
State of the Multi-Family Real Estate Market – Q2 2025
From Bubble to Reset: What’s Next for Real Estate Investors in 2025 and Beyond
For much of the last decade, real estate felt like a one-way bet. Record-low interest rates. Surging rents. Easy debt. But the past few years have delivered a harsh reality check — and a vital reset for investors.
At Tamarack, we believe in looking through the noise to find lasting opportunity. Here’s a breakdown of how we got here, where we are now, and what might lie ahead.
The Boom: 2010–2022
After the Great Financial Crisis, the 2010s were a golden era for multifamily real estate. Investors were picking up properties at steep discounts, often following the “2% rule” — where monthly rent equaled 2% of the purchase price. Equity appreciation was steady, rent growth was reliable, and underwriting was straightforward.
Then came the pandemic.
Government stimulus, ultra-low interest rates, and a sudden surge in housing demand (as people sought more space) fueled a speculative frenzy. Cap rates compressed into the 3–4% range, debt was cheap, and asset prices soared.
The Shift: 2023
Inflation changed everything. To curb it, the Federal Reserve aggressively raised interest rates — increasing borrowing costs by over 500 basis points in a short span.
The result? Transaction volume fell off a cliff, dropping over 80% in 2023. Sellers clung to bubble-era prices. Buyers couldn’t make deals pencil. And an entire industry built on volume — brokers, lenders, syndicators — was forced to reckon with a new reality.
The Reality: Mid-2024
Today, the multifamily market is recalibrating. Expectations are slowly realigning, but many sellers still expect 2021 prices. Meanwhile, buyers (ourselves included) are underwriting cautiously, assuming sustained higher interest rates and searching for value-add opportunities that justify today’s cost of capital.
We’re seeing cap rates in the high 5s to low 6s — not quite the 7%+ range some expected by now. That’s a sign that demand for these assets remains strong, especially from long-term investors who understand their intrinsic value.
The Opportunity: 2025–2027
So what’s next?
There’s reason for optimism — grounded, not speculative:
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Persistent housing shortage: The U.S. is still short 3–7 million units. Even with current construction rates, it could take decades to catch up. That imbalance supports long-term demand for multifamily housing.
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Location still matters: Markets with strong job and population growth will continue to outperform. For us, underwriting starts with location and ends with fundamentals.
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Higher-for-longer may persist: Tariff-heavy policies and inflationary pressures could keep interest rates elevated. At Tamarack, we don’t bank on rate drops. We underwrite conservatively — and if rates fall, that’s upside, not the plan.
What We’re Doing Now
We’ve closed fewer deals lately — not because we’re sitting out, but because we’re staying disciplined. Like many prudent operators, we’re hunting for the right deal, not just any deal. When one sticks, we’re ready to move.
Final Thoughts
Real estate isn’t broken — it’s recalibrating. And for investors with patience, discipline, and a long-term view, the next few years could offer generational opportunities.
We’re not here to predict the future. But we are here to navigate it with you — thoughtfully, transparently, and with conviction.
Take ownership. Build legacy. Invest with purpose.