Most investors know markets don’t move in straight lines. Real estate, in particular, runs in cycles, rising, peaking, correcting, and recovering in a rhythm that can swing prices by 30% or more over the course of a decade. For multifamily investors, staying attuned to multifamily market cycles is critical. It shapes not just when we buy or sell, but also how we position capital to maximize returns and manage risk.
The Four Phases of the Real Estate Cycle
Like the broader economy, real estate tends to repeat four phases:
- Recovery – The market begins to heal after a downturn. Vacancies start to tighten, rents stabilize, and confidence creeps back.
- Expansion – Growth kicks in. Rents rise, demand is strong, and new development ramps up. This is often the most optimistic—and competitive—phase.
- Hypersupply – Builders overshoot, supply outpaces demand, and vacancies creep higher. Rent growth slows or stalls.
- Recession – Excess supply and weaker demand push values and rents lower. Distress emerges, but so do some of the best long-term opportunities.
Each phase offers opportunities, but the right strategy depends on where the market stands.
Where We Are in 2025
Looking across today’s market, we’re somewhere between late correction and early recovery. The rapid interest rate hikes of the past two years slowed home sales and pressured multifamily rent growth in several high-growth metros. In some Sun Belt markets, year-over-year rents have even dipped. Meanwhile, tighter credit conditions and maturing loans are creating stress for owners who bought at peak valuations.
At the same time, supply pipelines are starting to thin, demographic demand remains strong, and inflation is easing. History suggests these are the ingredients that set the stage for the next recovery.
What the Past Teaches Us
If we look back over the last 25 years, the pattern is familiar:
- Early 2000s Expansion: Strong growth, easy credit, and overbuilding.
- 2007–2011 Downturn: Prices corrected sharply, creating once-in-a-generation buying opportunities.
- 2012–2019 Expansion: One of the longest growth cycles in history, with multifamily at the forefront.
- 2020–2022 Surge: Pandemic-driven demand and low rates fueled record rent growth and appreciation.
- 2023–2025 Reset: Higher borrowing costs and affordability challenges are forcing a reset in pricing.
Cycles repeat. The investors who consistently outperform are those who act when uncertainty is high, rather than waiting for headlines to turn positive.
Preparing for the Next Phase
If we are indeed moving into early recovery, this is the time to sharpen pencils and prepare for opportunities:
- Keep liquidity ready – Distressed and recapitalization deals are already emerging as loans mature.
- Focus on strong markets – Job growth, population inflows, and supply-constrained areas will rebound fastest.
- Lean into value-add – Repositioning well-located assets during recovery often delivers outsized returns.
- Watch rates closely – As the Fed eases, lower borrowing costs could accelerate the next expansion.
Final Thoughts
Real estate is cyclical by nature. Prices rise, correct, and recover. It’s a pattern we’ve seen repeatedly. What matters is how we respond.
Today’s environment is uncertain, but uncertainty is often the prelude to opportunity. For multifamily investors with patience, discipline, and capital at the ready, the next cycle could prove especially rewarding.
Now is the time to prepare, so that when the market begins its next leg up, you’re positioned to take advantage.
When You’re Ready… Here’s 3 Ways We Can Help:
- Connect With Our Team: Whether you’re exploring passive real estate for the first time or you’re a seasoned investor looking for a trusted partner, our team is available to answer your questions. Schedule a confidential strategy call to learn more about our investment philosophy, current opportunities, and how we help investors achieve income, growth, and tax efficiency.
- Join Our Private Investor Portal: Gain exclusive access to our current offerings and ongoing pipeline of multifamily investments. Inside, you’ll find detailed financials, market insights, and structured deal overviews—all designed to help you make informed, confident decisions about where to place your capital.
- Review Our Investment Strategy: Get a clear understanding of how we source, underwrite, and manage multifamily assets. Our strategy is built around long-term wealth creation, consistent passive income, and disciplined risk management. Learn what sets us apart and why sophisticated investors choose to partner with us.