
Many observers pinpoint the multifamily market’s “bottom” between the fourth quarter of 2023 and the first quarter of 2024, following several large portfolio transactions between large institutional investors, signaling a potential recovery in capital markets. The recovery since then has been uneven at best. Capital markets, while improved, still only function at efficient levels for a limited segment within all multifamily product. Property-level fundamentals have gone backward since the so-called “bottom,” and we will soon live through one of the most challenging winter leasing seasons in recent memory.
Despite these hurdles, 2025 is shaping up to be a small step in the right direction, with even more investment opportunities likely on the horizon for 2026 and 2027.
Fragmented Demand From Investors
Looking ahead, the multifamily transaction market will continue to be divided into the “haves” and “have-nots.” In 2024, properties located in top-quartile submarkets within major or rapidly growing cities like Atlanta, Dallas-Fort Worth, and North Carolina’s Raleigh-Durham attracted strong demand from mostly institutional buyers, driving up asset prices and pushing cap rates down into negative leverage territory. Alternatively, if an asset or location doesn’t “check enough boxes” to pass the investment committee screens for the larger institutions, the results were mostly disappointing for sellers.
Much of the buyer pool for the non-top-quartile asset category are either equity syndicates or 1031 exchange investors, who grapple with challenges in today’s high-net-worth fundraising environment. As a result, those buyers need more appealing economics, such as better yields and lower asset prices, to attract capital. In 2025, I expect the asset pricing gap to narrow between the “have” and “have-not” categories but remain wider than in the post-Global Financial Crisis (GFC) period.
Darkest Before Dawn
The near-term outlook is bleak as we enter what will likely be one of the worst winter leasing seasons in many cities, and interest rates staying stubbornly north of 5% for fixed-rate loans. However, I expect property-level fundamentals to improve later in the year as the primary reason for the struggles—oversupply—to absorb and bring supply and demand to a better balance. According to CBRE’s third quarter report, total annual new multifamily construction completions have slightly exceeded net absorptions over the past year.
As we continue to see at Fogelman in our Midwest markets where the supply waves were much more digestible, a return to healthy rent growth and occupancy levels are achievable in today’s macro-economy.
The immediate future for interest rates and capital markets is unclear. The availability of securing loans for multifamily is still a bright spot compared with other types of real estate, but rates could remain elevated as economic policies like tax cuts and deregulation drive growth expectations and long-term interest rates.
Loan Maturities and Market Momentum: A Turning Point for 2025?
I anticipate more buying opportunities and increased market activity in 2025. While the first quarter might not be as robust as it appeared when the 10-year Treasury was below 4%, I believe many property owners who postponed selling in 2023 and 2024 will likely move forward this year.
Not unlike what we experienced in the GFC, owners are holding off on selling, waiting for better market conditions. However, nearly half of U.S. apartment loan volume is due to mature in the next five years, according to a recent report from Yardi Matrix. Many properties are not qualifying for loan extensions or approaching the end of the term for hedging instruments, which will require owners to come out of pocket to pay down loans to refinance and/or incur large hedging expenses. The financial pressure may lead some owners to sell, whether by choice or necessity.
Some Headwinds for Our Industry
Beyond the usual challenges in our industry—now including fraudulent renting, cost of insurance, and a supply/demand imbalance for several markets—a less-discussed issue is the “capital starved” condition of many of the assets expected to come to market soon.
Near the height of the market, many companies used floating-rate financing, but, as interest rates have climbed in recent years, these investments have faced increasing cash flow problems.
To offset the higher interest carry cost, many chose to reduce operating expenses and general upkeep of the assets, which creates long-term problems for the properties. For prospective buyers, proper capital expenditure budgeting before closing a deal will be crucial to plan for more deferred maintenance issues than usual and to avoid disruptions or renegotiations during the transaction.

Adjusted ‘Buy Box’ to Reflect Current Market Conditions
While the core of Fogelman’s “buy box” has not changed significantly, we still seek to purchase high-quality value-add assets below replacement cost in strong suburban locations in the Sun Belt and Midwest. We are adjusting our lens to take advantage of unique market conditions today. Historically, Fogelman has been biased toward buying into a strong operating trend at the asset level, but that is more challenging to find in our Sun Belt markets.
We are now focusing on analyzing submarket supply trends in our existing geographic footprint within the Sun Belt and Midwest to identify areas likely to see significant strengthening over the next 12 months. Many outlying suburban markets are unlikely to experience another supply wave for quite a while, as existing lease-ups and newer assets trade at prices far below replacement costs, which is the amount of money required to replace an asset at its current market value. As a result, those submarkets will likely deliver above-average performance over the next five years. In contrast, more infill neighborhoods will continue to see moderate amounts of new supply, even after the larger wave has cleared.
The multifamily market’s road to recovery in 2025 will likely be marked by cautious optimism, strategic adjustments, and a focus on overcoming lingering challenges. While headwinds such as interest rate volatility, supply/demand imbalances, and capital constraints persist, the market shows promising signs of stabilization, particularly in suburban submarkets and regions with manageable supply pipelines.
For investors and operators, success will hinge on adaptability—both in refining acquisition criteria and proactively addressing deferred maintenance in undercapitalized assets. By leveraging data-driven insights into submarket dynamics and maintaining a disciplined approach to capital expenditures, stakeholders can position themselves to seize emerging opportunities while mitigating risks.
As we move closer to 2026 and beyond, the resilience of the multifamily sector continues to inspire confidence. While the immediate future may be challenging, the foundations for a stronger, more balanced market are being laid, setting the stage for long-term growth and investment potential.