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Apartment Buyers and Sellers MF Sentiment Improves in Q1 2025
During the first quarter of 2025, the Federal Reserve announced a slowdown in its Effective Federal Fund Rate. At the same time, the Trump administration’s various policy shifts impacted the equities market, consumer sentiment and trade.
Despite the uncertainty, multifamily buyer and seller sentiment improved, according to the results from a CBRE survey. Specifically:
- Core-asset buyer sentiment was 65% positive in Q1, versus 44% positive in Q4 2024
- Core-asset sellers’ negativity decreased, with 67% neutral sentiment in Q1, a change from the 57% neutral sentiment in Q4 2024
- Value-add buyers had a slightly improved positive-to-neutral sentiment, and value-add sellers were at a higher concentration of neutral sentiment
- Highest sentiment percentages were reported in the Sun Belt with all product types, and in San Francisco for core assets
Underwriting assumptions also improved for core multifamily assets, while those involving value-add assets weakened slightly. These assumptions involving annual asking rent growth held steady at 2.7% (core assets) and 3.1% (value-add assets). “This stability coincides with the current recovery in rent growth following a generational wave of new supply in many of our tracked markets,” CBRE analysts said.
In discussing cap rates, the survey said that:
- Value-add assets had a going-in cap rate of 5.32% and an exit cap rate of 5.42%
- Core assets had a going-in cap rate of 4.83% and an exit cap rate of 5.01%
- While the spread between core assets going-in and exit cap rates widened, the spread for value-add assets declined
CBRE analysts acknowledged that value-add underwriting metrics weakened somewhat in the first quarter. However, in their forecast for the remainder of the year, the analysts added, “We expect tailwinds in the multifamily sector as investors look to capitalize on improved market fundamentals, particularly in the core segment. “
- ◦Sale/Acquisition
- ◦Financing
