence from the committee that inflation has been tamed and that it will continue to trend towards their 2% goal. The FOMC Committee ‘Dot Plot’ shows the median expectation of 100 basis points of total cuts this year.

Historical correlation between federal funds rate and inflation. (Josh Bodin, Berkadia Capital Markets)

Labor Market

As inflation approaches the Fed’s 2% goal, market participants are highly attentive of the labor market weakening significantly. In mid-August the labor market reported that the U.S. economy created 818,000 fewer jobs than originally reported in the 12-month period through March 2024. The Fed is highly attentive to the labor market, hoping to rebalance the economy before unemployment climbs significantly higher. As the gap between the unemployment rate and nonfarm payrolls continues to narrow, the economy will likely improve.

Nonfarm Payrolls and Unemployment Rate

Treasury Yields:

Yield Curve Inversion: The 10-year Treasury yield is now higher than the 2-year yield. The spread between the two had not closed above zero since 2022, leaving the yield curve inverted for the longest run in about 60 years.

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity

10-Year Treasury Yield Vs Federal Funds Rate

The 10-year Treasury yield and the federal funds rate are related, as both are influenced by Federal Reserve policies and economic conditions. Generally, when the Federal Reserve raises the federal funds rate to combat inflation, the 10-year Treasury yield tends to rise as well, reflecting higher borrowing costs and expectations of future rate hikes. When the Fed lowers the federal funds rate to stimulate the economy, the 10-year Treasury yield often falls. However, the correlation is not perfect, as the 10-year yield also factors in long-term economic growth and inflation expectations. Below is a graphic showing the 10-year treasury yield compared to the Effective Federal Funds rate since July 2000.

Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, Quoted on an Investment Basis, Percent, Daily, Not Seasonally Adjusted

Ferndale Michigan:

Ferndale's population is of young professionals and families. Over the last decade, Ferndale has grown in popularity due to its expanding downtown, excellent schools and proximity to Downtown Detroit

Economic Growth

The City of Ferndale has been proactive in improving its public infrastructure and considering new developments. Recent projects have focused on enhancing public transportation, upgrading utilities, and creating pedestrian-friendly spaces. Ferndale's tenant base is diverse and mostly made up of young professionals and families.

Top 3 Multifamily Developments - Ferndale Michigan

1.) The Flats at Iron Ridge- 94 luxury apartments completed in November 2023

Featuring:

  • Fitness Center

  • Outdoor Pool and Lounge Deck

  • Dog Park with Pet Wash & Grooming Station

  • Attached Garages

  • Rentable Onsite Storage

  • Yoga Studio

  • Washer/Dryer in unit

2.) Ferndale Gateway Flats- 4 unit luxury complex completed June 2024.

Photo: Berkadia Sale Listing September 2024. Address: 345 W Marshall St. Ferndale MI

Investment Highlights:

  • Located just .5 miles from Downtown Ferndale

  • Fully leased 1 month after completion

  • Residents enjoy access to amenities of downtown Ferndale, Royal Oak and Downtown Detroit.

#3 - Proposed Downtown Ferndale Apartment Development:, a four-story 93 unit mixed-use property

The proposed location is in downtown Ferndale at 600 W. Nine Mile Road.

Development Highlights

A new four-story apartment building with 93 units is proposed for the parking lot of Ferndale Foods at 600 W. Nine Mile Road. The development aims to enhance the area by increasing density and adding a lobby and amenity area on the first floor. City officials are interested in including affordable housing and commercial space.

If you're interested in learning more about multifamily investing in the Midwest, feel free to reach out to your trusted Berkadia advisor. Click here to schedule a call with me.

#MultifamilyInvestments #RentalDemand #EconomicGrowth #DevelopmentPotential #MidwestMultifamily

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