Real Estate Is Shifting Again

New Winners Are Emerging

Cbre.france. 38ème Forum CBRE, André Comte-Sponville. 31 Jan. 2013, Wikimedia Commons, https://commons.wikimedia.org/wiki/File:38%C3%A8me_Forum_CBRE,_Andr%C3%A9_Comte-Sponville.jpg. Accessed 11 June 2026.

For much of the past three years, the real estate industry has operated under a cloud of uncertainty.

Rising interest rates, inflationary pressures, tighter lending standards and declining transaction volume created one of the most challenging investment environments in recent memory. Many investors retreated to the sidelines. Sellers struggled to adjust pricing expectations. Financing became more expensive and less available.

Yet beneath the surface, a new cycle appears to be taking shape. The correction that many expected has largely occurred across large portions of the market. Cap rates have expanded. Asset values have adjusted. Buyers and sellers are beginning to find common ground again. While challenges remain, transaction activity is slowly returning and investors are increasingly identifying opportunities across multifamily, student housing and residential real estate.

According to CBRE, multifamily transaction volume increased significantly in 2024 compared to the prior year as pricing discovery improved and investors regained confidence in underwriting assumptions.¹ The National Multifamily Housing Council similarly reports that demand for rental housing continues to exceed long term supply in many regions despite elevated construction activity.² Sean Lyons, Founder and Partner at Triad Real Estate Partners, believes the multifamily market is entering a new phase.

“The multifamily market nationally is in a transitional moment,” Lyons explains. He notes that cap rates have largely repriced, bid ask spreads have narrowed and transaction volume is recovering. According to Lyons, buyers who previously remained on the sidelines are increasingly becoming active again, particularly within the $5 million to $30 million acquisition range where private capital and 1031 exchange buyers remain highly active. That observation reflects broader market dynamics.

For much of 2022 and 2023, rising interest rates disrupted underwriting assumptions. Many owners resisted lowering prices while buyers demanded higher yields to compensate for increased financing costs. The result was a significant slowdown in transaction activity. Today, that gap has narrowed considerably.

The Urban Land Institute recently identified multifamily housing as one of the most attractive property sectors for institutional investors entering 2025.³ While rent growth has moderated from pandemic era highs, occupancy remains relatively strong across many markets. Investors increasingly view multifamily as a stable income producing asset class during a period of broader economic uncertainty. Not all markets are performing equally, however.

One of the most important shifts occurring today involves geography.

For years, the Sun Belt dominated investor attention. Cities across Texas, Florida, Arizona and the Carolinas attracted substantial population growth and unprecedented construction activity. While those trends remain important, aggressive development has created new challenges.

According to CoStar, several Sun Belt markets are now experiencing elevated supply levels that have placed temporary pressure on rents and occupancy.⁴ Investors who once focused almost exclusively on these regions are increasingly reconsidering Midwestern opportunities. Lyons believes this trend is accelerating.

“For the Midwest markets we largely cover specifically, the fundamentals are arguably more durable than the Sun Belt,” Lyons says. He points to less speculative construction activity, stable renter demographics and more attractive acquisition pricing as key advantages. Lyons notes that cities such as Milwaukee, Indianapolis and Chicago suburban markets are attracting increased attention from investors who historically overlooked them.

This shift reflects a broader principle that often emerges during real estate cycles. Investors frequently gravitate toward markets where future supply appears constrained and acquisition basis remains attractive. Student housing represents another area generating significant interest. While several property sectors experienced volatility during recent years, student housing has remained remarkably resilient. Enrollment growth at major universities, limited purpose built supply near many campuses and strong institutional demand have supported valuations throughout much of the cycle.

According to JLL, student housing occupancy rates remain near historic highs while preleasing activity continues to outperform many traditional multifamily segments.⁵ The sector has increasingly attracted pension funds, private equity firms and institutional investors seeking stable cash flows and demographic driven demand. Lyons believes the sector's appeal stems from both supply and demand dynamics. “Student housing has been a relative bright spot throughout this latest cycle,” Lyons explains. He points to enrollment growth, preference for purpose built properties and institutional demand surrounding assets located near major Power Four universities.

That demand appears unlikely to disappear anytime soon. Research from the National Center for Education Statistics projects continued enrollment growth across many flagship public universities during the coming decade.⁶ At the same time, development costs remain elevated, limiting the pace of new construction. As a result, many investors view student housing as one of the most attractive risk adjusted opportunities available today. Residential real estate is experiencing a different set of forces. The housing market remains constrained by one of the most severe supply shortages in modern history. According to Freddie Mac, the United States continues to face a housing shortage exceeding three million units.⁷ Limited inventory has kept home prices elevated despite higher mortgage rates.

Lawrence Yun, Chief Economist of the National Association of Realtors, has repeatedly emphasized that housing inventory remains the single largest challenge facing residential markets.⁸ While affordability concerns have slowed transaction activity, demand remains substantial due to demographic trends and years of underbuilding. The result is a market characterized by unusual tension. Potential buyers remain sensitive to mortgage rates. Sellers remain reluctant to relinquish low interest mortgages obtained during prior years. New construction helps address some supply shortages, but not enough to fully satisfy demand.

Harvard University's Joint Center for Housing Studies notes that affordability pressures continue affecting both renters and homeowners nationwide.⁹ Yet the same report highlights persistent demand for housing across virtually every demographic category. This dynamic helps explain why investors continue allocating capital toward residential and multifamily sectors despite macroeconomic uncertainty. Long term fundamentals remain compelling.

The broader investment community increasingly appears to agree. PwC and the Urban Land Institute's annual Emerging Trends in Real Estate report identified housing related asset classes among the strongest investment opportunities entering 2025.¹⁰

Demographic demand, supply constraints and long term necessity continue supporting investor confidence. What makes the current environment particularly interesting is that opportunity is no longer concentrated in obvious places. For years, many investors chased the same Sun Belt markets, the same development themes and the same growth narratives. Today, the landscape is becoming more nuanced. Midwest multifamily assets are receiving renewed attention. Student housing continues attracting institutional capital. Residential supply shortages remain unresolved. The next phase of the cycle may belong not to those chasing yesterday's trends, but to those identifying where fundamentals remain strongest. Real estate has always been cyclical.

The investors who perform best are rarely those who buy at the peak of enthusiasm. They are often the ones willing to move when uncertainty still exists but fundamentals are beginning to improve. That moment may be arriving now. While challenges remain, many of the adjustments investors have waited for are already occurring. Pricing has become more rational. Transaction volume is recovering. Capital is returning. The market may not be booming yet. But it is moving again.

Works Cited

1. CBRE. “2025 U.S. Multifamily Market Outlook.” CBRE Research, 2025, https://www.cbre.com.

2. National Multifamily Housing Council. “NMHC Quarterly Survey of Apartment Market Conditions.” NMHC, 2025, https://www.nmhc.org.

3. Urban Land Institute and PwC. Emerging Trends in Real Estate 2025. Urban Land Institute, 2025, https://www.uli.org.

4. CoStar Group. “Sun Belt Apartment Supply and Demand Analysis.” CoStar Research, 2025, https://www.costar.com.

5. JLL. “Student Housing Market Update.” JLL Research, 2025, https://www.jll.com.

6. National Center for Education Statistics. “Projections of Education Statistics.” U.S. Department of Education, https://nces.ed.gov.

7. Freddie Mac. “The Housing Supply Shortage Continues.” Freddie Mac Research, https://www.freddiemac.com.

8. Yun, Lawrence. “Housing Inventory and Market Conditions.” National Association of Realtors, https://www.nar.realtor.

9. Harvard University Joint Center for Housing Studies. The State of the Nation's Housing 2024. Harvard University, https://www.jchs.harvard.edu.

10. PwC and Urban Land Institute. Emerging Trends in Real Estate 2025. PwC, https://www.pwc.com.