Tight fundamentals: Multifamily remains one of the healthiest CRE sectors. Robust housing demand (young adults forming households) is outpacing new supply in most major markets. As a result, occupancy is high and rising. Leading forecasts predict U.S. vacancy falling to about 4.9% by end-2025, with rents up ~2.6%. Even markets that saw negative rent growth in 2024 (due to prior oversupply) should turn positive as deliveries slow. These fundamentals bode well for steady rental cash flow. Our CMIC analysis emphasizes core-plus investments in quality apartment communities, where long-term demand (from renters and investors) remains solid.

Managing costs: Operating expenses have jumped since the pandemic. Yardi Matrix reports that per-unit multifamily expenses rose ~7.1% year-over-year as of Jan 2024, with insurance and maintenance up sharply. While some cost inflation may moderate, we expect elevated spending on labor and materials to continue. Passive investors should account for higher capex and expenses when underwriting, favoring assets with efficient management or newer amenities that control costs.

Strategic positioning: For CMIC’s members, multifamily is attractive for its stable cash yields and built-in inflation hedge via rent growth. We look for well-located properties (especially in high-growth Sun Belt metros) where supply pipelines have peaked. Value-add plays—such as minor renovations or lease-up of vacant units—can boost returns while fundamentally safe. We avoid overpriced or highly speculative projects. In all, we remain optimistic on multifamily as a cornerstone of a passive income portfolio.