Sometimes waiting feels like watching paint dry, and that was us for most of 2024 (and 2023), watching rates hover in the stratosphere while deals gathered dust.
But here’s the thing about patience—it has a funny way of paying off when you’re about to lose your mind. After months of saying “not yet” (and believe us, it wasn’t always easy), we’re finally seeing the kind of opportunities that make us sit up straight in our chairs. We can’t tell you how grateful we are that you trusted our steady-handed approach through it all.
The market’s finally waking up from its deep freeze – and in a big way. We’re seeing deals pop up, especially in our multifamily niche (sales volume up 9% in Q3 alone). However, what really gets us excited are the undervalued and distressed opportunities: quality properties below replacement cost in markets we know like the back of our hand.
We are confident that 2025 will be one for the books, and we can’t wait to share what we’re cooking up in our early January biannual multifamily “State of the Market” webinar.
For now, let’s take a look at the year that was:
Interest Rates in 2024: A Year of Strategic Pivots
Money got cheaper in 2024 – and real estate markets responded accordingly. While the Federal Reserve started the year holding steady with rates between 5.25% and 5.50% through March, two significant cuts followed: a 50-basis-point reduction to 4.75%-5% in September, and another quarter-point drop to 4.50%-4.75% in November. Strong GDP growth and consumer spending drove the initial patience, but softening job markets and controlled inflation later opened the door for rate cuts.
Global factors played a major role in these decisions. Europe’s economic slowdown offset U.S. growth gains, while emerging markets wrestled with conflicts and weather disruptions. Supply chain problems and geopolitical tensions kept inflation concerns alive, forcing central banks worldwide to carefully time their moves.
Real Estate Investment Impact
Property values felt the squeeze from earlier high rates but started stabilizing after the Fed’s cuts. Markets showed regional variations – Northeast states like New Jersey and Rhode Island posted price gains despite the challenging environment. Savvy investors adapted by emphasizing economic profit calculations and efficient capital deployment. Many built diverse portfolios mixing bonds and real estate, while others turned to data analytics for smarter property management decisions.
Looking Ahead
Experts predict continued rate declines through 2025. Mortgage rates should drop to the low-6% range by the end of the year and hit the high-5% territory early next year. Most forecasts place 30-year fixed rates between 5.7% and 5.9% for 2025. The federal funds rate might reach 3.5% by year-end 2025, potentially sparking increased real estate activity. Opportunities will likely expand in this environment, but we maintain a balanced approach at RSN: monitoring economic uncertainties and regulatory changes while seeking out properties with proven rental track records.
Trump’s Return: Breaking Down the 2024 Election and Potential Real Estate Impacts
Most political analysts predicted a close race, but Donald Trump pulled off a decisive victory with 312 electoral votes to Kamala Harris’s 226, and he became the first Republican since 2004 to secure the popular vote. Meanwhile, Republicans strengthened their grip on Congress, flipping four Senate seats to claim a 53-seat majority while maintaining control of the House with 218 seats.
Policy Changes Reshaping Real Estate’s Future
Trump and his team want to make the 2017 Tax Cuts permanent before their 2025 expiration, which would provide an upward force on real estate valuations and corporate profits. The preservation of 1031 like-kind exchanges remains protected, letting investors defer taxes when reinvesting proceeds. Property owners can expect expanded Opportunity Zone benefits and restored 100% bonus depreciation for both new and used properties. Lastly, developers are likely to benefit additionally as regulations are weakened or eliminated, making permits faster and cheaper to grab. On the flip side – those proposed 10-20% import tariffs will likely increase the cost of building materials, and aggressive policing of immigration laws may increase deportations and have an outsized impact on the construction industry workforce.
Commercial Real Estate (CRE) Distress in 2024: A Market Under Pressure
Your inboxes are likely flooded with headlines about CRE market turmoil, and for good reason. Over $1 trillion in CRE loans will need refinancing through 2026, dropping like a bomb on regional and community banks already skating on thin ice – the traditional backbone of our industry. Commercial property foreclosures jumped 117% between March 2023 and 2024, with 625 properties facing foreclosure in March 2024 alone. Let’s unpack what this means for our investment strategy.
Office Buildings: The Cautionary Tale
While we’ve stayed focused on multifamily, it’s crucial to understand the broader market context. Office properties tell a sobering story, representing nearly half of all distressed assets. With national office vacancy rates hitting 19.2%, some multi-tenant office buildings have seen values plummet by 75%. High interest rates paired with remote work pulled the rug out from under traditional office spaces, leaving owners scrambling for solutions.
Multifamily: Short-Term Pain, Long-Term Gain
Our sector weathered its share of turbulence – multifamily vacancy rates hit 7.8% in March 2024, putting pressure on overleveraged “value-add” players who bet too heavily on endless rent growth and appreciation. But the winds have shifted. Q3 2024 brought welcome news: multifamily vacancies dropped 0.2% to 5.3%, marking the first quarterly decline in two years—the combination of slowing construction pipelines and resilient renter demand signals strengthening fundamentals. While office towers sit empty and industrial absorption hits decade lows, the simple truth remains – people always need places to live.
Finding Opportunity in Market Dislocation
Market dislocations like these create rare opportunities for disciplined operators. We’re seeing quality assets trading below replacement cost in markets with strong population growth and employment fundamentals. Our conservative underwriting and value-add expertise position us perfectly to acquire these gems. We’re particularly excited about distressed multifamily properties that need professional management and strategic capital improvements – our bread and butter. Our team has successfully handled multiple real estate cycles, and we’re ready to deploy capital thoughtfully as opportunities emerge. Remember – some of the best real estate investments are made during periods of market uncertainty when patient capital and operational expertise create exceptional value.
Deal Volume Picks Up Speed: The Game-Changing Trend of 2024
Finally, money flowed back into real estate during 2024, with multifamily properties stealing the spotlight. Q2 marked the turning point – total transaction volume hit $40.1 billion, leaping 13.9% from Q1. While retail and industrial saw healthy gains of 13% and 14%, multifamily emerged as the true heavyweight, with an 18% surge in deals. The momentum kept building through Q3 when multifamily racked up an impressive 9% year-over-year gain in sales volume. The sector’s sustained quarterly sales of $38.3 billion matched levels we hadn’t seen since 2017.
Momentum Builds Across All Regions
Real estate’s deep freeze ended in 2024. The National Association of REALTORS® recorded a 2.0% climb in pending home sales during October alone. Every region of the country saw more contracts being signed, with the West leading the pack. Single-property transactions rose 11.6% from Q1 to Q2, proving buyers meant business. In Q3, multifamily markets like San Francisco and Boulder also saw record-breaking YTD figures.
What Sparked the Revival?
Several factors lit the fuse on this dealmaking explosion. Interest rate clarity gave investors the confidence to jump back in. At the same time, logistics and residential properties became hot commodities thanks to near-shoring trends and tight vacancy rates. The global market caught the wave, too, as improved sentiment unleashed pent-up capital sitting on the sidelines. The message became clear: real estate was back in business, and 2024 marked the year when hesitation turned into action. That’s a great note to end this year and segway into next.
Looking Ahead to 2025: RSN’s Strategic Positioning
Watching deals go by while the Fed Funds rate sat above 5.5% this past year wasn’t always fun. But sticking to our guns on our underwriting standards and assumptions and being disciplined to never “stretch to win the deal” (i.e. overpay) turned out to be the right call. Once the Fed started cutting rates, the market began opening up exactly how we’d hoped. We’re now seeing quality properties trading at real discounts, solid employment numbers backing up tenant demand, and inflation finally settling into a more predictable pattern.
Sometimes the hardest part of investing is just staying patient, and our team did exactly that.
We’ve been working hard to make 2025 something special. During our January “State of the Market” webinar, we’ll walk you through several opportunities we’re excited about—the kind that check all our boxes for proven rental markets, clear value-add potential, and purchase prices that work even with our conservative math.
Your trust in our approach means everything to us, and we’re looking forward to showing you what we’ve been working on in the coming year.
Reed Goossens is an Australian-born real estate entrepreneur, investor, author, public speaker, and an all-around good bloke. Reed got his start in real estate investing back in 2012 when he moved to the US.
