Could significant multifamily opportunities emerge in the current environment? The multifamily sector is transitioning from a supply-driven correction to a period where fundamentals are poised to strengthen. For long-term investors, we believe this moment offers an attractive entry point—let’s look at three major reasons why.
Supply-Demand Recalibration Underway
The multifamily development pipeline has contracted sharply since recent highs in 2021 and 2022, setting the stage for a more favorable supply-demand balance. Multifamily permits and starts have trended downward for several years as developers respond to higher construction costs and interest rates. In February 2025, the seasonally adjusted annual rate for multifamily permitting fell to 404,000 units nationwide, meaningfully below the peak of roughly 700,000 units permitted at the end of 2021, and below the 2016-2019 average of approximately 450,000 units.[1]
In terms of deliveries, approximately 576,700 units came online for the year ended March 31, 2025, a below-peak figure which suggests the supply wave has crested.[2] Looking ahead, deliveries are expected to decline over the coming years as the current pipeline of projects is depleted.
Demand Bolstered by Structural Housing Shortage and Demographic Tailwinds
This supply recalibration comes at a moment when factors driving demand for multifamily housing appear to remain strong, enabling markets to absorb new units and grow rents.
First and foremost, the US faces a critical housing deficit estimated at several million units nationwide, creating baseline demand that outstrips available supply. The shortage is amplified by a significant pool of young adults still living with their parents, other family, or housemates—a demographic representing substantial pent-up demand. Adding pressure to this equation, current mortgage rates hovering near 7% and limited single-family inventory create formidable barriers to homeownership, effectively keeping potential buyers in rental housing longer than in previous generations. This extended rental phase coincides with continued household formation among Millennials and Gen Z, further boosting demand for multifamily units.
Post-pandemic migration patterns show renewed interest in urban centers, with many young professionals returning to city cores where multifamily housing dominates. The rise of flexible and hybrid work arrangements has also increased the premium placed on housing flexibility, making apartments more attractive than long-term mortgages for a growing segment of the population. Together, these factors create a robust foundation for multifamily investment as demand pressures show no signs of abating in the near term.
Market Cycle Positioning: An Opportune Entry Point
Along with supply and demand considerations, it is equally important for investors to recognize that the magnitude of the recent decline in commercial real estate values is similar to what we experienced during the global financial crisis, and if we have reached the trough, now is the time to look for opportunities. With apartment property values down 19% from the 2022 peak, we believe this may create a favorable entry point, especially following two years that favored selling or staying on the sidelines.
For investors with conviction and patient capital, we believe these conditions can create an opportunity to acquire multifamily assets at attractive prices with less competitive pressure, positioning portfolios for strong performance through the next cycle.
Risk Considerations
Investors should consider several risk factors when evaluating multifamily opportunities in the current environment. At the time of writing, tariff announcements by the Trump administration have introduced meaningful uncertainty across financial markets as investors assess potential retaliation, bilateral trade negotiations, and implications for inflation and interest rates. These macro factors could impact construction costs, financing conditions, and overall economic growth, all relevant to multifamily performance. As always, real estate investment outcomes remain highly dependent on market and submarket dynamics, with significant performance variations across geographic locations even within the same metropolitan area. This local nature of real estate underscores the importance of partnering with investment firms that possess deep market knowledge, established operational expertise, and a proven track record of navigating various market cycles. Sponsors with these capabilities are better positioned to identify truly attractive multifamily opportunities while avoiding potential pitfalls in this transitional market environment. As the market recalibrates, discerning investors may find opportunities to enter at the right price point, with the potential to benefit throughout the next upcycle.
To learn about Caliber’s multifamily offerings, contact our team today.
[1] https://www.realpage.com/analytics/apartment-supply-peak-1st-quarter-2025/
[2] https://www.realpage.com/analytics/apartment-supply-peak-1st-quarter-2025/
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About Caliber (CaliberCos Inc.) (NASDAQ: CWD)
With more than $2.9 billion of managed assets, including estimated costs to complete assets under development, Caliber’s 16-year track record of managing and developing real estate is built on a singular goal: make money in all market conditions. Our growth is fueled by our performance and our competitive advantage: we invest in projects, strategies, and geographies that global real estate institutions do not. Integral to our competitive advantage is our in-house shared services group, which offers Caliber greater control over our real estate and visibility to future investment opportunities. There are multiple ways to participate in Caliber’s success: invest in Nasdaq-listed CaliberCos Inc. and/or invest directly in our Private Funds.
Investor Considerations
The information contained herein is general in nature and is not intended, and should not be construed, as accounting, financial, investment, legal, or tax advice, or opinion, in each instance provided by Caliber or any of its affiliates, agents, or representatives. The reader is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances, desires, needs, and requires consideration of all applicable facts and circumstances. The reader understands and acknowledges that, prior to taking any action relating to this material, the reader (i) has been encouraged to rely upon the advice of the reader’s accounting, financial, investment, legal, and tax advisers with respect to the accounting, financial, investment, legal, tax, and other considerations relating to this material, (ii) is not relying upon Caliber or any of its affiliates, agents, employees, managers, members, or representatives for accounting, financial, investment, legal, tax, or business advice, and (iii) has sought independent accounting, financial, investment, legal, tax, and business advice relating to this material. Caliber, and each of its affiliates, agents, employees, managers, members, and representatives assumes no obligation to inform the reader of any change in the law or other factors that could affect the information contained herein.
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