August 2025
The latest newsletter reports the closing of a $10.175M asset in Chico, CA, consisting of 72 senior units, secured with a 5.33% interest-only loan for 10 years, and exceeding 5.5% cash-on-cash returns from the start. The newsletter also invites those with equity to consider exchanging or investing in new projects, mentioning a current $18.5M property under due diligence in Iowa. Economically, the U.S. multifamily market is entering a new cycle in the latter half of 2025, showing solid fundamentals despite macroeconomic uncertainty. Key indicators for July include a 0.2% increase in the all-items CPI (2.7% year-over-year), a 0.3% rise in core CPI (3.1% year-over-year), and a significant 0.9% jump in the PPI (3.3% annual growth). Interest rates have been steady in 2025, making transactions challenging. The multifamily sector expects stabilization, with the national vacancy rate projected to drop to 6.0% by year-end 2025, effective rent growth projected between 2.0% and 2.5% for the full year, and construction starts slowing. Investment activity has returned to pre-pandemic levels, with average cap rates stable at 5.7%.
June 2025
The June Newsletter outlines an economic outlook anticipating slower growth and renewed inflation in late 2025, though a recession is not expected, with policy adjustments predicted to fuel a stronger rebound in 2026. The FOMC held interest rates at 4.25%, reflecting confidence in the labor market and stable inflation. Various property types show mixed trends: retail is slowing except for personal and health products, industrial demand is driven by online sales, hotels face softer travel demand (especially limited-service), medical real estate benefits from elevated healthcare inflation, and student housing is a strong area for institutional lending. Developing trends to watch include the full impact of tariffs and the potential for higher oil prices due to the Middle East conflict. Inflation remains driven by services, with regional variations influencing multifamily housing demand and millionaire renters increasing, driven by high mortgage rates and a preference for flexible living. Finally, California landlords are seeking recourse for losses incurred during pandemic eviction moratoriums, with a recent federal appeals court ruling offering new hope for compensation claims.
March 2025
Some of our thoughts on the mixed picture for the multifamily housing market. Locally, leasing is picking up, but concessions and value-oriented rates have been driving tenant decisions. The hope is that increased demand will shift negotiations and reduce concessions as the year progresses. Acquisition efforts for a high-quality asset in 2025 were unsuccessful, but searching continues. Industry-wide, uncertainty persists due to fluctuating interest rates, impacting debt costs and property values. A gap between buyer and seller expectations is slowing transactions, but long-term optimism remains, fueled by expectations of stabilizing supply and strong demand. Inflation and economic indicators are being closely watched, with a potential for increased investment activity in 2025 despite higher interest rates.
January 2025
Things are off to a slow start this year. We saw a seasonal slow down late last year, which has made clearing any vacancies slower that usual. However things are picking up and new lease rates are trending slightly better than exiting tenants. I expect leasing to get back to full speed shortly.
For those of you with student properties, we are seeing about 50% renewing in 2025 on average with modest increases in rates. Butte College enrollment is up 9% compared with last spring and CSUC was up 3% in Fall 2024 year over year. Those are modest but good trends.