Multifamily Market Insights: Navigating 2025 with Optimism and Strategy
On a recent episode of America’s Commercial Real Estate Show, the host welcomed Greg Willett, Chief Economist, and Andrew Bowen, SVP of Strategic Partnerships—both from LeaseLock—to unpack the state of the multifamily market. Their in-depth discussion illuminated the current challenges and future opportunities shaping the multifamily landscape as we move through 2025 and into a highly anticipated recovery in 2026 and 2027.
Transaction Volume: Signs of Life After a Lull
After a sluggish period, multifamily transaction volume is poised for a comeback. Greg Willett noted that while 2024 started off slowly, recent drops in 10-year Treasury yields are helping deals move forward. There’s a growing sense of FOMO—fear of missing out—among investors, many of whom are eager to enter the market before fundamentals improve further. “You want to get some deals done to take full advantage of that runup that is probably ahead of us,” Willett said.
Deliveries vs. Demand: An Imbalance in Timing
While the U.S. faces a long-term housing shortage, the near-term has been flooded with new Class A apartment deliveries, especially in Sunbelt markets. The imbalance stems from a sharp decline in new starts, creating a lagging pipeline that will lead to tighter supply—and upward pressure on rents—in the next two years. Andrew Bowen likened it to weather: “We might have a drought overall, but if it rains too much in one day, we get flooding.”
Rent Trends: Flat Today, But Tomorrow Looks Bright
Rents have largely plateaued, but that’s likely temporary. With supply tapering off and demand expected to rebound, especially by 2026, rent growth is forecasted to pick up again. However, short-term fundamentals face headwinds: weakening consumer confidence and affordability constraints may dampen demand growth in 2025.
Bowen highlighted a bright spot—renewal rates are up significantly. Compared to 15-year averages, renewals are outperforming by 350 basis points. Operators are seeing a higher premium when residents renew rather than move, creating major NOI advantages.
Affordability: The Elephant in the Room
Despite income gains in recent years, housing affordability remains a pressing concern. Roughly 40% of renters are considered rent-burdened, spending over 30% of their income on rent. Add in rising credit card debt and economic uncertainty, and it’s clear why affordability is top-of-mind for the industry.
LeaseLock is tackling this with deposit alternatives that reduce move-in costs. “57% of Americans can’t cover an unexpected $1,000 expense,” Bowen said, citing a Bankrate study. Reducing upfront rental costs could make moving—and renting—more accessible.
Development Outlook: A Strategic Slowdown
According to Willett, multifamily development has bottomed out and should begin a slow rebound. There’s money re-entering the development pipeline, especially in underbuilt segments. However, regulatory hurdles and construction costs continue to steer developers toward luxury Class A product, where projects are more financially feasible.
Bowen hopes for more incentives to support workforce housing, including revisiting Opportunity Zones and tapping into federal land for development. A recent Wall Street Journal article noted that 7% of federal land is located in housing-impacted areas—a potential game changer if unlocked strategically.
Build-to-Rent and Operational Shifts
Build-to-rent (BTR) communities aren’t drastically disrupting the multifamily sector yet—at least from an investment standpoint. But operationally, they’re setting new standards. BTR’s emphasis on efficiency and centralized management is influencing traditional multifamily operations. Bowen said, “Every organization of any size is adjusting right now to figure out how they redo their operational model.”
Investment Strategy: Know Your Market
For investors, 2025 presents a transitional window. Willett advises looking beyond metro averages and digging into neighborhood-level trends to uncover hidden gems. The best deals may be in stabilized Class A assets or distressed Class C opportunities.
Final Takeaways
Both guests emphasized preparation and perspective. Willett sees 2025 as a bridge year: “Get ready now to take advantage of what’s coming.” Bowen urged operators to prioritize retention and resident experience: “The business of running properties is hospitality.”
In short, the multifamily sector is weathering a temporary storm—with plenty of sunshine on the forecast.