Our Chief Economist’s Takeaways from NMHC’s Annual Meeting

National Multifamily Housing Council’s annual conference was held the final week of January in Las Vegas. Conference sessions ranged from the macro, including a macroeconomic outlook with Justin Wolfers, Professor of Public Policy and Economics at the University of Michigan and a fireside chat with Henry Paulson, former Secretary of the Treasury, to the micro with lots of focus on artificial intelligence and real estate technology.

Summarizing a three-day agenda across such a breadth of topics with just a few hundred words can only achieve so much, but here is our attempt to recap the multifamily industry’s Super Bowl conference.

Key Theme #1: Risk is out there, and it comes in all shapes and sizes.

I talked to many people between sessions this year and risk seemed the biggest undercurrent of the conference. Risk of loan maturities in 2025, risk of policy and legislative shifts, risk of interest rates holding above last cycle norms, and more. And certainly not omitted from the discussion was the risks (or perhaps more accurately, the unknowns related to scale and impact) of President Trump’s campaign promises surrounding tariffs and immigration reform, in particular.

But one thing that stood out to me is that all of these discussed risks – plus many more – weren’t necessarily offered from a pessimistic perspective. Rather, it was a very grounded perspective that acknowledged the risks in the market while also not deterring optimism for the sector’s long-term investment theses… which ties into key theme #2.

Key Theme #2: The multifamily investment thesis remains strong, but don’t expect the floodgates to open in 2025.

Compared to 2023 and 2024, this year’s NMHC conference was arguably the most optimistic. Many of the unknowns a la 2023 and 2024 are now in the rearview. For instance, 2023’s conference came off the heels of a four-decade peak in inflation. Further, the industry had just recorded its weakest annual demand figure since the GFC. And in 2024, the topic du jour was all about supply (and rightfully so, as 2024 saw the delivery of more units than any year since the mid-1970s). In the January 2025 iteration of the conference, however, these previous unknowns have given way to more normal conditions. And that in turn is boosting investor sentiment as well. But we’re not likely to see the floodgates for increased investment activity open up in 2025 (at least not quite yet). And the same can be said for new development, too – that is, the interest is growing but it’ll take some time to reach realization due to the backdrop of interest rates.

Key Theme #3: Capital markets in 2025 diverge across different asset types and investment horizons (e.g., investment strategies).

Towards the end of the 2010s cycle, it was arguably more difficult to find an investment strategy that was struggling to execute on its proposed returns. Rent growth was solid, occupancy was healthy, supply was largely a non-risk, and the delta between cap rates and traditionally “safer” alternatives such as the 10 Year Treasury remained large enough (even with cap rate compression) that the sector became commercial real estate’s crown jewel in many ways. Today though, the story looks different in many ways. The thesis of acquiring assets “below replacement cost” makes a compelling story, but is ultimately difficult to realize at a significant scale. Value-add strategies meanwhile see a better outlook than the past two to three years, but even then this is requiring an approach that’s “less chainsaw, more scalpel” unlike the past cycle. Stated differently – location and strategic execution matter a lot more today than five years ago. But arguably most important above all as we kick off 2025: market fundamentals remain a non-issue.

Key Theme #4: Peak supply has arrived, but don’t expect all markets to rebound congruently.

Loosely tying into the previous point, market and location matter a lot in 2025. Most Sun Belt markets are past peak supply, but a large nominal figure slated to deliver in 2025 means there won’t likely be much revenue growth. Still, momentum is improving (even if in a few select instances this means replacing a larger negative figure from 2024 with a smaller negative figure in 2025).  A number of coastal Gateway markets meanwhile have yet to hit peak supply. While supply should always be welcomed in these critically undersupplied markets, there’s some potential that supply begins to catch back up to demand sooner rather than later, thereby influencing local revenue growth trends. More succinctly then, the shift in supply themes between these two regions (Sun Belt coming out of peak supply vs. Gateway markets approaching peak supply) means that we could see a narrowing gap between the outperformers and the underperformers.

Key Theme #5: Real estate technology remains in a liminal space between widespread adoption and relative infancy (in terms of sophistication).

As is the case with effectively every industry on the planet, technology is improving efficiency and productivity. It’s also up ending the status quo in a lot of ways, and AI’s meteoric rise the past few years (see: centralization) is accelerating things beyond most professionals’ wildest imaginations even just five years ago. Ergo, technology adoption (especially AI) is becoming more and more prevalent. But governance of these technologies is also becoming increasingly important. And despite the prevalence of technology in the industry already, almost everyone can see that this is just the proverbial tip of the iceberg. Which ultimately suggests that CRE technology (multifamily, in this case) has become a proven requirement instead of an unproven accoutrement for day-to-day operations.