However, growth has largely been due to the rapid expansion in the residential housing space, which made up for contractions in all the other sectors.

But although there is evidence that residential developers are responding to the affordability crisis by building cheaper multifamily units, inventory remains sluggish amid a record fall in mortgage demand due to high interest rates.

“We have had some inventory come on line, but not an adequate amount to cover the demand of six months ago. Instead of a 30 to 45-day inventory, which we were at probably nine months ago, we’re at a two to two and a half months and that is still a historically low level, getting closer to normalcy,” he added. “That’s why you’re seeing a lot of the large home builders pull back on large developments, but while demand is not as high as it was nine months ago (when there was a 3% interest rate), it’s going to continue to be high because people need a home to live in.”

As for the immediate future, he said he expected investors will have to provide more cash in order to strike a deal.

“We have pulled back on guidelines; we have lowered our LTVs to adjust for the uncertainty of what values will look like a year, 18 months, or two years in advance,” he said. “As guidelines tighten down, investors will be required to bring more liquidity to the closing table.”