Is It Time to Re-Enter the Multifamily Market?

Episode Transcript:  

   If you are a real estate investor that has been sitting on the sidelines and wondering is now the time to finally start moving again. This episode is loaded with data you'll wanna make sure to take into consideration. Let's get REady2Scale.

Hey guys, my name is Jeanette Friedrich. I'm the director of investor relations and here to, I am going to share some insights from our hot off the press. H 2 20 25 Multifamily outlook. Now you can download the entire report for free. There's a link in the show notes, but I'm gonna give you just some of the main highlights.

So first of all, let's talk about what has been happening so far this year in 2025. And what's really interesting to me and critical to most investors is taking a look at absorption. So essentially there has been a lot of new supply coming on the market for the last 24 to 36 months, uh, especially in the last 18 months.

In particular, meaning that a lot of developers have basically built brand new apartments and brought them to market. And existing multi-family assets have been competing against all of that new delivery. This has forced a lot of multifamily owner and operators of existing properties to have to give concessions.

Like, you know, the first two weeks, free or half off your rent or $99 moves you in. Things along those lines, uh, in order to try to compete with the offers that these other brand new properties are also bringing to the market. So it's been very, very competitive as a multifamily owner and operator for the last basically 18 to 24 months.

And so in Q1, something very interesting and encouraging happened, and that is that we actually hit the strongest first quarter in more than 30 years for absorption. So in Q1 alone, over 138,000 brand new apartments were delivered to the market. And rented. Now, the critical detail in that is that it was rented very quickly indicating that demand is very strong for multifamily and only getting stronger.

Right now for the vast majority of people, it makes way better sense to just rent than it does to buy, and that is very unlikely to change anytime soon. Now. In addition to that, not only did we see strong absorption, which is a very reassuring data point for multifamily investors, but we also saw that vacancy, which had been hovering around 7% or so, the last year actually started to narrow and is now closer to 5%.

That's also really encouraging to see, because it's reaffirming. Basically the fundamentals that you wanna have in place for successful multifamily investments. So we've got strong absorption and we've got vacancy narrowing, which are both really good signs. Now, where it gets really interesting though, is actually what's coming up in Q3.

So in the third quarter of 2025, primarily between July and September, two thirds of all active construction will finally be hitting the market. And then after that. P, it essentially just drops off. And so that is really interesting because new construction starts, meaning people that go out and and get permits in order to start new construction projects is down 11% year over year as of right now, and very likely will only continue to taper down because of, again, all of the economic factors that I just mentioned earlier about it being very.

Expensive to have successful, profitable development projects. So for multifamily, passive investors, or even just other regular general real estate investors, if you have some duplexes or you know, a private single family home, all of these. Fundamental data points are really encouraging that essentially supply is going to be coming to a serious drop, and demand is as strong as it's ever been and will probably only continue to increase.

So if you have been sitting on the sidelines wondering if it's time to move or not, I think these data points are something you'll want to take into consideration. I hope you guys found this helpful. Don't forget that we have the link to the full report in the show notes, and in the meantime, let us know anything else you'd like us to take a deep dive into.

Thanks guys. Ready to Scale is brought to you by Blue Lake Capital, where we hunt down the best multi-family investment opportunities that we can find and invite investors to join in with us. We target Class B value add multi-family properties across the Sunbelt. Our CEO Ellie Perlman invest a substantial amount of capital into every deal.

This means our interests are aligned with yours. If you're an accredited investor looking to. Span your portfolio and diversify sponsors. Be sure to visit us@bluelakecapital.com. Blue Lake Capital, be bold, be extraordinary, and keep moving forward.