Fear & Greed Index

Geopolitical tensions and tariffs continue to limit the Fed’s ability to reduce interest rates,
Asset values
There is still a major bid-ask gap across all sectors of real estate. Prices haven’t decreased and
keeping significant CRE deal flow muted. It’s been way too long. Investors are ready to buy across sectors but need roughly six months of positive news to restart activity beyond distressed transactions. High interest rates and construction costs make it difficult for tenants (daycares, fast coffee, etc.) to afford rents.

Macroeconomic chaos and uncertainty continue to put downward pressure on the market across all sectors.

Our overall outlook is neutral to bearish. We are beginning to see signs of distressed sellers emerging as interest rates rise. Newer or unseasoned properties are more vulnerable.”

We are still bullish on build-to-rent and believe there will be an influx of single-platted BTR capital once there is a resolution on the housing legislation.

Our primary concern is stagflation. I expect multifamily rent growth to accelerate somewhat, although inflation-adjusted performance may still look weak.” inflation-adjusted performance may still look weak.

The multifamily maturity wall (large volume of upcoming loan maturities) will soon have a significant impact.

The multifamily market remains significantly overvalued relative to historical pricing fundamentals, including cap rate spreads and band-of-investment methodologies. Many current participants have never experienced a market disruption like the 1990 S&L crisis or the 2008 GFC, and are still relying on traditional sale comp pricing methods that are less relevant in today’s capital markets environment.

The Southeast is experiencing weakness at both the top and bottom ends of the market. At the top end, renters are no longer moving into luxury apartments as migration from the northeast has slowed to a trickle. At the bottom end, a lot of Class C apartments are suffering from low occupancy due to immigration policy. There are still a large number of distressed Class C properties that need to work through foreclosure, but debt funds have been slow to act because they do not want to recognize losses.

There is still a major bid-ask gap across all sectors of real estate. Prices haven’t decreased and buyers are being more prudent with their funds. So much of the market is frozen.“

The market is beginning to normalize, and the bid-ask spread on transactions is finally starting to align between buyers and sellers.

Values may not have declined significantly; rather, market cap rate realization is catching up to where values have effectively been for the last two years absent major upside.

The market remains significantly overpriced. The large institutional buyers (less than 5% of market participants purchasing on an unlevered basis) are limiting cap rate expansion. The remaining 95% of the market that relies on leverage is still at a standstill. Cap rates likely need to reach the 7.75%–8% range, consistent with the last time the 10-year Treasury yield was at current levels.