The Perfect Storm: Why Multifamily Demand Is Booming While New Supply Falls

Introduction: When Demand Surges but Supply Shrinks

The latest data from CRE Daily paints a powerful picture for apartment investors:

➤ Construction starts for multifamily buildings are down over 30% year-over-year, the largest drop in more than a decade.

➤ Meanwhile, renter demand has sharply rebounded, fueled by high interest rates, limited home affordability, and persistent supply chain hangovers.

In short: Demand is roaring back—just as the supply pipeline dries up.

For multifamily investors, this could be the most strategic moment in years to enter the market.

What’s Causing the Drop in New Construction?

Developers are hitting the brakes, and for good reason:

➤ Interest rates remain elevated, making new projects harder to pencil.
➤ Construction costs—while improving—are still high relative to pre-pandemic levels.
➤ Financing has tightened, especially for ground-up development.
➤ Many lenders have shifted capital toward stabilized assets over speculative builds.

As a result, we’re seeing a sharp drop in the number of new units breaking ground in 2025. And the projects that do move forward are often delayed, downsized, or repriced.

Why Renter Demand Is Accelerating

Despite economic uncertainty, renter demand is climbing in key markets. Here’s why:

➤ Homeownership is increasingly out of reach for many due to high mortgage rates.
➤ In-migration continues in the Sunbelt and Southeast, with more jobs and lifestyle-driven relocations.
➤ Millennials and Gen Z renters are forming households faster than inventory is being added.

Even with higher rents, renting remains more flexible, more affordable, and more attractive than buying for many Americans.

And that’s great news for apartment owners.

The Investment Thesis: Buying Existing Apartments Is Now the Smart Play

With new construction lagging behind demand, existing value-add apartment communities stand to benefit most. Why?

✅ Occupancy will rise as renters have fewer new options.
✅ Rents will strengthen, especially in Class B and renovated C+ properties.
✅ Investors can acquire below replacement cost—often $100k–$200k+ less than what it would cost to build new.

In other words, value-add multifamily is one of the few asset classes positioned to benefit from both macro tailwinds and supply-side constraints.

How Faris Capital Is Responding

At Faris Capital Partners, we’re already deploying this strategy:

➤ Buying in growth markets like Tampa, Charleston, and Atlanta, where demand continues to surge
➤ Targeting 1980s–2000s vintage buildings for our Full Out renovations
➤ Avoiding speculative bets and focusing on cash-flowing assets with strong fundamentals

We’ve structured a new deal that is already seeing early leasing traction—and they’re available to both Canadian and U.S. accredited investors.

Final Word: This Is the Window

Markets like this don’t come around often.

➤ Demand is up.
➤ New supply is down.
➤ Assets are trading at favorable pricing.
➤ And long-term rent trends remain solid, especially for workforce housing.

If you’ve been waiting for the “all clear” signal, this may be it.

👉 Reserve your spot in our next deal

Or book a short call to get the details and decide if it’s the right fit for you.