PassivePockets: The Passive Real Estate Investing Show

Multifamily Market Secrets and Trends: Jay Parsons Explains

17 snips

Jan 28, 2025

Jay Parsons, a rental housing economist, dives into multifamily market trends and what's ahead for 2025. He explains why demand remains robust despite record new deliveries and discusses the complexities of interest rates and local policies. Jay predicts a split between struggling C-class properties and stable A/B-class options. He reveals that Midwest markets are thriving, while the Sunbelt may soon bounce back. For passive investors, understanding these dynamics is crucial for navigating the changing landscape.

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INSIGHT

Stalled Construction

New multifamily construction has stalled due to increased capital costs and lack of investor interest.
Equity investors are seeking to buy below replacement cost, making new development less attractive.

ADVICE

Don't Wait to Invest

Avoid waiting for all signals to turn green before investing in multifamily.
A strong market with low supply may lead to lower cap rates and higher prices, benefiting early investors.

INSIGHT

Policy vs. Supply Risk

Policy risk is unpredictable and permanent, while supply risk is predictable and temporary.
Focus on supply risks, but be aware of potential policy changes impacting the multifamily market.

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We welcome rental housing economist Jay Parsons to dissect the current multifamily landscape and offer insights on what 2025 might bring. Jay unpacks why record new deliveries haven’t led to severe distress (yet), how interest rate surprises are reshaping capital markets, and whether policy risks could outweigh simple supply-and-demand fundamentals. Learn why he believes “steady eddy” Midwest markets are surging, why the Sunbelt could soon make a comeback, and what these trends mean for passive investors looking at longer-term holds.

Today’s Episode Takeaways:

- Why multifamily demand has remained surprisingly strong

- Whether we’ll see more distressed properties change hands in 2025

- How changes in supply, policy, and interest rates are shaping next year’s outlook

- Why Jay sees a potential split between “busted” C-class deals and A/B-class stability

- Key factors for LPs to consider when underwriting longer-term investments

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jimpfeifer@biggerpockets.com