Earlier this week, I was scrolling through financial news (which I probably shouldn't do so often), and it felt like a tsunami of negativity.
The S&P was flirting with bear market territory, down nearly 20% from its highs. Recession talk is everywhere. On-again, off-again tariffs are creating massive uncertainty, as are job loss predictions.
It's a lot.
But as I closed my browser, something struck me: we've been here before. This kind of economic uncertainty is nothing new – it's just today's flavor of the same old noise.
And that noise is drowning out something much more important: the unchanging fundamentals that continue to point to outperformance in real estate (particularly multifamily).
I've talked with several very experienced multifamily operators and investors over the last week. Their reaction to all this chaos? Not panic, but excitement. Not retreat, but anticipation.
Why? Because they're looking past the headlines to what actually matters: demographic demand and supply constraints that aren't going anywhere.
The Freight Train of Demographic-Driven Demand
Here's what hasn't changed:
Millennials and Gen Z are still firmly in their prime household formation years:
https://www.dailykos.com/stories/2023/12/20/2212817/-US-population-distribution-by-age-2022-to-2100
The buy versus rent math remains heavily skewed in favor of renting (more than we've seen in decades)
https://www.marcusmillichap.com/research/videos/the-forces-driving-long-term-rental-housing-demand
People will still get married, have kids, and need to move regardless of economic sentiment
Sure, economic uncertainty might delay some of these decisions (it typically does). So the household formation we expected to accelerate in late 2025 might get pushed out another 6-12 months.
But can consumer sentiment completely derail demographic-driven demand for rental housing? Not a chance.
It's like trying to stop a freight train with a traffic cone.
Supply Constraints Haven't Magically Disappeared
When the Fed started raising rates in 2022, multifamily construction starts fell off a cliff. And they haven't picked back up in any meaningful way since.
The projects that were already in motion in 2022 have largely been completed now, and we've been able to absorb those new units that have come online over the last few years. But there's very little new construction entering the pipeline.
When unchanging demand meets constrained supply, the outcome is predictable: shortages, rising rents, and eventually, increasing property values. It's simple economics playing out in slow motion.
Why This Extended Runway Is Good News
Going into last year, there was a lot of talk about the “wall of maturities” – a wave of commercial real estate loans coming due that would force owners to refinance at much higher rates or sell at a loss. Many analysts predicted this would lead to massive distressed selling in multifamily.
I wrote in early 2024 that I didn't think this would actually happen. I thought that banks were more likely to extend these loans rather than take losses, kicking the can down the road (aka “extend and pretend”).
That prediction largely held true – but something interesting is happening in 2025.
We're now seeing banks get increasingly aggressive about dealing with underwater loans, with an increasing amount of banks forcing sales or taking over the properties. It’s not a tsunami of foreclosures, but definitely more pressure than we saw 12-18 months ago.
We’ve recently seen several properties where the seller has their back against the wall with a maturing note. The property itself? Solid. Good occupancy. Strong location. The issue isn't the asset – it's the financial structure around it.
This extended runway before the full force of demographic demand hits stagnant supply is giving us a larger window of opportunity.
Think about it:
More distressed sellers means more deals at better prices
Negative headlines keep inexperienced investors on the sidelines, reducing competition
Assets acquired now will be in great position when the coming shortage materializes
Don't Get Suckered by the Headlines
It's nearly impossible not to be influenced by the constant barrage of negative headlines. They're designed to capture attention, not provide perspective.
But the most experienced investors I know aren't glued to CNBC or doomscrolling on Twitter. Many don't even have heavy stock market exposure, so they're not feeling the psychological impact of daily market swings.
Instead, they're focused on the fundamentals and quietly positioning themselves to capitalize on the current environment.
There are opportunities in every market cycle. Always have been, always will be. The key is having a framework to evaluate what's happening beneath the surface noise.
So ask yourself: What in the current environment is actually changing the core fundamentals that drive multifamily performance?
If the answer is “not much,” then perhaps this is an ideal time for passive investors to partner with experienced operators who can navigate these waters and find those opportunities that others are missing.