- Investor sentiment for multifamily surged by 40 points in Q1 2025, with 62% now viewing it as a top-performing asset class.
- Rising mortgage rates and limited for-sale housing continue to channel demand into the rental market, supporting occupancy and rent growth.
- Despite concerns over economic uncertainty, multifamily was one of just two CRE sectors to post year-over-year growth in transaction volume.
The Big Picture
One year after investor sentiment soured on multifamily due to rising costs and oversupply fears, confidence in the sector has made a full rebound, reports GlobeSt. Renewed optimism stems from housing rebalancing, as high mortgage rates and low for-sale inventory drive more demand toward rentals.
Reversal In Confidence
In early 2024, only 46% of investors saw multifamily as a likely top performer, while nearly a third expected it to underperform. But by Q1 2025, 62% of respondents identified multifamily as a top-performing asset class, and just 6% labeled it as a worst performer—a 40-point swing in sentiment.
Get Smarter about what matters in CRE
Stay ahead of trends in commercial real estate with CRE Daily – the free newsletter delivering everything you need to start your day in just 5-minutes
What’s Driving The Shift
Elevated borrowing costs have created a “lock-in” effect, discouraging homeowners from selling properties secured with low-rate mortgages. March 2025 saw just 4.02M existing home sales on an annualized basis—the lowest level in over 30 years. While some demand has shifted to new home construction, elevated interest rates and building costs have capped further growth.
Multifamily Fundamentals Stabilize
Altus noted accelerating rent growth in mid-rise and high-rise segments, especially in urban cores, as the multifamily rebound absorbs displaced housing demand. Despite overbuilding in some Sun Belt metros and slower new development, improving fundamentals and limited single-family inventory are driving the multifamily rebound.
Looking Ahead
With transaction volume rising and market fundamentals stabilizing, the multifamily rebound is drawing investors back to the sector. Altus says strong housing demand, despite ongoing uncertainty, continues to favor multifamily over other real estate sectors in 2025.
