2025 Multifamily Market Outlook
Challenges and Opportunities Ahead
Absorption Strains Across Tiers: Rent declines and rising vacancies from luxury to Class C properties are creating ripple effects, with older Class C assets facing potential demolition.
Strategic Value-Add Opportunities: Upgrades to 1990s–2010s Class B+/A- properties and repositioning Class C assets offer revenue growth and stabilization potential at steep discounts.
Market Realignment Advantage: Slower construction and distressed asset sales present unique opportunities for acquisitions and future rent growth.
Disproportionate Asset Value Drops in Multifamily Real Estate
Key Insights Across Property Classes
Uneven Value Declines: Property values have dropped significantly, with Class A down 30%–60%, Class B 40%–70%, and Class C suffering the most at 50%–90%. Many Class C properties are now underwater.
Class C Challenges: Declines in revenue and rising expenses have led to a 75.9% value drop for Class C properties, driven by weak economic outlooks and higher cap rates.
Uneven Value Declines: Property values have dropped significantly, with Class A down 30%–60%, Class B 40%–70%, and Class C suffering the most at 50%–90%. Many Class C properties are now underwater.
