EXCLUSIVE: 83% Of Multifamily Investors Are Looking To Buy In 2025

Multifamily real estate investors are looking for deals in 2025 as the asset class reckons with last year's supply tsunami and a rolling wave of distress.

Just 2% of multifamily investors plan to cut their portfolios this year, while 83% are looking to make acquisitions, according to a new survey conducted by Berkadia and shared exclusively with Bisnow. It’s the latest sign that capital markets are coming unstuck after spending the last two years frozen by high interest rates and limited pricing visibility.

“The little bit of our canary in the coal mine is our investment sales business, and that group seems to be incredibly busy right now,” said Ernie Katai, Berkadia head of production for mortgage banking.

Berkadia surveyed 240 of its largest clients in January to gauge their outlook on the multifamily market and broader economy. The results reflect growing optimism about apartment assets, even as investors come to grips with the realities of higher-for-longer interest rates.

Debt costs remain the main constraint on the market, with 93% of investors saying it’s very or somewhat difficult to underwrite deals today. Around 7% said it’s neither easy nor hard. No one said it was easy. 

“The good news is there's no shortage of capital,” Katai said. “In the past, a lot of these downturns meant no capital was available, this is completely different. There is capital, it's just whether people are willing to jump back in the pool.”

Around 43% of investors expect core-plus assets to outperform the rest of the sector in 2025, while 30% see the greatest upside in value-add properties and 17% of investors are eyeing development or opportunistic investments. 

Just 11% of investors think core assets will be the strongest performers of the year, but Katai said interest in the sector could grow as debt costs come down. 

The Southeast remains the most popular region for capital allocation. But the Midwest, largely an afterthought of pandemic-era migration trends, ranks second. The U.S. West and Central regions look the weakest to investors. 

More than 20% of investors cited interest rates as the top challenge facing their portfolio, and the lack of good deals has also vexed investors. Most investors expect the investment market to improve in the back half of this year, and 44.6% of investors expect the climate to be significantly better by the end of 2026. 

Between the public and private markets, roughly $600B in multifamily debt will mature in 2025, according to JLL. The short-term extensions that defined the recent investment strategy known as extend-and-pretend may be coming to an end, said Hilary Provinse, who leads a team of more than 350 multifamily capital markets professionals at Berkadia.

“We're seeing a little bit of nudging, but we're not seeing wholesale pushes,” Provinse said. Still, property owners who can wait for a better debt environment continue to delay going to market. 

Sellers could be helped along by the narrowing gap between asking price and bids from buyers that has tightened as owners are slowly coming to accept that valuations aren't bouncing back soon. 

“If you bought early in 2021 or 2022 you probably overpaid,” Katai said. “At some point, there's got to be a capitulation somewhere. Whether it's the lending institutions, the borrowers or they do it together, they've got to figure things out.”

The recent slide of the yield on U.S. 10-year Treasury bonds — driven down by investor unease about the broader economy — could be enough to loosen the sales market. If the bond yield, which is used as a benchmark for all sorts of debt, settles below 4.25%, transaction momentum will accelerate, according to both Provinse and Katai.  

Investors would prefer rates stabilize, but they’re accepting that President Donald Trump's administration is likely to add to market volatility. To navigate the uncertainty, buyers are closely watching the movement of the 10-year Treasury, putting contracts together and waiting to pull the trigger on a deal when the moment is right. 

The yield was 4.2% on Monday, and Provinse said swings of 20 basis points were enough to push some deals across the finish line.

“People have finally realized that, especially given the administration, there's going to continue to be volatility,” she said. “And so what they have to do is just be ready to move when rates hit those low points.” 

Multifamily investors aren’t expecting significant, sticky swings to bond yields, which have been sliding in recent weeks due to concerns about the broader direction of the economy. 

Half of investors expect the Treasury yield, which is used to price long-term debt, to remain between 4.0% and 4.5% through 2025. Roughly 20% of investors expect the yield to rise, while fewer than 10% are expecting significant rate relief. 

More than half of investors expect the Federal Reserve will only make one rate cut this year, and they expect the investment climate to remain largely the same in the coming months, with some predicting a modest improvement in the back half of the year will give way to a significantly healthier marketplace by the end of next year.

Katai said he was inundated by calls when the Fed cut rates, but the calls stopped as the 10-year yield began to climb in the proceeding months. He likened debt yields to a light switch that was turned on in September and then quickly turned back off.

It remains to be seen how bright and how steadily the light will shine in 2025.  

“I kind of joke, 2025 is going to be a light switch, but is it going to be a dimmer switch, or is it going to be a three-year-old flashing the lights on and off,” he said.