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*Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. * In 2023, mortgage rates peaked at 8%, blowing past the incredibly low rates buyers experienced just a few years earlier as the pandemic dropped interest rates to all-time lows (2).
“Many homeowners are reluctant [to] put their homes on the market and give up the low mortgage rates they already have,” the report stated. “To them, high price gains won’t mitigate their ability to pay more for another home at significantly higher interest rates.”
While rates today are slightly lower at about 6.33% for a 30-year fixed mortgage (3), the report noted that mortgage rates this high are making it tough for both buyers and sellers to consider entering the real estate market.
And Berkshire Hathaway isn’t alone in their assessment.
A recent report from Zillow also found that interest rates would need to drop by 4.43% to make homeownership affordable for the average American — and in some expensive coastal metros like New York, Los Angeles, Miami, San Francisco, San Diego and San Jose, not even a 0% rate would make the typical house affordable (4).
Even as homeownership slips further out of reach for many Americans, the multifamily market is seeing renewed energy. Rising occupancy, slowing construction, and new federal incentives are combining to create a favorable environment for multifamily investors poised to take advantage of the next phase of growth.
According to a report from Arbor Realty Trust, the multifamily rental market is recovering after experiencing a 19% price drop from 2022 to 2024 (5).
The current lack of affordable mortgage rates for first-time buyers means many who would prefer to buy are instead forced to stay in the rental market, increasing demand.
The report points out that rental construction has slowed, interest rates have started falling, and federal tax incentives are also helping boost this market.
Despite a questionable economic outlook, with tariff concerns, soft consumer spending and a labor market slowdown, property values on multifamily rentals increased in June for the first time in two years.
After a historic boom, construction also slowed from 2.0 to 1.1 units per 1,000 people. This reduction in supply led to 70% of U.S. markets experiencing monthly rent growth over the summer.
The report also noted that new federal legislation — including restoring 100% bonus depreciation, making Opportunity Zones permanent and expanding the 9% Low-Income Housing Tax Credit — has made the multifamily market appealing again.
For investors, these types of properties can increase market resiliency, allowing for rental revenue streams from multiple tenants.
This turning point in the market could make it a good time to consider investing in multifamily rentals.
If diversifying into multifamily rentals appeals to you, you could consider investing with Lightstone DIRECT, a new investing platform from the Lightstone Group, one of the largest private real estate companies in the country with over 25,000 multifamily units in its portfolio.
Since they eliminate intermediaries —brokers and crowdfunding middlemen — accredited investors with a minimum investment of $100,000 can gain direct access to institutional-quality multifamily opportunities. This streamlined model can help reduce fees while enhancing transparency and control.
And with Lightstone DIRECT, you invest in single-asset multifamily deals alongside Lightstone — a true partner — as Lightstone puts at least 20% of its own capital into every offering. All of Lightstone’s investment opportunities undergo a rigorous, multi-stage review before being approved by Lightstone’s Principals, including Founder David Lichtenstein.
How it works is simple: Just sign up with your email, and you can schedule a call with a capital formation expert to assess your investment opportunities. From here, all you have to do is verify your details to begin investing.
Founded in 1986, Lightstone has a proven track record of delivering strong risk-adjusted returns across market cycles with a 27.5% historical net IRR and 2.49x historical net equity multiple on realized investments since 2004. All told, Lightstone has $12 billion in assets under management — including in industrial and commercial real estate.
As such, even if multifamily rentals don’t appeal to you, Lightstone could still serve you well as an investment vehicle for other real estate verticals.
