release edition [001] read time [8 minutes] Welcome to The Multifamily Download, a weekly newsletter where I provide institutional insights to help you build an exceptional career in Real Estate. Today at a Glance:
My go-to tool for market research & content creation:IntroductionFor those of you that are new here, welcome! I'm glad you're here. As a quick background, I have been writing a weekly newsletter for 76 consecutive weeks, but this is the first edition of my rebranded newsletter, "The Multifamily Download". "Trey, why the change?" In addition to writing this newsletter, I've been actively publishing on LinkedIn for nearly 18-months. Toward the end of 2024 I came to realize that my 'public' message (aka LinkedIn) was very different from my 'private' one (aka my Newsletter). Given my aspirations in Multifamily, I felt this rebrand would (a) help enhance your reading and learning experience, and (b) improve the overall perception and value of my growth online. "What can I expect?" The Multifamily Download will deliver exactly what it promises -- institutional insights every Saturday. My day job is as the VP of Multifamily Investments for a ~$500M AUM Multifamily owner/operator, where I help oversee acquisitions, asset management, investor relations, special projects, and many debt/equity relationships. Simply put, I live and breathe Multifamily, and I'm excited to share my institutional approach and learnings here with you. The topics will vary from week to week, but the format should remain the same. "What if I'm not an institutional investor?" Rest assured, we're cut from the same cloth. My Multifamily journey began in private client Multifamily investment sales ($1M - $20M) at Cushman & Wakefield in Southern California, so I understand the entire spectrum of Multifamily assets. This newsletter will share insights both professionally and thoughtfully, which can then be applied to your private investing network, investment sales or brokerage career, or investments alongside friends & family. "I'm not in the Real Estate industry" Some of you reading this found me because of my career related content, and I'm grateful you're here! As you probably know, many of the wealthiest people in the world own Real Estate. It is my hope that you'll stick around to observe, learn, and eventually apply the information that I will be sharing inside of The Multifamily Download newsletter. That said, no hard feelings if you decide to leave, but I would simply ask that you share this link with a friend or family member that likes or owns Real Estate in case they'd like to become a weekly reader. My intent here is pure, and I hope that shines through in my writing. Yes, I'd like to eventually generate revenue with this newsletter and my other offerings, but, I will always put you, the reader, first by maintaining professionalism and sharing my most valuable insights. This newsletter is my labor of love, and it is intended to help you grow your Real Estate knowledge. In return, if you enjoy it, I simply ask that you share the link below with your friends or family.
OutlookMultifamily is poised for a remarkably positive upcoming 3- to 5-years thanks to several market and economic tailwinds. Investors are becoming increasingly more optimistic, with Deloitte's 2025 commercial real estate outlook survey showing Multifamily as the top opportunity for North American owners and investors over the next 12- to 18-months. Below are 5 of the key tailwind variables to keep an eye on in 2025.
Let's unpack each of these briefly.
Next week, I'll share some of the 2025 outlook research that I've been studying along with my personal predictions. NewsFamous hedge fund investor Bill Ackman made a bold prediction recently on X where he predicted that Fannie Mae and Freddie Mac (known as GSEs, or Government Sponsored Enterprise) will be removed from conservatorship and be allowed to operate as standalone business entities. I think this is fascinating to consider, and while it is somewhat idealistic given his status as a current shareholder of both Fannie and Freddie stock, I think it is realistic to occur under the new administration. If you're interested in learning more, Bill Ackman is hosting an X Space conversation on January 16th at 6:00am to discuss this topic further. You can set a reminder by clicking here. "A successful emergence of Fannie and Freddie from conservatorship should generate more than $300 billion of additional profits to the Federal government (this is on top of the $301 billion of cash distributions already paid to the Treasury) while removing ~$8 trillion of liabilities from our government’s balance sheet." - Bill Ackman, CEO of Pershing Square Capital Management FinanceThe U.S. is in a debt crisis that many people have not yet identified. Based on what I read on X from The Kobeissi Letter, there is a perfect storm potentially brewing, including (1) credit card debt reaching ATH of $1.17T alongside credit card interest rates reaching ATH of 23.4%, (2) credit card lenders wrote off $46bn in seriously deliquent loans YTD through September 2024, and (3) the U.S. Gov debt is currently $36.3T with an average interest rate of 3.4%, which has doubled from ~1.5% in early 2022. While household debt payments as a percentage of disposable income is not alarming at ~11.5% (for context, this approached 16% during the GFC), it is climbing rapidly. Total U.S. credit card debt topped $1 trillion for the first time ever in the second quarter of 2023, and increased 8.3% over the one-year period ending September 30, 2024. Furthermore, a bubble appears to have formed in the Stock market. The current P/E ratio of the S&P 500 is 29 compared to the historical median P/E ratio of ~18. Just 7 stocks, the "Mag 7", accounted for 75% of the S&P 500's profits and more than 50% of the price gains in 2024. Additionally, the S&P 500 rose more than 20% in 2024 for the second straight year, a feat last accomplished in the 1990s. The graph below demonstrates the record-level concentration of wealth in the U.S. Equities (stock) market. US households' allocation to stocks as a percentage of financial assets rose to 43.4% in Q3 2024, an all-time high. This percentage has surpassed the previous record of 41.7% set in Q4 2021, according to the Fed data. Households’ stock allocation is now even higher than at the 2000 Dot-Com Bubble peak of 38.5%. Meanwhile, the top 10% of households now own 87% of all stocks with the top 1% owning half of them. At the same time, the bottom 50% holds just 1% of all equities. There is no simple or singular path forward, unfortunately. The Fed is in a tough spot, especially given the bond sell-off that occurred in Q4 2024 after the Fed began it's easing cycle. They will likely continue to cut in 2025, but the impact on U.S. Treasuries and therefore Real Estate remains largely unknown, especially with during a transition year in the White House. The reality is this: Approximately 68% of the U.S. GDP comes from consumer spending. If consumers begin spending less in 2025, productivity measures may drop, profitability of businesses may fall, and there could be a negative ripple effect felt across the economy including in the Real Estate sector. I know this is not a fun topic to consider, but it's a potential reality nonetheless. The next four years under the new administration may be pivotal to a productive and prosperous future for America. Weekly ListenMy favorite podcast episode this week was the Treppwire Podcast Episode 299, which explored current & historical delinquency data along with a few 2025 predictions. These were my biggest takeaways:
ConferencesAre you attending either of the two conferences below? I'm attending and it would be great to meet you there! Conference: IMN - Private Fund Investing Location (Dates): Laguna Beach, CA (January 22-24) Conference: NMHC - Annual Meeting Location (Dates): Las Vegas, NV (January 27-30)
Closing RemarksWell, 2025 has officially arrived. Opportunities in Multifamily will present themselves this year, so make sure you're ready. It's time to dust off your keyboard, load up the coffee maker, and pick up your cell phone. Let's make it happen this year! #ThriveIn2025 Forwarded this email? Sign up here. |
The Multifamily Download · January 4, 2025
2025 Outlook, Consumer Credit, & Delinquencies
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