Why Multifamily Still Works — If You Buy It Right

A lot of noise in 2023-2024 said multifamily was "dead." The people who said that didn't know how to underwrite in a normal-rate environment. Here's the actual thesis for buying multifamily today.

Demand is structural. The US is under-housed by 3-6 million units depending on which study you read. Household formation continues to outpace new construction. Class B/C workforce housing specifically is chronically undersupplied. This isn't a cyclical shortage — it's a decade-long structural imbalance.

Supply is finally slowing. Construction starts collapsed in 2023-2024 as construction costs, insurance, and interest rates made new deals impossible to pencil. That means less new supply hitting the market in 2025-2027, right when demand is set to accelerate.

Rates will normalize eventually. I'm not saying they'll return to 3%. But 30-year fixed at 7%+ isn't a permanent state either. Deals bought in 2024-2025 at today's cap rates, with fixed-rate agency debt, will benefit from any refinancing opportunity that appears in years 3-7.

But you have to buy it right. That means: no bridge debt on stabilized assets, exit cap = acquisition cap, real capex reserves, conservative rent growth (0-3% not 5-7%), and a sponsor who has weathered a downcycle before. Deals that pencil under these assumptions are rare — but the ones that pencil are extraordinary.